<PAGE>
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
Filed by the registrant [X]
Filed by a party other than the registrant __
Check the appropriate box:
[X] Preliminary Proxy Statement
__ Definitive Proxy Statement
__ Definitive Additional Materials
__ Soliciting Material pursuant to Section 240.14a-11(c) or Section 240.14a-12
ZAPATA CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
__ $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
__ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11: /1/
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
__ 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:
- --------------------------------------------------------------------------------
<PAGE>
[Preliminary Copy]
[Logo]
March 25, 1994
To Our Stockholders:
You are cordially invited to attend the 1994 Annual Meeting of Stockholders to
be held at 10:00 a.m., Houston time, at the offices of the Company at One
Riverway, 777 South Post Oak Lane, Suite 2200, Houston, Texas 77056, on April
27, 1994.
At the meeting, we will report on the progress of the Company, comment on
matters of interest, and respond to your questions. A copy of the Company's 1993
annual report to stockholders has previously been furnished to all stockholders.
Of particular importance, the Company's Board of Directors is recommending for
stockholder approval a one-for-five reverse stock split of the Company's
outstanding Common Stock. At its current share price, the Company's Common Stock
falls below the threshold of many investors. The primary purpose of the reverse
stock split is to increase the attractiveness of the Common Stock and hopefully
gain institutional support. If the reverse stock split is approved, an annual
dividend of $0.14 per share will be instituted on all outstanding shares of
Common Stock, after adjustment.
Whether or not you plan to attend the meeting, we ask that you indicate the
manner in which you wish your shares to be voted and sign and return your proxy
as promptly as possible in the enclosed envelope so that your vote may be
recorded. You may vote your shares in person if you attend the meeting, even if
you send in your proxy.
I appreciate your interest in Zapata as we continue efforts to refocus the
Company.
Sincerely yours,
R.C. Lassiter
Chairman and
Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
PAGE
Notice of Annual Meeting of Stockholders
Proxy Statement
Voting Securities . . . . . . . . . . . . . . . . . . . . 1
Certain Beneficial Owners . . . . . . . . . . . . . . . . 3
Election of Directors . . . . . . . . . . . . . . . . . . 4
Nominees. . . . . . . . . . . . . . . . . . . . . . . . . 4
Continuing Directors. . . . . . . . . . . . . . . . . . . 5
Board of Directors and Committees of the Board. . . . . . 6
Security Ownership of Management. . . . . . . . . . . . . 8
Executive Compensation. . . . . . . . . . . . . . . . . . 9
Compliance with Section 16(a) of the Exchange Act . . . . 13
Certain Relationships and Related Transactions. . . . . . 13
Report of the Compensation Committee. . . . . . . . . . . 15
Compensation Committee Interlocks and Insider . . . . . . 16
Participation
Stockholder Return Performance Graphs . . . . . . . . . . 18
Reverse Stock Split . . . . . . . . . . . . . . . . . . . 19
Ratification of the Appointment of Independent. . . . . . 25
Accountants
Stockholder Proposal on Cumulative Voting . . . . . . . . 25
Other Matters . . . . . . . . . . . . . . . . . . . . . . 27
Stockholder Proposals for 1995 Annual Meeting of. . . . . 28
Stockholders
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
[Preliminary Copy]
ZAPATA CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1994
The Annual Meeting of the Stockholders of Zapata Corporation will be held
at the offices of the Company at One Riverway, 777 South Post Oak Lane, Suite
2200, Houston, Texas 77056 on Wednesday, April 27, 1994, at 10:00 a.m., Houston
time, for the purpose of considering and voting on:
1. Election of two directors as members of Class II of the
Board of Directors for a three year term.
2. Approval of a proposal to effect a one-for-five reverse
stock split (the "Reverse Stock Split") of the Company's
outstanding Common Stock.
3. Ratification of the appointment of Coopers & Lybrand as
independent public accountants for the Company for 1994.
4. A stockholder proposal (the "Stockholder Proposal") to
request the Board of Directors to take the steps
necessary to provide for cumulative voting of the
Company's Common Stock.
5. Such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed March 23, 1994 as the record date for
determining the stockholders of the Company entitled to notice of and to vote at
the meeting and any adjournment thereof, and only holders of the Company's
Common Stock, $6 Cumulative Preferred Stock and $2 Noncumulative Convertible
Preference Stock of record at the close of business on such date will be
entitled to notice of and to vote at said meeting or adjournment.
By order of the Board of Directors,
Joseph L. von Rosenberg III
Associate General Counsel
and Corporate Secretary
Houston, Texas
March 25, 1994
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY AS PROMPTLY AS POSSIBLE. AN ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES, IS ENCLOSED FOR THIS PURPOSE.
<PAGE>
[Preliminary Copy]
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Zapata Corporation, a Delaware corporation
(hereinafter called the "Company"), to be voted at the 1994 Annual Meeting of
Stockholders to be held on Wednesday, April 27, 1994, and any and all
adjournments thereof.
Solicitation of proxies by mail is expected to commence on March 25, 1994,
and the cost thereof will be borne by the Company. In addition to such
solicitation by mail, certain of the directors, officers and regular employees
of the Company may, without extra compensation, solicit proxies by telephone,
telegraph and personal interview. Arrangements will be made with brokerage
houses, custodians, nominees and other fiduciaries to send proxy material to
their principals, and they will be reimbursed by the Company for postage and
clerical expenses. Furthermore, Morrow & Co. has been retained to assist in the
solicitation of proxies from stockholders of the Company for an anticipated fee
of $5,000 plus out-of-pocket expenses.
Shares represented by properly executed proxies will be voted as specified.
If no specifications have been given in a proxy, the shares represented thereby
will be voted FOR the election of nominees listed herein as directors (Item 1),
FOR the Reverse Stock Split (Item 2), FOR the ratification of Coopers & Lybrand
as independent public accountants for 1994 (Item 3), AGAINST the Stockholder
Proposal (Item 4), and, in the discretion of the persons named in the proxy, on
any other business that may properly come before the meeting.
Proxies may be revoked at any time prior to the exercise thereof by filing
with the Corporate Secretary, at the Company's principal executive offices, a
written revocation or a duly executed proxy bearing a later date. The principal
executive offices of the Company are located at One Riverway, 777 South Post Oak
Lane, Suite 2200, Houston, Texas 77056. The mailing address of the Company is
P.O. Box 4240, Houston, Texas 77210-4240. For a period of at least ten days
prior to the Annual Meeting of Stockholders, a complete list of stockholders
entitled to vote at such meeting will be available for inspection by
stockholders of record during ordinary business hours for proper purposes at the
Company's principal executive offices.
VOTING SECURITIES
Stockholders of record at the close of business on March 23, 1994 (the
"Record Date"), are entitled to vote at the meeting and at any adjournments
thereof. On that date the issued and outstanding capital stock of the Company
consisted of 158,302,958 shares of Common Stock (the "Common Stock"), 44,943
shares of $6 Cumulative Preferred Stock (the "$6 Preferred Stock") and 2,687
shares of $2 Noncumulative Convertible Preference Stock (the "$2 Preference
Stock"), each of which shares is entitled to one vote. The presence at the
meeting, in person or by proxy, of the holders of a majority of the outstanding
shares of voting stock of the Company is necessary to constitute a quorum for
the transaction of business at the Annual Meeting of Stockholders. If there are
not sufficient shares represented in person or by proxy at the meeting to
constitute a quorum, the meeting may be postponed or adjourned in order to
permit further solicitations of proxies by the Company. Proxies given pursuant
to this solicitation and not revoked will be voted at any postponement or
adjournment of the Annual Meeting of Stockholders in the manner hereinabove set
forth.
<PAGE>
The two nominees receiving the greatest number of votes cast by the holders
of Common Stock, $6 Preferred Stock and $2 Preference Stock will be elected as
directors. There will be no cumulative voting in the election of directors. The
approval of the Reverse Stock Split will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock, $6 Preferred
Stock and $2 Preference Stock, voting together as a single class. The
Stockholder Proposal and the ratification of independent public accountants
require the affirmative vote of holders of a majority of the shares of Common
Stock, $6 Preferred Stock and $2 Preference Stock present in person or
represented by duly executed proxies at the Annual Meeting of Stockholders and
entitled to vote on the subject matter.
Under Delaware law, abstentions are treated as present and entitled to vote
and thus will be counted in determining whether a quorum is present and will
have the effect of a vote against a matter. A broker non-vote (i.e., shares held
by brokers or nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote as to which the broker or nominee
does not have discretionary power to vote on a particular matter) is counted for
purposes of determining the existence of a quorum and will operate to prevent
approval of the Reverse Stock Split to the same extent as a vote against such
proposal. However, a broker non-vote will have no effect on the outcome of the
vote on the Stockholder Proposal and the ratification of independent public
accountants.
2
<PAGE>
CERTAIN BENEFICIAL OWNERS
The following information relates to the holders of the Company's voting
securities known to the Company on March 23, 1994 to own beneficially 5% or more
of any class of the Company's voting securities. For the purposes of this Proxy
Statement, beneficial ownership of securities is defined in accordance with the
rules of the Securities and Exchange Commission (the "Commission") to mean
generally the power to vote or dispose of securities, regardless of any economic
interest therein.
<TABLE>
<CAPTION>
Shares Owned Percent
Title of Class Name and Address Beneficially of Class
- -------------- ---------------- ------------ --------
<S> <C> <C> <C>
Common Stock Malcolm I. Glazer 51,976,923(1) 32.8
1482 South Ocean
Boulevard
Palm Beach, Florida 33480
Norex America, Inc. 15,696,124(2) 9.9
P.O. Box 429
Hamilton, Bermuda HM-BX
Trust Company of the 12,006,108(3) 7.6
West
865 South Figueroa St.,
Ste. 1800
Los Angeles, California 90017
Peter M. Holt 11,875,021(4) 7.5
Holt Avenue and
South W.W. White Rd
San Antonio, Texas 78222
Bank of America National 8,045,927 5.1
Trust and Savings Association
555 California Street, 2nd Floor
San Francisco, California 94104
$6.00 Preferred Francis C. Haynie 3,558 7.9
Stock 8654 Rio Grande Road
Richmond, Virginia 23229
$2.00 Preference Larry A. Reiten 150 5.7
Stock Route 1, Box 297
Bayfield, Wisconsin 54814
</TABLE>
___________________
(1) All such shares are owned by the Malcolm I. Glazer Trust.
(2) Includes 1,300,000 shares held by Prosperity Investments,
Inc., a private investment company, the president of which
is also the president of Norex America, Inc. ("Norex
America") and the management of which is provided by a
subsidiary of Norex Plc, which shares voting and investment
power over such shares with the board of directors of such
investment company (Norex Plc owns approximately 48.3% of
the outstanding capital stock of Norex). Norex Plc and
Norex America disclaim any beneficial interest with respect
to such 1,300,000 shares.
3
<PAGE>
(3) Includes shares held by TCW Special Credits Fund II, L.P.;
TCW Special Credits Fund IIb, L.P.; The Weyerhaeuser Company
Master Pension Trust and The Inland Steel Industries Pension
Trust. Sole voting and investment power over all of these
shares is held by Trust Company of the West.
(4) Includes 140,164 shares held by the Peter Holt H-R Trust,
1,102,389 shares held by the S Stock GST Trust for Peter M.
Holt, 1,102,389 shares held by the S Stock GST Trust for
Benjamin D. Holt III, 1,102,390 shares held by the S Stock
GST Trust for Anne Holt, 1,037,910 shares held by the Holt
Corporate Stock Marital Trust--1985, 1,004,429 shares held
by the Holt Corporate Stock Life Trust--1985, 579,800 shares
held by the Peter M. Holt Grantor Trust and 3,200,486 shares
held by Benjamin D. Holt, Jr. Peter M. Holt disclaims
beneficial ownership as to all of the shares held by the S
Stock GST Trust for Benjamin D. Holt III and the S Stock GST
Trust for Anne Holt.
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation of the Company, as amended,
provides for the classification of the Board of Directors into three classes
(Class I, Class II and Class III), having staggered terms of three years each.
The current term of office of directors in Class II expires at the forthcoming
Annual Meeting of Stockholders. The terms of office of the directors in Classes
III and I will expire at the annual meetings of stockholders to be held in 1995
and 1996, respectively.
Two Class II directors will be elected at the Annual Meeting of
Stockholders to serve for a three year term expiring at the 1997 annual meeting
of stockholders. Mr. B. John Mackin, a former Class II director of the Company,
resigned on February 21, 1994. On February 23, 1994 the Board of Directors
amended the By-laws of the Company to reduce the number of Directors of the
Company from eight (8) to seven (7) members. The By-laws were also amended to
further reduce the number of Directors of the Company to six (6) effective with
the annual meeting of stockholders to be held in 1995.
It is the intention of the persons designated as proxies in the enclosed
proxy card, unless the proxy is marked with contrary instructions, to vote for
the election of Messrs. Peter M. Holt and Kristian Siem as Class II directors to
serve until the 1997 annual meeting of stockholders and until their successors
have been duly elected and qualified. If either of the nominees becomes
unavailable for any reason, shares represented by such proxies will be voted for
such person or persons, if any, as may be designated by the Board of Directors.
At present, it is not anticipated that any nominee will be unable to serve.
Directors will be elected by a plurality of the votes cast.
NOMINEES
The following sets forth certain information with respect to the business
experience of each nominee during the past five years and certain other
directorships held by each nominee.
Peter M. Holt, age 45, has been a director since November 1993. Since July 1984,
Mr. Holt has served as the chief executive officer of Energy Industries, which
was acquired by the Company in November 1993. Mr. Holt is also the chief
executive officer of certain other companies, including Caterpillar equipment
dealerships and companies engaged in used machinery sales, aircraft sales and
real estate investment, a position he has held with each such entity for more
than the past five years. In addition, Mr. Holt is an advisory director of Texas
Commerce Bank, San Antonio and chairman
4
<PAGE>
of the board of DUECO, an international used equipment cooperative.
Kristian Siem, age 45, has been a director since 1993. Mr. Siem has also been a
director of Norex America, Inc. since June 1982 and its chairman and chief
executive officer since August 1988. Mr. Siem is also the chairman of Wilrig AS
and a director of Kalvin-Miller International, Inc., Drayton Blue Chip Trust
Plc, Petroleum Geo-Services A/S, Lowndes Lambert Group Holdings Plc, Norex
Offshore AS and Det Sondenfjelds-Norske Dampskibsselskab.
CONTINUING DIRECTORS
The following sets forth certain information with respect to all members of
the Board of Directors whose current terms will continue after the Annual
Meeting of Stockholders. Information is provided concerning the business
experience of each continuing director during the past five years and certain
other directorships held by each continuing director. Unless otherwise
indicated, each person has had the same occupation for at least five years.
Class III Directors - Term Expiring 1995
Jack T. Trotter, age 67, has been a director since 1986. Mr. Trotter has been a
partner in the Washington law firm of McClure, Trotter & Mentz since 1969, and
maintains an office in Houston for the purpose of managing his personal
investments. Mr. Trotter also serves as a director of First Interstate Bank of
Texas, N.A., Houston Industries Incorporated, Houston Lighting & Power Company,
Howell Corporation, Weingarten Realty Investors, Continental Airlines, Inc. and
King Ranch, Inc.
Daniel P. Whitty, age 62, has been a director since 1988. Mr. Whitty is an
independent financial consultant who also serves as a director of EOTT Energy
Corp. and Methodist Retirement Services, Inc., as a trustee of the Methodist
Retirement Trust, and as a member of the Audit Committee of Northern Border
Partners, L.P. Mr. Whitty served 35 years with Arthur Andersen & Co. and was
elected to their worldwide partnership in 1962.
Class I Directors - Term Expiring 1996
Ronald C. Lassiter, age 61, has been a director since 1974. Mr. Lassiter has
been Chairman of the Board of Directors of the Company since December 1985 and
Chief Executive Officer since January 1983. He was also President of the Company
from July 1978 until December 1985, when the office was eliminated. He has
served in various positions with the Company since 1970, and he served as a
director of Zapata Gulf Marine Corporation from November 1984 to January 1992.
In addition, Mr. Lassiter serves as a director of Daniel Industries, Inc.
Avram A. Glazer, age 33, has been a director since 1993. He has been employed
by, and works on behalf of, Malcolm I. Glazer and a number of entities owned and
controlled by Malcolm I. Glazer, including Florida Management Office, TV
Management Office, Farmington Mobile Home Park, Inc., Century Development
Corporation d/b/a KGNS Laredo, and Canandaigua Mobile Park, for more than the
past five years. Mr. Glazer's principal responsibilities include identifying,
implementing, monitoring and disposing of Malcolm I. Glazer's investment
interests. He also serves as a director of Gilbert/Robinson Restaurants, Inc. (a
restaurant holding company). Avram A. Glazer is the son of Malcolm I. Glazer.
5
<PAGE>
Malcolm I. Glazer, age 65, has been a director since 1993. Mr. Glazer has been a
self-employed, private investor whose diversified portfolio consists of
investments in television broadcasting, restaurants, food services equipment,
health care, banking, real estate, stocks and corporate bonds, for more than the
past five years. He is also a director and chairman of the board of
Gilbert/Robinson Restaurants, Inc. Malcolm I. Glazer is the father of Avram A.
Glazer.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During fiscal 1993, the Board of Directors held fourteen (14) meetings. The
Board of Directors has established an Audit Committee, Compensation Committee,
Nominating Committee and an Executive Committee to oversee specific matters
affecting the Company.
The Audit Committee, currently composed of Messrs. Daniel Whitty
(Chairman), Malcolm Glazer, Kristian Siem and Jack Trotter, held two (2)
meetings in fiscal 1993. The Audit Committee meets with the Company's
independent accountants to review the Company's accounting policies, internal
controls and other accounting and auditing matters; makes recommendations to the
Board as to the engagement of independent accountants; and reviews the letter of
engagement and statement of fees relating to the scope of the annual audit and
special audit work which may be recommended or required by the independent
accountants.
The Compensation Committee, currently composed of Messrs. Peter Holt,
Malcolm Glazer, Kristian Siem and Daniel Whitty, held three (3) meetings during
fiscal 1993. The functions performed by the Compensation Committee include:
reviewing the Company's executive salary and bonus structure; reviewing Zapata's
stock option plans (and making grants thereunder); recommending directors' fees;
setting bonus goals; and approving salary and bonus awards to key executives.
The Nominating Committee, currently composed of Messrs. Peter Holt
(Chairman), Malcolm Glazer, Kristian Siem and Jack Trotter, held one (1) meeting
during fiscal 1993. The functions performed by the Nominating Committee include:
selecting candidates to fill vacancies on the Board of Directors; reviewing the
structure and composition of the Board; and considering qualifications requisite
for continuing Board service. The Nominating Committee will consider candidates
recommended by a stockholder of the Company. Any such recommendation should be
provided to the Corporate Secretary of the Company. In January 1994, the Board
of Directors amended the By-laws of the Company to eliminate those provisions
which require certain advance notice to the Board of Directors for nominations
by a stockholder.
The Executive Committee, currently composed of Messrs. Kristian Siem
(Chairman), R.C. Lassiter, Malcolm Glazer, Avram Glazer and Peter Holt, held one
(1) meeting in fiscal 1993. The Executive Committee reviews and develops
strategies and policies of the Company and recommends changes thereto.
Avram A. Glazer is the alternate for Malcolm I. Glazer on the Audit,
Compensation and Nominating Committees.
During the fiscal year ended September 30, 1993 each director attended at
least 75% of the aggregate number of meetings of the Corporation's Board of
Directors and respective Committees on which he served.
6
<PAGE>
Compensation of Directors
Each non-employee director is paid an annual retainer of $20,000 plus $700
for each meeting of the Board or its committees they attend. Each director who
is not an employee of the Company and who also serves as the chairman of a
committee of the Board of Directors is paid an additional annual retainer of
$3,000. Pursuant to the Company's Amended and Restated Special Incentive Plan,
each non-employee director of the Company automatically receives, following
initial appointment or election to the Board of Directors, a grant of options to
purchase 100,000 shares of the Company's Common Stock at the fair market value
on the date of the grant. Each such option is exercisable in three equal annual
installments after the date of the grant. Those directors who are also Company
employees do not receive any additional compensation for their services as
directors.
On August 27, 1981, the Company and B. John Mackin entered into a
Consulting and Retirement Agreement pursuant to which Mr. Mackin, who was then
serving as chairman of the board and chief executive officer of the Company,
agreed to continue serving as chairman of the board and chief executive officer
of the Company until his normal retirement date, and to serve as a consultant to
the Company following his retirement. The agreement provides for annual
retirement income of $225,000 for the remainder of Mr. Mackin's life and
thereafter $112,500 annually to his wife should she survive him. Mr. Mackin
retired as an employee of the Company on December 31, 1985, and as a result he
receives amounts provided for under the agreement. The agreement was deemed
appropriate by the Board of Directors since by serving the Company in the stated
capacities, Mr. Mackin forfeited retirement benefits comparable to those
provided for under such agreement and which otherwise would have accrued to him
in respect of his previous employment. Mr. Mackin was also not eligible to
participate in the Company's pension plan. Mr. Mackin resigned from the Board of
Directors on February 21, 1994.
In November 1993, Peter M. Holt and the Company entered into a three-year
Consulting Agreement pursuant to which the Company will pay Mr. Holt an annual
consulting fee of $200,000 for the first year, $150,000 for the second year and
$130,000 for the third year. During the first eighteen months of the term of the
Consulting Agreement, Mr. Holt will serve in the capacity of chairman and chief
executive officer of the divisions or subsidiaries of the Company engaged in the
natural gas compression business, without additional compensation from the
division or subsidiaries. Mr. Holt has agreed that, upon receipt of the written
request of the Chief Executive Officer of the Company during such eighteen month
period, he will relinquish the title of chief executive officer of such
divisions or subsidiaries, but will continue to have the title of chairman of
such divisions or subsidiaries. During the second eighteen months of the term of
the Consulting Agreement, Mr. Holt will serve in the capacity of chairman of
such divisions or subsidiaries. Under the Consulting Agreement, Mr. Holt has
agreed to assign to the Company or its nominee without further consideration his
entire right, title and interest in any inventions, improvements or discoveries
conceived, developed or reduced to practice by Mr. Holt in connection with or as
a result of his services for the Company under the Consulting Agreement.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is certain information with respect to beneficial ownership
of the Company's Common Stock as of March 23, 1994 by each director, nominee
director, the Chief Executive Officer and the four most highly compensated
executive officers and by directors and executive officers as a group.
<TABLE>
<CAPTION>
Shares Owned Percent
Title of Class Name Beneficially(1) of Class
-------------- ---- --------------- --------
<S> <C> <C> <C>
Common Stock . . . . Avram A. Glazer -- *
Malcolm I. Glazer 51,976,923(2) 32.8%
Peter M. Holt 11,875,021(3) 7.5
R.C. Lassiter 1,376,449 *
Kristian Siem 15,696,124(4) 9.9
Jack T. Trotter 580,000 *
Daniel P. Whitty 130,100 *
Thomas H. Bowersox 701,000 *
Robert W. Jackson 1,922,181(5) *
Marvin J. Migura 700,000 *
Bruce K. Williams 496,700(6)
All of the above
and other executive
officers as a group
(12 persons) 85,944,498 54.3
</TABLE>
________________
* Less than 1%.
(1) Except as otherwise noted, individuals listed in the table have sole voting
and investment power with respect to the indicated shares. Investment power
with respect to certain shares held by certain officers of the Company
under the Profit-Sharing Plan is limited; such shares amount to less than
1% of the total number of shares of Common Stock held by all officers and
directors as a group. Included in the amounts indicated are shares which
are subject to options exercisable within sixty days of March 23, 1994. The
numbers of such shares are 100,000 for each of Messrs. Trotter and Whitty,
1,220,000 for Mr. Lassiter, 700,000 for each of Messrs. Bowersox and
Migura, 490,000 for Mr. Williams and 3,800,000 shares for the directors and
executive officers as a group.
(2) All of such shares are owned by the Malcolm I. Glazer Trust.
(3) Includes 140,164 shares held by the Peter Holt H-R Trust, 1,102,389 shares
held by the S Stock GST Trust for Peter M. Holt, 1,102,389 shares held by
the S Stock GST Trust for Benjamin D. Holt III, 1,102,390 shares held by
the S Stock GST Trust for Anne Holt, 1,037,910 shares held by the Holt
Corporate Stock Marital Trust--1985, 1,004,429 shares held by the Holt
Corporate Stock Life Trust--1985, 579,800 shares held by the Peter M. Holt
Grantor Trust and 3,200,486 shares held by Benjamin D. Holt, Jr. Peter M.
Holt disclaims beneficial ownership as to all of the shares held by the S
Stock GST Trust for Benjamin D. Holt III and the S Stock GST Trust for Anne
Holt.
(4) 14,396,124 shares of Common Stock are owned by Norex America and 1,300,000
shares of Common Stock are owned by a private investment company, the
president of which is also the president of Norex America and the
management of which is provided by a subsidiary of Norex Plc, which shares
voting and investment power over such shares with the board of
8
<PAGE>
directors of such investment company (Norex Plc owns approximately
48.3% of the outstanding capital stock of Norex America). Norex Plc and
Norex America disclaim any beneficial interest with respect to such
1,300,000 shares. Mr. Siem is chairman and chief executive officer of Norex
America and managing director of Norex Plc, and under the rules of the
Commission all of such shares may be deemed to be beneficially owned by
him. Mr. Siem disclaims beneficial ownership with respect to all of the
foregoing shares.
(5) All of such shares are owned by the Robert W. Jackson Trust.
(6) Mr. Williams owns 6,700 shares of Common Stock jointly with his wife.
EXECUTIVE COMPENSATION
The following table sets forth information regarding annual and long-term
compensation with respect to the fiscal years ended September 30, 1993, 1992 and
1991 for services in all capacities rendered to the Company by those persons who
were, at September 30, 1993, (i) the company's chief executive officer and (ii)
the other four most highly compensated executive officers of the Company
(collectively referred to hereon as the "Named Officers"). The format and
information presented are as prescribed in the revised rules of the Commission.
In accordance with transitional provisions of the rules, information in the "All
Other Comp." column is not presented for years prior to 1992. All positions are
with the Company unless otherwise indicated.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------- ------------
LTIP All Other
Name & Principal Position Year Salary($) Bonus($) Payouts($) Comp.($)(1)
- ------------------------- ---- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Ronald C. Lassiter, 1993 358,600 175,000 -- 2,100
Chairman and 1992 358,600 125,510 2,006,519(2) 1,200
Chief Executive Officer 1991 358,600 144,964 -- --
Robert W. Jackson, 1993 200,000 0 -- --
President and Chief
Executive Officer,
Cimarron Gas Holding
Company(3)
Thomas H. Bowersox, 1993 185,400 50,000 -- 3,000
Executive Vice President 1992 183,600 64,890 -- 1,400
1991 176,668 66,150 --
Marvin J. Migura, 1993 165,600 70,000 -- 3,000
Senior Vice President and 1992 162,970 57,960 -- 1,400
Chief Financial Officer 1991 150,136 59,188 -- --
Bruce K. Williams, 1993 156,240 39,000 -- 3,000
Chairman, President and 1992 153,762 54,684 -- 1,400
Chief Executive Officer, 1991 142,827 55,986 -- --
Zapata Exploration Company
</TABLE>
9
<PAGE>
____________________
(1) The amounts indicated represent the Company's contributions
to its Profit-Sharing plan.
(2) In connection with the merger of Zapata Gulf Marine
Corporation ("Zapata Gulf") with a subsidiary of Tidewater
in January 1992, Mr. Lassiter received such payment under
the Equity Incentive Plan established by Zapata Gulf in
1989. There are no further amounts payable under such plan.
(3) Mr. Jackson became an executive officer of the Company as of
October 1, 1992.
While the officers of the Company receive benefits in the form of certain
perquisites, none of the Named Officers receives perquisites which exceed in
value the lesser of $50,000 or 10% of such officer's salary and bonus.
Aggregated Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal- In-the-Money Options at
Year-End (#) Fiscal Year-End ($)
----------------------- -----------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
<S> <C> <C>
Ronald C. Lassiter .. 1,220,000 / 0 457,500 / 0
Robert W. Jackson.... 0 / 0 0 / 0
Thomas H. Bowersox.. 700,000 / 0 262,500 / 0
Marvin J. Migura.... 700,000 / 0 262,500 / 0
Bruce K. Williams... 490,000 / 0 183,750 / 0
</TABLE>
The foregoing table sets forth information for each of the Named Officers
with respect to options to purchase a like number of shares of Common Stock
granted under the Company's 1990 Stock Option Plan and held as of September 30,
1993, including the aggregate amount by which the market value of the option
shares exceeds the exercise price of the options at September 30, 1993. All of
these options are currently exercisable.
Long-Term Incentive Plans - Awards in 1993
<TABLE>
<CAPTION>
Performance or Estimated Future Payouts Under
Number of Shares, Other Period Until Non-Stock Price-Based Plans
Units or Maturation ------------------------------
Name Other Rights or Payout Threshold Target Maximum
- ---- ---------------- ------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert W. Jackson:
Incentive Appreciation
Agreement (1) 09/30/97(1) (1) (1)(3) (1)
Cimarron Incentive
Appreciation Plan (2) 09/30/97(2) (2) (2)(3) (2)
</TABLE>
________________
10
<PAGE>
(1) Mr. Jackson and Cimarron Gas Companies, Inc. ("Cimarron") are parties to an
Incentive Appreciation Agreement which provides that a payment is to be
made to Mr. Jackson in cash or a combination of cash and Common Stock
(provided that no more than 40% of such amount may be Common Stock) upon
the earlier of September 30, 1997 or the date when Mr. Jackson ceases to be
an employee of Cimarron due to total and permanent disability, involuntary
termination by Cimarron without cause, or voluntary termination by Mr.
Jackson with good reason. The payment is to be equal to 5% of certain
increases above $4.1 million of Cimarron's appraised equity value on the
valuation date (as calculated in accordance with guidelines set forth in
the Incentive Appreciation Agreement) and grossed up for federal income tax
purposes.
(2) The Cimarron Incentive Appreciation Plan provides that a payment is to be
made to participants in the plan in cash or a combination of cash and
Common Stock (provided that no more than 40% of such amount may be Common
Stock) upon the earlier of September 30, 1997 or the date when such
participant ceases to be an employee of the Company due to total and
permanent disability, involuntary termination by Cimarron without cause, or
voluntary termination by such participant with good reason. The payment is
to be equal to such participant's Participation Multiplier (as assigned to
each participant under the plan) multiplied by 15% of certain increases
above $4.1 million in the appraised equity value of Cimarron on such
valuation date (as calculated in accordance with the guidelines set forth
in the plan). The aggregate of all Participation Multipliers may not be
greater than 1.0. Mr. Jackson is a participant in such plan and has a
Participation Multiplier of .846.
(3) Pursuant to the terms of the Incentive Appreciation Agreement and the
Cimarron Incentive Appreciation Plan, no payout amounts would be payable
based on the performance of Cimarron during fiscal 1993.
<TABLE>
<CAPTION>
Pension Plan Table
Years of Service
---------------------------------------------
15 Years 20 Years 25 Years 30 Years 35 Years
-------- -------- -------- -------- --------
Average Compensation:
<S> <C> <C> <C> <C> <C>
$150,000 . . . . . 36,654 48,872 61,090 73,308 85,526
175,000 . . . . . 43,029 57,372 71,715 86,058 100,401
200,000 . . . . . 49,404 65,872 82,340 98,808 115,276
225,000 . . . . . 55,779 74,372 92,965 111,558 130,151
275,000 . . . . . 68,529 91,372 114,215 137,058 159,901
325,000 . . . . . 81,279 108,372 135,465 162,558 189,651
375,000 . . . . . 94,029 125,372 156,715 188,058 219,401
425,000 . . . . . 106,779 142,372 177,965 213,558 249,151
475,000 . . . . . 119,529 159,372 199,215 239,058 278,901
525,000 . . . . . 132,279 176,372 220,465 264,558 308,651
</TABLE>
The estimated annual benefits payable at age 65 in the foregoing table are
computed on a straight-life annuity basis, although a participant can select
other methods of calculating benefits to be received under the Company's Pension
Plan and Supplemental Pension Plan. Such benefits are not subject to deduction
for Social Security or other offset amounts. The average compensation upon which
such benefits are based is the average of the participant's salary and bonuses
during the five highest-paid years within the last ten years of employment. The
applicable amounts of salaries and bonuses for the Named Officers during the
most recent fiscal year are set forth in the Summary Compensation Table. As of
September 30, 1993, Messrs. Lassiter, Bowersox, Migura and Williams had 23, 17,
18 and 19 years of credited service, respectively, under the Pension Plan. Mr.
Jackson is not a participant in the Company's Pension Plan and Supplemental
Pension Plan.
11
<PAGE>
Employment Agreements and Other Incentive Plans
Effective as of March 15, 1991, the Company entered into employment
agreements with Messrs. Lassiter, Bowersox, Migura and Williams. Each of these
agreements provides for continuing employment of the executive in his current
position or one comparable in scope at a compensation level at least equal to
the executive's current level of compensation. Each agreement will terminate on
the date occurring three years after the Company provides notice of termination
to the executive. However, if employment is terminated by the Company for cause,
or if employment terminates as the result of the executive's death, total and
permanent disability or voluntary resignation, the executive's salary will cease
as of the end of the month in which such event occurred. If the Company
terminates the executive's employment for any other reason, the Company will be
obligated to continue to pay the salary then being paid to the executive for a
three-year period.
Under each of these employment agreements, the executive would also
continue to receive his salary for a three-year period following a termination
of employment under certain circumstances occurring within two years after a
change of control. Such circumstances include a substantial change in the
executive's duties or reporting responsibilities; a reduction in salary,
participation in benefit plans or other employment benefits; or a required
change in principal place of employment. A change in control under the
employment agreements is deemed to have occurred if any person or group becomes
the beneficial owner of securities of the Company representing 30% or more of
the combined voting power of the then-outstanding securities of the Company. In
July 1992, Malcolm I. Glazer reported the acquisition of beneficial ownership of
approximately 41% of the Company's Common Stock.
Each of these employment agreements provides that all payments to be made
thereunder shall be reduced as necessary such that the present value of all
parachute payments, as defined under federal tax laws, will be one dollar less
than three times the executive's base amount of salary, so as to avoid the
excise taxes on the executive or the disallowance of a tax deduction by the
Company.
Effective as of September 30, 1992 Cimarron entered into an employment
agreement with Robert W. Jackson (the "Jackson Agreement"). The Jackson
Agreement provides for Mr. Jackson's continuing employment as president, chief
executive officer and director of Cimarron for a period of five years. However,
if Mr. Jackson's employment is terminated for cause, his salary will cease as of
such date. If Mr. Jackson's employment is terminated by death or total or
permanent disability, his salary will cease as of the end of the month in which
such event occurs. If Mr. Jackson's employment is terminated without cause,
Cimarron will be obligated to pay the salary then being paid for the remainder
of the term of the Jackson Agreement.
In the event that Mr. Jackson voluntarily resigns for "good reason,"
Cimarron is obligated to continue to pay the salary then being paid for the
remainder of the term of the Jackson Agreement. "Good reason" is defined as (i)
the assignment to Mr. Jackson of any duties materially inconsistent with his
position, a substantial change in his reporting responsibilities or the failure
to re-elect him as president, chief executive officer or director of Cimarron;
(ii) a reduction in Mr. Jackson's base salary or benefits; (iii) the transfer of
Mr. Jackson; or (iv) a material breach by Cimarron of the Jackson Agreement. If
Mr. Jackson voluntarily resigns without good reason, his salary will cease as of
the date of resignation.
12
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Commission and the New York
Stock Exchange initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Directors, officers
and greater than 10% stockholders are required by the Commission's regulations
to furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1993 all
reports required by Section 16(a) to be filed by its directors, officers and
greater than 10% beneficial owners were filed on a timely basis, except that the
initial statement of ownership was filed late by Robert W. Jackson.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Peter M. Holt is a director of the Company and is the beneficial owner of
7.5% of the Company's Common Stock. In November 1993 the Company purchased the
natural gas compression business of Energy Industries, Inc. ("Energy
Industries") for an aggregate of $67,227,631 in cash and 13,500,000 shares of
the Company's Common Stock. At the time of the acquisition, Mr. Holt was the
chairman and chief executive officer of Energy Industries, as well as its
majority shareholder. As part of the acquisition of Energy Industries, the
Company entered into a noncompetition agreement with Mr. Holt. In exchange for
Mr. Holt's covenant not to compete with the Company's natural gas compression
business for a three year period after the closing date in the states of
Arkansas, Louisiana, Kansas, New Mexico, Oklahoma and Texas, the Company paid
Mr. Holt $3,886,514. Also in connection with the acquisition of Energy
Industries, the Company entered into a three year Consulting Agreement with Mr.
Holt. The terms of this Consulting Agreement are explained more fully in "Board
of Directors and Committees of the Board - Compensation of Directors" in this
Proxy Statement.
Pursuant to a real property purchase and sale agreement dated as of August
5, 1993, a subsidiary of the Company purchased five real estate properties from
Holt Commercial Properties, Ltd., an affiliate of Mr. Holt, for $3,400,000. The
purchase price was equal to the appraised value of the properties. These
properties are used in connection with Energy Industries' natural gas
compression business.
In connection with the acquisition of Energy Industries the Company agreed
to use its best efforts to elect Mr. Holt as a member of the Board of Directors
and as a member of the Executive Committee and Nominating Committee of the Board
of Directors. If the term of office for the class of directors for which Mr.
Holt was elected expires prior to 1996, the Company agreed to use its best
efforts to cause the Nominating Committee of the Board of Directors to nominate
Mr. Holt as a director for an additional three year term.
Energy Industries, now a wholly-owned subsidiary of the Company, purchases
parts used in manufacturing and servicing compressors and for resale to its
customers from an affiliate of Mr. Holt. Energy Industries projects that it will
pay approximately $6.5 million to this affiliate of Mr.
13
<PAGE>
Holt in fiscal 1994. The Company believes that such payments are comparable to
those that would have been made to other non-affiliated entities.
Mr. Holt also uses an aircraft of another affiliated company of his for
travel in connection with his duties at Energy Industries. Energy Industries
pays Mr. Holt's affiliate for this usage, the amount of which ranges from $5,000
to $10,000 per month. The Company believes that such payments are comparable to
those that would be made to other non-affiliated firms for comparable services.
Kristian Siem has been a director of the Company since 1993. Mr. Siem is
also the chairman and chief executive officer of Norex America. In May 1993, the
Company completed a refinancing of its senior debt. The Company raised a total
of $111.4 million from the issuance of debt and equity pursuant to the Second
Amended and Restated Master Restructuring Agreement dated as of April 16, 1993,
as amended (as so amended, the "Norex Agreement"), between the Company and Norex
Drilling, Ltd. ("Norex Drilling"), a wholly owned subsidiary of Norex America
(Norex America and Norex Drilling are collectively referred to herein as
"Norex").
Under the terms of the Norex Agreement, the Company issued $82.6 million in
principal amount of senior notes to Norex. The notes mature in three years and
bear interest at 13%. In addition, Norex purchased 15 million shares of Common
Stock for $11.25 million and 17.5 million shares of $1 Cumulative Exchangeable
Preference Stock ("$1 Preference Stock") for $17.5 million.
In August 1993, Norex exchanged all of the $1 Preference Stock for $17.5
million principal amount of 8.5% unsecured exchangeable notes, maturing in 1996.
Such notes are exchangeable into 673,077 shares of Tidewater, Inc. common stock
currently owned by the Company and set aside for this purpose. In December 1993,
the Company prepaid $68.5 million aggregate principal amount of the 13% senior
indebtedness to Norex, along with $1.7 million in accrued interest and a $3.5
million prepayment premium.
The Company also entered into an administrative services arrangement with
Norex America effective June 1, 1993, pursuant to which it provides office space
and certain administrative services to Norex America. Norex America reimburses
the Company on a quarterly basis for the full cost of providing such services as
and when incurred, plus an administrative fee of 2.5%. In fiscal 1993 the
Company billed Norex America $31,000 under such arrangement.
On July 1, 1993 Malcolm I. Glazer, Avram A. Glazer and Norex Drilling
entered into an agreement pursuant to which the Company agreed that the Board of
Directors would elect and did elect Malcolm I. Glazer, Avram A. Glazer and
Kristian Siem to serve as directors on the Company's Board of Directors. Malcolm
I. Glazer and Avram A. Glazer became Class I directors and Mr. Siem became a
Class II director. In accordance with this agreement, Malcolm I. Glazer and
Kristian Siem were elected to the Executive, Compensation, Audit and Nominating
Committees and Avram A. Glazer was elected as an alternate member of each such
committee who may replace Malcolm I. Glazer at any meeting of those committees.
Robert W. Jackson, the chief executive officer of Cimarron, a wholly-owned
subsidiary of the Company, received a total of $70,000 in fiscal 1993 from the
Company in exchange for the continuation of his personal guarantee for a seven-
month period on approximately $9.5 million of Cimarron indebtedness.
14
<PAGE>
On February 26, 1993, Mr. Jackson loaned $1,250,000 to Cimarron, which used
the funds to purchase interests in a gathering system and processing plant in
Oklahoma. The loan, which was evidenced by a note bearing interest at the prime
rate, was repaid on May 26, 1993. The Company believes that the terms of the
loan were at least as favorable as those that could be obtained from an arm's
length lender.
The Company has agreed to allow Jack T. Trotter, one of its directors, the
use of its corporate aircraft under an arrangement which provides the Company
with full recovery of the expense associated with such use, including all direct
and indirect costs. These expenses are billed to Mr. Trotter on a quarterly
basis. In October 1993 the invoice for these expenses for the previous quarter
was approximately $79,000, which was subsequently paid by Mr. Trotter.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") is responsible for the
approval and administration of compensation programs for the Company's executive
officers. The Committee endeavors to ensure that the compensation programs for
its executive officers are effective in attracting and retaining key executives
responsible for the success of the Company and are administered in an
appropriate fashion in the long-term best interest of the Company and its
stockholders. The Committee seeks to align total compensation for its executive
officers with the performance of the Company and the individual performance of
each executive officer in assisting the Company in accomplishing its goals. The
Company's present compensation program consists of (1) an annual component,
which includes base salary and an annual incentive bonus, and (2) a long-term
component consisting of stock options.
Base Salary
The Committee's policy with respect to 1993 base salaries for executive
officers was generally to keep them at the same levels as had been in effect for
1992. This decision was based on the Committee's subjective determination, based
on recommendations from the Chief Executive Officer, that the base salary rates
were at an appropriate level in light of compensation surveys in which the
Company participated and the expectation that executive compensation policies
would be reviewed on a comprehensive basis at a later date. The Committee's
determination not to change base salary levels also applied to the Chief
Executive Officer, whose base salary has been at its current level since 1985.
In February 1994, the Committee began to study its executive compensation
policies with assistance from an outside compensation consulting firm. Base
salaries for all executive officers will remain at 1993 levels pending
completion of this study.
Annual Incentive Bonus
In February 1993, the Committee determined to discontinue its prior annual
incentive plan and stated that 1993 bonuses would be determined on a
discretionary basis at the end of the year. The Chief Executive Officer's 1993
bonus amount of $175,000 was determined based on the Committee's subjective
assessment of his performance in helping the Company achieve the goals set forth
in the Company's strategic plan. These goals included the refinancing of the
Company's senior debt, the realization by the Company of the appreciation of a
significant portion of its
15
<PAGE>
investment in the common stock of Tidewater, Inc., the acquisition of gas
gathering and processing assets, the acquisition of the gas compression business
of Energy Industries and the overall redirection of the Company into the natural
gas services market.
The 1993 bonus amounts for the other executive officers were awarded by the
Committee based on the recommendations of the Chief Executive Officer, which in
turn were based on a subjective assessment of their performance in helping the
Company achieve the strategic plan goals referred to above, to the extent
applicable to each executive officer's area of responsibility. The Committee did
not utilize any formulas based on stock prices or other quantitative measures of
corporate performance in determining the 1993 bonus amounts.
As a part of its review of executive compensation policies in February
1994, the Committee will consider whether to adopt a new annual incentive plan.
The Committee intends to complete its study and make its decision before the end
of the Company's 1994 fiscal year.
Stock Options
The Company believes that in order to achieve its long-term growth
objectives and to align management and its stockholders interests, it is in the
Company's best interest from time to time to grant stock options to key members
of its management staff. The Company's 1990 Stock Option Plan is administered by
the Committee, which has the full power and authority to designate participants
and determine the terms and provisions of the respective option agreements. The
price of each option granted is the fair market value of a share of the
Company's Common Stock on the date the option is granted. Stock options were
last granted in 1990. The Committee believes that options should be granted only
once every several years so that option grants do not become considered a part
of normal annual compensation.
THE COMPENSATION COMMITTEE
Peter M. Holt
Malcolm I. Glazer
Kristian Siem
Daniel P. Whitty
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of the Company is
currently composed of Peter M. Holt, Malcolm I. Glazer, Kristian Siem and Daniel
P. Whitty. Before his resignation from the Board of Directors on February 21,
1994, B. John Mackin served on the Compensation Committee. Mr. Mackin served as
chairman of the Board of Directors of the Company from March 1979 until December
1985 and as chief executive officer of the Company from March 1979 until January
1983.
Peter M. Holt is a director of the Company and is the beneficial owner of
7.5% of the Company's Common Stock. In November 1993 the Company purchased the
natural gas compression business of Energy Industries, Inc. ("Energy
Industries") for an aggregate of $67,227,631 in cash and 13,500,000 shares of
the Company's Common Stock. At the time of the acquisition, Mr. Holt was the
chairman and chief executive officer of Energy Industries, as well as its
majority shareholder.
16
<PAGE>
As part of the acquisition of Energy Industries, the Company entered into a
noncompetition agreement with Mr. Holt. In exchange for Mr. Holt's covenant not
to compete with the Company's natural gas compression business for a three year
period after the closing date in the states of Arkansas, Louisiana, Kansas, New
Mexico, Oklahoma and Texas, the Company paid Mr. Holt $3,886,514. Also, in
connection with the acquisition of Energy Industries, the Company entered into a
three year Consulting Agreement with Mr. Holt. The terms of this Consulting
Agreement are explained more fully in "Board of Directors and Committees of the
Board - Compensation of Directors" in this proxy statement.
Pursuant to a real property purchase and sale agreement dated as of August
5, 1993, a subsidiary of the Company purchased five real estate properties from
Holt Commercial Properties, Ltd., an affiliate of Mr. Holt, for $3,400,000. The
purchase price was equal to the appraised value of the properties. These
properties are used in connection with Energy Industries' natural gas
compression business.
Energy Industries, now a wholly-owned subsidiary of the Company, purchases
parts used in manufacturing and servicing compressors and for resale to its
customers from an affiliate of Mr. Holt. Energy Industries projects that it will
pay approximately $6.5 million to this affiliate of Mr. Holt in fiscal 1994. The
Company believes that such payments are comparable to those that would have been
made to other non-affiliated entities.
Mr. Holt also uses an aircraft of another affiliated company of his for
travel in connection with his duties at Energy Industries. Energy Industries
pays Mr. Holt's affiliate for this usage, the amount of which ranges from $5,000
to $10,000 per month. The Company believes that such payments are comparable to
those that would be made to other non-affiliated firms for comparable services.
Kristian Siem has been a director of the Company since 1993. Mr. Siem is
also the chairman and chief executive officer of Norex America. In May 1993, the
Company completed a refinancing of its senior debt. The Company raised a total
of $111.4 million from the issuance of debt and equity pursuant to the Second
Amended and Restated Master Restructuring Agreement dated as of April 16, 1993,
as amended (as so amended, the "Norex Agreement"), between the Company and Norex
Drilling, Ltd. ("Norex Drilling"), a wholly owned subsidiary of Norex America
(Norex America and Norex Drilling are collectively referred to herein as
"Norex").
Under the terms of the Norex Agreement, the Company issued $82.6 million in
principal amount of senior notes to Norex. The notes mature in three years and
bear interest at 13%. In addition, Norex purchased 15 million shares of Common
Stock for $11.25 million and 17.5 million shares of $1 Cumulative Exchangeable
Preference Stock ("$1 Preference Stock") for $17.5 million.
In August 1993, Norex exchanged all of the $1 Preference Stock for $17.5
million principal amount of 8.5% unsecured exchangeable notes, maturing in 1996.
Such notes are exchangeable into 673,077 shares of Tidewater, Inc. common stock
currently owned by the Company and set aside for this purpose. In December 1993,
the Company prepaid $68.5 million aggregate principal amount of the 13% senior
indebtedness to Norex, along with $1.7 million in accrued interest and a $3.5
million prepayment premium.
17
<PAGE>
The Company also entered into an administrative services arrangement with
Norex America effective June 1, 1993, pursuant to which it provides office space
and certain administrative services to Norex America. Norex America reimburses
the Company on a quarterly basis for the full cost of providing such services as
and when incurred, plus an administrative fee of 2.5%. In fiscal 1993 the
Company billed Norex America $31,000 under such arrangement.
STOCKHOLDER RETURN PERFORMANCE GRAPHS
The following graph compares the yearly percentage change in the Company's
cumulative total return on its Common Stock with the cumulative total return of
the Standard & Poor's 500 Stock Index ("S&P 500 Index") and a peer group ("Peer
Group") of publicly traded companies similar to the Company over the preceding
five year period. The Peer Group consists of the following companies, which are
in industries related to the Company's major business operations and some of
which also experienced financial difficulties: Edisto Resources Corporation,
Energy Service Company, Inc., Global Marine Inc., Marine Drilling Companies,
Inc., Mesa, Inc., Reading & Bates Corporation, Western Company of North America
and Wolverine Exploration Company. The following graph is presented pursuant to
Commission rules.
Comparison of Five Year Cumulative Total Return
Among the Company, S&P 500 Index and the Peer Group(1)
[Insert Graph]
<TABLE>
<CAPTION>
September 30,
-------------
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Zapata Corporation 100 91 43 28 35 35
S&P 500 Index 100 133 121 158 175 198
Peer Group 100 128 208 92 63 94
</TABLE>
(1) Assumes that the value of the investment in Common Stock, the S&P 500 Index
and the Peer Group was $100 on September 30, 1988 and that all dividends
were reinvested.
In addition to the Five Year Cumulative Total Return graph above, below is
a graph indicating the relative performance of the Company for the period
December 31, 1990 through September 30, 1993. This graph provides additional
information regarding the performance of the
18
<PAGE>
Company against the S&P 500 Index and the Peer Group. At the beginning of 1991,
the Company successfully completed the last major component of its comprehensive
restructuring which included the sale of its drilling rig fleet, the
restructuring of $560 million of senior debt and the repurchase of $52 million
of publicly held subordinated debentures. This restructuring was formally
completed on January 10, 1991. In the period since this restructuring, the
Company's management has initiated a strategy to refocus operations into the
natural gas services sector of the energy market. The data points for the graph
below are computed using the same method as in the Five Year Cumulative Total
Return graph above, with the exception that the first comparison period only
covers nine months as opposed to one year.
Comparison of Cumulative Total Return for the Period 12/31/90
through 09/30/93
Among the Company, S&P 500 Index and the Peer Group(1)
[Insert Graph]
<TABLE>
<CAPTION>
December 31, September 30,
------------ -------------
1990 1991 1992 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Zapata Corporation 100 163 200 200
S&P 500 Index 100 120 134 151
Peer Group 100 75 51 77
</TABLE>
(1) Assumes that the value of the investment in Common Stock, the S&P 500 Index
and the Peer Group was $100 on December 31, 1990 and that all dividends
were reinvested.
REVERSE STOCK SPLIT
The Board of Directors has approved the Reverse Stock Split and directed
that it be submitted to the Company's stockholders for consideration and action.
If approved by the stockholders, the Reverse Stock Split may be effected, as
described below.
The intent of the Reverse Stock Split is to increase the marketability and
liquidity of the Common Stock. If the Reverse Stock Split is approved by the
stockholders of the Company at the Annual Meeting of Stockholders, the Reverse
Stock Split will be effected only upon a determination by the Board of Directors
that the Reverse Stock Split is in the best interests of the Company and its
stockholders. Although the Company's Board of Directors believes as of the date
of this Proxy Statement that the one-for-five Reverse Stock Split is advisable,
the Reverse Stock Split may be abandoned by the Board of Directors at any time
before, during or after the Annual Meeting of Stockholders and prior to filing
an Amended and Restated Certificate of Incorporation (the
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<PAGE>
"Amended and Restated Certificate") of the Company including the proposed
amendment with the Secretary of State of the State of Delaware.
Purposes and Effects of the Reverse Stock Split
Consummation of the Reverse Stock Split will not alter the number of
authorized shares of Common Stock, which will remain 165,000,000 shares.
Proportionate voting rights and other rights of stockholders will not be altered
by any Reverse Stock Split.
The Common Stock is listed for trading on the New York Stock Exchange. On
the Record Date, the reported closing price of the Common Stock on the New York
Stock Exchange was $___.
The Board of Directors believes that a decrease in the number of shares of
Common Stock outstanding without any material alteration of the proportionate
economic interest in the Company represented by individual shareholders may
increase the trading price of such shares to a price more appropriate for an
exchange-listed security, although no assurance can be given that the market
price of the Common Stock will rise in proportion to the reduction in the number
of outstanding shares resulting from the Reverse Stock Split.
Additionally, the Board of Directors believes that the current per share
price of the Common Stock may limit the effective marketability of the Common
Stock because of the reluctance of many brokerage firms and institutional
investors to recommend lower-priced stocks to their clients or to hold them in
their own portfolios. Certain policies and practices of the securities industry
may tend to discourage individual brokers within those firms from dealing in
lower-priced stocks. Some of those policies and practices involve time-consuming
procedures that make the handling of lower priced stocks economically
unattractive. The brokerage commission on a sale of lower-priced stock may also
represent a higher percentage of the sale price than the brokerage commission on
a higher priced issue. Any reduction in brokerage commissions resulting from the
Reverse Stock Split may be offset, however, in whole or in part, by increased
brokerage commissions required to be paid by stockholders selling "odd lots"
created by such Reverse Stock Split.
The Board of Directors believes that the decrease in the number of shares
of Common Stock outstanding as a consequence of the proposed Reverse Stock Split
and the resulting anticipated increased price level will encourage greater
interest in the Common Stock by the financial community and the investment
public and possibly promote greater liquidity for the Company's stockholders.
However, it is possible that such liquidity could be affected adversely by the
reduced number of shares outstanding after the Reverse Stock Split. Also,
although any increase in the market price of the new Common Stock resulting from
the Reverse Stock Split may be proportionately less than the decrease in the
number of shares outstanding, the proposed Reverse Stock Split could result in a
market price for the shares that would be high enough to overcome the
reluctance, policies and practices of brokerage houses and investors referred to
above and to diminish the adverse impact of correspondingly high trading
commissions on the market for the shares.
There can be no assurances, however, that the foregoing effects will occur
or that the market price of the new Common Stock immediately after
implementation of the proposed Reverse Stock Split will be maintained for any
period of time, or that such market price will approximate five times the market
price before the proposed Reverse Stock Split.
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The par value of the Common Stock will remain at $0.25 per
share following the Reverse Stock Split, and the number of shares
of Common Stock outstanding will be reduced. As a consequence,
the aggregate par value of the outstanding Common Stock will be
reduced, while the aggregate capital in excess of par value
attributable to the outstanding Common Stock for statutory and
accounting purposes will be correspondingly increased. However,
under Delaware law, the Board of Directors of the Company will
have the authority, subject to certain limitations, to transfer
some or all of such increased capital in excess of par value from
capital to reinvested earnings, which could be distributed to
stockholders as dividends or used by the Company to repurchase
outstanding stock. Subject to the effectiveness of the Reverse
Stock Split by the stockholders, the Board of Directors of the
Company has approved a new dividend policy in which dividends of
$0.035 per quarter ($0.14 per year), will be paid on each share
of the Company's Common Stock, after adjustment pursuant to the
Reverse Stock Split.
The number of holders of the Common Stock on the Record Date
was ____. The Company does not anticipate that the Reverse Stock
Split would result in a significant reduction in the number of
such holders, and does not currently anticipate that the Reverse
Stock Split would result in a reduction in the number of holders
large enough to jeopardize continued listing of the Common Stock
on the New York Stock Exchange.
The conversion ratios of any shares of the Company's $2
Preference Stock and $100 Convertible Preference Stock ("$100
Preference Stock") shall be correspondingly adjusted upon
consummation of the Reverse Stock Split pursuant to the Restated
Certificate of Incorporation, as amended, and the Certificate of
Designations of the $100 Preference Stock ("Certificate of
Designations"). Pursuant to the terms of the Company's Amended
and Restated 1981 Stock Incentive Plan, 1990 Stock Option Plan
and Special Incentive Plan, the total number of shares reserved
for grants and all options granted under these plans shall be
proportionately reduced in number. The cash consideration
payable per share upon exercise of the options pursuant to these
plans shall be proportionately increased.
Reservation of Common Stock for Conversion of $100 Preference
Stock
Pursuant to the Norex Agreement between the Company and
Norex Drilling, the Company is obligated to use its best efforts
to obtain the approval of the stockholders of the Company at the
Company's Annual Meeting of Stockholders in 1994 of an increase
in the authorized number of shares of the Company's Common Stock.
These additional authorized shares would allow for the
reservation of shares of Common Stock to be issued upon the
conversion of the $100 Preference Stock into Common Stock
pursuant to the terms of the Certificate of Designations. If the
Reverse Stock Split is approved, the Company will have enough
excess authorized shares to reserve Common Stock for issuance
pursuant to this conversion and fulfill its obligation under the
Norex Agreement.
Under the Norex Agreement, Norex Drilling may convert up to
$15 million of the aggregate principal amount of the Senior
Convertible Note, payable by the Company to Norex Drilling, into
150,000 shares of $100 Preference Stock. If the Reverse Stock
Split is approved and in accordance with the Certificate of
Designations, each share of the $100 Preference Stock shall be
convertible into 20 shares of Common Stock. The conversion of
the $100 Preference Stock into Common Stock shall occur
automatically upon the issuance or transfer to a person or entity
which is not controlling, controlled by or under common control
with Norex America.
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If the Reverse Stock Split is approved, an additional
2,940,000 shares of Common Stock will be reserved for issuance
upon conversion of the $100 Preference Stock. 60,000 shares of
Common Stock (on an as-adjusted basis after the Reverse Stock
Split) have already been reserved to accommodate the conversion
of the $100 Preference Stock.
Amendment to Restated Certificate of Incorporation
The Restated Certificate of Incorporation, as amended,
currently provides that the Company has the authority to issue up
to 185,000,000 shares, consisting of 165,000,000 shares of Common
Stock having a par value of $0.25 per share, 2,000,000 shares of
Preferred Stock, without par value, and 18,000,000 shares of
Preference Stock having a par value of $1 per share. If the
Reverse Stock Split is approved, Article FOURTH of the Restated
Certificate of Incorporation will be amended in the Amended and
Restated Certificate to be filed with the Secretary of State of
the State of Delaware. The amendment, in the form to be filed in
the Amended and Restated Certificate, is set forth in Exhibit A
attached to this Proxy Statement. The discussion of the Reverse
Stock Split is qualified in its entirety by reference to Exhibit
A, which is incorporated herein by reference as if fully set
forth herein.
If the Reverse Stock Split is approved, the total number of
shares outstanding of Common Stock held by each stockholder would
be converted automatically into a right to receive an amount of
whole shares of new Common Stock equal to the number of shares
owned immediately prior to the Reverse Stock Split divided by
five. No fractional shares would be issued and, in lieu of any
fractional shares, fractional shares otherwise issuable to a
given stockholder would be rounded up to the next whole share.
The number of authorized shares of Common Stock shall remain at
165,000,000.
Approval of the Reverse Stock Split would not affect any
stockholder's percentage ownership interest in the Company or
proportional voting power, except for minor differences resulting
from the rounding of fractional shares. The Reverse Stock Split
should not reduce the number of stockholders of the Company since
fractional shares will be rounded up to a whole share of new
Common Stock. The shares of Common Stock which will be issued
upon approval of the Reverse Stock Split will be fully paid and
nonassessable. The voting rights and other privileges of the
holders of Common Stock would not be affected substantially by
adoption of the Reverse Stock Split or subsequent implementation
thereof. If for any reason the Board of Directors deems it
advisable to do so, the Reverse Stock Split may be abandoned by
the Board of Directors at any time before, during or after the
Annual Meeting of Stockholders and prior to filing and
effectiveness of the amendment in the Amended and Restated
Certificate with the Secretary of State of the State of Delaware,
pursuant to Section 242(c) of the Delaware General Corporation
Law, without further action by the stockholders of the Company.
If the Reverse Stock Split is approved by the stockholders
at the Annual Meeting of Stockholders, and upon a determination
by the Board of Directors that a Reverse Stock Split is in the
best interests of the Company and its stockholders, the amendment
to Article FOURTH, in the form set forth in Exhibit A hereto,
would be filed in the Amended and Restated Certificate with the
Secretary of State of the State of Delaware on any date (the
"Effective Date") selected by the Board of Directors on or prior
to the Company's next Annual Meeting of Stockholders, and the
Reverse Stock Split would become effective as of 5:00 p.m. E.S.T.
on the date of such filing. Without any further action on the
part of the Company or the stockholders, the shares of Common
Stock held by
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stockholders of record as of the Effective Date
will be converted at 5:00 p.m. E.S.T. on the Effective Date into
the right to receive an amount of whole shares of new Common
Stock equal to the number of their shares divided by five, with
any fractional share rounded up to the next whole share.
Exchange of Stock Certificates
At soon as practicable after the Effective Date, the Company
will send a letter of transmittal to each stockholder of record
on the Effective Date for use in transmitting certificates
representing shares of Common Stock ("old certificates") to the
Company's transfer agent, The First National Bank of Boston (the
"Exchange Agent"). The letter of transmittal will contain
instructions for the surrender of old certificates to the
Exchange Agent in exchange for certificates representing the
number of whole shares of new Common Stock. No new certificates
will be issued to a stockholder until such stockholder has
surrendered all old certificates together with a properly
completed and executed letter of transmittal to the Exchange
Agent.
Upon proper completion and execution of the letter of
transmittal and return thereof to the Exchange Agent, together
with all old certificates, stockholders will receive a new
certificate or certificates representing the number of whole
shares of new Common Stock into which their shares of Common
Stock represented by the old certificates have been converted as
a result of the Reverse Stock Split. Until surrendered,
outstanding old certificates held by stockholders will be deemed
for all purposes to represent the number of whole shares of
Common Stock to which such stockholders are entitled as a result
of the Reverse Stock Split. Stockholders should not send their
old certificates to the Exchange Agent until they have received
the letter of transmittal. Shares not presented for surrender as
soon as practicable after the letter of transmittal is sent shall
be exchanged at the first time they are presented for transfer.
No service charges will be payable by stockholders in
connection with the exchange of certificates, all expenses of
which will be borne by the Company.
Effect of the Reverse Stock Split Proposal
If the Reverse Stock Split is approved at the Annual
Meeting of Stockholders and the Company's Board of Directors
subsequently determines that it is advisable to proceed with the
Reverse Stock Split, the result would be that each stockholder
who owns five or more shares of Common Stock will receive one
share of new Common Stock for each five shares of Common Stock
held at the time of the Reverse Stock Split, and one additional
share in lieu of the issuance of a fractional share of new Common
Stock, if any. Each Company stockholder who owns fewer than
five shares of Common Stock on the date of the Reverse Stock
Split is effected will be entitled to receive one share of new
Common Stock in lieu of receiving a fractional share resulting
from the Reverse Stock Split. The rounding up of fractional
shares to the next whole share is being done to avoid the expense
and inconvenience to the Company of issuing fractional shares,
and is not a separately bargained-for-consideration.
After the Reverse Stock Split the Company will still have
authorized Common Stock of 165,000,000 shares. As of March 23,
1994, the number of issued shares of Common Stock was
158,302,958. Based upon the Company's best estimates, the
aggregate number of shares of new Common Stock that will be
issued and outstanding as a result of the Reverse Stock Split
will be 31,660,592. Because the number of authorized shares of
Common Stock is remaining at
23
<PAGE>
165,000,000 there will remain an estimated 130,400,000 authorized but unissued
shares of Common Stock as a result of the Reverse Stock Split (after the
reservation of an additional 2,940,000 shares of Common Stock for conversion of
the $100 Preference Stock as described above).
Federal Income Tax Consequences
The following is a summary of the material anticipated
Federal income tax consequences of the Reverse Stock Split to
stockholders of the Company. This summary is based on the
Federal income tax laws now in effect and as currently
interpreted; it does not take into account possible changes in
such laws or interpretations, including amendments to applicable
statutes, regulations and proposed regulations or changes in
judicial or administrative rulings, some of which may have
retroactive effect. This summary is provided for general
information only and does not purport to address all aspects of
the possible Federal income tax consequences of the Reverse
Stock Split and IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. In
particular, and without limiting the foregoing, this summary does
not consider the Federal income tax consequences to stockholders
of the Company in light of their individual investment
circumstances or to holders subject to special treatment under
the Federal income tax laws (for example, life insurance
companies, regulated investment companies and foreign taxpayers).
The summary does not address any consequence of the Reverse Stock
Split under any state, local or foreign tax laws.
No ruling from the Internal Revenue Service ("Service") or
opinion of counsel will be obtained regarding the Federal income
tax consequences to the stockholders of the Company as a result
of the Reverse Stock Split. ACCORDINGLY, EACH STOCKHOLDER IS
ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH
STOCKHOLDER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL
AND FOREIGN INCOME AND OTHER TAX LAWS.
The Company believes that the Reverse Stock Split would be a
tax-free recapitalization to the Company and its stockholders.
If the Reverse Stock Split qualifies as a recapitalization under
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as
amended, a stockholder of the Company who exchanges his or her
Common Stock solely for new Common Stock should recognize no gain
or loss for Federal income tax purposes. A stockholder's
aggregate tax basis in his or her shares of new Common Stock
received from the Company should be the same as his or her
aggregate tax basis in the Common Stock exchanged therefor. The
holding period of the new Common Stock received by such
stockholder should include the period during which the Common
Stock surrendered in exchange therefor was held, provided all
such Common Stock was held as a capital asset on the date of the
exchange.
Vote Required
The approval of the Reverse Stock Split requires the
affirmative vote of a majority of the outstanding shares of
Common Stock, $6 Preferred Stock and $2 Preference Stock of the
Company, voting together as a single class.
The Board recommends a vote FOR the approval of the Reverse
Stock Split.
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RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to stockholder ratification, the Board of Directors
has appointed Coopers & Lybrand to serve as the Company's
independent public accountants for the fiscal year ending
September 30, 1994. Representatives of Coopers & Lybrand are
expected to be present at the meeting, and will have the
opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
On February 23, 1994, the Board of Directors of Zapata
Corporation (the "Company") decided to change the Company's
principal independent accountants from Arthur Andersen & Co.
("Arthur Andersen") to Coopers & Lybrand. Prior to this
decision, the Audit Committee of the Board had discussed the
possible change, but had submitted the matter to the Board of
Directors without making any recommendation regarding the change.
During the Company's two most recently-completed fiscal
years and the subsequent interim period preceding such change
there were no disagreements with Arthur Andersen on any matters
of accounting principles or practice, financial statement
disclosure, or auditing scope or procedure, which, if not
resolved to the satisfaction of Arthur Andersen, would have
caused it to make a reference to the subject matter of the
disagreement in connection with its report. Arthur Andersen's
report on the Company's financial statements for either of the
past two years did not contain an adverse opinion or a disclaimer
of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles.
Representatives of Arthur Andersen & Co. will not be present
at the meeting.
The Board of Directors recommends a vote FOR ratification of
the selection of Coopers & Lybrand as the Company's independent
public accountants for the fiscal year ending September 30, 1994.
STOCKHOLDER PROPOSAL ON CUMULATIVE VOTING
Martin Glotzer, who resides at 7061 North Kedzie Avenue
#301, Chicago, Illinois 60645, is the owner of 1,024 shares, and
John J. Gilbert is the owner of 18 shares and co-trustee under
the will of Caston J. Gilbert for 200 shares of the Company's
Common Stock. These stockholders have advised the Company that
it is their intention to present the following resolution for
consideration and action by stockholders at the 1994 Annual
Meeting of Stockholders:
"RESOLVED: That the stockholders of Zapata
Corporation, assembled in annual meeting in person and
by proxy, hereby request the Board of Directors to take
the steps necessary to provide for cumulative voting in
the election of directors, which means each stockholder
shall be entitled to as many votes as shall equal the
number of shares he or she owns multiplied by the
number of directors to be elected, and he or she may
cast all of such votes for a single candidate, or any
two or more of them as he or she may see fit."
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<PAGE>
Proponent's Statement in Support of Proposal
Messrs. Glotzer and Gilbert have made the following statement in
support of this proposal:
"REASONS: A law enacted in California provides that
all state pension holdings, as well as state college
funds, invested in shares must be voted in favor of
cumulative voting proposals, showing increasing
recognition of the importance of this democratic means
of electing directors.
"Also, the National Bank Act has provided for
cumulative voting. Unfortunately, in so many cases
companies get around it by forming holding companies
without cumulative voting. Thus, with so many banking
failures the result is that tax payers have to make up
the losses. Banking authorities have the right to
question the capability of directors to be on banking
boards. Unfortunately, in so many cases authorities
come in after and say the director or directors were
not qualified. So there is no reason why this could
not be done for corporations under the SEC and banking
authorities.
"It has increasingly been recognized that fair and
equitable distribution of voting power is best secured
when all the stockholders have the right of cumulative
voting. This is the purpose of cumulative voting, in
our opinion, it protects everyone.
"Because of the normal need to find new directors and
the need for directors on the compensation committee,
we think cumulative voting is the answer. In addition,
some recommendations have been made to carry out the
Valdez 10 points. In our opinion, the 11th should be
to have cumulative voting and to end the stagger system
of electing directors.
"Alaska took away cumulative voting, over our
objections, when it became a state. Perhaps, if the
citizens had insisted on proper representation the
disastrous Valdez oil spill might have been prevented
if environmental directors were elected through
cumulative voting.
"Many successful corporations have cumulative voting.
For example, Pennzoil having cumulative voting defeated
Texaco in that famous case. Another example, in spite
of still having a stagger system of electing directors,
Ingersoll-Rand, which has cumulative voting, won two
awards. In FORTUNE magazine it was ranked second as
'America's Most Admired Corporations' and the WALL
STREET TRANSCRIPT noted 'on almost any criteria used to
evaluate management, Ingersoll-Rand excels.' We
believe Zapata should follow this example.
If you agree, please mark your proxy for this
resolution; otherwise it is automatically cast against
it, unless you have marked to abstain."
Comment by Management
The Board of Directors believes that directors should be
chosen for their capacity and willingness to represent all
stockholders, and that the present system of voting for directors
provides
26
<PAGE>
the best assurance that the decisions of the directors
will be made in the best interest of all the stockholders, rather
than for the benefit of special interest groups.
Cumulative voting tends to produce special interest
directors beholden to the narrow interests of those who elect
them, even though such interests may be adverse to the overall
welfare of the Corporation and the stockholders as a whole. A
board encumbered by such conflicting factions could impede the
ability of the Company to arrive at decisions that represent the
long-term interest of all stockholders and to react timely and
decisively in critical situations. The factionalism caused
by cumulative voting could also deter independent persons of
standing and reputation from serving on the Board and reduce the
sense of cooperation and confidence which the Board presently
maintains.
Neither Delaware, the State in which the Company and most
major publicly-owned corporations are incorporated, nor the Model
Business Corporation Act, which reflects a consensus of the
academic and practicing legal community, requires cumulative
voting. This is in accord with the Board's belief that the
principle of majority rule is the appropriate one for the
election of directors.
Under the corporation law of the State of Delaware, the
action recommended in this proposal could be taken only if the
Board of Directors recommended an amendment to the Corporation's
Restated Certificate of Incorporation establishing cumulative
voting and directed that the amendment be submitted to a vote of
the Company's stockholders. The Company's Board of Directors has
not recommended, and does not recommend, such an amendment.
Therefore, a vote in favor of this proposal would be only an
advisory recommendation to the Board of Directors that it take
steps to initiate such an amendment.
At certain annual meetings of stockholders of, among others,
Florida Power & Light Company, FPL Group, Inc., Rockefeller
Center Properties, Inc., Citicorp, The Chase Manhattan
Corporation and Chemical Banking Corporation, Mr. Gilbert
submitted similar cumulative voting proposals. At all such
meetings, the proposals were overwhelmingly rejected by the
stockholders.
Vote Required
The affirmative vote of a majority of the total number of
shares of Common Stock, $6 Preferred Stock and $2 Preference
Stock represented at the meeting is required to approve the
Stockholder Proposal.
The Board of Directors recommends a vote AGAINST the
Stockholder Proposal.
OTHER MATTERS
The Board of Directors knows of no other matter to be
presented at the 1994 Annual Meeting of Stockholders. If any
additional matter should be presented properly, it is intended
that the enclosed proxy will be voted in accordance with the
discretion of the persons named in the proxy.
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<PAGE>
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the
1995 annual meeting of stockholders must be received by the
Company by November 25, 1994 to be considered for inclusion
in the proxy statement and form of proxy relating to the 1995
meeting.
By Order of the Board of Directors,
R.C. Lassiter
Chairman of the Board and
Chief Executive Officer
March 25, 1994
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<PAGE>
EXHIBIT A
---------
Article FOURTH, Part III of the Company's Restated
Certificate of Incorporation, as amended, shall be further
amended in the Amended and Restated Certificate of Incorporation
to be adopted by the Board of Directors and filed with the
Secretary of State of the State of Delaware by adding the
following provision, which will be modified to insert the date
of filing in the blank:
"4. Reverse Stock Split. Each five (5) shares of
authorized Common Stock issued and outstanding at 5:00
p.m. E.S.T. on _____, 1994 (the "Effective Time") shall
thereupon automatically be reclassified and changed
into one (1) validly issued, fully paid and
nonassessable share of Common Stock. Each holder of
record of shares of Common Stock to be so reclassified
and changed shall at the Effective Time become the
record owner of the number of shares of Common Stock as
shall result from such reclassification and change.
Each such record holder shall be entitled to receive,
upon the surrender of the certificate or certificates
representing the shares of Common Stock to be so
reclassified and changed at the office of the transfer
agent of the corporation in such form and accompanied
by such documents, if any, as may be prescribed by the
transfer agent of the corporation, a new certificate
or certificates representing the number of shares of
Common Stock of which he or she is the record owner
after giving effect to the provisions of this Article
FOURTH. The corporation shall not issue fractional
shares with respect to the reclassification and change,
and instead, in lieu of any fractional share of Common
Stock which would otherwise result, shall issue to the
holder entitled thereto one (1) whole share of Common
Stock, which share shall be validly issued, fully paid
and nonassessable."
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[Preliminary Copy]
PROXY
ZAPATA
CORPORATION
P.O. BOX 4240
HOUSTON, TX 77210
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.C. Lassiter, Thomas H. Bowersox and
Marvin J. Migura and each of them, attorneys and agents with full power of
substitution to vote as proxy all the shares of Common Stock, $6 Cumulative
Preferred Stock and $2 Noncumulative Convertible Preference Stock of Zapata
Corporation held of record by the undersigned on March 23, 1994 at the 1994
Annual Meeting of Stockholders of Zapata Corporation to be held on April 27,
1994 and at any adjournments thereof, in the manner indicated on the reverse
hereof and in their discretion on such other matters as may properly come before
said meeting or any adjournments thereof.
If you wish to vote in accordance with the recommendations of the Board of
Directors, you may just sign and date below and mail in the postage paid
envelope provided. Specific choices may be made on the reverse side.
Dated __________________, 1994
___________________________________________
Signature
___________________________________________
Signature if held jointly
When signing as Executor, Administrator, Trustee
or the like, please give full title.
PROXY (CONTINUED)
This proxy will be voted as directed, or if no direction is indicated, will be
voted FOR Item 1 all nominees listed below for election as directors, FOR Item
2, FOR Item 3, and AGAINST Item 4. The Board of Directors recommends a vote
FOR Items 1, 2 and 3 and recommends a vote AGAINST Item 4.
(1) Election of Directors FOR ALL [_] WITHHOLD AUTHORITY TO VOTE FOR [_]
(except as
specified below)
Term Ending 1997:
Peter M. Holt
Kristian Siem
Instructions: To withhold vote for individual(s) write name(s) below.
- ---------------------------------------------------------------------
(2) Reverse Stock Split FOR [_] AGAINST [_] ABSTAIN [_]
(3) Ratification of
appointment of independent
public accountants for 1994 FOR [_] AGAINST [_] ABSTAIN [_]
(4) Stockholder proposal for
cumulative voting FOR [_] AGAINST [_] ABSTAIN [_]
(Sign and date on reverse side)
30
