-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NK2jzGqf1H+H6UPiWekd9JqNhKR4qCez3g71fHCKy3vI9ThZZwDT6d+Xl44gtbiP OWyTe8Xqg++9+3RZdNXNxA== 0000950129-98-001671.txt : 19980421 0000950129-98-001671.hdr.sgml : 19980421 ACCESSION NUMBER: 0000950129-98-001671 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980529 FILED AS OF DATE: 19980420 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORE LABORATORIES N V CENTRAL INDEX KEY: 0001000229 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] IRS NUMBER: 000000000 STATE OF INCORPORATION: P7 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: SEC FILE NUMBER: 000-26710 FILM NUMBER: 98597407 BUSINESS ADDRESS: STREET 1: 1017 BZ AMSTERDAM STREET 2: HERENGRACHT 424 CITY: THE NETHERLANDS STATE: P7 BUSINESS PHONE: 3120420319 MAIL ADDRESS: STREET 1: HERENGRACHT 424 STREET 2: 1017 BZ AMSTERDAM CITY: THE NETHERLANDS STATE: P7 PRE 14A 1 CORE LABORATORIES N.V. - 05/29/98 1 SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12 CORE LABORATORIES, N.V. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11. (1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing Party: - -------------------------------------------------------------------------------- (4) Date Filed: - -------------------------------------------------------------------------------- 2 CORE LABORATORIES N.V. HERENGRACHT 424 1017 BZ AMSTERDAM THE NETHERLANDS NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 28, 1998 To The Shareholders: The 1998 Annual Meeting of the Shareholders (the "Annual Meeting") of Core Laboratories N.V., a limited liability company organized under the laws of The Netherlands (the "Company"), will be held at the law offices of Nauta Dutilh, Weena 750, 3014 DA Rotterdam, The Netherlands, on Friday, May 28, 1998 at 10:00 a.m., local time, for the following purposes: 1. To elect eight members (each, a "Supervisory Director") to the Board of Supervisory Directors of the Company (the "Supervisory Board"), consisting of three Class I Supervisory Directors, three Class II Supervisory Directors and two Class III Supervisory Directors, to serve until the annual meeting of shareholders in 1999, 2000 and 2001, respectively, and until their successors shall have been duly elected and qualified; 2. To confirm and adopt the Dutch Statutory Annual Accounts of the Company for the fiscal year ending December 31, 1997 (the "Annual Accounts"); 3. To approve the extension of the authority of the Management Board of the Company (the "Management Board") to repurchase up to 10% of the outstanding share capital of the Company until November 28, 1999 at a price of not more than $200 per share; 4. To approve the extension of the authority of the Supervisory Board to issue and/or to grant rights (including options to purchase) on common and/or preferred shares of the Company until May 28, 2003; 5. To approve the extension of the authority of the Supervisory Board to limit or exclude the preemptive right of the holders of the common shares of the Company until May 28, 2003; 6. To approve an amendment to the Articles of Association, as amended, to increase the authorized share capital of the Company from 30,000,000 common shares to 100,000,000 common shares; 7. To approve an amendment to the Articles of Association, as amended, to provide that dividends otherwise than in cash may be authorized by the Supervisory Board; 8. To ratify and approve an interim dividend authorized by the Supervisory Board to satisfy amounts otherwise owed by the shareholders under the laws of The Netherlands for the stock split effected in December 1997; 9. To ratify and approve the appointment of Arthur Andersen LLP as the Company's independent public auditors for the fiscal year ending December 31, 1998; and 10. To transact such other business as may properly come before the Annual Meeting or any adjournment(s) thereof. Copies of the Annual Accounts, the report of the Management Board, the proposed amendments to the Articles of Association and the list of nominees for the Supervisory Board are open for inspection at the offices of the Company, located at Herengracht 424, 1017 BZ Amsterdam, The Netherlands, Attention: Mr. Jacobus Schouten, by registered shareholders and other persons entitled to attend meetings of shareholders of the Company. Such copies will be open for inspection from the date hereof until the close of the Annual Meeting. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS OF WHETHER YOU PLAN TO ATTEND. THEREFORE, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. IF YOU ARE PRESENT AT THE ANNUAL MEETING AND WISH TO DO SO, YOU MAY REVOKE THE PROXY AND VOTE IN PERSON. By Order of the Board of Supervisory Directors, Jacobus Schouten SUPERVISORY DIRECTOR April 30, 1998 Amsterdam, The Netherlands 3 CORE LABORATORIES N.V. HERENGRACHT 424 1017 BZ AMSTERDAM THE NETHERLANDS ----------------------------- PROXY STATEMENT ----------------------------- SOLICITATION AND REVOCATION OF PROXIES The accompanying proxy is being solicited by and on behalf of the Board of Supervisory Directors (the "Supervisory Board") of Core Laboratories N.V. (the "Company") for use at the 1998 Annual Meeting of the Shareholders of the Company (the "Annual Meeting") to be held at the law offices of Nauta Dutilh, Weena 750, 3014 DA Rotterdam, The Netherlands, on Friday, May 29th, 1998 at 10:00 a.m., local time. If the accompanying proxy is properly executed and returned, the shares it represents will be voted at the Annual Meeting in accordance with the directions noted thereon, or, if no directions are indicated, it will be voted in favor of the proposals described in this Proxy Statement. Any shareholder giving a proxy has the power to revoke it by oral or written notice to the Secretary of the Company at any time before it is voted. The solicitation of proxies by the Supervisory Board will be conducted by mail. In addition, certain members of the Supervisory Board (each, a "Supervisory Director"), officers and regular employees of the Company may solicit proxies in person or by facsimile, telex or telephone. The Company will bear the cost of preparing and mailing proxy materials as well as the cost of soliciting proxies. The Company will reimburse banks, brokerage firms, custodians, nominees and fiduciaries for their expenses in sending proxy materials to the beneficial owners of the common shares, par value NLG .03 per share, of the Company (the "Common Shares"). At the close of business on April 1, 1998, the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting, there were 24,776,913 Common Shares outstanding, each of which is entitled to one vote. The class of Common Shares is the only class of capital stock of the Company outstanding and entitled to notice of and to vote at the Annual Meeting. The presence, in person or by proxy, of at least a majority of the outstanding Common Shares is required for a quorum. Common Shares abstained from voting will have the effect of a vote against a proposal. Broker non-votes will not be counted to determine the shareholders entitled to vote on a proposal, and will not affect the outcome of the vote on such matter. A copy of the Company's Annual Report on Form 10-K, including the financial statements, schedules and exhibits thereto, may be obtained without charge by written request to John D. Denson, Secretary, in care of Core Laboratories, Inc., 5295 Hollister Road, Houston, Texas 77040. This Proxy Statement and the accompanying proxy were first mailed to shareholders on or about May 2, 1998. ITEM 1. ELECTION OF SUPERVISORY DIRECTORS The Amended and Restated Articles of Association of the Company (the "Articles of Association") provide for one or more Supervisory Directors. The Supervisory Directors are proposed by the Supervisory Board and elected at each annual meeting of shareholders by the affirmative vote of the holders of a majority of the Common Shares present in person or by proxy. The shareholders may override the proposal of the Supervisory Board by a vote of two-thirds of the votes cast at the meeting if more than one-half of the outstanding share capital is present or represented. The Supervisory Board is divided into Classes I, II and III, the terms of office of which are scheduled to expire on the dates of the annual meeting of shareholders in 1999, 2000 and 2001, respectively. The Supervisory Board is proposing the election of eight Supervisory Directors at the Annual Meeting. Three of the nominees (Bob G. Agnew, Jacobus Schouten and James A. Read) will be elected as Class I Supervisory Directors 4 for a term expiring 1999, three of the nominees (Joseph R. Perna, David M. Demshur and Timothy J. Probert) will be elected as Class II Supervisory Directors for a term expiring 2000 and two of the nominees (Richard L. Bergmark and Stephen D. Weinroth) will be elected as Class III Supervisory Directors for a term expiring 2001. At each future Annual Meeting of shareholders, the successors to the class of Supervisory Directors whose terms shall expire that year shall be elected to hold office for a term of three years and until their respective successors shall have been duly elected and qualified. All of the nominees for Supervisory Directors are presently members of the Supervisory Board. Unless otherwise instructed or unless authority to vote is withheld, the enclosed proxy will be voted for the election of the nominees listed below. If at the time of or prior to the Annual Meeting any of the nominees should be unable or decline to serve, the discretionary authority provided in the proxy may be used to vote for a substitute or substitutes designated by the Supervisory Board. The Supervisory Board has no reason to believe that any substitute nominee or nominees will be required. No proxy will be voted for a greater number of persons than the number of nominees named herein. THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES FOR SUPERVISORY DIRECTOR AS SET FORTH ABOVE, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON. The following table sets forth the names, ages and titles of the persons who have been nominated for election as Supervisory Directors: CLASS I SUPERVISORY DIRECTORS (TERM EXPIRES 1999)
NAME AGE POSITION - ---- --- -------- Bob G. Agnew..................................... 67 Supervisory Director Jacobus Schouten................................. 43 Supervisory Director James A. Read.................................... 48 Supervisory Director
CLASS II SUPERVISORY DIRECTORS (TERM EXPIRES 2000)
NAME AGE POSITION - ---- --- -------- Joseph R. Perna.................................. 54 Supervisory Director David M. Demshur................................. 43 President, Chief Executive Officer and Supervisory Director Timothy J. Probert............................... 46 Supervisory Director
CLASS III SUPERVISORY DIRECTORS (FOR TERM EXPIRING IN 2001)
NAME AGE POSITION - ---- --- -------- Richard L. Bergmark.............................. 44 Chief Financial Officer, Treasurer and Supervisory Director Stephen D. Weinroth.............................. 59 Chairman of the Supervisory Board and Supervisory Director
Set forth below is a brief description of the business experience and length of service of the Supervisory Directors. Bob G. Agnew was, until his retirement in January 1994, Manager of Drilling for International Operations for Exxon Company International (a division of Exxon Corporation) and a member of the Production Advisory Committee of Exxon Production Research Company. Mr. Agnew is a member of the Society of Petroleum Engineers and has served on its Drilling Technical Committee. He has served as a Supervisory Director since 1995. Richard L. Bergmark joined Western Atlas International, Inc. ("Western Atlas") as Treasurer in 1987. In 1991, he became the Area Manager for Finance and Administration for Europe, Africa and the Middle East operations of Western Geophysical, and in 1994 he became Chief Financial Officer of the Company. Mr. Bergmark presently serves as Chief Financial Officer, Treasurer and a Supervisory Director of the Company. He has served as a Supervisory Director since 1995. David M. Demshur joined the Company in 1979 and has held various operating positions since that date, including Manager of Geological Sciences, Vice President of Europe, Africa and the Middle East in 1989, Senior Vice President -2- 5 of Petroleum Services in 1991 and President in 1994. Mr. Demshur presently serves as President, Chief Executive Officer and a Supervisory Director of the Company. He has served as a Supervisory Director since 1994. Mr. Demshur is a member of the Society of Petroleum Engineers, the American Association of Petroleum Geologists, Petroleum Exploration Society of Great Britain and the Society of Core Analysts Section of the Society of Professional Well Loggers Association. Joseph R. Perna joined the Company as General Manager in 1985. In 1991, he was promoted to Senior Vice President, with responsibility for certain Laboratory Services operations and the Technology Products Division, a position he held until his retirement from the Company on March 31, 1998. Mr. Perna has served as a Supervisory Director since 1995. Timothy J. Probert has served as the President of Baker Hughes, Inteq (a business unit of Baker Hughes Inc., a diversified oil service company ("Baker Hughes")) since September 1995 and Vice President of Baker Hughes since March 1994. He joined Baker Hughes in 1972, where he has held various management positions, including Vice President of Drilling and Evaluation Technology for Baker Hughes Inteq, President of Eastman Teleco, President of Milpark Drilling Fluids and Vice President of Marketing for Baker Sand Control. Mr. Probert has served as a Supervisory Director since 1995. James A. Read is a member of the board of directors of Mezzanine Management Limited, the firm which has served as the investment advisor to First Britannia Mezzanine N.V. ("First Britannia") since First Britannia's formation in 1988. First Britannia is an investment company whose funds are provided by institutional investors, and it has been a mezzanine lender to, and investor in, the Company since the purchase of the Company from Western Atlas in 1994. Mr. Read has been a Director of the Company since the purchase from Western Atlas and is also a member of the board of directors of various European companies. Jacobus Schouten has been an executive officer of First Britannia since 1989. Mr. Schouten has been a Supervisory Director of the Company since 1994, and he is a member of the board of directors of various European companies, including CB Holdings SA. Stephen D. Weinroth is a Partner of Anderson, Weinroth & Co., L.P., an investment firm, and a Managing Director of First Britannia, which position he has held since its inception in 1988. From 1993 to 1995, he served as Co-Chairman and Co-Executive Officer of VETTA Sports, Inc., an international bicycle parts and accessories producer and distributor. Mr. Weinroth has been a Supervisory Director since 1994, the Chairman of the Supervisory Board since 1995 and is a member of the board of directors of Hovnanian Enterprises, Inc. EXECUTIVE OFFICERS The Executive Officers of the Company (each, an "Executive Officer") currently are David M. Demshur, Richard L. Bergmark and John D. Denson. In addition, Mr. Perna was an Executive Officer of the Company until his retirement on March 31, 1998. Biographical information regarding Messrs. Demshur, Perna and Bergmark is set forth above. The following biography describes the business experience of the remaining Executive Officer. The Executive Officers are not Managing Directors of the Company for purposes of Dutch law. John D. Denson joined Western Atlas as Division Counsel in 1992, with responsibility for the Core Laboratories division. Mr. Denson, who is 40 years of age, presently serves as Vice President, General Counsel and Secretary of the Company. Mr. Denson is a member of the State Bar of Texas. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The table below sets forth certain information, as of April 1, 1998, with respect to the Common Shares beneficially owned by (i) each person known by the Company to own beneficially five percent or more of the Common Shares, (ii) each Supervisory Director and nominee for Supervisory Director, (iii) each of the Executive Officers and (iv) all Supervisory Directors, nominees for Supervisory Director and Executive Officers as a group. -3- 6
AMOUNT OF COMMON SHARES PERCENT AND NATURE OF OF NAME OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP CLASS - --------------------------- --------------------- ---------- First Britannia Mezzanine N.V.(2) .......................... 4,202,534 17.0 Pilgrim Baxter & Associates Ltd (3) ........................ 1,914,000 7.7 Franklin Resource Inc.(4) .................................. 1,721,000 6.9 Invesco MIN PLC(5) ......................................... 1,349,000 5.4 Stephen D. Weinroth(6) ..................................... 600,850 2.4 David M. Demshur ........................................... 438,834 1.8 Richard L. Bergmark ........................................ 199,612 * Joseph R. Perna ............................................ 157,413 * John D. Denson ............................................. 22,998 * Timothy J. Probert ......................................... 6,000 * Bob G. Agnew ............................................... 4,600 * James A. Read .............................................. 4,000 * Jacobus Schouten ........................................... -- -- All Supervisory Directors, nominees for Supervisory Director and Executive Officers as a group .............. 1,434,307 5.7
- ---------------------------- * Less than one percent. (1) Unless otherwise indicated, each person has sole voting power and investment power with respect to the Common Shares listed. (2) The business address of First Britannia is de Ruyterkade 62, Curacao, Netherlands Antilles. (3) As reported on the Schedule 13G/A dated February 17, 1998. The business address of Pilgrim Baxter & Associates LTD is 825 Dupartail Road, Wayne, PA 19087. (4) As reported on the Schedule 13G dated January 30, 1998, the shares reported by Franklin Resource are beneficially owned by one or more open or closed-end investment companies or other managed accounts which are advised by direct or indirect investment advisory subsidiaries of Franklin. Such advisory contracts grant to the advisory subsidiaries all investment and/or voting power over the shares. Charles B. Johnson and Rupert H. Johnson, Jr. (the "Principal Shareholders") each own in excess of 10% of the outstanding Common Stock of Franklin Resource and are the principal shareholders of Franklin Resource. Franklin Resource and the Principal Shareholders may be deemed to be, for purposes of Rule 13d-3 under the 1934 Act, the beneficial owner of securities held by persons and entities advised by Franklin Resource subsidiaries. Franklin Resource, the Principal Shareholders and each of the advisory subsidiaries disclaim economic interest or beneficial ownership in any of the shares. The business address of Franklin Resource is 901 Mariners Island Blvd., 6th Floor, San Mateo, CA 94404. (5) As reported on the Schedule 13G dated February 9, 1998, Invesco MIN PLC holds their shares in various subsidiaries for which it shares voting power. Invesco's business address is 11 Devonshire Square, London EC2M 4YR England. (6) Mr. Weinroth is a Managing Director of First Britannia, and the numbers above do not reflect any Common Shares owned by First Britannia. COMMITTEES OF THE SUPERVISORY BOARD The Supervisory Board has two standing committees, the identities, memberships and functions of which are described below. Audit Committee. The members of the Audit Committee of the Supervisory Board (the "Audit Committee") are Messrs. Agnew and Weinroth. The Audit Committee's functions include making recommendations concerning the engagement of independent auditors, reviewing with the independent auditors the plan and results of the auditing -4- 7 engagement, approving professional services provided by the independent auditors and reviewing the adequacy of the Company's internal accounting controls. Compensation Committee. The members of the Compensation Committee of the Supervisory Board (the "Compensation Committee") are Messrs. Read, Probert and Weinroth. The Compensation Committee's functions include a general review of the Company's compensation and benefit plans to ensure that they meet corporate objectives. The Compensation Committee reviews the Chief Executive Officer's recommendations on (i) compensation of the senior executive officers of the Company, (ii) granting of awards under the Company's stock option and other benefit plans and (iii) adopting and changing major Company compensation policies and practices. In addition to reviewing the compensation for the Chief Executive Officer, the Compensation Committee reports its recommendations to the whole Supervisory Board for approval. The Compensation Committee also administers the Company's 1995 Long-Term Incentive Plan and the 1995 Non-Employee Directors Stock Option Plan. INFORMATION REGARDING MEETINGS The Supervisory Board held four meetings in 1997. The Audit Committee and the Compensation Committee each held two meetings in 1997. Each Supervisory Director attended at least 75% of the meetings of the Supervisory Board and of the committees (if any) on which such person serves, with the exception of Messrs. Read and Bergmark, who attended 50% of such meetings. DIRECTOR COMPENSATION Each Supervisory Director who is not a full-time employee of the Company is paid (i) an annual retainer of $12,000, payable semiannually in arrears, (ii) $1,000 per meeting of the Supervisory Board at which such individual is present in person, (iii) $750 per meeting of any committee thereof at which such individual is present in person, (iv) an additional $500 per meeting for each committee meeting for which the individual is chairperson and (v) reimbursement for all out of pocket expenses incurred in attending any meeting of the Supervisory Board or any committee thereof. Supervisory Directors who are full-time employees of the Company receive no compensation for serving as Supervisory Directors. The 1995 Nonemployee Director Stock Option Plan (the "Nonemployee Director Plan") was amended and restated May 29, 1997 to authorize an additional 100,000 common shares, for a maximum aggregate of 200,000 common shares, for grant to eligible Supervisory Directors of the Company. Pursuant to the Nonemployee Director Plan, beginning in 1996, 10,000 options will be granted to each eligible Director and 20,000 options will be granted to the Chairman on an annual basis. The options will be exercisable for a period of 10 years and will vest one year following the date of grant. The exercise price of options granted under the Plan equals the market price of the Common Shares on the date of grant. -5- 8 EXECUTIVE COMPENSATION The following table summarizes, with respect to the Company's Chief Executive Officer and each of the three other most highly compensated Executive Officers whose salary and bonus compensation from the Company exceeded $100,000 in 1997 (collectively, the "Named Executive Officers"), certain information relating to the compensation earned for services rendered in all capacities during fiscal years 1995 through 1997. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION ------------ ANNUAL SECURITIES COMPENSATION(1) UNDERLYING NAME AND FISCAL ------------------- OPTIONS ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS (NUMBER) COMPENSATION(2) - -------------------------------------------------- --------- -------- ---------- --------- --------------- David M. Demshur, President and 1997 $246,529 $252,800 55,000 $ 16,431 Chief Executive Officer ....................... 1996 215,112 131,219 -- 12,790 1995 185,144 100,000 30,000 15,201 Joseph R. Perna, Senior Vice 1997 $196,529 $152,850 40,000 $ 17,406 President (3) ................................. 1996 174,093 77,695 -- 13,871 1995 150,145 61,875 25,000 14,730 Richard L. Bergmark, Chief Financial 1997 $171,019 $130,300 96,000 $ 15,428 Officer and Treasurer ............................ 1996 150,088 68,372 -- 11,778 1995 126,927 52,500 20,000 11,563 John D. Denson, Vice President, 1997 $128,026 $ 64,600 16,000 $ 15,418 General Counsel and Secretary ................. 1996 114,059 29,550 -- 11,772 1995 105,840 27,500 16,000 10,744
- ------------------ (1) During the years ending December 31, 1995, 1996 and 1997, perquisites for each individual named in the Summary Compensation Table aggregated less than 10% of the total annual salary and bonus reported for such individual in the Summary Compensation Table. Accordingly, no such amounts are included in the Summary Compensation Table. (2) Consists of matching contributions and Company contributions through the Company's retirement plans and amounts paid under certain insurance plans. (3) Mr. Perna retired from the Company on March 31, 1998. -6- 9 STOCK OPTION GRANTS The following table sets forth certain information with respect to stock option grants made to the Named Executive Officers during 1997 under the Company's 1995 Long-Term Incentive Plan, as amended (the "Stock Option Plan").
OPTION GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE SECURITIES OPTIONS AT ASSUMED ANNUAL RATES UNDERLYING GRANTED TO EXERCISE OR OF-STOCK-PRICE OPTIONS EMPLOYEES BASE PRICE EXPIRATION APPRECIATION-FOR NAME GRANTED IN 1997 ($/SH) DATE OPTION TERM(1) - ---- --------- ----------- ----------- ---------- --------------------------- 5% 10% ----------- ----------- David M. Demshur.............. 55,000 6.7% 8.375 2/28/2007 750,310 1,194,743 Joseph R. Perna............... 40,000 4.9 8.375 2/28/2007 545,680 868,904 Richard L. Bergmark........... 96,000 11.8 8.375 2/28/2007 1,309,631 2,085,369 John D. Denson................ 16,000 2.0 8.375 2/28/2007 218,272 347,561
- ------------------ (1) The dollar amounts under these columns represent the potential realizable value of each grant of options assuming that the market price of common shares appreciate in value from the date of grant at the 5% and 10% annual rates prescribed by the Securities and Exchange Commission and therefore is not intended to forecast possible future appreciation, if any, of the price of common shares. 1997 OPTION EXERCISES AND YEAR-END VALUE TABLE The following table sets forth for the Named Executive Officers in the Summary Compensation Table above information regarding options held by them at December 31, 1997.
SHARES SECURITIES UNDERLYING VALUE OF SECURITIES UNDERLYING ACQUIRED UNEXERCISED OPTIONS UNEXERCISED OPTIONS ON HELD AT DECEMBER 31, 1997 HELD AT DECEMBER 31, 1997(1) EXERCISE VALUE ------------------------------ -------------------------------- NAME OF OPTION REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- --------- -------- ----------- ------------- ----------- ------------- David M. Demshur........... -- -- 28,750 56,250 314,141 580,547 Joseph R. Perna............ -- -- 22,500 42,500 247,656 441,406 Richard L. Bergmark........ -- -- 34,000 82,000 353,125 818,125 John D. Denson............. -- -- 12,000 20,000 135,250 212,750
- ------------------ (1) Computed based on the difference between aggregate fair market value and aggregate exercise price. The fair market value of the Common Shares on December 31, 1997 was $18-1/16, based on the average of the high and low sales prices on the Nasdaq Stock Market on such date. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires the Supervisory Directors, Executive Officers and persons who own more than ten percent of the Common Shares to file initial reports of ownership and reports of changes in ownership (Forms 3, 4, and 5) of Common Shares with the Securities and Exchange Commission (the "SEC") and the Nasdaq Stock Market. Supervisory Directors, Executive Officers and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all such forms that they file. -7- 10 To the Company's knowledge based solely on its review of the copies of such reports received by the Company and on written representations by certain reporting persons that no reports on Form 5 were required, the Company believes that during the fiscal year ending December 31, 1997, all Section 16(a) filing requirements applicable to its Supervisory Directors, Executive Officers and ten percent shareholders were complied with, except that First Britannia was one day late on the filing of a Form 4. TRANSACTIONS WITH MANAGEMENT AND CERTAIN SHAREHOLDERS Set forth below is a description of certain transactions entered into between the Company and certain of its Supervisory Directors, nominees for Supervisory Director and shareholders. Transactions with Shareholders The Company and the holders of Common Shares prior to the initial public offering of the Company are parties to a Registration Rights Agreement, dated as of September 15, 1995 (the "Registration Rights Agreement"). Upon the request from one or more shareholders holding at least 15% of the then-outstanding Common Shares (the "Requesting Holders"), the Company is required to file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") to register the Common Shares held by the Requesting Holders and any other shareholders who are parties to the Registration Rights Agreement and who desire to sell Common Shares. The holders of Common Shares who are parties to the Registration Rights Agreement are subject to a maximum of two requests in total as well as a maximum of one request in any three-month period. Subject to certain conditions and limitations, the Registration Rights Agreement provides that holders of registrable Common Shares may participate in a registration by the Company of any of its Common Shares in an underwritten offering. In the case of both types of registration, the number of Common Shares that may be registered is subject to limitation if the managing underwriter determines that market conditions require such a limitation. The rights conferred by the Registration Rights Agreement are transferable to transferees of the Common Shares. The Company is generally required to bear all registration expenses (other than underwriting discounts and commissions) in connection with these registrations. In May 1997, the Company acquired all of the capital stock of Saybolt International B.V., a private limited liability company organized under the laws of The Netherlands (the "Saybolt Acquisition"). In connection with the Saybolt Acquisition, Anderson Weinroth & Co. L.P., of which Mr. Weinroth is a principal, received investment banking fees of $1,615,000. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 1997, no Executive Officer served as (i) a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a Supervisory Director or (ii) a director of another entity, one of whose executive officers served on the Supervisory Board or the board of directors of a subsidiary of the Company. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee's responsibilities are (1) to oversee the development of the compensation program for the Company's officers and managerial employees, (2) to administer the incentive and stock option plans, including approval of grants and awards under these plans and (3) to establish the compensation program for the Chief Executive Officer and the other executive officers. With the assistance of an independent consultant, the Compensation Committee completed a comprehensive review of the management compensation program. The Compensation Committee also reviewed market compensation trends and established the compensation program for nonemployee Supervisory Directors. During 1997, the Compensation Committee was comprised of the following Supervisory Directors, all of whom were nonemployee Supervisory Directors of the Company: Timothy J. Probert, James A. Read and Stephen D. Weinroth. Executive Compensation Philosophy The objective of the compensation program for officers and managers is to create strong financial incentives for corporate and division officers and managers to increase profits, revenues and operating efficiency, which will lead to an increase in shareholder value. The following objectives guide the Compensation Committee in its deliberations: -8- 11 o Provide a competitive compensation program that enables the Company to attract and retain key executives and Supervisory Board members. o Ensure a strong relationship between the performance results of the Company or division and the total compensation received. o Balance both annual and longer term performance objectives of the Company. o Encourage executives to acquire and retain meaningful levels of Common Shares. o Work closely with the Chief Executive Officer to ensure that the compensation program supports the management style, objectives and culture of the Company. In addition to normal employee benefits, the executive total compensation program includes base salary, annual cash incentive compensation and longer term stock-based grants and awards. Market Comparisons. Primary market comparisons are made to oilfield service companies, adjusted for size and job responsibilities. The market comparison companies used in the development of the compensation program are broader than those used in the performance graph presented elsewhere in this Proxy Statement and are used because they are more representative of the market in which the Company competes for executive talent. Data sources include oilfield industry surveys, national survey databases and general trend data provided by consultants. Variable Incentives. Variable incentives, both annual and longer term, are major components of the program and are used to link pay and performance results appropriate to each executive officer or manager. Variable incentive awards and performance standards are calibrated such that total compensation will approximate the market 50th percentile when Company performance plans are achieved and exceed the 50th percentile when Company performance plans are exceeded. Code Section 162(m). Section 162(m) of the Code imposes a $1,000,000 limit, with certain exceptions, on the deductibility of compensation paid to each of the five highest paid Executive Officers. In particular, compensation that is determined to be "performance based" is exempt from this limitation. To be "performance based," incentive payments must use predetermined objective standards, limit the use of discretion in making awards and be certified by the Compensation Committee made up of "outside directors." It is not anticipated that any executive will receive compensation in excess of this limit during 1998 or 1999. The Compensation Committee will continue to monitor this situation and will take appropriate action if it is warranted in the future. Executive Compensation Program The following is a discussion of each of the principal components of the executive total compensation program. Base Salary. The base salary program targets the median of the primary comparison group for corporate and divisional officers and managers. Each executive is reviewed individually on an annual basis. Salary adjustments are based on the individual's experience and background, the individual's performance during the prior year, the general movement of salaries in the marketplace and the Company's financial position. As a result of these factors, an executive's base salary may be above or below the targeted median at any point in time. Annual Incentive Compensation. The Company administers an annual incentive plan for its corporate and divisional officers and managers. The goal of the plan is to reward participants in proportion to (i) the performance of the Company as a whole and the division for which they have direct responsibility and (ii) their individual contributions to the Company's success. For 1997, corporate participants were measured on EBIT, return on equity and earning per share, while division participants were also measured on working capital management. In addition, a discretionary component was included as part of the plan to recognize outstanding effort and dedication. The measures were weighted substantially equally. -9- 12 If budgeted performance is achieved, the resulting incentive awards, in combination with base salary, are targeted at the 50th percentile of the market. During 1997, actual corporate performance results exceeded the budget, due in part to the substantial growth of the Company through acquisitions. The price of the Company's Common Shares also more than [doubled] during the year. As a result of these achievements, cash compensation levels, including the special bonus paid to the executive officers, were greater than the 50th percentile. Supplemental Executive Retirement Plan. The Company has adopted the Core Laboratories Supplemental Executive Retirement Plan (the "SERP"), effective July 1, 1997, for the benefit of certain key employees and outside directors of the Company. The SERP was established to provide additional retirement income to the participants and death benefits to the participants' surviving spouses as a reward for the participants' contributions to the success and growth of the Company. The four participants in the SERP are Richard L. Bergmark, David M. Demshur, Joseph R. Perna and Stephen D. Weinroth. Each participant is entitled to receive a retirement benefit of $250,000 per year, which begins on the participant's 65th birthday and is paid in annual installments until the participant's death. If the participant dies before he begins receiving his retirement benefit, the surviving spouse of the deceased participant is entitled to receive $225,000 each year for 15 years. Each participant's benefit under the SERP is fully vested and fully accrued. There is no possibility of forfeiture of the benefit except in the event of termination for cause. The Company has purchased an insurance policy on the lives of Messrs. Bergmark, Demshur and Perna to assist it in providing benefits under the SERP. The Company is the owner and beneficiary of the three policies. The Company is obligated to pay the total premium of $319,500 each year until the policies are paid up (which is anticipated to be eight years). The first premium of $319,500 was paid by the Company on June 12, 1997. Based on actuarial calculations (including a 12% interest rate assumption), the Company expects that the death benefits paid to the Company under the insurance policies will be sufficient to cover the costs of the SERP benefits and the policy premium payments. However, to the extent the death benefits under the policies are insufficient to cover those costs, the Company is obligated to pay the remainder out of its other general assets and absorb any shortfall. In the event of a "change of control," the Company is obligated under the related trust agreement to fully fund the amount of the retirement benefits and death benefits of all four participants and their spouses. The amount of the "change of control" contribution is the lesser of (i) the total amount due under the terms of the SERP or (ii) the amount of unpaid premiums on any insurance policies held by the trust through the seventh anniversary of the date of the purchase of each such policy. Stock Based Compensation. Stock ownership by corporate and divisional management is encouraged through the use of a stock plan that provides for the award of Common Share options and awards. The Compensation Committee and management believe that widespread Common Share ownership by key employees is an important means of encouraging superior performance and employee retention. Common Share option grants are considered annually based on competitive multiples of base salary. Senior executives typically have a higher multiple and, as a result, have a greater portion of their total compensation linked to the longer term success of the Company. In determining the appropriate grant multiples, the Company targets the market median among publicly-held oilfield service companies of similar size. Compensation of the Chief Executive Officer The Chief Executive Officer, David M. Demshur, participates in the executive compensation program described above. In establishing the base salary for Mr. Demshur, the Compensation Committee assessed the pay levels for chief executive officers in similar companies in the oilfield service industry and the profit performance of the Company. In August 1997, Mr. Demshur's base salary was increased from $215,000 to $260,000. He also received an annual incentive award of $252,800 based on the performance results achieved by the Company in 1997. The Committee made no discretionary adjustments to this award. Mr. Demshur received 55,000 stock options in 1997. COMPENSATION COMMITTEE Timothy J. Probert James A. Read Stephen D. Weinroth -10- 13 SHAREHOLDER RETURN PERFORMANCE PRESENTATION The following performance graph compares the performance of the Common Shares to the NASDAQ Market Index and the Company's Peer Group (Input/Output Inc., Newpark Resources, Inc., Baker Hughes, Inc. and Varco International Inc.) for the period beginning September 20, 1995 and ending March 31, 1998 (the "New Peer Group"). The Company's previous peer group (the "Old Peer Group") did not include Baker Hughes, but included Production Operators Corp. Production Operators Corp. was acquired in 1997 and as a result, their common stock is no longer publicly traded. The members of the New Peer Group, while not direct competitors to the Company, have one or more attributes which are similar in nature to the Company, such as being a service provider to the international market, having high market share based upon technology innovation or operating within a unique niche. The graph assumes that the value of the investment in the Common Shares and each index was $100 at September 20, 1995 (using the initial public offering price of $6.00 for the Common Shares, after giving effect to the 2 for 1 stock split in December 1997) and that all dividends were reinvested. The Common Shares began trading on the Nasdaq Stock Market in September 1995. Prior to that time there was no market in the Common Shares and, accordingly, five year data is unavailable. COMPARISON OF QUARTERLY CUMULATIVE RETURNS AMONG CORE LABORATORIES N.V., PEER GROUP INDEX AND NASDAQ MARKET INDEX
9/20/95 12/31/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 ------- -------- ------- ------ ------- -------- ------- ------- -------- ------- ------- Core Laboratories N.V. ............. 100.000 100.000 102.083 120.451 129.071 135.421 141.391 187.870 222.485 225.699 260.647 Peer Group ......... 100.000 121.276 127.831 140.246 138.464 143.754 153.900 140.898 172.053 168.693 169.988 Nasdaq Market Index 100.000 104.970 109.770 113.664 116.151 123.925 126.136 143.045 150.065 152.509 168.041
The foregoing stock price performance comparisons shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent that the Company specifically incorporates this graph by reference, and shall not otherwise be deemed filed under such acts. There can be no assurance that the Common Share performance will continue into the future with the same or similar trends depicted in the graph above. The Company will not make or endorse any predictions as to future performance of the Common Shares. ITEM 2. APPROVAL OF ANNUAL ACCOUNTS At the Annual Meeting, the shareholders will be asked to approve the Dutch Statutory Annual Accounts of the Company for the fiscal year ending December 31, 1997 (the "Annual Accounts"), as required under Dutch law and the Articles of Association. In accordance with Article 408 of the Dutch Civil Code, the Annual Accounts are the annual accounts of the Company and its participation and do not represent the consolidated accounts of the Company and all of its subsidiaries as presented in the Consolidated Financial Statements contained in the Annual Report of the Company for the year ending December 31, 1997. The affirmative vote of the holders of a majority of the Common Shares present or represented by proxy and entitled to vote at the Annual Meeting is required to adopt the Annual Accounts. THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADOPTION OF THE ANNUAL ACCOUNTS, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON. -11- 14 ITEM 3. EXTENSION OF AUTHORITY OF MANAGEMENT BOARD TO REPURCHASE SHARES OF THE SHARE CAPITAL OF THE COMPANY UNTIL NOVEMBER 28, 1999 AT A PRICE OF NOT MORE THAN $200.00 PER SHARE Under Dutch law and the current Articles of Association, the Company may, subject to certain Dutch statutory provisions, repurchase up to 10% of the Company's outstanding share capital in open market purchases at any price not to exceed $50.00 or its equivalent in other currencies. Any such purchases are subject to the approval of the Supervisory Board and the authorization of shareholders at the annual meeting of shareholders, which authorization may not continue for more than 18 months. At the 1997 annual meeting of shareholders, the shareholders authorized such repurchases until November 28, 1998. At the Annual Meeting, the shareholders will be asked to approve a further extension of this authority for an additional eighteen-month period from the date of the Annual Meeting until November 28, 1999 and to increase the price at which shares of the Company can be repurchased from $50.00 to $200.00. Since the initial public offering, after giving effect to the 2 for 1 stock split in December 1997, the stock price has more than quadrupled. Thus the Board of Supervisory Directors desires to have the flexibility to repurchase shares if it so chooses if the stock price were to increase above the $50.00 level. The affirmative vote of the holders of a majority of the Common Shares present or represented by proxy and entitled to vote at the Annual Meeting is required to extend the authorization of the Management Board to repurchase up to 10% of the outstanding share capital of the Company for an additional eighteen-month period from the date of the Annual Meeting. THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION OF THE AUTHORITY OF THE MANAGEMENT BOARD TO REPURCHASE UP TO 10% OF THE OUTSTANDING SHARE CAPITAL OF THE COMPANY UNTIL NOVEMBER 28, 1999, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON. ITEM 4. EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO ISSUE SHARES OF THE SHARE CAPITAL OF THE COMPANY UNTIL MAY 28,2003 Under Dutch law and the Articles of Association, the Supervisory Board has the power to issue shares of the Company's share capital if and insofar as the Supervisory Board has been designated at the annual meeting of shareholders as the authorized body for this purpose. A designation of the Supervisory Board to issue shares may be effective for a specified period of up to five years and may be renewed on an annual rolling basis. In connection with the initial public offering of the Common Shares in September 1995, the shareholders authorized the Supervisory Board to issue shares and/or rights on shares for five years. This five-year period was set to expire on August 31, 2000. At the 1997 annual meeting of shareholders, the shareholders extended the designation of the Supervisory Board to issue common and/or preferred shares and/or to grant rights (including options to purchase) on common and/or preferred shares until May 28, 2002. At the Annual Meeting, the shareholders will be asked to approve a further extension of this authority for a five-year period from the date of the Annual Meeting until May 28, 2003. The affirmative vote of the holders of a majority of the Common Shares present or represented by proxy and entitled to vote at the Annual Meeting is required to extend the authority of the Supervisory Board to issue and/or to grant rights (including options to purchase) on common and/or preferred shares of the Company for a five-year period from the date of the Annual Meeting. THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION OF THE AUTHORITY OF THE SUPERVISORY BOARD TO ISSUE AND/OR TO GRANT RIGHTS (INCLUDING OPTIONS TO PURCHASE) ON COMMON AND/OR PREFERRED SHARES OF THE COMPANY UNTIL MAY 28, 2003, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON. -12- 15 ITEM 5. EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO LIMIT OR ELIMINATE PREEMPTIVE RIGHTS UNTIL MAY 28, 2003 Holders of Common Shares (other than employees of the Company and its subsidiaries who are issued Common Shares pursuant to the exercise of options granted under the 1995 Long-Term Incentive Plan or the Nonemployee Director Plan) have a pro rata preemptive right of subscription to any Common Shares issued for cash unless such right is limited or eliminated. Holders of Common Shares have no pro rata preemptive subscription right with respect to any Common Shares issued for consideration other than cash. If designated for this purpose at the annual meeting of shareholders, the Supervisory Board has the power to limit or eliminate such rights. A designation may be effective for up to five years and may be renewed on an annual rolling basis. In connection with the initial public offering of the Common Shares in September 1995, the shareholders authorized the Supervisory Board for a five-year period to limit or eliminate from time to time the preemptive rights of holders of Common Shares. This five-year period was set to expire on August 31, 2000. At the 1997 annual meeting of shareholders, the shareholders extended the authorization of the Supervisory Board until May 28, 2002. At the Annual Meeting, the shareholders will be asked to approve a further extension of this authority for a five-year period from the date of the Annual Meeting until May 28, 2003. The affirmative vote of the holders of a majority of the Common Shares present or represented by proxy and entitled to vote at the Annual Meeting is required to extend the authority of the Supervisory Board to limit or eliminate the preemptive rights of holders of Common Shares for a five-year period from the date of the Annual Meeting. THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION OF THE AUTHORITY OF THE SUPERVISORY BOARD TO LIMIT OR ELIMINATE PREEMPTIVE RIGHTS OF HOLDERS OF COMMON SHARES UNTIL MAY 28, 2003, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON. ITEM 6. APPROVAL OF AN AMENDMENT TO ARTICLES OF ASSOCIATION TO INCREASE AUTHORIZED COMMON SHARES The Board of Supervisory Directors believes that it is desirable for the shareholders to consider and act upon a proposal to amend the Company's Articles of Association. Pursuant to the proposal, the currently authorized common shares, par value $.03 NLG, will be increased from 30,000,000 to 100,000,000 common shares. In December 1997, the Board of Supervisory Directors issued a two-for-one stock split to shareholders of record on December 1, 1997, which resulted in an additional 12,039,803 shares issued to the shareholders. Of the 30,000,000 currently authorized common shares, as of December 31, 1997, 24,703,621 were issued. Of the remaining 5,296,379 authorized common shares, 1,785,000 were reserved for issuance in connection with the Company's stock option plans. Except for shares currently reserved as explained above, the Company does not now have any present plan, understanding or agreement to issue additional shares. However, the Board of Supervisory Directors believes that the proposed increase in authorized common shares is desirable to enhance the Company's flexibility in connection with possible future actions, such as stock splits, stock dividends, corporate mergers and acquisitions, financings, acquisitions of property, use in employee benefit plans, or other corporate purposes. The Board of Supervisory Directors will determine whether, when, and on what terms the issuance of common shares may be warranted in connection with any of the foregoing purposes. If the proposed amendment is approved, all or any of the authorized common shares may be issued without further action by the shareholders and, subject to restrictions imposed by Dutch law, without first offering such shares to the stockholders for subscription. The issuance of common shares otherwise than on a pro-rata basis to all holders of such stock would reduce the proportionate interests of such stockholders. -14- 16 Pursuant to the proposal, the first sentence of Article 4 of the Articles of Association will be amended to read as follows: "The authorized share capital of the company amounts to three million ninety thousand Dutch Guilders (3,090,000-NLG), divided into one hundred million (100,000,000) common shares and three million (3,000,000) preferred shares, each share with a par value of NLG .03 per share." Other than increasing the authorized common shares from 30,000,000 to 100,000,000, the proposed amendment in no way changes the Articles of Association. The Management Board and the Board of Supervisory Directors have unanimously adopted resolutions setting forth the proposed amendment to the Articles of Association, declaring its advisability and directing that the proposed amendment be submitted to the shareholders for their approval at the Annual Meeting on May 28, 1998. The affirmative vote of two-thirds of the votes present or represented by proxy and entitled to vote at the Annual Meeting and representing more than a majority of the issued shares is required to adopt the amendment to the Articles of Association to increase the authorized shares. THE BOARD OF SUPERVISORY DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSAL. ITEM 7. PROPOSAL TO APPROVE AN AMENDMENT TO THE ARTICLES OF ASSOCIATION TO ALLOW FOR DIVIDENDS OTHERWISE THAN IN CASH TO BE AUTHORIZED BY THE BOARD OF SUPERVISORY DIRECTORS The Articles of Association, as currently in effect, require that dividends otherwise than in cash be approved at a general meeting of the shareholders. The Board of Supervisory Directors may in the future desire to issue stock dividends to the shareholders without the time and expense involved in calling a general meeting of the shareholders. To allow for this flexibility, the Management Board and the Board of Supervisory Directors have unanimously adopted resolutions to amend the Articles of Association and directing that the proposed amendment be submitted to the stockholders for their approval at the Annual Meeting. Pursuant to the proposed amendment, Article 25, paragraph 6, would be amended to read as follows: "With due observance of the provisions in paragraph 4 of article 2:105 of the (Dutch) Civil Code and in paragraph 4 of this article, the board of supervisory directors may resolve that an interim dividend shall be paid. The board of supervisory directors may resolve that these interim dividends shall wholly or partly be paid otherwise than in cash." The affirmative vote of two-thirds of the votes present or represented by proxy and entitled to vote at the Annual Meeting and representing more than a majority of the issued shares is required to adopt the amendment to the Articles of Association to allow for dividends otherwise than in cash to be authorized by the Board of Supervisory Directors. THE BOARD OF SUPERVISORY DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSAL. ITEM 8. PROPOSAL TO RATIFY AND APPROVE AN INTERIM DIVIDEND TO SATISFY ANY DEBTS OTHERWISE OWED BY THE SHAREHOLDERS IN CONNECTION WITH THE STOCK SPLIT EFFECTED IN DECEMBER 1997 In November, 1997, the Supervisory Board authorized a 2-for-1 stock split to shareholders of record of the Company on December 16, 1997. Under U.S. law, this action would normally take the effect of a stock dividend to the shareholders. Currently, the Articles of Association provide that a stock dividend may be effected only upon approval by the shareholders at a meeting. As indicated in Item 7 above, the Company is proposing to amend the Articles of -14- 17 Association to delete this requirement under Dutch law. Rather than hold a general meeting, the stock split was effected through the issuance of shares to a subsidiary and a distribution by the subsidiary of common shares to the shareholders. The structure normally would require the shareholders to pay up the par value of the shares. However, this obligation was ratified by Core Labs International B.V. for the shareholders, which technically then allowed such entity to have a claim for the amount of the obligation against the shareholders. These claims were later assigned to the Company. The Supervisory Board has adopted resolutions approving an interim dividend to the shareholders that will be used to offset this claim. Accordingly, no cash will be received by the shareholders by virtue of the dividend and there will be no tax effect on the shareholders. In the future, if the amendment to the Articles of Association are approved as set forth under Item 7, stock dividends may be issued upon approval of the Board of Supervisory Directors without a general meeting. The affirmative vote of two-thirds of the votes present or represented by proxy and entitled to vote at the Annual Meeting and representing more than a majority of the issued shares is required to approve an interim dividend to satisfy any debts otherwise owed by the shareholders in connection with the stock split effected in December 1997. THE BOARD OF SUPERVISORY DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSAL. ITEM 9. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC AUDITORS OF THE COMPANY FOR 1998 The Supervisory Board has appointed the firm of Arthur Andersen LLP as the Company's independent public auditors for the year ending December 31, 1998, subject to ratification by the shareholders. Arthur Andersen LLP has acted as the Company's auditors since inception. Representatives of Arthur Andersen LLP are not expected to be present at the Annual Meeting. The affirmative vote of holders of a majority of the Common Shares present or represented by proxy and entitled to vote at the Annual Meeting is required to ratify the appointment of Arthur Andersen LLP as the Company's independent public auditors for 1998. THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF ARTHUR ANDERSEN LLP'S APPOINTMENT AS THE COMPANY'S INDEPENDENT PUBLIC AUDITORS FOR 1998, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON. ITEM 10. OTHER MATTERS The Supervisory Board does not know of any other matters that are to be presented for action at the Annual Meeting. However, if any other matters properly come before the Annual Meeting or any adjournment(s) thereof, it is intended that the enclosed proxy will be voted in accordance with the judgment of the persons voting the proxy. -15- 18 SHAREHOLDER PROPOSALS Any proposal of a shareholder intended to be presented at the 1999 Annual Meeting of Shareholders must be received at the Company's principal executive offices no later than December 28, 1998 if the proposal is to be considered for inclusion in the Company's proxy statement relating to such meeting. By Order of the Board of Supervisory Directors Jacobus Schouten Supervisory Director Amsterdam, The Netherlands April 30, 1998 -16- 19
CORE LABORATORIES N.V. ANNUAL MEETING TO BE HELD ON 05/29/98 CORE LABORATORIES N.V. FOR HOLDERS AS OF 06/06/97 *ISSUER CONFIRMATION COPY-INFO ONLY* 05/29/97 1341 ITEM(S) [ ]-0001 THIS FORM IS PROVIDED FOR INFORMATIONAL 2375816 SHARE(S) PURPOSES ONLY. PLEASE DO NOT USE IT FOR VOTING PURPOSES. DIRECTORS MARK "X" FOR ONLY ONE BOX CUSIP: N22717107 CONTROL NO. DIRECTORS - --------- DIRECTORS RECOMMENDED: A VOTE FOR ELECTION OF THE FOLLOWING DIRECTORS 1 [ ] FOR ALL NOMINEES 1 - BOB G. AGNEW, JACOBUS SCHOUTEN, JAMES A. READ, JOSEPH R. PERNA, DAVID M. DEMSHUR, TIMOTHY J. PROBERT, RICHARD L. BERGMARK, [ ] WITHHOLD ALL NOMINEES STEPHEN D. WEINROTH. [ ] WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE. WRITE NUMBER(S) OF NOMINEES(S) BELOW. USE NUMBER ONLY_____________________ DIRECTORS PROPOSAL(S) RECOMMEND FOR AGAINST ABSTAIN - ---------- --------- 2 - APPROVAL OF ANNUAL ACCOUNTS. FOR 2 [ ] [ ] [ ] PLEASE INDICATE YOUR PROPOSAL SELECTION BY PLACING AN "X" IN THE APPROPRIATE NUMBERED BOX WITH BLUE OR BLACK INK ONLY. [ X ] 3 - APPROVAL OF EXTENSION OF AUTHORITY OF MANAGEMENT BOARD TO FOR 3 [ ] [ ] [ ] REPURCHASE UP TO 10% OF THE OUTSTANDING SHARE CAPITAL OF THE SEE VOTING INSTRUCTION NO. 3 ON REVERSE COMPANY UNTIL NOVEMBER 28, 1999, AT A PRICE OF NOT MORE THAN [ DO NOT USE ] ACCOUNT NO: $200 PER SHARE. FOR AGAINST ABSTAIN 4 - APPROVAL OF EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO FOR 4 [ ] [ ] [ ] ISSUE AND/OR TO GRANT RIGHTS (INCLUDING OPTIONS TO PURCHASE) ON CUSIP: N22717107 COMMON AND/OR PREFERRED SHARES OF THE COMPANY UNTIL MAY 28, 2002. [ DO NOT USE ] CONTROL NO. [ DO NOT USE ] CLIENT NO: PLACE "X" HERE IF YOU PLAN TO VOTE YOUR SHARES AT THE MEETING [ADP LOGO] FOR AGAINST ABSTAIN 5 - APPROVAL OF EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO LIMIT FOR 5 [ ] [ ] [ ] OR ELIMINATE PREEMPTIVE RIGHTS OF HOLDERS OF COMMON SHARES UNTIL MAY 28, 2003. [ DO NOT USE ] 6 - APPROVAL OF AN AMENDMENT TO THE ARTICLES OF ASSOCIATION, AS FOR 6 [ ] [ ] [ ] AMENDED, TO INCREASE THE AUTHORIZED SHARE CAPITAL OF THE COMPANY 57 MERCEDES WAY FROM 30,000,000 COMMON SHARES TO 100,000,000 COMMON SHARES. EDGEWOOD NV 11217 FOR AGAINST ABSTAIN 7 - APPROVAL OF AN AMENDMENT TO THE ARTICLES OF ASSOCIATION, AS FOR 7 [ ] [ ] [ ] AMENDED, TO PROVIDE THAT DIVIDENDS OTHERWISE THAN IN CASH MAY BE AUTHORIZED BY THE SUPERVISORY BOARD. 8 - APPROVE AN INTERIM DIVIDEND AUTHORIZED BY THE SUPERVISORY BOARD FOR 8 [ ] [ ] [ ] TO SATISFY AMOUNTS OTHERWISE OWED BY THE SHAREHOLDERS UNDER THE LAWS OF THE NETHERLANDS FOR THE STOCK SPLIT EFFECTED IN DECEMBER 1997. [ DO NOT USE ] 9 - RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS FOR 9 [ ] [ ] [ ] INDEPENDENT PUBLIC AUDITORS OF THE COMPANY FOR 1997. *NOTE* SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE [ DO NOT USE ] MEETING OR ANY ADJOURNMENT THEREOF *NOTE* TIME OF MEETING: 10:00 A.M., ROTTERMAN, THE NETHERLANDS [ DO NOT USE ] CORE LABORTORIES N.V. 5295 HOLLISTER ROAD HOUSTON, TX 77048 ATTN: JOHN BENSON [ DO NOT USE ] [ DO NOT USE ] , --------------------------------- ------- --- SIGNATURES: DATE
20 VOTING INSTRUCTIONS TO OUR CLIENTS: WE HAVE BEEN REQUESTED TO FORWARD TO YOU THE ENCLOSED PROXY MATERIAL RELATIVE TO SECURITIES HELD BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. SUCH SECURITIES CAN BE VOTED ONLY BY US AS THE HOLDER OF RECORD. WE SHALL BE PLEASED TO VOTE YOUR SECURITIES IN ACCORDANCE WITH YOUR WISHES, IF YOU WILL EXECUTE THE FORM AND RETURN IT TO US PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE. IT IS UNDERSTOOD THAT IF YOU SIGN WITHOUT OTHERWISE MARKING THE FORM, THE SECURITIES WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS ON ALL MATTERS TO BE CONSIDERED AT THE MEETING. FOR THIS MEETING, THE EXTENT OF OUR AUTHORITY TO VOTE YOUR SECURITIES IN THE ABSENCE OF YOUR INSTRUCTIONS CAN BE DETERMINED BY REFERRING TO THE APPLICABLE VOTING INSTRUCTION NUMBER INDICATED ON THE FACE OF YOUR FORM. VOTING INSTRUCTION NUMBER 1 - WE URGE YOU TO SEND IN YOUR INSTRUCTIONS SO THAT WE MAY VOTE YOUR SECURITIES IN ACCORDANCE WITH YOUR WISHES. HOWEVER, THE RULES OF THE NEW YORK STOCK EXCHANGE PROVIDE THAT IF INSTRUCTIONS ARE NOT RECEIVED FROM YOU PRIOR TO THE ISSUANCE OF THE FIRST VOTE, THE PROXY MAY BE GIVEN AT DISCRETION BY THE HOLDER OF RECORD OF THE SECURITIES (ON THE TENTH DAY, IF THE PROXY MATERIAL WAS MAILED AT LEAST 15 DAYS PRIOR TO THE MEETING DATE. ON THE FIFTEENTH DAY IF PROXY MATERIAL WAS MAILED 25 DAYS OR MORE PRIOR TO THE MEETING DATE). IF YOU ARE UNABLE TO COMMUNICATE WITH US BY SUCH DATE, WE WILL NEVERTHELESS FOLLOW YOUR INSTRUCTIONS, EVEN IF OUR DISCRETIONARY VOTE HAS ALREADY BEEN GIVEN, PROVIDED YOUR INSTRUCTIONS ARE RECEIVED PRIOR TO THE MEETING DATE. VOTING INSTRUCTION NUMBER 2 - WE WISH TO CALL YOUR ATTENTION TO THE FACT THAT UNDER THE RULES OF THE NEW YORK STOCK EXCHANGE. WE CANNOT VOTE YOUR SECURITIES ON ONE OR MORE OF THE MATTERS TO BE ACTED UPON AT THE MEETING WITHOUT YOUR SPECIFIC VOTING INSTRUCTIONS. IF WE DO NOT HEAR FROM YOU PRIOR TO THE ISSUANCE OF THE FIRST VOTE, WE MAY VOTE YOUR SECURITIES IN OUR DISCRETION TO THE EXTENT PERMITTED BY THE RULES OF THE EXCHANGE (ON THE TENTH DAY, IF THE PROXY MATERIAL WAS MAILED AT LEAST 15 DAYS PRIOR TO THE MEETING DATE. ON THE FIFTEENTH DAY IF THE PROXY MATERIAL WAS MAILED 25 DAYS OR MORE PRIOR TO THE MEETING DATE). IF YOU ARE UNABLE TO COMMUNICATE WITH US BY SUCH DATE, WE WILL NEVERTHELESS FOLLOW YOUR VOTING INSTRUCTIONS. EVEN IF OUR DISCRETIONARY VOTE HAS ALREADY BEEN GIVEN, PROVIDED YOUR INSTRUCTIONS ARE RECEIVED PRIOR TO THE MEETING DATE. VOTING INSTRUCTION NUMBER 3 - IN ORDER FOR YOUR SECURITIES TO BE REPRESENTED AT THE MEETING, IT WILL BE NECESSARY FOR US TO HAVE YOUR SPECIFIC VOTING INSTRUCTIONS. PLEASE DATE, SIGN, AND RETURN YOUR VOTING INSTRUCTIONS TO US PROMPTLY IN THE RETURN ENVELOPE PROVIDED. VOTING INSTRUCTION NUMBER 4 REMINDER - WE HAVE PREVIOUSLY SENT YOU PROXY SOLICITING MATERIAL PERTAINING TO THE MEETING OF SHAREHOLDERS OF THE COMPANY INDICATED. ACCORDING TO OUR LATEST RECORDS, WE HAVE NOT AS YET RECEIVED YOUR VOTING INSTRUCTION ON THE MATTERS TO BE CONSIDERED AT THIS MEETING AND THE COMPANY HAS REQUESTED US TO COMMUNICATE WITH YOU IN AN ENDEAVOR TO HAVE YOUR SECURITIES VOTED. THE VOTING INSTRUCTIONS REQUEST PERTAINS TO SECURITIES CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. SUCH SECURITIES CAN BE VOTED ONLY BY US AS THE HOLDER OF RECORD OF THE SECURITIES. PLEASE DATE, SIGN AND RETURN YOUR VOTING INSTRUCTIONS TO US PROMPTLY IN THE RETURN ENVELOPE PROVIDED. - -------------------------------------------------------------------------------- SHOULD YOU WISH TO ATTEND THE MEETING AND VOTE IN PERSON, PLEASE CHECK THE BOX ON THE FRONT OF THE FORM FOR THIS PURPOSE. A LEGAL PROXY COVERING YOUR SECURITIES WILL BE ISSUED TO YOU. Please ensure you fold then detach and retain this portion of the Voting Instruction Form -----END PRIVACY-ENHANCED MESSAGE-----