def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
EXTERRAN HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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EXTERRAN
HOLDINGS, INC.
Dear Fellow Stockholder:
You are invited to attend the 2008 Annual Meeting of
Stockholders of Exterran Holdings, Inc. on May 6, 2008, in
Houston, Texas. Your attendance at the meeting will give you the
opportunity to meet members of our Board of Directors as well as
our senior management team.
The formal notice of the Annual Meeting, Proxy Statement and
form of proxy that follow provide information regarding the
matters to be voted on at the meeting as well as information
regarding other items of interest to our stockholders.
Your vote is important. Regardless of the size of your
stockholdings, we want to see your shares represented at the
Annual Meeting. Please vote your shares by one of the methods
offered and explained in the Proxy Statement and on the enclosed
proxy card. If you have access to the Internet, we urge you to
vote your shares electronically.
As you know, this will be Exterran’s first
stockholders’ meeting. We are the result of the
August 20, 2007 merger between Hanover Compressor Company
and Universal Compression Holdings, Inc. If you are a former
Hanover or Universal stockholder, thank you for your continued
support. If you are new to Exterran, welcome.
We hope to see you at the 2008 Annual Meeting.
Sincerely,
Gordon T. Hall
Chairman of the Board
April 3, 2008
EXTERRAN
HOLDINGS, INC.
NOTICE OF 2008 ANNUAL MEETING
OF STOCKHOLDERS
To the Stockholders of Exterran Holdings, Inc.:
The 2008 Annual Meeting of Stockholders of Exterran Holdings,
Inc., a Delaware corporation, will be held at 9:00 a.m.
local time on Tuesday, May 6, 2008, at the Wyndham Hotel,
12400 Greenspoint Drive, Houston, Texas 77060, for the following
purposes:
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to elect nine directors to serve until the next Annual Meeting
of Stockholders or until their successors are duly elected and
qualified;
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to ratify the appointment of Deloitte & Touche LLP as
Exterran Holdings, Inc.’s independent registered public
accounting firm for fiscal year 2008; and
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to transact such other business as may properly come before the
meeting.
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The Board of Directors has set the close of business on
March 18, 2008, as the record date for determining the
stockholders who are entitled to notice of and to vote at the
meeting and at any postponement or adjournment of the meeting.
We encourage you to sign and return your proxy card, use the
telephone or Internet voting procedures or attend the meeting in
person so that your shares are represented.
By Order of the Board of Directors,
Donald C. Wayne
Secretary
Houston, Texas
April 3, 2008
2008
PROXY STATEMENT
TABLE OF
CONTENTS
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i
EXTERRAN
HOLDINGS, INC.
4444 Brittmoore
Road
Houston, Texas 77041
PROXY STATEMENT FOR 2008 ANNUAL
MEETING OF STOCKHOLDERS
MAY 6, 2008
GENERAL
INFORMATION
The Board of Directors has sent these proxy materials to you to
solicit your vote at the 2008 Annual Meeting of Stockholders
(the “2008 Stockholders’ Meeting”). The meeting
will begin promptly at 9:00 a.m. local time on Tuesday,
May 6, 2008, at the Wyndham Hotel, 12400 Greenspoint Drive,
Houston, Texas 77060. This Proxy Statement and form of proxy are
first being mailed to stockholders on or about April 3,
2008, and are accompanied by our 2007 Annual Report. Exterran
Holdings, Inc., a Delaware corporation, is also referred to in
this Proxy Statement as “we,” “us,”
“our,” “Exterran” or the “Company.”
Agenda
The 2008 Stockholders’ Meeting will be held for the
following purposes:
1. to elect nine directors to serve until the next annual
meeting of stockholders or until their successors are duly
elected and qualified;
2. to ratify the appointment of Deloitte & Touche
LLP as Exterran’s independent registered public accounting
firm for fiscal year 2008; and
3. to transact such other business as may properly come
before the meeting.
All of these items are discussed in more detail in this Proxy
Statement.
Stockholders
Entitled to Vote
Owners of Exterran’s common stock, $0.01 par value per
share (the “Common Stock”), as of the close of
business on March 18, 2008, are entitled to notice of and
to vote at the 2008 Stockholders’ Meeting. At the close of
business on March 18, 2008, there were
65,338,595 shares of Common Stock issued and outstanding.
Each share of Common Stock entitles the holder to one vote on
all matters submitted to a vote at the 2008 Stockholders’
Meeting and any adjournment or postponement of the meeting. A
complete list of the stockholders entitled to vote will be
available for examination at the meeting and for at least
10 days prior to the meeting at the principal executive
offices of Exterran Holdings, Inc., 4444 Brittmoore Road,
Houston, Texas 77041.
Quorum
and Required Votes
A quorum of stockholders is necessary for a valid meeting. The
presence in person or by proxy of the holders of a majority of
the outstanding shares of our Common Stock will constitute a
quorum for the 2008 Stockholders’ Meeting. Under our
Amended and Restated Bylaws and under Delaware law, abstentions
and “broker non-votes” are counted as present in
determining whether the quorum requirement is satisfied. A
“broker non-vote” occurs when a broker holding shares
for a beneficial owner does not vote on a particular proposal
because the broker does not have discretionary voting power for
that proposal and has not received instructions from the
beneficial owner. Under the current rules of the New York Stock
Exchange (“NYSE”), if you hold your shares through a
bank or broker, your broker is permitted to vote your shares on
the election of directors and ratification of our independent
registered public accounting firm even if the broker has not
received instructions from you.
The table below shows the vote required to approve each of the
proposals described in this Proxy Statement.
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Proposal
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Required Vote
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Proposal 1 — Election of nine members to the
Board of Directors
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A plurality of the votes present in person or by proxy and
entitled to vote is required to elect each director nominee;
however, our Corporate Governance Principles require that any
nominee who receives a greater number of “withheld”
votes than “for” votes must submit his or her
resignation for consideration by our Board of Directors.
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Proposal 2 — Ratification of the appointment of
Deloitte & Touche LLP as the Company’s
independent registered public accounting firm for fiscal year
2008
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Ratification requires the affirmative vote of a majority of the
shares of voting stock represented at the meeting. Abstentions
will be treated as votes cast and will have the same effect as a
vote against the proposal.
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For any other matters that may be properly presented for
consideration at the 2008 Stockholders’ Meeting, the
persons named as proxies will have discretion to vote on those
matters according to their best judgment to the same extent as
the person delivering the proxy would be entitled to vote. As of
the date of this Proxy Statement, we do not anticipate that any
other matters will be properly presented for consideration at
the 2008 Stockholders’ Meeting.
401(k)
Holdings
Shares of our Common Stock held through the Exterran Holdings,
Inc. Retirement and Savings Plan will be voted by the plan
participant as though such participant was a registered holder
with respect to such shares of Common Stock allocated to the
participant’s plan account.
How to
Vote Your Proxy
Because many stockholders cannot attend the 2008
Stockholders’ Meeting in person, it is necessary that a
large number of stockholders be represented by proxy. You can
vote your proxy by one of the following three methods:
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over the Internet,
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by calling a toll-free telephone number, or
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by completing the enclosed proxy card and mailing it in the
postage-paid envelope provided in these materials.
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You may receive more than one proxy card, depending on how you
hold your shares. You should complete and return each proxy
provided to you. Please refer to your proxy card or the
information forwarded by your bank, broker or other nominee to
determine which options are available for voting the proxy. The
internet and telephone voting procedures are designed to
authenticate stockholders by use of a control number and to
allow you to confirm that your instructions have been properly
recorded.
Revocation
of a Proxy
A proxy may be revoked at any time before it is voted by sending
written notice of revocation to our Corporate Secretary, by
delivering a later dated proxy (by one of the methods described
above) or by voting in person at the meeting. The Corporate
Secretary may be contacted at the following address: Exterran
Holdings, Inc., 4444 Brittmoore Road, Houston, Texas 77041,
Attention: Corporate Secretary.
Proxy
Solicitation
This solicitation is made on behalf of the Board of Directors.
We will pay the cost of soliciting proxies. Proxies are being
solicited by mail and may be solicited by telephone, telegram,
facsimile, or in person by our employees, who will not receive
additional compensation for any such solicitation. We will also
request brokers and other
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fiduciaries to forward proxy soliciting materials to the
beneficial owners of shares of our Common Stock that are held of
record by such brokers and fiduciaries, and we will reimburse
their reasonable out-of-pocket expenses.
PROPOSAL 1
ELECTION OF DIRECTORS
Nine directors are nominated to be elected to the Board of
Directors at the 2008 Stockholders’ Meeting, to hold office
until our next annual meeting of stockholders or until their
respective successors are duly elected and qualified. Each
nominee has consented to serve as a director if elected.
Nominees
for Director
Information concerning the name, age and background of each of
the nominees for election to the Board of Directors is set forth
below. Ages are stated as of March 18, 2008. The nominees
listed below previously served as directors of Hanover
Compressor Company (“Hanover”) or Universal
Compression Holdings, Inc. (“Universal”) and were
appointed to the Board of Directors of Exterran on
August 20, 2007, the effective date of a series of mergers
among Hanover, Universal and certain of its subsidiaries that
resulted in Hanover and Universal becoming wholly owned
subsidiaries of Exterran.
Janet F. Clark, 53, became a director of Universal in
January 2003. Ms. Clark was appointed Executive Vice
President and Chief Financial Officer of Marathon Oil Company
(an international energy company) in January 2007, having served
as Senior Vice President and Chief Financial Officer since
January 2004. Prior to joining Marathon Oil, Ms. Clark
served as Senior Vice President and Chief Financial Officer of
Nuevo Energy Company (a natural gas and oil exploration company)
from December 2001 through December 2003, and as Executive Vice
President, Corporate Development and Administration, and Senior
Vice President and Chief Financial Officer of Santa Fe
Snyder Corporation (subsequently merged into Devon Energy
Corporation) and its predecessor, Santa Fe Energy
Resources, Inc., from 1997 through 2000. Ms. Clark serves
on the board of several non-profit organizations.
Ernie L. Danner, 53, became a director of Universal upon
the consummation of Universal’s acquisition of Tidewater
Compression Service, Inc. in 1998. Mr. Danner served in
various positions of increasing responsibility at Universal from
1998 until 2007, including as an Executive Vice President of
Universal from February 1998 to 2007 and Chief Operating
Officer from July 2006 to August 2007. Prior to joining
Universal, Mr. Danner served as Chief Financial Officer and
Senior Vice President of MidCon Corp. (an interstate pipeline
company and a wholly-owned subsidiary of Occidental Petroleum
Corporation). Mr. Danner is a director of Exterran GP LLC,
the ultimate general partner of Exterran Partners, L.P. (a
master limited partnership which is 51% owned by Exterran).
Mr. Danner is also a director of Copano Energy, LLC (a
midstream natural gas company) and Horizon Lines, LLC (a Jones
Act shipping company), and he serves on the Board of Trustees of
the John Cooper School in The Woodlands, Texas.
Uriel E. Dutton, 77, became a director of Universal in
February 2001 as a designee of WEUS Holding, Inc. following
Universal’s acquisition of Weatherford Global Compression
Services, L.P. Mr. Dutton has been counsel to and a partner
with the law firm of Fulbright & Jaworski L.L.P. for
over 50 years, where his practice focuses on real estate
and oil and gas matters. Mr. Dutton also serves as director
and Vice President of the M.D. Anderson Foundation (a charitable
organization).
Gordon T. Hall, 48, became a director of Hanover in March
2002 and Chairman of the Board in May 2005. Prior to his
election as a director, Mr. Hall was a Managing Director at
Credit Suisse First Boston (a brokerage services and investment
banking firm). While at Credit Suisse First Boston,
Mr. Hall served as Senior Oil Field Services Analyst and
Co-Head of the Global Energy Group. Mr. Hall joined the
First Boston Corporation in 1987 as a technology analyst.
Mr. Hall was a director of Hydril Company (a manufacturer
of pressure control products for the oil and gas industry) until
its merger with Tenaris S.A. in May 2007 and is currently a
director of Grant Prideco, Inc. (a drill technology and
manufacturing company). Mr. Hall also serves as a director
of several non-profit organizations.
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J.W.G. “Will” Honeybourne, 57, became a
director of Universal in April 2006. Mr. Honeybourne has
been Managing Director of First Reserve Corporation (a private
equity firm) since January 1999, where he is responsible for
deal origination, investment structuring and monitoring,
focusing on the energy services and manufacturing sectors and
international markets. Prior to joining First Reserve,
Mr. Honeybourne served as Senior Vice President of Western
Atlas International (a seismic and wireline-logging company).
Mr. Honeybourne currently serves as a director of Acteon
Group (a U.K.-based offshore and subsea services company), Red
Technology Alliance (a First Reserve joint venture with
Halliburton) and Abbott Group (a U.K.-based drilling company).
John E. Jackson, 49, became a director of Hanover in July
2004 and served as Hanover’s President and Chief Executive
Officer from October 2004 to August 2007, having joined Hanover
in January 2002 as Senior Vice President and Chief Financial
Officer. Mr. Jackson was named Chairman, Chief Executive
Officer and President of Price Gregory Services, Inc. (a
pipeline-related infrastructure service provider in North
America) in February 2008. Mr. Jackson joined Duke Energy
Field Services (a producer and marketer of natural gas liquids)
in 1999 and served as Vice President and Chief Financial
Officer. Prior to joining Duke Energy Field Services,
Mr. Jackson held a variety of treasury, controller and
accounting positions at Union Pacific Resources (an oil and gas
exploration and production company). Mr. Jackson is
currently a director of Seitel Inc. (a provider of seismic data
and geophysical expertise) and Encore Energy Partners GP LLC
(the general partner of Encore Energy Partners, L.P., an oil and
gas exploration and production partnership) and serves on the
board of a non-profit organization.
William C. Pate, 44, became a director of Hanover in
January 2007. Mr. Pate is Chief Investment Officer and a
Managing Director of Equity Group Investments, L.L.C., or EGI (a
private investment firm), and serves as a member of the board of
directors of certain private affiliates of EGI. Prior to joining
EGI in 1994, Mr. Pate was an associate with The Blackstone
Group (a global asset management and advisory services firm) and
served in the mergers and acquisitions group of Credit Suisse
First Boston (a brokerage services and investment banking
provider). Mr. Pate also serves as a director of Covanta
Holding Corporation (an owner and operator of energy-from-waste
and power generation projects).
Stephen M. Pazuk, 64, became a director of Hanover in
February 2004. Mr. Pazuk is the Chief Financial Officer and
Treasurer of Drive Thru Technology, Inc. (a provider of
computer-based surveillance equipment, systems and monitoring),
a position he has held since 2000. He has also been involved in
venture capital investments and real estate development in
Boston, Massachusetts, and Fresno and Clovis, California, since
his retirement as Senior Vice President, Treasurer and Partner
of Wellington Management Company, LLP (a global investment
advisor) in June 2000. Mr. Pazuk started his career with
Wellington in 1968 and held various positions during his tenure,
including Treasurer of Wellington Trust Company NA and
President of Wellington Sales Company. Mr. Pazuk currently
serves on the boards of several privately held companies.
Stephen A. Snider, 60, became President, Chief Executive
Officer and director of Universal upon the consummation of
Universal’s Tidewater Compression Services, Inc.
acquisition in 1998, and was appointed as Chairman of
Universal’s Board of Directors in April 2006. He has over
26 years of experience in senior management of operating
companies. Mr. Snider also serves as President, Chief
Executive Officer and director of Exterran GP LLC.
Mr. Snider is on the board of directors of Energen
Corporation (a diversified energy company focusing on natural
gas distribution and oil and gas exploration and production) and
the Memorial Hermann Hospital System and serves as an officer
and director of certain majority-owned subsidiaries of Exterran.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE
FOR
THE ELECTION OF EACH OF THE NOMINEES TO THE BOARD OF
DIRECTORS.
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INFORMATION
REGARDING CORPORATE GOVERNANCE, THE BOARD OF
DIRECTORS AND COMMITTEES OF THE BOARD
Governance
The Board of Directors has designated an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance
Committee to assist in the discharge of the Board’s
responsibilities. Members of each committee are elected by the
Board at its first meeting following the annual meeting of
stockholders and serve for one-year terms. The Board and the
committees of the Board are governed by our Code of Business
Conduct, Corporate Governance Principles and committee charters,
which are reviewed by the Board annually and are available to
the public on our website at www.exterran.com or in print
by submitting a written request to Exterran Holdings, Inc., 4444
Brittmoore Road, Houston, Texas 77041, Attention: Corporate
Secretary.
Director
Independence
Exterran’s Code of Business Conduct requires all employees,
officers and non-employee directors to avoid situations that may
impact their ability to carry out their duties in an independent
and objective fashion. Any circumstances that have the potential
to compromise their ability to perform independently must be
disclosed. This policy is made available to all employees. In
addition, Exterran distributes director and officer
questionnaires at least annually to elicit related party
information. The questionnaire requires that responses be
updated to the extent circumstances change.
The Nominating and Corporate Governance Committee assesses
director independence each year by considering all direct or
indirect business relationships between Exterran and each
director (including his or her immediate family), as well as
relationships with other for-profit concerns and charitable
organizations. With the Nominating and Corporate Governance
Committee’s recommendation, the Board makes a determination
relating to the independence of its members, which is based on
applicable laws, regulations, Exterran’s Corporate
Governance Principles and the rules of the NYSE.
During the Nominating and Corporate Governance Committee’s
most recent review of independence, the Committee was provided
information regarding transactions with any related parties as
determined through a search of our accounting records as well as
the responses to the director and officer questionnaires; as a
result, the relationships described in this Proxy Statement
under the section titled “Certain Relationships and Related
Transactions” were reviewed by the Nominating and Corporate
Governance Committee.
Based on the recommendation of the Nominating and Corporate
Governance Committee, the Board determined that the following
directors are independent: Ms. Clark and
Messrs. Dutton, Hall, Honeybourne, Pate and Pazuk.
Mr. Snider is not independent by virtue of his role as
President and Chief Executive Officer of Exterran,
Mr. Jackson is not independent by virtue of his former role
as an executive of Hanover, and Mr. Danner is not
independent by virtue of his former role as an executive of
Universal and his entry into a consulting agreement with
Exterran from August 2007 through February 2008, as further
described in the section titled “— Transactions
with Directors” on page 41 of this Proxy Statement.
Executive
Sessions of the Board
Mr. Hall serves as Chairman of the Board and presides over
the executive sessions of the Board, which are attended by
non-management directors only and are held at every regularly
scheduled Board meeting. The Board also holds at least one
executive session each year in which only the independent
members of the Board participate.
Communication
with the Board
Stockholders may communicate with the entire Board or any
individual member of the Board by writing to us at the following
address: Exterran Holdings, Inc., 4444 Brittmoore Road, Houston,
Texas 77041, Attention: Corporate Secretary. All written
inquiries will be immediately forwarded to the Chairman of the
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Board. In addition, any concern or inquiry may be communicated
to the Audit Committee or the Board by calling our hotline at
1-800-281-5439
(within the U.S.) or 1-832-554-4859 (outside the U.S.).
Committees
of the Board
Audit
Committee
Purpose. The Audit Committee has been
appointed by the Board to assist the Board in its oversight of
the integrity of our financial statements, our compliance with
legal and regulatory requirements, the independence,
qualifications and performance of the independent auditor, the
performance of our internal audit function and the independent
auditor and our systems of disclosure controls and procedures
and internal controls over financial reporting. The Audit
Committee operates under a Board-approved written charter, a
copy of which is available as indicated in the section titled
“Governance” above.
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Members.
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Janet F. Clark (Chair)
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Gordon T. Hall
William C. Pate
The Board has determined that each member of the Audit Committee
is independent and possesses the requisite financial literacy to
serve on the Audit Committee. The Board has also determined that
each member qualifies as an “audit committee financial
expert” as that term is defined by the Securities and
Exchange Commission (the “SEC”). No member of the
Audit Committee serves on the audit committee of more than two
other public companies. The Report of the Audit Committee is
included in this Proxy Statement on page 15.
Compensation
Committee
Purpose. The Compensation Committee has been
appointed by the Board to oversee the development and
implementation of our compensation philosophy and strategy with
the goals of attracting the executive talent required to achieve
corporate objectives and linking pay and performance. The
Compensation Committee operates under a Board-approved written
charter, a copy of which is available as indicated in the
section titled “Governance” above.
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Members.
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J.W.G. (“Will”) Honeybourne
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William C. Pate
Stephen M. Pazuk (Chair)
The Board has determined that each member of the Compensation
Committee is independent. The Report of the Compensation
Committee is included in this Proxy Statement on page 16.
Nominating
and Corporate Governance Committee
Purpose. The Nominating and Corporate
Governance Committee has been appointed by the Board to identify
qualified individuals to become Board members, determine whether
existing Board members should be nominated for re-election,
review the composition of the Board and its committees, oversee
the evaluation of the Board and review and implement our
Corporate Governance Principles. The Nominating and Corporate
Governance Committee operates under a Board-approved written
charter, a copy of which is available as indicated in the
section titled “Governance” above.
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Members.
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Uriel E. Dutton (Chair)
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Gordon T. Hall
J.W.G. (“Will”) Honeybourne
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The Board has determined that each member of the Nominating and
Corporate Governance Committee is independent.
Attendance
at Meetings
Since we became a publicly traded company on August 20,
2007, the Board and its committees held the following number of
meetings and acted by unanimous written consent the following
number of times during the remainder of 2007:
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Board
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Board Action by Unanimous Written Consent
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2
|
|
Audit Committee
|
|
|
3
|
|
Compensation Committee
|
|
|
2
|
|
Compensation Committee Action by Unanimous Written Consent
|
|
|
2
|
|
Nominating and Corporate Governance Committee
|
|
|
1
|
|
Nominating and Corporate Governance Committee Action by
Unanimous Written Consent
|
|
|
1
|
|
We expect members of the Board to attend all meetings. All
directors standing for re-election attended 100% of the meetings
of the Board and Board committees on which they served since
August 20, 2007. Directors are also encouraged to attend
the annual meeting of stockholders.
Compensation
of Directors
Cash Compensation. On August 20, 2007,
the Compensation Committee recommended and the Board approved
remuneration for non-employee members of the Board that was
composed of cash and equity. Each director (other than
Messrs. Snider and Hall) receives a cash retainer in the
annual amount of $30,000 (payable in four equal quarterly
installments). Directors are reimbursed for expenses incurred
for attendance at the meetings of the Board and its committees.
The chairs of the Audit Committee and Compensation Committee
each receive an annual retainer of $15,000 (payable in four
equal quarterly installments) and the chair of the Nominating
and Corporate Governance Committee receives an annual retainer
of $10,000 (payable in four equal quarterly installments). Each
director (other than Messrs. Snider and Hall) also receives
$1,500 per meeting attended.
Mr. Hall receives a retainer of $150,000 per year (payable
in four equal quarterly installments) for his services as a
director and Chairman of the Board.
Equity-Based Compensation. It is anticipated
that each non-employee director will receive an annual equity
grant beginning in 2008. The Compensation Committee chose not to
provide an equity grant during 2007, except as follows:
|
|
|
|
•
|
on August 20, 2007, the Compensation Committee approved the
grant of 1,400 non-qualified stock options to
Mr. Danner; and
|
|
|
•
|
on October 1, 2007, the Compensation Committee approved the
grant of 900 non-qualified stock options to Mr. Jackson.
|
The Compensation Committee determined to grant equity awards
only to Messrs. Danner and Jackson in 2007, because neither
of them received an annual equity grant prior to the merger in
his capacity as an executive of Universal and Hanover,
respectively. The number of options awarded to
Messrs. Danner and Jackson was based on a pro-ration of an
annual grant value of $125,000 (with an assumed option value as
a percentage of face value and rounded to the nearest 100
options). The stock options vest on the one-year anniversary of
the date of grant.
7
Director Stock and Deferral Plan. Pursuant to
Exterran’s Director Stock and Deferral Plan, directors may
elect to receive all or a portion of their cash remuneration in
the form of our Common Stock. In addition, for 2008, the
directors were provided the opportunity to defer their cash
remuneration under the plan.
Total Compensation. Set forth below is a
summary of the total compensation attributable to each
non-employee director’s service to Exterran during 2007,
which commenced on August 20, 2007.
Total
Non-Employee Director Compensation — 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation(1)
|
|
|
Long Term Incentive Awards
|
|
|
|
|
|
|
Board
|
|
|
Committee
|
|
|
Meeting
|
|
|
Stock
|
|
|
Restricted
|
|
|
|
|
|
|
Retainer
|
|
|
Chair Retainer
|
|
|
Fees
|
|
|
Options(2)
|
|
|
Stock(3)
|
|
|
Total
|
|
|
Janet F. Clark
|
|
$
|
10,842
|
|
|
$
|
5,421
|
|
|
$
|
7,500
|
|
|
$
|
35,475
|
|
|
|
—
|
|
|
|
59,238
|
|
Ernie L. Danner
|
|
|
10,842
|
|
|
|
|
|
|
|
4,500
|
|
|
|
12,284
|
|
|
|
—
|
|
|
|
27,626
|
|
Uriel E. Dutton
|
|
|
10,842
|
|
|
|
3,614
|
|
|
|
4,500
|
|
|
|
35,475
|
|
|
|
—
|
|
|
|
54,431
|
|
Gordon T. Hall
|
|
|
54,212
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
75,659
|
|
|
|
129,871
|
|
J. W. G. Honeybourne
|
|
|
10,842
|
|
|
|
|
|
|
|
6,000
|
|
|
|
35,475
|
|
|
|
—
|
|
|
|
52,317
|
|
John E. Jackson
|
|
|
10,842
|
|
|
|
|
|
|
|
4,500
|
|
|
|
8,270
|
|
|
|
—
|
|
|
|
23,612
|
|
William C. Pate
|
|
|
10,842
|
|
|
|
|
|
|
|
9,000
|
|
|
|
—
|
|
|
|
12,834
|
|
|
|
32,676
|
|
Stephen M. Pazuk
|
|
|
10,842
|
|
|
|
5,421
|
|
|
|
6,000
|
|
|
|
—
|
|
|
|
12,834
|
|
|
|
35,097
|
|
|
|
|
(1) |
|
Retainers and meeting fees reflect Board of Director service
from August 20, 2007 through December 31, 2007. |
|
(2) |
|
The amounts shown are based on the compensation cost we
recognize as described in SFAS 123R relating to stock
options awarded by Universal or Exterran. The actual value of
stock options ultimately realized by each director is dependent
on fluctuations in the market price of our Common Stock. |
|
(3) |
|
The amounts shown are based on the compensation cost we
recognize as described in SFAS 123R relating to restricted
stock awarded by Hanover. The actual value of restricted stock
ultimately realized by each director will vary based on
fluctuations in the market price of our Common Stock. |
Director
Qualifications and Nominations
Stockholders may propose director nominees to the Nominating and
Corporate Governance Committee (for consideration for election
at the 2009 Annual Meeting of Stockholders) by submitting,
within the time frame set forth in this Proxy Statement on
page 46, the names and supporting information (including
confirmation of the nominee’s willingness to serve as a
director) to: Exterran Holdings, Inc., 4444 Brittmoore Road,
Houston, Texas 77041, Attention: Corporate Secretary.
Any stockholder-recommended nominee will be evaluated in the
context of our director qualification standards and the existing
size and composition of the Board. The Nominating and Corporate
Governance Committee believes that all Board candidates should
be selected for their character, judgment, ethics, integrity,
business experience, time commitment and acumen. The Board, as a
whole, through its individual members, seeks to have competence
in areas of particular importance to us such as finance,
accounting, international business and relevant technical
expertise. Directors must be committed to enhancing the
long-term interests of our stockholders as a whole and should
not be biased toward the interests of any particular segment of
the stockholder or employee population. Board members should
also be prepared to travel to personally attend meetings of the
Board and its committees and should be ready to dedicate
sufficient time to prepare in advance of such meetings to allow
them to make an effective contribution to the meetings. Further,
Board members should ensure that they are not otherwise
committed to other activities which would make a commitment to
Exterran’s Board impractical or unadvisable and should
satisfy the independence, qualification and composition
requirements of the Board and its committees, as required by law
or the rules of the NYSE, our certificate of incorporation and
bylaws and our Corporate Governance Principles.
8
Compensation
Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Board of
Directors during the last completed fiscal year were
Messrs. Honeybourne, Pate and Pazuk. There are no matters
relating to interlocks or insider participation that we are
required to report.
EXECUTIVE
OFFICERS
The following provides information regarding our executive
officers as of March 18, 2008. All officers were elected by
the Board on August 20, 2007. Certain of our executive
officers also serve as officers of Exterran GP LLC, the ultimate
general partner of Exterran Partners, L.P., a master limited
partnership which is 51% owned by Exterran and its wholly owned
subsidiaries. Information concerning the business experience of
Mr. Snider is provided under the Section titled
“— Nominees for Director” on page 4 of
this Proxy Statement.
J. Michael Anderson, 45, is Senior Vice President
and Chief Financial Officer. He also serves as Senior Vice
President and director of Exterran GP LLC, positions he has held
since June 2006 and October 2006, respectively. Prior to the
merger of Hanover and Universal, Mr. Anderson was Senior
Vice President and Chief Financial Officer of Universal, a
position he assumed in March 2003. Mr. Anderson held
various positions with Azurix Corp. (a water and wastewater
utility and services company), including, and primarily as,
Chief Financial Officer and later as Chairman and Chief
Executive Officer. Prior to that time, he spent ten years in the
Global Investment Banking Group of J.P. Morgan
Chase & Co., where he specialized in merger and
acquisitions advisory services. Mr. Anderson also serves as
an officer and director of certain other Exterran majority-owned
subsidiaries.
Kenneth R. Bickett, 46, is Vice President and Controller.
He also serves as Vice President and Controller of Exterran GP
LLC, a position he has held since June 2006. Prior to the merger
of Hanover and Universal and since July 2005, Mr. Bickett
served as Vice President, Accounting and Corporate Controller of
Universal. Mr. Bickett previously served as Vice President
and Assistant Controller for Reliant Energy, Inc. (an
electricity and energy services provider). Prior to joining
Reliant Energy in 2002, Mr. Bickett was employed by Azurix
Corp. since 1998, most recently as Vice President and
Controller. Mr. Bickett also serves as an officer of
certain other Exterran majority-owned subsidiaries.
D. Bradley Childers, 43, is Senior Vice President.
He also serves as Senior Vice President of Exterran GP LLC, a
position he has held since June 2006, and as President, North
America of Exterran Energy Solutions, L.P., a position he has
held since March 2008. From August 2007 through March 2008,
Mr. Childers served as Exterran’s Senior Vice
President, Corporate Development. Prior to the merger of Hanover
and Universal, Mr. Childers was Senior Vice President of
Universal and President of the International Division of
Universal Compression, Inc., Universal’s wholly owned
subsidiary, positions he held since July 2006. Previously, he
served as Senior Vice President, Business Development, General
Counsel and Secretary of Universal beginning in April 2005 and
as Senior Vice President, General Counsel and Secretary of
Universal beginning in September 2002. Prior to joining
Universal, he held various positions with Occidental Petroleum
Corporation and its subsidiaries (an international oil and gas
exploration and production company) from 1994 to 2002, including
Vice President, Business Development at Occidental Oil and Gas
Corporation and corporate counsel. Mr. Childers also serves
as an officer and director of certain other Exterran
majority-owned subsidiaries.
Brian A. Matusek, 49, is Senior Vice President and Chief
Operating Officer. He also serves as Senior Vice President and
director of Exterran GP LLC, a position he has held since
October 2007. Prior to the merger of Hanover and Universal,
Mr. Matusek was Senior Vice President, Western Hemisphere
of Hanover, a position he assumed in July 2006, having served as
Senior Vice President, U.S. and Global Services since May
2005. He joined Hanover in August 2003 and had previously served
as Vice President of Marketing, Product Development &
Domestic Sales and Vice President of Marketing and Strategic
Development. Prior to joining Hanover, Mr. Matusek served
in various senior managerial roles with Schlumberger (an
oilfield services company), from 1998 through 2003, including
leadership roles in Schlumberger’s compression systems and
9
artificial lift product lines. Before joining Schlumberger as
part of its purchase of Camco International, Inc. (a provider of
oilfield equipment and services for applications in oil and gas
drilling, completion and production), he served as Vice
President, International Business of Camco. Mr. Matusek
also serves as an officer and director of certain other Exterran
majority-owned subsidiaries.
Steven W. Muck, 55, is Senior Vice President, Global
Human Resources. Prior to the merger of Hanover and Universal,
Mr. Muck served as Vice President, Global Human Resources
and Health, Safety and Environment of Hanover since July 2006,
having served as Vice President, Latin America since May 2005.
Mr. Muck joined Hanover in 2000 as Vice President,
International Operations. From 1997 to 2000, Mr. Muck
served as Vice President of Worldwide Operations of Dresser-Rand
Compressor Services (a provider of equipment to the oil, gas and
chemical industries). In addition, Mr. Muck held positions
in sales, marketing and operations with Dresser-Rand and its
predecessor, Ingersoll Rand, from 1975 to 1997. Mr. Muck
also serves as an officer of certain other Exterran
majority-owned subsidiaries.
Daniel A. Newman, 51, is Senior Vice President,
Manufacturing and Supply Chain. Prior to the merger of Hanover
and Universal, Mr. Newman served as Vice President,
Manufacturing and Global Services of Hanover since January 2006,
having served as Director Global Services since May 2005.
Mr. Newman joined Hanover in June 2004 as Director Global
Engineering. Prior to joining Hanover, he served as Vice
President of the Central U.S. Division of Halliburton (an
energy service provider and construction company, including well
logging, well completion and reservoir engineering).
Mr. Newman began his career as a manufacturing engineer
with Halliburton and held a variety of positions with the
company, including Research and Development Engineer, Product
Scheduling Manager for the U.S., Manufacturing Engineering
Manager, Global Manufacturing Technology Manager and Vice
President, Global Shared Services. Mr. Newman also serves
as an officer and director of certain other Exterran
majority-owned subsidiaries.
Daniel K. Schlanger, 34, is Senior Vice President. He
also serves Exterran GP LLC as Senior Vice President and Chief
Financial Officer, positions he has held since June 2006, and as
a director, a position he has held since October 2006. Prior to
the merger of Hanover and Universal and since May 2006,
Mr. Schlanger served as Vice President, Corporate
Development of Universal Compression, Inc. (a wholly owned
subsidiary of Universal). From August 1996 through May 2006,
Mr. Schlanger was employed as an investment banker with
Merrill Lynch & Co. where he focused on the energy
sector.
Donald C. Wayne, 41, is Senior Vice President, General
Counsel and Secretary. He also serves as Vice President, General
Counsel and Secretary of Exterran GP LLC, a position he has held
since August 2006. Prior to the merger of Hanover and Universal,
Mr. Wayne served as Vice President, General Counsel and
Secretary of Universal, a position he held since joining
Universal in August 2006. Prior to joining Universal, he served
as Vice President, General Counsel and Secretary of
U.S. Concrete, Inc. (a producer of ready-mixed concrete and
concrete-related products) from 1999 to August 2006. Prior to
joining U.S. Concrete in 1999, Mr. Wayne served as an
attorney with the law firm of Akin, Gump, Strauss,
Hauer & Feld, L.L.P. Mr. Wayne also serves as an
officer and director of certain other Exterran majority-owned
subsidiaries.
10
BENEFICIAL
OWNERSHIP OF COMMON STOCK
5%
Stockholders
The following table provides information about beneficial
owners, known by us as of March 18, 2008, of more than 5%
of the outstanding Common Stock (the “5%
Stockholders”). Unless otherwise noted in the footnotes to
the table, the 5% Stockholders named in the table have sole
voting and investment power with respect to all shares shown as
beneficially owned by them. This information is based upon
statements that have been filed with the SEC pursuant to
Section 13(d) or Section 13(g) under the Securities
Exchange Act of 1934.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Approximate
|
Name and Address of Beneficial Owner
|
|
Beneficially Owned
|
|
Percent of Class
|
|
Barclay’s Global Investors, NA
|
|
|
3,339,318
|
(1)
|
|
|
5.1
|
%
|
45 Fremont Street
San Francisco, CA 94105
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP
|
|
|
3,471,783
|
(2)
|
|
|
5.3
|
%
|
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
|
|
|
|
|
|
|
|
|
EGI-HC, L.L.C.
|
|
|
4,386,249
|
(3)
|
|
|
6.7
|
%
|
Two North Riverside Plaza, Suite 600
Chicago, Illinois 60606
|
|
|
|
|
|
|
|
|
FMR Corp
|
|
|
9,482,533
|
(4)
|
|
|
14.5
|
%
|
82 Devonshire Street
Boston, Massachusetts 02109
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Barclays Global Investors, NA is the beneficial owner of
1,550,994 shares of our Common Stock and has sole
dispositve power over such shares and sole voting power over
1,318,350 shares. Barclays Global Fund Advisors is the
beneficial owner of 1,681,329 shares and has sole voting
and dispositive power over such shares. Barclays Global
Investors, LTD is the beneficial owner of 51,843 shares and
has sole dispositive power over such shares and sole voting
power over 45,366 shares. Barclays Global Investors Japan
Limited is the beneficial owner of 55,152 shares and has
sole voting and dispositive power over such shares. |
|
(2) |
|
Dimensional Fund Advisors LP (“Dimensional”), an
investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, furnishes investment advice to
four investment companies registered under the Investment
Company Act of 1940 and serves as investment manager to certain
commingled group trusts and separate accounts (the
“Funds”). In its role as investment advisor or
manager, Dimensional possesses investment and/or voting power
over shares of our Common Stock that are owned by the Funds and
may be deemed to be the beneficial owner. All securities
reported in the table above are owned by the Funds, and
Dimensional disclaims beneficial ownership of such securities. |
|
(3) |
|
EGI-Fund
(05-07)
Investors, L.L.C., a Delaware limited liability company
(“Fund 05-07”),
is the managing member of EGI-HC, L.L.C., a Delaware limited
liability company (“EGI-HC”). SZ Investments, L.L.C.,
a Delaware limited liability company (“SZI”), is the
managing member of
Fund 05-07.
SZI is indirectly owned by various trusts established for the
benefit of Samuel Zell and his family (the “Trusts”).
The trustee of each of the Trusts is Chai Trust Company,
L.L.C., an Illinois limited liability company (“Chai
Trust”).
Fund 05-07,
SZI, EGI-HC and Chai Trust share voting power and dispositive
power over the shares owned beneficially by them. EGI-HC holds
4,306,249 shares of our Common Stock and
Fund 05-07
holds 80,000 shares of our Common Stock. |
|
(4) |
|
Fidelity Management & Research Company
(“Fidelity”), a wholly owned subsidiary of FMR LLC, is
the beneficial owner of 8,867,607 shares of our Common
Stock as a result of acting as investment adviser to various
investment companies (the “Funds”). Edward C.
Johnson III and FMR Corp. have sole dispositive power of
such shares but not voting power. Fidelity carries out the
voting of the shares under written guidelines established by the
Funds’ Boards of Trustees. |
11
Pyramis Global Advisors, LLC (“PGALLC”), an indirect
wholly owned subsidiary of FMR LLC, is the beneficial owner of
75,000 shares of our Common Stock as a result of its
serving as investment adviser to institutional accounts,
non-U.S. mutual
funds, or investment companies registered under Section 8
of the Investment Company Act of 1940 owning such shares. Edward
C. Johnson III and FMR LLC, through its control of PGALLC,
each has sole voting and dispositive power over such shares.
Pyramis Global Advisors Trust Company (“PGATC”),
an indirect wholly owned subsidiary of FMR LLC, is the
beneficial owner of 516,226 shares of our Common Stock as a
result of its serving as investment manager of institutional
accounts owning such shares. Edward C. Johnson III and FMR
LLC, through its control of PGATC, each has sole dispositive
power over 516,226 shares and sole voting power over
486,592 shares.
Fidelity International Limited (“FIL”) and various
foreign-based subsidiaries provide investment advisory and
management services to a number of
non-U.S. investment
companies and certain institutional investors. FIL is the
beneficial owner of 23,700 shares of our Common Stock.
Partnerships controlled predominantly by members of the family
of Edward C. Johnson III, Chairman of FMR LLC and FIL, or
trusts for their benefit, own shares of FIL voting stock with
the right to cast approximately 47% of the total votes which may
be cast by all holders of FIL voting stock. FMR LLC and FIL are
separate and independent corporate entities, and their boards of
directors are generally composed of different individuals.
The following table provides information, as of March 18,
2008, regarding the beneficial ownership of our Common Stock by
each of our directors, each of our Named Executive Officers (as
identified on page 17 of this Proxy Statement), and all of
our current directors and executive officers as a group. Unless
otherwise noted in the footnotes to the table, the persons named
in the table have sole voting and investment power with respect
to all shares shown as beneficially owned by them. The address
for each executive officer and director listed below is
c/o Exterran
Holdings, Inc., 4444 Brittmoore Road, Houston, Texas 77041.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Unvested
|
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
Owned
|
|
|
Restricted
|
|
|
Stock
|
|
|
Indirect
|
|
|
Total
|
|
|
of
|
|
Name of Beneficial Owner
|
|
Directly(1)
|
|
|
Stock(2)
|
|
|
Options(3)
|
|
|
Ownership
|
|
|
Ownership
|
|
|
Class
|
|
|
Non-Employee Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Janet F. Clark
|
|
|
3,721
|
|
|
|
—
|
|
|
|
32,500
|
|
|
|
|
|
|
|
36,221
|
|
|
|
*
|
|
Ernie L. Danner
|
|
|
7,939
|
|
|
|
—
|
|
|
|
113,350
|
|
|
|
1,340
|
|
|
|
122,629
|
|
|
|
*
|
|
Uriel E. Dutton
|
|
|
701
|
|
|
|
—
|
|
|
|
47,500
|
|
|
|
|
|
|
|
48,201
|
|
|
|
*
|
|
Gordon T. Hall
|
|
|
23,432
|
|
|
|
9,002
|
|
|
|
7,210
|
|
|
|
|
|
|
|
39,644
|
|
|
|
*
|
|
J.W.G. Honeybourne
|
|
|
2,800
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
|
|
|
|
12,800
|
|
|
|
*
|
|
John E. Jackson
|
|
|
7,855
|
|
|
|
—
|
|
|
|
26,946
|
|
|
|
48
|
|
|
|
34,849
|
|
|
|
*
|
|
William C. Pate(4)
|
|
|
183
|
|
|
|
1,527
|
|
|
|
|
|
|
|
|
|
|
|
1,710
|
|
|
|
*
|
|
Stephen M. Pazuk
|
|
|
2,663
|
|
|
|
1,527
|
|
|
|
5,200
|
|
|
|
|
|
|
|
9,390
|
|
|
|
*
|
|
Officers
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen A. Snider
|
|
|
42,153
|
|
|
|
41,393
|
|
|
|
366,234
|
|
|
|
2,188
|
|
|
|
451,968
|
|
|
|
*
|
|
Brian A. Matusek
|
|
|
21,673
|
|
|
|
19,320
|
|
|
|
7,352
|
|
|
|
|
|
|
|
48,345
|
|
|
|
*
|
|
J. Michael Anderson
|
|
|
10,850
|
|
|
|
18,040
|
|
|
|
142,290
|
|
|
|
877
|
|
|
|
172,057
|
|
|
|
*
|
|
Steven W. Muck
|
|
|
13,957
|
|
|
|
11,504
|
|
|
|
12,768
|
|
|
|
39
|
|
|
|
38,268
|
|
|
|
*
|
|
D. Bradley Childers
|
|
|
5,782
|
|
|
|
17,370
|
|
|
|
120,705
|
|
|
|
962
|
|
|
|
144,819
|
|
|
|
*
|
|
All directors and executive officers as a group (17 persons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,208,421
|
|
|
|
1.8
|
%
|
12
|
|
|
(1) |
|
Includes vested restricted stock awards and, where applicable,
shares acquired under the Company’s Employee Stock Purchase
Plan. |
|
(2) |
|
Unvested restricted stock awards vest on the anniversary date of
grant and have no less than a three-year vesting period from the
original date of grant. Officers and directors have voting power
and, once vested, dispositive power. |
|
(3) |
|
Shares that can be acquired immediately or within 60 days
of March 18, 2008 through the exercise of stock options
and, where applicable, through a distribution from
Universal’s Employee Supplemental Savings Plan. |
|
(4) |
|
Mr. Pate is Chief Investment Officer of Equity Group
Investments, L.L.C. (“EGI”), but disclaims beneficial
ownership of the shares that are owned by EGI. See footnote 3 of
the “5% Stockholders’ table on page 11 of this
Proxy Statement. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and persons who
beneficially own more than 10% of our Common Stock to file
reports with the SEC and us to disclose their initial beneficial
ownership of Common Stock and changes in such ownership. Based
upon a review of such reports furnished to us and certifications
from our directors and executive officers, we believe that
during 2007, all of our directors, executive officers and
beneficial owners of more than 10% of our Common Stock complied
with all Section 16(a) filing requirements applicable to
them with the following exceptions: a Form 4 disclosing the
grant of 1,400 stock options to Mr. Danner for his service
as a director and a Form 4 disclosing the acquisition of
71 shares by Ms. Clark under the Directors’ Stock
and Deferral Plan was filed late, each due to an administrative
error.
PROPOSAL 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Independent
Registered Public Accounting Firm of Hanover
Prior to the merger of Hanover and Universal,
PricewaterhouseCoopers LLP (“PwC”) and
Deloitte & Touche LLP (“Deloitte”) acted as
the independent registered public accounting firm for Hanover
and Universal, respectively. Hanover was the accounting acquirer
in the merger with Universal and, with the approval of
Hanover’s board of directors, PwC’s appointment as
Hanover’s independent registered public accounting firm was
concluded upon consummation of the merger. PwC’s reports on
Hanover’s financial statements for the prior two fiscal
years did not contain an adverse opinion or a disclaimer of
opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. During the prior two
fiscal years and through August 20, 2007, there were no
disagreements with PwC on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the
satisfaction of PwC, would have caused PwC to make reference
thereto in its reports on Hanover’s financial statements
for such years. In addition, during the prior two fiscal years
and through August 20, 2007, there were no reportable
events as defined in Item 304(a)(1)(v) of
Regulation S-K
of the Securities Exchange Act of 1934.
Independent
Registered Public Accounting Firm of Exterran
On August 20, 2007, Exterran’s Audit Committee
ratified the appointment of Deloitte as the independent
registered public accounting firm to audit our consolidated
financial statements for fiscal year 2007. The Audit Committee
has also selected Deloitte as our independent registered public
accounting firm for the fiscal year ending December 31,
2008. We are submitting the selection of Deloitte for
stockholder ratification at the 2008 Stockholders’ Meeting.
A representative of Deloitte is expected to be present at the
2008 Stockholders’ Meeting and will have an opportunity to
make a statement and to respond to appropriate questions from
stockholders.
Our organizational documents do not require that our
stockholders ratify the selection of our independent registered
public accounting firm. We are requesting such ratification
because we believe it is a matter of good
13
corporate practice. If our stockholders do not ratify the
selection, the Audit Committee will reconsider whether to retain
Deloitte. Even if the selection is ratified, the Audit
Committee, in its discretion, may change the appointment at any
time during the year if it determines that such a change would
be in the best interests of us and our stockholders.
Fees Paid
to the Independent Registered Public Accounting Firm
The following table presents fees for professional services
rendered by (a) PwC and its member firms and respective
affiliates on behalf of Hanover (the accounting acquirer in the
merger with Universal) for calendar year 2006, and by
(b) Deloitte and its member firms and respective affiliates
on behalf of Exterran for calendar year 2007:
|
|
|
|
|
|
|
|
|
Types of Fees
|
|
FY 2007
|
|
|
FY 2006
|
|
|
|
(In thousands)
|
|
|
Audit fees(a)
|
|
$
|
2,945
|
|
|
$
|
3,209
|
|
Audit-related fees(b)
|
|
|
35
|
|
|
|
4
|
|
Tax fees(c)
|
|
|
1,033
|
|
|
|
65
|
|
All other fees(d)
|
|
|
—
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Total fees:
|
|
$
|
4,013
|
|
|
$
|
3,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Audit fees include fees billed by our independent registered
public accounting firm related to audits and reviews of
financial statements that we are required to file with the SEC,
audits of internal control over financial reporting, statutory
audits of certain of our subsidiaries’ financial statements
as required under local regulations and other services,
including issuance of comfort letters and assistance with and
review of documents filed with the SEC. |
(b) |
|
Audit-related fees include fees billed by our independent
registered public accounting firm related to employee benefit
plan audits and consultations concerning financial accounting
and reporting standards. |
(c) |
|
Tax fees include fees billed by our independent registered
public accounting firm primarily related to tax compliance and
consulting services. |
(d) |
|
All other fees include fees billed by our independent registered
public accounting firm related to software licensing agreements. |
In considering the nature of the services provided by Deloitte,
the Audit Committee determined that such services are compatible
with the provision of independent audit services. The Audit
Committee discussed these services with our independent
registered public accounting firm and our management to
determine that they are permitted under the rules and
regulations concerning auditor independence promulgated by the
SEC to implement the Sarbanes-Oxley Act of 2002, as well as the
American Institute of Certified Public Accountants.
Pre-Approval
Policy
The Audit Committee has adopted policies and procedures relating
to the approval of all audit and non-audit services that are to
be performed by our independent registered public accounting
firm. This policy generally provides that we will not engage our
independent registered public accounting firm to render audit or
non-audit services, and will not engage any other independent
registered public accounting firm to render audit services,
unless the service is specifically approved in advance by the
Audit Committee.
The Audit Committee’s practice is to consider for approval,
at its regularly scheduled meetings, all audit and non-audit
services proposed to be provided by our independent registered
public accounting firm. In situations where a matter cannot wait
until the next regularly scheduled committee meeting, the chair
of the Audit Committee has been delegated authority to consider
and, if appropriate, approve audit and non-audit services.
Approval of services and related fees by the Audit Committee
chair are reported to the full Audit Committee at the next
regularly scheduled meeting. All services performed by our
independent registered public accounting firm in 2007 were
pre-approved by the Audit Committee.
THE BOARD
OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR
THE RATIFICATION OF THE REAPPOINTMENT OF
DELOITTE & TOUCHE LLP.
14
REPORT OF
THE AUDIT COMMITTEE
The purpose of the Audit Committee is to assist the Board of
Directors in its general oversight of Exterran’s financial
reporting, internal controls and audit functions. The Audit
Committee Charter describes in greater detail the full
responsibilities of the Audit Committee and is available on
Exterran’s website at www.exterran.com.
The Audit Committee has reviewed and discussed the consolidated
financial statements and management’s assessment of
internal controls over financial reporting with management and
Deloitte & Touche LLP (“Deloitte”), the
Company’s independent registered public accounting firm.
Management is responsible for the preparation of financial
statements and the reporting process, including the system of
internal controls. Deloitte is responsible for performing an
independent audit of Exterran’s consolidated financial
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and to issue
a report thereon. The Audit Committee monitors these processes.
The Audit Committee members are not professional accountants or
auditors, and their functions are not intended to duplicate or
to certify the activities of management and the independent
auditors. The Audit Committee serves a board-level oversight
role, in which it provides advice, counsel and direction to
management and the independent auditors on the basis of the
information it receives, discussions with management and the
independent auditors, and the experience of the Audit
Committee’s members in business, financial and accounting
matters. The Audit Committee has the authority to engage its own
outside advisers, including experts in particular areas of
accounting, as it determines appropriate, apart from counsel or
advisers hired by management.
In this context, the Audit Committee met and held discussions
with management and Deloitte. Management represented to the
Audit Committee that Exterran’s consolidated financial
statements were prepared in accordance with accounting
principles generally accepted in the United States, and the
Audit Committee reviewed and discussed the consolidated
financial statements with management and Deloitte. The Audit
Committee also discussed with Deloitte the matters required to
be discussed by Statement on Auditing Standards No. 61
(Codification of Statements on Auditing Standards, AU 380), as
amended.
In addition, the Audit Committee discussed with Deloitte their
independence from Exterran and its management, and Deloitte
provided to the Audit Committee the written disclosures and
letter required by the Independence Standards Board Standard
No. 1 (Independence Discussions With Audit Committees). The
Audit Committee discussed with Exterran’s internal auditors
and Deloitte the overall scope and plans for their respective
audits. The Audit Committee met with the internal auditors and
Deloitte, with and without management present, to discuss the
results of their examinations, their evaluations of
Exterran’s internal controls, and the overall quality of
Exterran’s financial reporting.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to Exterran’s Board of
Directors, and the Board has concurred, that (i) the
audited financial statements be included in Exterran’s
Annual Report on
Form 10-K
for the twelve months ended December 31, 2007, for filing
with the Securities and Exchange Commission; (ii) Deloitte
meets the requirements for independence; and (iii) the
appointment of Deloitte for 2008 be submitted to the
stockholders for ratification.
Submitted by the Audit Committee
of the Board of Directors
Janet F. Clark, Chair
Gordon T. Hall
William C. Pate
15
REPORT OF
THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to Exterran’s Board of
Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement.
Submitted by the Compensation Committee of the Board of Directors
Stephen M. Pazuk, Chair
J.W.G. Honeybourne
William C. Pate
16
COMPENSATION
DISCUSSION AND ANALYSIS
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis
(“CD&A”) provides information about our
compensation objectives and policies for our chief executive
officer, chief financial officer and three other most highly
compensated executive officers (our “Named Executive
Officers”) and provides additional context for the numbers
presented in the compensation tables which follow this
discussion. For calendar year 2007, the following individuals
comprised our Named Executive Officers:
|
|
|
|
•
|
Stephen A. Snider, President and Chief Executive Officer
|
|
|
•
|
J. Michael Anderson, Senior Vice President and Chief
Financial Officer
|
|
|
•
|
D. Bradley Childers, Senior Vice President
|
|
|
•
|
Brian A. Matusek, Senior Vice President and Chief
Operating Officer
|
|
|
•
|
Steven W. Muck, Senior Vice President, Global Human
Resources
|
Prior to the consummation of the merger of Hanover and Universal
effective August 20, 2007, each of our Named Executive
Officers was employed by Hanover or Universal, and many of the
key decisions impacting their 2007 compensation were made by the
respective company’s compensation committee prior to the
merger. This CD&A will address key compensation decisions
made by Hanover and Universal prior to the merger, as well as
actions taken by our Compensation Committee.
Compensation
Committee Overview
The Compensation Committee is comprised of independent,
non-employee directors and operates under a charter approved by
the full Board, which is available on our website at
www.exterran.com. The fundamental responsibilities of the
Committee are to:
|
|
|
|
•
|
establish compensation programs that are consistent with our
compensation philosophy and values and serve to align the
interests of management with our stockholders;
|
|
|
•
|
review the Chief Executive Officer’s performance and
approve the annual salary, annual performance-based compensation
and long-term incentive opportunities for the Chief Executive
Officer and other executive officers;
|
|
|
•
|
provide oversight of management’s decisions concerning the
performance and compensation of other officers and employees;
|
|
|
•
|
review and approve any employment or severance arrangement
entered into with an executive officer;
|
|
|
•
|
approve equity grants under our long-term incentive plan;
|
|
|
•
|
oversee regulatory compliance with respect to compensation
matters; and
|
|
|
•
|
review and recommend to the full Board of Directors the
compensation of non-employee directors.
|
Compensation
Philosophy and Objectives
We and the Compensation Committee believe that compensation
programs play a vital role in attracting and retaining people
with the level of expertise and experience needed to help
achieve the business objectives that ultimately drive both
short- and long-term success and stockholder value. Our
philosophy is to provide total compensation that is competitive
with that of similarly-sized companies within the oilfield
services sector by targeting cash compensation at the 50%
percentile and by targeting equity compensation at the 50% to
75% percentile. The combination of these percentages positions
our executives’ compensation competitively relative to the
market, but places a greater emphasis on at-risk compensation.
To attract, retain and motivate an effective management team,
the Compensation Committee has guided management in developing a
compensation program to reward the achievement of specific goals
and to link pay and performance consistent with our
17
corporate values. These values include the recognition of the
importance of retaining talented employees and fostering an
entrepreneurial spirit within an environment of well-reasoned
risk-taking to achieve consistent growth, profitability and
return for our stockholders.
More than half of the compensation earned in 2007 by our Named
Executive Officers was variable and was based on corporate level
financial and operational objectives as well as individual
performance. This is consistent with our emphasis on a pay for
performance philosophy and is intended to focus executives and
key employees on Exterran’s short-term goals of
profitability as well as long-term strategic goals for sustained
growth and stockholder value.
Elements
of Compensation
Our executive compensation programs are managed from a
“total rewards” perspective, with consideration given
to each of the following components:
|
|
|
|
•
|
base salary;
|
|
|
•
|
annual performance-based incentives;
|
|
|
•
|
long-term incentives;
|
|
|
•
|
severance; and
|
|
|
•
|
other compensation and benefit programs.
|
In addition to base salaries and annual incentive bonuses, our
U.S. and certain of our international employees are
provided and share in the cost of customary health and welfare
benefits and are eligible to participate in the Exterran 401(k)
Plan and Employee Stock Purchase Plan. In addition, certain
employees are also eligible to participate in Exterran’s
Deferred Compensation Plan. Employees whose employment is
terminated due to a change of control or reduction in workforce
are eligible to receive severance benefits, and certain
executive officers, including our Named Executive Officers, have
been provided with change of control arrangements, as further
described below. Employees who are asked to relocate outside of
their home country are provided with an expatriate compensation
package, which generally includes assistance with housing, auto
and education expenses and, where applicable, a cost of living
adjustment. We have attempted to keep perquisites to a minimum
and have typically made exceptions only in circumstances where
necessary to attract or retain specific talent. Information on
the compensation paid to our Named Executive Officers can be
found in tabular format in the Summary Compensation Table on
page 31 of this Proxy Statement.
Role
of Our Compensation Consultant
During 2007, Hanover’s and Universal’s compensation
committees engaged Towers Perrin LLC and Hewitt Associates LLC,
respectively, to act as a third-party consultant in connection
with the overall design of compensation and benefit programs,
including executive compensation.
The chairman of Exterran’s Compensation Committee, with the
Compensation Committee’s authorization, entered into an
agreement in August 2007 for Towers Perrin to act as a
third-party consultant to the Committee. Towers Perrin has been
directed by our Compensation Committee to:
|
|
|
|
•
|
provide a competitive review of executive compensation in the
marketplace (including data from the peer group of Exterran as
selected by the Compensation Committee (and identified below
under “Determining Executive Compensation”), the
oilfield services industry and publicly traded companies across
industries);
|
|
|
•
|
model estimated long-term incentive awards for executives,
directors and other eligible employees;
|
|
|
•
|
provide an estimate of the potential cost of severance in the
event of a change of control; and
|
|
|
•
|
provide the Compensation Committee and management with
information on how trends, new rules, regulations and laws
impact executive and board compensation practice and
administration.
|
18
The scope of Towers Perrin’s compensation review includes
base salary, annual incentives, long-term incentives and total
direct compensation and takes into consideration Exterran’s
financial plans, strategic direction, organization structure and
current compensation programs.
Role
of Our Executive Officers in Compensation
Decisions
The most significant aspects of management’s role in the
compensation-setting process are:
|
|
|
|
•
|
recommending compensation programs, compensation policies,
compensation levels and incentive opportunities that are
consistent with Exterran’s business strategies;
|
|
|
•
|
compiling, preparing and distributing materials for Compensation
Committee review and consideration, including market data;
|
|
|
•
|
recommending corporate performance goals; and
|
|
|
•
|
assisting in the evaluation of employee performance.
|
The Chief Executive Officer annually reviews the performance of
each executive. The conclusions he reaches and recommendations
he makes based on these reviews, including salary adjustments,
annual cash incentives and equity awards, are then presented to
the Compensation Committee. The Compensation Committee meets in
executive session to determine the compensation of our executive
officers in its discretion, taking into account the
recommendations of the Chief Executive Officer and other data
and materials made available to the Committee.
Determining
Executive Compensation
In considering the appropriate levels of compensation during
2007, the Hanover and Universal compensation committees engaged
in a discretionary review of total compensation and used as a
reference published compensation surveys, information obtained
from their respective compensation consultant and compensation
data contained in the proxy statements for companies which the
respective compensation committees identified as its peers in
the oilfield services industry, which included the following:
|
|
|
Hanover Peer Group
|
|
Universal Peer Group
|
|
Cameron International Corporation
Grant Prideco, Inc.
Hydril Co.
Natco Group Inc.
National Oilwell Varco, Inc.
Universal Compression Holdings, Inc.
|
|
BJ Services Company
Cameron International Corporation
FMC Technologies, Inc.
Global Industries, Ltd.
Grant Prideco, Inc.
Hanover Compressor Company
Maverick Tube Corporation
Nabors Industries Ltd.
National Oilwell Varco, Inc.
Noble Corporation
Rowan Companies, Inc.
SEACOR Holdings Inc.
Tidewater Inc.
W-H Energy Services, Inc.
|
For the fourth quarter of 2007 and calendar year 2008, the
following companies were selected by Exterran’s
Compensation Committee as oilfield services industry peers based
on a range of revenue, market capitalization, number of
employees, product offerings, and international markets: BJ
Services Company, Cameron International Corporation, FMC
Technologies, Inc., Grant Prideco, Inc., Natco Group Inc.,
National Oilwell Varco, Inc. and Smith International, Inc. While
the Compensation Committee considers peer group information in
its decision-making process, particularly from a competitive and
retention aspect, data from the oilfield services sector is also
considered, as well as corporate and individual performance, in
determining the compensation of our executive officers.
19
During the last quarter of 2007, the Compensation Committee
reviewed each executive officer’s current and historic
total compensation, which included a three year look-back at
base salary, short-term incentive pay and the value of long-term
incentives. In its review, the Compensation Committee focused on
each executive officer’s performance and scope of
responsibilities, our strategic initiatives and that
individual’s contribution to those initiatives, his or her
future potential, experience and competitive market pay levels
relative to the oilfield services market generally and our peer
group.
Each of the compensation components provided to executive
officers and key employees is further described below.
Base
Salaries
2007. Base salary increases during 2007
were determined by the respective Hanover and Universal
compensation committees. Each of Messrs. Snider, Anderson
and Childers received a 4% increase in base salary effective
July 1, 2007. Messrs. Matusek and Muck received a 10%
and 8% increase in base salary, respectively, effective
April 1, 2007, in recognition of significant changes in
their responsibilities in July 2006.
2008. Our Compensation Committee has
determined that base pay generally should be set near the median
of our peer group companies and similarly-sized companies in the
oilfield services industry in order to attract and retain
sufficient talent. In addition to considering market comparisons
in making salary decisions, the Compensation Committee exercises
judgment and discretion based upon an individual’s level of
responsibility, individual skills, experience in their current
role or expanded future role or promotion, performance, and
external factors involving competitive positioning and general
economic conditions. No specific formula is applied to determine
the weight of each of these factors. Performance evaluations are
conducted during the first quarter of each year and adjustments
in base salaries are effective shortly thereafter. Due to the
timing of the merger, Exterran’s Compensation Committee
determined not to make additional adjustments in our Named
Executive Officers’ base salaries for the remainder of 2007.
In February 2008, the Compensation Committee approved changes,
expected to be effective in April 2008, to the annual base
salaries of our Named Executive Officers as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
|
|
|
|
|
Amount of
|
|
Base
|
|
|
|
|
Increase
|
|
Salary
|
Officer
|
|
Title
|
|
($)
|
|
($)
|
|
Stephen A. Snider
|
|
President & Chief Executive Officer
|
|
|
28,000
|
|
|
|
600,000
|
|
J. Michael Anderson
|
|
Senior Vice President & Chief Financial Officer
|
|
|
33,000
|
|
|
|
355,000
|
|
D. Bradley Childers
|
|
Senior Vice President
|
|
|
28,000
|
|
|
|
340,000
|
|
Brian A. Matusek
|
|
Senior Vice President & Chief Operating Officer
|
|
|
35,000
|
|
|
|
375,000
|
|
Stephen W. Muck
|
|
Senior Vice President, Human Resources
|
|
|
15,000
|
|
|
|
285,000
|
|
Annual
Performance-Based Incentive Compensation
2007 Awards. The 2007 annual
performance-based incentive programs of each of Hanover and
Universal were established in early 2007, and Exterran’s
Compensation Committee determined that the Named Executive
Officers and other participants would earn compensation based
upon actual performance under the performance measures set out
in the respective programs for the period of January 1,
2007 through August 20, 2007, the date of the merger, and
at target performance for the remainder of 2007. The following
is a brief description of Hanover’s and Universal’s
annual incentive programs that applied to our Named Executive
Officers in 2007.
Hanover Short-Term Incentive
Program. Messrs. Matusek and Muck, our
Named Executive Officers who participated in Hanover’s 2007
performance-based short-term incentive program (the
“Hanover
20
STI Program”), were assigned a target cash bonus award
opportunity of 50% of base salary, which represented the level
of payment the executive could earn in the event plan
performance was achieved at “target.” Participants in
the Hanover STI Program could earn payouts above or below the
target based on performance levels that exceeded or fell below
expectations. For 2007, annual incentive compensation was based
on the following:
Hanover’s
2007 Performance Goals
|
|
|
|
|
|
|
|
|
|
|
Weight of
|
|
Performance
|
|
Performance
|
Performance Measure
|
|
Measure
|
|
Level
|
|
Goals
|
|
Corporate Performance
|
|
|
|
|
|
|
|
|
EBITDA — earnings before interest, tax, depreciation
and amortization
|
|
|
15
|
%
|
|
Threshold
|
|
$385 million
|
|
|
|
|
|
|
Target
|
|
$430 million
|
|
|
|
|
|
|
Maximum
|
|
$485 million
|
ROCE — return on capital employed(1)
|
|
|
15
|
%
|
|
Threshold
|
|
7.20%
|
|
|
|
|
|
|
Target
|
|
9.00%
|
|
|
|
|
|
|
Maximum
|
|
11.30%
|
EPS — earnings per share
|
|
|
20
|
%
|
|
Threshold
|
|
$0.31
|
|
|
|
|
|
|
Target
|
|
$0.57
|
|
|
|
|
|
|
Maximum
|
|
$0.87
|
Individual Performance
|
|
|
50
|
%
|
|
|
|
|
|
|
|
(1) |
|
ROCE is calculated as (1) earnings before interest and
taxes, or “EBIT,” divided by (2) the sum of
short-term debt, current maturities of long-term debt, long-term
debt, minority interest and stockholders’ equity, less
cash. The method used in calculating ROCE for the three-year
performance period computes the average annualized EBIT over the
entire period and divides it by the average capital employed. |
As the table above illustrates, 50% of each executive
officer’s bonus that could be earned under the Hanover STI
Program was to be calculated based on an objective analysis of
Hanover’s financial and operational performance, with 15%
based on earnings before interest, tax, depreciation and
amortization (“EBITDA”), 15% based on return on
capital employed (“ROCE”) and 20% based on earnings
per shares (“EPS”). For each 2007 Hanover corporate
performance measure, there were three levels of attainment:
threshold, target and maximum. No awards could be made for any
performance measure for which the threshold was not met; awards
were prorated for performance between the threshold and maximum
levels. For the range of possible payouts based on performance
under the Hanover STI Program, see the Grants of Plan-Based
Awards Table following this CD&A.
The remaining 50% of each executive officer’s bonus that
could be earned under the Hanover STI Program was to be based on
an examination of each executive’s performance compared
with his or her pre-established goals and objectives. However,
because effecting the merger required the Named Executive
Officers to redirect a substantial portion of their time and
focus, Exterran’s Compensation Committee chose to evaluate
each executive relative to his overall performance, including
with respect to effecting the merger, rather than compared with
the goals and objectives established for such executive at the
beginning of 2007.
For the period from January 1, 2007 through August 20,
2007, Exterran’s Compensation Committee determined that the
corporate performance goals under the Hanover STI Program were
attained at 200%. Because of the difficulty in assessing
Hanover’s corporate performance following the merger on
August 20, 2007, the Compensation Committee determined
that, for the period from August 21, 2007 through
December 31, 2007, incentive bonuses would be paid out at
the target level (100%). Therefore, in February 2008,
Exterran’s Compensation Committee concluded that the total
Hanover STI Program funding associated with the achievement of
corporate performance goals for 2007 would be 163.7%, assuming
21
individual performance met Exterran’s standards. The cash
incentive awards under Hanover’s STI Program were paid in
March 2008, as set forth in the Summary Compensation Table
following this CD&A.
Universal Officer Incentive
Program. Messrs. Snider, Anderson and
Childers, our Named Executive Officers who participated in
Universal’s Officer Incentive Program (the “Universal
OIP”) for 2007, were assigned a target cash bonus award
opportunity of 70% of base salary (100% in the case of
Mr. Snider), which represented the level of payment as a
percentage of base salary the executive could earn in the event
plan performance was achieved at “target.”
Participants in the Universal OIP could earn payouts above or
below the target based on performance levels that exceeded or
fell below expectations. For 2007, annual incentive compensation
was based on the following:
Universal’s
2007 Performance Goals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weight of
|
|
|
|
|
|
Weight of
|
|
|
Measure for
|
|
|
|
Target Performance
|
|
Measure for
|
|
|
International
|
|
Performance Measure
|
|
Goal
|
|
Corporate Group
|
|
|
Group
|
|
|
Financial Performance
|
|
|
|
|
|
|
|
|
|
|
Corporate EPS — earnings per share
|
|
$3.31
|
|
|
30
|
%
|
|
|
30
|
%
|
EBT — earnings before taxes
North America Division
|
|
$170.26 million
|
|
|
20
|
%
|
|
|
—
|
|
International Division
|
|
$30.02 million
|
|
|
10
|
%
|
|
|
30
|
%
|
Operational Performance — Safety
|
|
|
|
|
|
|
|
|
|
|
North America Division TRIR — total reportable
incident rate or International Division (excluding Argentina)
|
|
1.03/1.00
|
|
|
6
|
%
|
|
|
—
|
|
International Division (Argentina)
|
|
1.82
|
|
|
2
|
%
|
|
|
5
|
%
|
Worldwide Collision Rate
|
|
3.0 per million miles
driven
|
|
|
2
|
%
|
|
|
5
|
%
|
Individual Performance
|
|
|
|
|
30
|
%
|
|
|
30
|
%
|
As the table above illustrates, 70% of each executive
officer’s bonus that could be earned under the Universal
OIP was to be calculated based on an objective analysis of
Universal’s financial and operational performance, with 30%
based on corporate earnings per share (“EPS”), 30%
based on divisional earnings before taxes (“EBT”), and
10% based on operational performance, as measured by the
incident rate of recordable injuries and lost time accidents,
and frequency of motor vehicle collisions occurring in a
company-owned vehicle, each variable being defined in the
Universal OIP. For each 2007 company performance measure,
there were three levels of attainment: threshold (80% of
objective), target (100% of objective) and maximum (120% of
objective). No awards could be made for any performance measure
for which the threshold was not met; awards were prorated for
performance between the threshold and maximum levels. For the
range of possible payouts based on performance under the
Universal OIP, see the Grants of Plan-Based Awards Table
following this CD&A.
The remaining 30% of each executive officer’s bonus that
could be earned under the Universal OIP was to be based on an
examination of each executive’s performance compared with
his pre-established goals and objectives. However, because
effecting the merger required the Named Executive Officers to
redirect a substantial portion of their time and focus,
Exterran’s Compensation Committee chose to evaluate each
executive relative to his overall performance, including with
respect to effecting the merger, rather than compared with the
goals and objectives established for such executive at the
beginning of 2007.
For the period from January 1, 2007 through August 20,
2007, Exterran’s Compensation Committee determined that the
performance goals under the Universal OIP were attained at 56.0%
of the prorated target for Messrs. Snider and Anderson
(members of the Corporate Group) and at 78.7% of the prorated
target for Mr. Childers (a member of the International
Group). Because of the difficulty in assessing Universal’s
corporate performance following the merger on August 20,
2007, the Compensation Committee determined
22
that, for the period from August 21, 2007 through
December 31, 2007, incentive bonuses would be paid out at
the target level (100%). Therefore, in February 2008, the
Compensation Committee concluded that the total incentive
program funding associated with the achievement of performance
goals for 2007 would be 72.3% for the Corporate Group and 86.6%
for the International Group, assuming individual performance met
Exterran’s standards.
Under the provisions of the Universal OIP, Exterran’s
Compensation Committee could, in its discretion, and taking into
consideration the recommendation of the Chief Executive Officer
with respect to the compensation of the other Named Executive
Officers, choose to apply an individual multiplier, which could
range from 0 to 1.25, to each executive’s bonus for 2007.
The multiplier was designed to provide differentiation for
individual contribution to company performance, and could be
increased above 1.25 in the discretion of the Compensation
Committee. Mr. Snider recommended to the Compensation
Committee that the multiplier for certain executives, including
Messrs. Anderson and Childers, be set greater than 1.00,
based on their individual performance. Mr. Snider also
requested that his own multiplier be set below 1.00 to partially
offset the increased multiplier for certain executives. The cash
incentive awards under the Universal OIP were paid in March
2008, as set forth in the Summary Compensation Table following
this CD&A.
2008 Awards — Exterran Annual Performance Pay
Plan. In January 2008, Exterran’s
Compensation Committee approved the Exterran Annual Performance
Pay Plan (the “APPP”) to provide the short-term
incentive compensation element of Exterran’s total direct
compensation program. Under the APPP, each Named Executive
Officer will be eligible to receive an annual cash award based
on our level of achievement of specified corporate performance
objectives established by the Compensation Committee for that
year as well as the individual Named Executive Officer’s
performance assessment, which will be determined primarily
through his performance evaluation for that year. The amount of
a Named Executive Officer’s award under the APPP for a
given year will be calculated by multiplying (i) a target
percentage of his base salary by (ii) the level of
Exterran’s achievement of the applicable corporate
performance measures (ranging from 0% to 200% of the target
performance level) for that year by (iii) his individual
performance coefficient (ranging from 0% to 125%) for that year.
The Compensation Committee considered the relative
responsibility of each of its executive officers, their role in
continuing the integration of Exterran and their potential
impact on the achievement of our short-term and long-term
performance goals, in determining the target 2008 bonus
opportunity for each of the Named Executive Officers (expressed
as a percentage of each Named Executive Officer’s base
salary for 2008), which is as follows:
|
|
|
|
|
|
|
|
|
|
|
2008 Bonus
|
|
|
|
|
Target
|
Executive Officer
|
|
Title
|
|
(%)
|
|
Stephen A. Snider
|
|
President & Chief Executive Officer
|
|
|
100
|
|
J. Michael Anderson
|
|
Senior Vice President & Chief Financial Officer
|
|
|
70
|
|
Brian A. Matusek
|
|
Senior Vice President & Chief Operating Officer
|
|
|
70
|
|
D. Bradley Childers
|
|
Senior Vice President
|
|
|
70
|
|
Steven W. Muck
|
|
Senior Vice President, Global Human Resources
|
|
|
50
|
|
The Compensation Committee adopted corporate performance
measures under the APPP for 2008 that are related to the
following:
|
|
|
|
•
|
the incident rate for both recordable injuries and lost time
accidents for all employees worldwide;
|
|
|
•
|
EBITDA, defined for purposes of the Plan as net income plus
income taxes, interest expense, depreciation and amortization
expense, impairment charges, merger and integration expenses,
minority interest, excluding non-recurring items, and
extraordinary gains or losses;
|
|
|
•
|
growth in U.S. working horsepower from year to year;
|
|
|
•
|
bookings made outside the United States and Canada related to
product sales and new contract operations projects; and
|
|
|
•
|
merger-related synergies.
|
23
For each 2008 company performance measure, there are three
levels of attainment: threshold (50% of objective), target (100%
of objective) and maximum (200% of objective). No awards will be
made for any performance measure for which the threshold is not
met; awards will be prorated for performance between the
threshold and maximum levels.
Because the future performance targets for our Named Executive
Officers are based on our strategic plan, we believe they
reflect confidential business information. We are in a highly
competitive business with low barriers to entry and we employ
technology and processes that are not patented; therefore, the
disclosure of our target performance objectives would
potentially create competitive harm by providing competitors and
other third parties with insights into our planning process and
methods of obtaining a market advantage. Such disclosure could
potentially give rise to below market pricing of goods and
services, strategic inventory issues and overly aggressive
recruiting of field employees by competitors.
Our target performance objectives generally reflect a growth
rate that the Compensation Committee considered sufficiently
aggressive but achievable based on the underlying strategic and
operating assumptions. While future results cannot be predicted
with certainty, the Compensation Committee believes that these
performance targets are set at levels such that achievement of
the target levels would require significant effort on the part
of the executive officers and that payment of the maximum
amounts would reflect results substantially in excess of
internal and market expectations.
We anticipate that awards under the APPP for the year ending
December 31, 2008 will be determined and paid in the first
quarter of 2009.
Long-Term
Incentive Compensation
2007 Awards. During 2007, the Hanover
and Universal compensation committees had the authority to
provide long-term incentives to executive officers and other key
employees through the award of a variety of vehicles, including
stock options, restricted stock, restricted stock units, stock
appreciation rights and performance-based awards, which are
collectively referred to as “LTI Awards.” In
determining the mix of 2007 LTI Awards, both compensation
committees conducted an analysis of prior LTI Awards and
considered the cost, value and retention element of these prior
awards. The compensation committees also reviewed share
overhang, burn rate, and the accounting treatment and earnings
impact of various forms of LTI Awards. Each respective
compensation committee’s determination of the size of LTI
Awards to its executive officers was based on market references
to long-term incentive compensation for comparable positions
within the respective Peer Groups and on the subjective
assessment of organizational roles and internal job
relationships by the compensation committees. At the time both
compensation committees were considering the grant of LTI
Awards, the proposed merger between Hanover and Universal had
been announced. Therefore, both compensation committees
determined that in light of the merger, performance-based awards
were not appropriate as management and the compensation
committees would not be in a position to set meaningful
performance measures for the combined company. Additionally,
both compensation committees determined that retention should be
a key aspect of awards during 2007, as it was anticipated that
all outstanding equity awards that were granted prior to
February 5, 2007, by both Hanover and Universal would vest
due to the change of control triggered by the merger. Therefore,
the compensation committees chose to provide long-term
incentives in 2007 to executives and certain key employees as
follows:
|
|
|
|
•
|
Messrs. Matusek and Muck (former Hanover
executives) — 100% of the total LTI Award value as
restricted stock, vesting at the rate of one-third per year over
a period of three years on each anniversary of May 8, 2007,
the date of grant, awarded under the Hanover Compressor Company
2006 Stock Incentive Plan.
|
|
|
•
|
Messrs. Snider, Anderson and Childers (former Universal
executives) — 56% of the total LTI Award value as
restricted stock and 44% of the total LTI Award value as stock
options, in each case vesting at the rate of one-third per year
over a period of three years on each anniversary of
June 12, 2007, the date of grant, awarded under the
Universal Compression Holdings, Inc. Restricted Stock Plan for
Executive Officers and the Universal Compression Holdings, Inc.
Incentive Stock Option Plan, respectively.
|
24
2008 Awards. Exterran’s
Compensation Committee and management believe that our executive
officers and other key employees should have an ongoing stake in
our success and that these individuals should have a meaningful
portion of their total compensation tied to the achievement of
our strategic objectives and long-term financial and operational
performance. In considering the makeup of the 2008 LTI Awards,
the Compensation Committee also considered the need to enhance
retention of executives and key employees in light of the
vesting of pre-2007 equity awards due to the merger. Based on
this review, the Compensation Committee adjusted the mix of
awards for its executive officers to include 45% Exterran
restricted stock, 45% Exterran stock options and 10% phantom
units of Exterran Partners, L.P., a master limited partnership
in which Exterran holds a 51% ownership interest (“Exterran
Partners”), or a combination of the foregoing to certain
other key employees, to make up the aggregate value of long-term
incentive awards during 2008. Exterran’s Compensation
Committee believes that:
|
|
|
|
•
|
grants of stock options provide an incentive to our key
employees and executive officers to work toward our long-term
performance goals, as the benefit will increase only if and to
the extent that the value of our Common Stock increases;
|
|
|
•
|
grants of restricted stock not only provide an incentive to our
key employees and executive officers to work toward long-term
performance goals, but also serve as a retention tool; and
|
|
|
•
|
grants of Exterran Partners phantom units with tandem
distribution equivalent rights serve to emphasize our growth
objectives with respect to Exterran Partners. Such grants will
be made from the Exterran Partners, L.P. Long-Term Incentive
Plan (“Exterran Partners LTIP”), which is solely
administered by the compensation committee of Exterran GP LLC,
the general partner of Exterran Partners’ general partner.
Distribution equivalent rights (“DERs”) are the right
to receive cash distributions that are provided to all common
unitholders, subject to the same vesting restrictions and risk
of forfeiture applicable to the underlying grant.
|
If our Compensation Committee determines to continue to include
LTI Awards as a component of our compensation program in future
years, it is expected that such LTI Awards will be granted
during the first quarter of the year. Any award of equity is
considered effective and priced at the close of business on the
date of Compensation Committee or Board approval. The
Compensation Committee has also delegated limited authority to
Exterran’s Chief Executive Officer to grant equity awards,
with the following restrictions:
|
|
|
|
•
|
The aggregate limit on the grant of restricted stock or
stock-settled restricted stock units is 10,000 and the aggregate
limit on the grant of stock options is 20,000;
|
|
|
•
|
The number of shares or options that can be awarded to any one
individual is limited to 10% of the aggregate limit;
|
|
|
•
|
Time-vested awards will vest over a minimum of three years;
|
|
|
•
|
No grants will be made to a Section 16 officer;
|
|
|
•
|
No grants will be made retroactively (i.e., they are considered
effective on the date of hire or promotion); and
|
|
|
•
|
All grants are required to be regularly reported to the
Compensation Committee.
|
An aggregate of 2,350 shares of restricted stock was
granted by the Chief Executive Officer during 2007 under the
Compensation Committee’s delegation of authority.
Change
of Control Arrangements
Change of Control Provisions in Equity
Plans. Hanover’s and Universal’s
equity plans
and/or award
agreements provided for the accelerated vesting of all equity
granted prior to February 5, 2007 in connection with the
change of control resulting from the merger of Hanover and
Universal, except for awards made under the Exterran Partners
LTIP. Therefore, effective August 20, 2007, all such equity
grants became fully vested. No additional grants can be made
from Hanover’s and Universal’s equity plans. The
Exterran Holdings, Inc. Amended and Restated 2007 Stock
Incentive Plan, adopted on August 20, 2007, and
subsequently amended,
25
also provides for accelerated vesting in the event of a change
of control (other than the change of control that resulted from
the merger of Hanover and Universal).
Change of Control Provisions in 401(k)
Plans. Hanover’s and Universal’s
respective 401(k) plans provided for the accelerated vesting of
all company matching contributions in connection with the change
of control that resulted from the merger of Hanover and
Universal. Therefore, effective August 20, 2007, company
contributions in all employee accounts became fully vested. The
Exterran Holdings, Inc. 401(k) Plan also provides for
accelerated vesting of all company matching contributions in the
event of a change of control (other than the change of control
that resulted from the merger of Hanover and Universal).
Hanover and Universal Change of Control
Agreements. Hanover and Universal had entered
into change of control agreements with certain of their
executive officers and key members of management. The
August 20, 2007 merger of Hanover and Universal triggered a
change of control under these agreements. For those executives
and key employees whose employment was terminated following such
change of control or whose employment may be terminated within a
year of August 20, 2007, the appropriate payments have been
or will be made. A more specific description of the terms of the
Hanover and Universal change of control agreements, along with
an illustration of the estimated payouts in connection with such
agreements assuming a change of control and “qualifying
termination,” is provided in this Proxy Statement beginning
on page 36.
Exterran Change of Control
Agreements. Exterran’s Compensation
Committee concluded that the provision of change of control
agreements for its executive officers is consistent with the
Compensation Committee’s compensation philosophy and is in
the best interest of our stockholders. The Compensation
Committee also considered the change of control agreements a
customary part of executive compensation and, therefore, an aid
in attracting and retaining executive talent. The Exterran
change of control agreements provide for continued employment of
the executive for a period of time following a qualifying change
of control and are designed to ensure continuity of management
in such event.
The Exterran change of control agreements generally provide that
if the executive is terminated within 12 months after a
change of control occurs, or if during that period the executive
terminates his employment for “good reason,” as
defined in the agreements, he will be entitled to a payment
equal to a multiple of two times the executive’s annual
base salary and target bonus (three times base salary and bonus,
in the case of Mr. Snider), will be provided health and
welfare benefits for a number of years equaling the payment
multiple, and will receive certain other forms of remuneration.
A more specific description of the terms of change of control
agreements provided to our Named Executive Officers, along with
an illustration of the estimated payouts in connection with such
agreements assuming a change of control and “qualifying
termination,” is provided in this Proxy Statement beginning
on page 39.
2007
Retention Bonus Plan
After the proposed merger between Hanover and Universal was
announced, during the first quarter of 2007, the boards of
directors of Hanover and Universal approved the adoption of
retention plans that were intended to provide select employees,
including certain of our Named Executive Officers, with an
incentive to continue employment in light of the pending merger
between the two companies. The Hanover Compressor Company
Retention Plan and the Universal Compression Holdings, Inc.
Retention Bonus Plan (collectively, the “Retention Bonus
Plans”) provide for the payment of the following amounts to
our Named Executive Officers on the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
Amount of Retention
|
|
|
|
Expected
|
|
Bonus Award
|
|
Named Executive Officer
|
|
Payment Date
|
|
($)
|
|
|
J. Michael Anderson
|
|
April 30, 2008
|
|
|
160,000
|
|
D. Bradley Childers
|
|
April 30, 2008
|
|
|
160,000
|
|
Steven W. Muck
|
|
March 31, 2008
|
|
|
250,000
|
|
The amounts payable under the Retention Bonus Plans were set at
a level that was intended to provide a sufficient incentive to
the executive to remain in the employ of Exterran for an
adequate period of time following the merger and ensure a smooth
integration of Hanover and Universal. Under the terms of the
26
Retention Bonus Plans, if the officer remains in the employment
of Exterran up to the payment date indicated in the table, the
officer is entitled to be paid his entire retention bonus, and
if any of the above officers’ employment with Exterran is
terminated prior to the payment date by reason of death,
disability or termination without cause (as defined in the
Retention Bonus Plans), that officer will be entitled to be paid
his entire retention bonus.
Other
Compensation Programs
401(k)
Retirement and Savings Plans
Prior to the merger, Hanover maintained the Hanover Companies
Retirement Savings Plan (the “Hanover 401(k) Plan”)
and Universal maintained the 401(k) Retirement and Savings Plan
(the “Universal 401(k) Plan”), both of which provided
employees, including the Named Executive Officers, the
opportunity to defer up to 25% of their eligible salary up to
the IRS maximum deferral amount on a pre-tax basis. This was
accomplished through contributions to an account maintained by
an independent trustee in investments as directed by the
employee. Hanover and Universal each had a policy to match an
employee’s contribution, up to a maximum of 3% and 4.5% of
an employee’s annual eligible compensation, respectively,
and in the case of the Universal 401(k) Plan, subject to
limitations described under “Employees’ Supplemental
Savings Plan” below. As noted above, as a result of the
merger, all company matching contributions under the Hanover
401(k) Plan and the Universal 401(k) Plan fully vested on the
merger date.
Effective January 1, 2008, Exterran Holdings’ Board of
Directors amended the Hanover 401(k) Plan (as amended, the
“Exterran 401(k) Plan”) to, among other things,
provide that Exterran would become the plan sponsor and merge
the Universal 401(k) Plan with and into the Exterran 401(k)
Plan. The Exterran 401(k) Plan provides employees the
opportunity to defer up to 25% of their eligible salary up to
the IRS maximum deferral amount on a pre-tax basis. This is
accomplished through contributions to an account maintained by
an independent trustee. Exterran’s policy for all employees
is to match 100% of an employee’s contribution to a maximum
of 1% of the employee’s annual eligible compensation plus
50% of an employee’s contribution to a maximum of 5% of the
employee’s annual eligible compensation. The employee may
direct how the funds are invested. Employees vest in
Exterran’s contributions after two years of service.
Employees’
Supplemental Savings Plan
Prior to the merger, Universal sponsored an Employees’
Supplemental Savings Plan (the “ESSP”) through which
employees with an annual base salary of $100,000 or more,
including the Named Executive Officers, could defer up to 25% of
their eligible salary on a pre-tax basis. The ESSP was a
nonqualified, deferred compensation plan and participation was
voluntary. Participants could also defer up to 100% of their
incentive bonus in 25% increments. Universal’s policy was
to provide matching contributions to the ESSP, in the form of
Universal common stock. Deferrals from bonuses were not eligible
for the match. The match limits of 3% and 4.5% (based on company
tenure) were aggregate amounts and included both the Universal
401(k) Plan and the ESSP match amounts. The ESSP was designed in
part to provide a vehicle to restore qualified plan benefits
that were reduced as a result of limitations imposed under the
Internal Revenue Code of 1986, as amended (the
“Code”). It also enabled deferral of compensation that
would otherwise be treated as excess employee remuneration by
Universal within the meaning of Section 162(m) of the Code.
Effective January 1, 2008, the ESSP was amended to
(i) change the plan sponsor to Exterran, (ii) freeze
the ESSP with respect to new participation and contributions as
of December 31, 2007 and (iii) fully vest the accounts
of active participants as of that date. On December 31,
2007, all deferred compensation and employer matching
contributions that were earned or vested under the ESSP after
December 31, 2004, along with all associated earnings,
gains and losses, were transferred from the ESSP to the Exterran
Deferred Compensation Plan (described below) and will be
maintained and distributed under the Exterran Deferred
Compensation Plan. The ESSP is intended to be a
“grandfathered” plan for purposes of Section 409A
of the Code.
27
Deferred
Compensation Plan
Effective January 1, 2008, our Board of Directors adopted
the Exterran Deferred Compensation Plan (the “Deferred
Compensation Plan”), under which key management or highly
compensated employees may (i) defer receipt of their
compensation, including up to 100% of their salaries and up to
100% of their bonuses, and (ii) be credited with company
contributions that are designed to
make-up a
portion of the employer-matching contribution that cannot be
made under the Exterran 401(k) Plan due to qualified plan limits
under the Code. We may, but have no obligation to, make
discretionary contributions on behalf of a participant, in such
form and amount as Exterran’s Compensation Committee deems
appropriate, in its sole discretion. In addition, the ESSP
deferred compensation and employer matching contributions that
were not earned and vested prior to January 1, 2005 were
transferred to the Deferred Compensation Plan.
Participant elections with respect to deferrals of compensation
and distributions generally must be made in the year preceding
that in which the compensation is earned, except that our
Compensation Committee may permit a newly eligible participant
to make deferral elections up to 30 days after he or she
first becomes eligible to participate in the Deferred
Compensation Plan. The Deferred Compensation Plan is an
“unfunded” plan for state and federal tax purposes,
and participants have the rights of our unsecured creditors with
respect to their Deferred Compensation Plan accounts.
Participants may elect to receive distributions of their
accounts while still in the service of Exterran or upon the
participant’s separation from service or disability, each
as defined in the Deferred Compensation Plan. Participants also
may elect to receive distributions of their accounts either in a
lump sum or in two to 10 annual installments. Distributions will
be made in cash, except that a participant may elect to have any
portion of his or her account that is deemed invested in our
Common Stock to be distributed in shares of Common Stock if the
distribution is made prior to January 1, 2011.
Employee
Stock Purchase Plan
On August 20, 2007, our Board of Directors adopted the
Exterran Holdings, Inc. Employee Stock Purchase Plan (the
“ESPP”), which provides our eligible employees with an
option to purchase Common Stock through payroll deductions and
is designed to comply with Section 423 of the Code.
Exterran’s Compensation Committee, which administers the
ESPP, has determined that employees who elect to participate in
the ESPP will initially have an option to purchase a share of
Common Stock at the lesser of (i) 85% of the fair market
value of a share of Common Stock on the offering date or
(ii) 85% of the fair market value of a share of Common
Stock on the purchase date. Exterran’s Compensation
Committee has the discretion to set the purchase price at 85% to
100% of the fair market value of a share of Common Stock on one
of the following dates: (i) the offering date,
(ii) the purchase date or (iii) the offering date or
the purchase date, whichever is lower. The initial offering
period commenced on October 1, 2007 and offering periods
will consist of three months, or such other period as may be
determined from time to time by Exterran’s Compensation
Committee. A total of 650,000 shares of Common Stock have
been authorized and reserved for issuance under the ESPP.
Amended
and Restated 2007 Stock Incentive Plan
On August 20, 2007, our Board of Directors initially
adopted and then subsequently amended the Exterran Holdings,
Inc. Amended and Restated 2007 Stock Incentive Plan (the
“Stock Incentive Plan”), which is administered by our
Compensation Committee and authorizes the issuance of awards, at
the discretion of our Compensation Committee, of Common Stock,
stock options, restricted stock, restricted stock units, stock
appreciation rights and performance awards to our directors and
employees and employees of our subsidiaries. A maximum of
4,750,000 shares of Common Stock is available for issuance
under the Stock Incentive Plan. This plan was approved by
Universal’s and Hanover’s stockholders in connection
with their approval of the merger of the two companies.
28
Perquisites
Hanover, Universal and Exterran made what we believed were
limited use of perquisites during 2007. None of our executive
officers had company cars or car allowances. A taxable benefit
of tax preparation and planning services was made available to
each Named Executive Officer formerly employed by Universal. The
health care and insurance coverage provided to our executives
was the same as that provided to all active employees with the
exception of the Medical Expense Reimbursement Plan
(“MERP”). The MERP provided for additional medical,
dental, and vision benefits to certain of our executive
officers, and an annual physical examination was made available
to our Named Executive Officers during 2007. In addition, we
have agreed that Mr. Snider and his spouse will be entitled
to continue to participate at no cost in Exterran’s medical
benefit plan following his retirement, provided he remains an
active employee of Exterran until the time of his retirement.
Chief
Executive Officer Compensation
Our President and Chief Executive Officer, Steve Snider,
received compensation through August 20, 2007, from
Universal in his role as Universal’s President and Chief
Executive Officer. Upon consummation of the merger,
Exterran’s Compensation Committee determined not to make
any changes in the compensation of our Named Executive Officers,
including Mr. Snider, during the remainder of 2007.
Mr. Snider’s compensation was determined by the
Universal compensation committee using substantially the same
criteria utilized to determine compensation for the other Named
Executive Officers who were former executives of Universal, as
described above.
Base Salary. In accordance with
Universal’s overall philosophy and practice to provide
generally for 4% base salary increases in 2007, its compensation
committee chose to increase Mr. Snider’s 2006 annual
base salary by 4% to $572,000, effective July 1, 2007.
Annual Performance-Based Incentive
Compensation. Exterran’s Compensation
Committee considered Universal’s corporate performance with
respect to the measures described in the section above entitled
the “— Determining Executive
Compensation — Annual Performance-Based Incentive
Compensation” section above and Mr. Snider’s
personal performance as evaluated by the Compensation Committee.
In reviewing Mr. Snider’s performance during 2007, the
Compensation Committee disregarded the objectives that
Universal’s compensation committee had established at the
beginning of 2007 and instead considered overall corporate
performance, the leadership role Mr. Snider played in
effecting the merger and the level of success of the subsequent
integration of Hanover and Universal. In addition, the entire
Board of Directors participated in a written evaluation of
Mr. Snider’s performance with respect to qualitative
measures (including, but not limited to, strategic and
organizational leadership, customer satisfaction and other key
relationships, financial management and ethics), the results of
which the Compensation Committee considered. Although, based on
this evaluation, Mr. Snider was determined to have met or
exceeded the Board’s expectations, Mr. Snider
requested that the Compensation Committee apply an individual
performance multiplier to his 2007 bonus of less than 1.00 (as
described in the section titled “- Universal Officer
Incentive Program”), which resulted in a reduced payout to
Mr. Snider of $350,000.
Long-Term Incentive Award. The
Universal compensation committee considered it in the best
interest of both the stockholders and Mr. Snider to
emphasize long-term incentives as a key component of
Mr. Snider’s total compensation. To recognize the
importance of Mr. Snider’s role in effecting the
merger between Universal and Hanover and integrating the two
companies, the Universal compensation committee approved on
June 12, 2007, the following LTI Award for Mr. Snider:
|
|
|
|
•
|
A grant of 21,333 shares of restricted stock, which
represents approximately 50% of the total value of
Mr. Snider’s 2007 LTI Award. The restricted stock is
subject to vesting at the rate of one-third per year on each
anniversary from the date of grant over a period of three years.
|
|
|
•
|
A grant of 3,984 incentive stock options and 34,667
non-qualified options to purchase our Common Stock, which
represents approximately 50% of the total value of
Mr. Snider’s 2007 LTI Award. The
|
29
|
|
|
|
|
stock options are subject to vesting at the rate of one-third
per year on each anniversary from the date of grant over a
period of three years.
|
The size and type of awards provided to Mr. Snider, taken
together with the other elements of his compensation, were
determined by Universal’s compensation committee to be
appropriate and were designed to encourage the achievement of a
successful merger, improved operating results and growth in
stockholder value as well as to aid in retention and to ensure a
greater ownership stake in Exterran, thereby further aligning
Mr. Snider’s interests with those of our stockholders.
Stock
Ownership Requirements
We do not have any policy or guidelines that require specified
ownership of our Common Stock by our directors or executive
officers or stock retention guidelines applicable to
equity-based awards granted to directors or executive officers.
As of March 18, 2008, the Named Executive Officers held
649,349 stock options and 107,627 shares of restricted
stock, representing 1% of the outstanding Common Stock.
Accounting
Implications and Compensation Deductions
Limitation
We accounted for the equity compensation expense under Statement
of Financial Accounting Standards No. 123R,
“Share-Based Payment,” which requires us to estimate
and record an expense for each award of equity compensation over
the vesting period of the award. Accounting rules also require
us to record cash compensation as an expense at the time the
obligation was incurred.
Section 162(m) of the Code limits the deductibility of
certain compensation expenses in excess of $1,000,000 to any one
individual in any fiscal year. Compensation that is
“performance-based” is excluded from this limitation.
For compensation to be “performance-based,” it must
meet certain criteria including certain predetermined objective
standards approved by stockholders. We believe that maintaining
the discretion to evaluate the performance of our executive
officers is an important part of our responsibilities and
benefits our stockholders. The Compensation Committee, in
coordination with management, periodically assesses the
potential application of Section 162(m) on incentive
compensation awards and other compensation decisions.
Conclusion
We believe that our executive compensation programs for 2007
were:
|
|
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|
•
|
appropriate in amount;
|
|
|
•
|
appropriately applied to our Named Executive Officers; and
|
|
|
•
|
necessary to retain the executive officers who are essential to
our continued development and success, to compensate those
executive officers for their contributions and to enhance
stockholder value.
|
30
INFORMATION
REGARDING EXECUTIVE COMPENSATION
In the tables that follow, compensation paid and equity awards
granted prior to August 20, 2007, were by Universal (in the
case of Messrs. Snider, Anderson and Childers) or by
Hanover (in the case of Messrs. Matusek and Muck) pursuant
to the executive’s employment with each respective company.
Any compensation paid thereafter was in connection with each
executive’s employment with Exterran.
The following table sets forth certain information with respect
to compensation paid during 2007 to our Named Executive Officers.
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
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Non-Equity
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|
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|
|
|
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|
|
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Incentive
|
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|
|
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|
|
|
|
|
|
|
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Stock
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|
Option
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Plan
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All Other
|
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|
|
|
|
|
|
|
Salary
|
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|
Bonus
|
|
|
Awards
|
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Awards
|
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|
Compensation
|
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Compensation
|
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Total
|
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Name and Position
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Year
|
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|
($)
|
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|
($)(1)
|
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|
($)(2)
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|
($)(3)
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($)(4)
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($)(5)
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($)
|
|
|
Stephen A. Snider,
President and Chief Executive Officer
|
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2007
|
|
|
|
550,000
|
|
|
|
|
|
|
|
989,646
|
(6)
|
|
|
2,523,597
|
(6)
|
|
|
350,000
|
|
|
|
44,486
|
|
|
|
4,457,729
|
|
J. Michael Anderson,
Senior Vice President and Chief Financial Officer
|
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|
2007
|
|
|
|
309,808
|
|
|
|
|
|
|
|
792,408
|
(6)
|
|
|
728,535
|
(6)
|
|
|
200,000
|
|
|
|
18,081
|
|
|
|
2,048,832
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|
D. Bradley Childers,
Senior Vice President
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|
2007
|
|
|
|
300,000
|
|
|
|
|
|
|
|
736,095
|
(6)
|
|
|
640,334
|
(6)
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|
200,000
|
|
|
|
25,489
|
|
|
|
1,901,918
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|
Brian A. Matusek,
Senior Vice President and Chief Operating Officer
|
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2007
|
|
|
|
331,944
|
|
|
|
180,000
|
|
|
|
1,143,917
|
(7)
|
|
|
63,808
|
(7)
|
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|
360,000
|
|
|
|
8,022
|
|
|
|
2,087,691
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|
Steven W. Muck,
Senior Vice President, Global Human Resources
|
|
|
2007
|
|
|
|
264,636
|
|
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|
140,000
|
|
|
|
1,201,268
|
(7)
|
|
|
57,557
|
(7)
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|
285,000
|
|
|
|
8,618
|
|
|
|
1,957,079
|
|
|
|
|
(1) |
|
The amounts included in this column represent the cash payment
of a long-term incentive award at 100% of target payout earned
in connection with Hanover’s Long-Term Incentive Program
for a three year performance period commencing on
January 1, 2005, which was governed by the terms of
Hanover’s 2003 Stock Incentive Plan, the vesting of which
accelerated upon consummation of the merger. |
|
(2) |
|
The amounts included in this column represent the compensation
cost recognized by Exterran that is related to restricted stock
awards, as described in SFAS 123R. For a discussion of
valuation assumptions, see Note 15 to the consolidated
financial statements within our Annual Report on
Form 10-K
for the year ended December 31, 2007. Please see the Grants
of Plan-Based Awards Table below for more information regarding
equity-based awards granted in 2007. |
|
(3) |
|
The amounts included in this column represent the compensation
cost of (a) options to purchase our Common Stock,
(b) options to purchase Exterran Partners common units,
awarded and recognized by Exterran Partners, and (c) unit
appreciation rights with respect to Exterran Partners common
units, awarded and recognized by Exterran, in each case as
described in SFAS 123R. For a discussion of valuation
assumptions, see Note 15 to the consolidated financial
statements within our Annual Report on
Form 10-K
for the year ended December 31, 2007. Please see the Grants
of Plan-Based Awards Table below for more information regarding
equity-based awards granted in 2007. |
|
(4) |
|
The amounts included in this column represent the following cash
awards: |
|
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|
•
|
For Messrs. Snider, Anderson and Childers, a cash payment
under Universal’s 2007 Officer Incentive Plan, which
covered the twelve-month compensation measurement and
performance review period ending December 31, 2007, and
which was paid during the first quarter of 2008; and
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•
|
For Messrs. Matusek and Muck:
|
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|
|
•
|
a cash payment under Hanover’s 2007 Short-Term Incentive
Program, which covered the twelve-month compensation measurement
and performance review period ending December 31, 2007, and
which was paid during the first quarter of 2008; and
|
31
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|
|
•
|
a cash bonus representing an additional 50% of target payout to
supplement the payout (described in footnote (1) of this
table) under Hanover’s Long-Term Incentive Program. This
supplemental cash bonus was approved by Hanover’s
compensation committee to partially correct the inequity created
under the terms of Hanover’s 2003 Stock Incentive Plan,
which limited the payout in the event of a change of control to
100% of target payout (despite expected actual performance at
200% of stated corporate performance objectives). The
supplemental cash bonus was paid upon consummation of the merger
with Universal.
|
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|
(5) |
|
The amounts shown in this column for the year ended
December 31, 2007 are attributable to the following: |
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Tax
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|
|
|
|
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Preparation
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|
401(k) Plan
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|
ESSP
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Executive
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and
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|
Matching
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|
Matching
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|
Medical
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|
Planning
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|
|
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|
|
Contribution
|
|
Contribution
|
|
Coverage
|
|
Services
|
|
Other
|
|
Total
|
Name
|
|
($)(a)
|
|
($)(b)
|
|
($)(c)
|
|
($)
|
|
($)(d)
|
|
($)
|
|
Stephen A. Snider
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|
10,125
|
|
|
|
15,120
|
|
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|
7,005
|
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|
11,000
|
|
|
|
1,236
|
|
|
|
44,486
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|
J. Michael Anderson
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|
6,750
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|
2,730
|
|
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|
7,005
|
|
|
|
900
|
|
|
|
696
|
|
|
|
18,081
|
|
D. Bradley Childers
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|
9,265
|
|
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|
3,645
|
|
|
|
7,005
|
|
|
|
4,900
|
|
|
|
674
|
|
|
|
25,489
|
|
Brian A. Matusek
|
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|
7,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
868
|
|
|
|
8,022
|
|
Steven W. Muck
|
|
|
7,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
868
|
|
|
|
8,618
|
|
|
|
|
(a) |
|
Executives could contribute up to 25% of their salary to the
Universal and Hanover 401(k) Plans, which during 2007 was
matched by Universal and Hanover (with a maximum match of 4.5%
and 3%, respectively, of each executive’s annual eligible
compensation). Both individual and matching contributions are
subject to limits established by the Internal Revenue Service. |
|
(b) |
|
Eligible executive officers could contribute up to 25% of their
salary and up to 100% of their incentive bonus to the Employee
Supplemental Savings Plan, which during 2007 was matched by
Universal and Exterran in an amount ranging from 3% to 4.5% of
the executive’s annual eligible compensation, based on such
executive’s tenure. |
|
(c) |
|
Represents premiums paid for medical coverage under the Medical
Expense Reimbursement Plan. |
|
(d) |
|
Other benefits include premiums paid by Exterran for group term
life and accidental death and disability insurance. |
|
|
|
(6) |
|
These amounts include shares of restricted stock and options to
acquire Common Stock that immediately vested on August 20,
2007, the effective date of the merger (as set forth in the
Option Exercises and Stock Vested Table below), awarded by
Universal prior to the merger under the Universal Incentive
Stock Option Plan and the Restricted Stock Plan for Executive
Officers. |
|
(7) |
|
These amounts include shares of restricted stock and options to
acquire Common Stock that immediately vested on August 20,
2007, the effective date of the merger (as set forth in the
Option Exercises and Stock Vested Table below), awarded by
Hanover prior to the merger under Hanover’s equity plans. |
32
Grants of
Plan-Based Awards Table
The following table provides additional information about stock
and option awards and non-equity incentive plan awards granted
to the Named Executive Officers during the year ended
December 31, 2007.
|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
or Base
|
|
|
Value of
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
Stock and
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/SH)
|
|
|
($)(2)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
Stephen A. Snider
|
|
|
|
|
|
|
114,400
|
|
|
|
572,000
|
|
|
|
1,114,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,333
|
(3)
|
|
|
|
|
|
|
|
|
|
|
1,599,975
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,984
|
(4)
|
|
|
75.27
|
|
|
|
128,325
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,667
|
(5)
|
|
|
75.27
|
|
|
|
1,116,624
|
|
J. Michael Anderson
|
|
|
|
|
|
|
45,080
|
|
|
|
225,400
|
|
|
|
450,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,984
|
(4)
|
|
|
75.27
|
|
|
|
128,325
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,887
|
(5)
|
|
|
75.27
|
|
|
|
221,830
|
|
D. Bradley Childers
|
|
|
|
|
|
|
43,680
|
|
|
|
218,400
|
|
|
|
436,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,984
|
(4)
|
|
|
75.27
|
|
|
|
128,325
|
|
|
|
|
6/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,887
|
(5)
|
|
|
75.27
|
|
|
|
221,830
|
|
Brian A. Matusek
|
|
|
|
|
|
|
85,000
|
|
|
|
170,000
|
|
|
|
340,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/8/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,280
|
(6)
|
|
|
|
|
|
|
|
|
|
|
499,999
|
|
Steven W. Muck
|
|
|
|
|
|
|
67,500
|
|
|
|
135,000
|
|
|
|
270,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/8/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,824
|
(6)
|
|
|
|
|
|
|
|
|
|
|
399,992
|
|
|
|
|
(1) |
|
The amounts in these columns reflect the range of potential
payouts under the 2007 Universal Officer Incentive Plan (for
Messrs. Snider, Anderson and Childers) and the 2007 Hanover
Short-Term Incentive Program (for Messrs. Matusek and
Muck). The actual payouts under the plans have been determined
and were paid in March 2008, as reflected in the Summary
Compensation Table above. The performance measures which
determined the payouts under the plans are described in the
CD&A above. |
|
(2) |
|
The value of restricted stock and stock option awards is based
on SFAS 123R calculations. |
|
(3) |
|
Restricted stock awards were granted on June 12, 2007 under
the Universal Restricted Stock Plan for Executive Officers and
vest on each anniversary date of grant at the rate of one-third
per year over a three-year period, subject to accelerated
vesting in the event of a change of control. |
|
(4) |
|
Incentive options were granted on June 12, 2007 under the
Universal Incentive Stock Option Plan and vest on each
anniversary date of grant at the rate of one-third per year over
a three-year period, subject to accelerated vesting in the event
of a change of control. |
|
(5) |
|
Non-qualified options were granted on June 12, 2007 under
the Universal Incentive Stock Option Plan and vest on each
anniversary date of grant at the rate of one-third per year over
a three-year period, subject to accelerated vesting in the event
of a change of control. |
|
(6) |
|
Restricted stock awards were granted on May 8, 2007 under
the Hanover 2006 Stock Incentive Plan and vest on each
anniversary date of grant at the rate of one-third per year over
a three-year period, subject to accelerated vesting in the event
of a change of control. |
33
Outstanding
Equity Awards at Fiscal Year-End Table
The following table provides information regarding equity awards
and equity-based awards granted by Hanover, Universal and
Exterran which were outstanding at December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Option Awards
|
|
|
|
|
|
Value of
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Shares or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Units of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Stock
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
That
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
Stephen A. Snider
|
|
|
145,306
|
|
|
|
|
|
|
|
21.30
|
|
|
|
2/19/2012
|
|
|
|
21,333
|
|
|
|
1,745,039
|
|
|
|
|
130,000
|
|
|
|
|
|
|
|
43.39
|
|
|
|
3/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
38.15
|
|
|
|
3/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
29,015
|
|
|
|
|
|
|
|
16.71
|
|
|
|
3/10/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
97,024
|
|
|
|
|
|
|
|
33.60
|
|
|
|
4/20/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
31,675
|
|
|
|
|
|
|
|
30.07
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
90,523
|
|
|
|
|
|
|
|
31.65
|
|
|
|
12/11/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,984
|
(2)
|
|
|
75.27
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,667
|
(2)
|
|
|
75.27
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,714
|
(3)
|
|
|
25.94
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,714
|
(4)
|
|
|
25.94
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
J. Michael Anderson
|
|
|
20,000
|
|
|
|
|
|
|
|
43.39
|
|
|
|
3/3/2016
|
|
|
|
6,000
|
|
|
|
490,800
|
|
|
|
|
17,000
|
|
|
|
|
|
|
|
38.15
|
|
|
|
3/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
67,660
|
|
|
|
|
|
|
|
17.30
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
17,340
|
|
|
|
|
|
|
|
17.30
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
16,675
|
|
|
|
|
|
|
|
30.07
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
3,325
|
|
|
|
|
|
|
|
30.07
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,984
|
(2)
|
|
|
75.27
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,887
|
(2)
|
|
|
75.27
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,286
|
(3)
|
|
|
25.94
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,286
|
(4)
|
|
|
25.94
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
D. Bradley Childers
|
|
|
20,000
|
|
|
|
|
|
|
|
43.39
|
|
|
|
3/3/2016
|
|
|
|
6,000
|
|
|
|
490,800
|
|
|
|
|
17,000
|
|
|
|
|
|
|
|
38.15
|
|
|
|
3/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
19,016
|
|
|
|
|
|
|
|
16.71
|
|
|
|
3/10/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
5,984
|
|
|
|
|
|
|
|
16.71
|
|
|
|
3/10/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
16,675
|
|
|
|
|
|
|
|
30.07
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
3,325
|
|
|
|
|
|
|
|
30.07
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
24,238
|
|
|
|
|
|
|
|
19.03
|
|
|
|
9/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
14,182
|
|
|
|
|
|
|
|
19.03
|
|
|
|
9/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,984
|
(2)
|
|
|
75.27
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,887
|
(2)
|
|
|
75.27
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,857
|
(3)
|
|
|
25.94
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,857
|
(4)
|
|
|
25.94
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
Brian A. Matusek
|
|
|
1,827
|
|
|
|
|
|
|
|
30.76
|
|
|
|
10/22/2013
|
|
|
|
7,280
|
|
|
|
595,504
|
|
|
|
|
5,525
|
|
|
|
|
|
|
|
36.86
|
|
|
|
7/8/2015
|
|
|
|
|
|
|
|
|
|
Steven W. Muck
|
|
|
1,773
|
|
|
|
|
|
|
|
44.76
|
|
|
|
5/14/2012
|
|
|
|
5,824
|
|
|
|
476,403
|
|
|
|
|
3,250
|
|
|
|
|
|
|
|
31.38
|
|
|
|
11/8/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
3,520
|
|
|
|
|
|
|
|
35.16
|
|
|
|
7/16/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
4,225
|
|
|
|
|
|
|
|
36.86
|
|
|
|
7/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the market closing price of our Common Stock on
December 31, 2007 ($81.80). |
|
(2) |
|
Represents options to purchase our Common Stock, awarded under
the Universal Incentive Stock Option Plan, that vest on each
anniversary date of grant at the rate of one-third per year over
a three-year period with a term of ten years following the date
of grant. |
34
|
|
|
(3) |
|
Represents options to purchase Exterran Partners common units,
awarded under the Exterran Partners LTIP, that vest in a lump
sum on January 1, 2009. |
|
(4) |
|
Represents unit appreciation rights payable in cash by Exterran,
that vest in a lump sum on January 1, 2009. |
Option
Exercises and Stock Vested Table
The following table provides additional information about the
value realized by the Named Executive Officers on stock option
exercises and stock award vesting during the year ended
December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number
|
|
|
|
|
Shares
|
|
Value
|
|
of Shares
|
|
Value
|
|
|
Acquired on
|
|
Realized on
|
|
Acquired
|
|
Realized on
|
|
|
Exercise
|
|
Exercise
|
|
on Vesting
|
|
Vesting
|
Name
|
|
(#)
|
|
($)(1)
|
|
(#)
|
|
($)(2)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
Stephen A. Snider
|
|
|
3,325
|
|
|
|
152,518
|
|
|
|
31,250
|
|
|
|
2,338,125
|
(3)
|
J. Michael Anderson
|
|
|
—
|
|
|
|
—
|
|
|
|
33,000
|
|
|
|
2,479,560
|
(4)
|
D. Bradley Childers
|
|
|
—
|
|
|
|
—
|
|
|
|
25,500
|
|
|
|
1,945,535
|
(5)
|
Brian A. Matusek
|
|
|
—
|
|
|
|
—
|
|
|
|
23,369
|
|
|
|
1,841,613
|
(6)
|
Steven W. Muck
|
|
|
—
|
|
|
|
—
|
|
|
|
23,596
|
|
|
|
1,845,155
|
(7)
|
|
|
|
(1) |
|
The amount included in this column represents the aggregate
dollar value realized upon the exercise of options to purchase
Common Stock. |
|
(2) |
|
The amounts included in this column represent the number of
shares vested multiplied by the market price of a share of
Common Stock on the date of vesting. |
|
(3) |
|
The value of vested shares reported for Mr. Snider is
attributable to vesting of the following awards: |
5,000 restricted shares of Common Stock at $65.01 —
$325,050
3,750 restricted shares of Common Stock at $67.32 —
$252,450
22,500 restricted shares of Common Stock at $78.25 —
$1,760,625 (in connection with the closing of the merger)
|
|
|
(4) |
|
The value of vested shares reported for Mr. Anderson is
attributable to vesting of the following awards: |
2,000 restricted shares of Common Stock at $65.01 —
$130,020
5,000 restricted shares of Common Stock at $67.68 —
$338,400
2,000 restricted shares of Common Stock at $66.57 —
$133,140
24,000 restricted shares of Common Stock at $78.25 —
$1,878,000 (in connection with the closing of the merger)
|
|
|
(5) |
|
The value of vested shares reported for Mr. Childers is
attributable to vesting of the following awards: |
2,000 restricted shares of Common Stock at $65.01 —
$130,020
2,000 restricted shares of Common Stock at $66.57 —
$133,140
21,500 restricted shares of Common Stock at $78.25 —
$1,682,375 (in connection with the closing of the merger)
|
|
|
(6) |
|
The value of vested shares reported for Mr. Matusek is
attributable to vesting of the following awards: |
1,245 restricted shares of Common Stock at $81.32 —
$101,243
4,538 restricted shares of Common Stock at $80.27 —
$364,265
17,586 restricted shares of Common Stock at $78.25 —
$1,376,105 (in connection with the closing of the merger)
|
|
|
(7) |
|
The value of vested shares reported for Mr. Muck is
attributable to vesting of the following awards: |
975 restricted shares of Common Stock at $81.32 —
$79,287
663 restricted shares of Common Stock at $79.69 —
$52,834
35
2,198 restricted shares of Common Stock at $80.27 —
$176,433
1,625 restricted shares of Common Stock at $72.33 —
$117,536
18,135 restricted shares of Common Stock at $78.25 —
$1,419,064 (in connection with the closing of the merger)
Non-Qualified
Deferred Compensation Table
The following Non-qualified Deferred Compensation Table
summarizes the Named Executive Officers’ compensation under
the Universal Employee Supplemental Savings Plan (the
“ESSP”) (assumed by Exterran) for the year ended
December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
Aggregate
|
|
|
|
Aggregate
|
|
|
Executive
|
|
Contributions in
|
|
Earnings
|
|
Aggregate
|
|
Balance at
|
|
|
Contributions in
|
|
Last Fiscal
|
|
in Last
|
|
Withdrawals/
|
|
Last Fiscal
|
|
|
Last Fiscal Year
|
|
Year
|
|
Fiscal Year
|
|
Distributions
|
|
Year-End
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
($)(4)
|
|
Stephen A. Snider
|
|
|
259,500
|
|
|
|
15,120
|
|
|
|
154,370
|
|
|
|
—
|
|
|
|
2,522,696
|
|
J. Michael Anderson
|
|
|
11,708
|
|
|
|
2,730
|
|
|
|
14,014
|
|
|
|
—
|
|
|
|
166,467
|
|
D. Bradley Childers
|
|
|
17,500
|
|
|
|
3,645
|
|
|
|
7,742
|
|
|
|
—
|
|
|
|
101,443
|
|
|
|
|
(1) |
|
Amounts shown represent contributions made by each Named
Executive Officer to the ESSP during 2007. |
|
(2) |
|
Amounts shown represent matching contributions (in the form of
Common Stock) to each Named Executive Officer’s ESSP
account. |
|
(3) |
|
Amounts shown represent earnings under the ESSP, considering
historical balances and Named Executive Officer and Company
matching contributions during 2007. |
|
(4) |
|
Amounts shown represent the aggregate ESSP balance for each
Named Executive Officer at December 31, 2007. |
Payments
and Potential Payments upon Change of Control
Because the merger between Hanover and Universal resulted in a
change of control under both companies’ equity plans, other
than the Exterran Partners LTIP, all unvested grants awarded
prior to February 5, 2007 immediately vested on
August 20, 2007, the effective date of the merger. This
change of control under the plans resulted in the vesting of the
following awards held by our Named Executive Officers:
|
|
|
|
•
|
138,376 options to acquire our Common Stock, originally awarded
as options to acquire Hanover or Universal common stock; and
|
|
|
•
|
103,725 shares of our Common Stock, originally awarded as
Hanover or Universal restricted stock.
|
Hanover Change of Control Agreements. Each of
Messrs. Matusek and Muck is a party to a change of control
agreement with Hanover (the “Hanover change of control
agreements”) pursuant to which certain benefits may be paid
or provided to the executive due to a change of control, but
only if his employment is terminated within one year from the
date of such change of control. Although the merger of Hanover
and Universal constituted a change of control under the Hanover
change of control agreements, each of Messrs. Matusek and
Muck continued his employment with Exterran and thus has not
been entitled to any payout under his agreement; however, if
either of these executives’ employment with Exterran is
terminated without cause or if the executive terminates his
employment for good reason before August 20, 2008, then
Exterran will pay the executive in a lump sum in cash within
five business days after the date of termination (provided,
however, that to the extent the executive is a specified
employee for purposes of Section 409A of the Code, payment
of amounts subject to Section 409A will be delayed for six
months from the date of termination) the following:
|
|
|
|
•
|
the executive’s earned but unpaid base salary through the
date of termination plus the executive’s target bonus for
the current year (prorated to the date of termination);
|
36
|
|
|
|
•
|
any earned but unpaid actual bonus for the prior year;
|
|
|
•
|
that portion of the executive’s vacation pay accrued, but
not used, for the current year to the date of termination;
|
|
|
•
|
the product of two times the sum of the executive’s
respective base salary and target bonus; and
|
|
|
•
|
amounts previously deferred by the executive, if any, or earned
but not paid, if any, under any Hanover incentive and
nonqualified deferred compensation plans or programs as of the
date of termination.
|
In addition, the Hanover change of control agreements provide
that Exterran will pay the executive for health insurance
premiums for a period of up to 18 months following his
termination. If the executive is terminated for
“cause,” or such executive terminates his or her
employment without “good reason,” Exterran is not
obligated to make any payments under the Hanover change of
control agreement.
Assuming a termination of employment on December 31, 2007,
and assuming a Common Stock value of $81.80 per share (the
December 31, 2007 closing price), we estimate that
Messrs. Matusek and Muck would receive the following under
the Hanover change of control agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
|
|
Target
|
|
Stock
|
|
Restricted
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Options
|
|
Stock
|
|
Benefits
|
|
Total
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)
|
|
Brian A. Matusek
|
|
|
680,000
|
|
|
|
340,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,464
|
|
|
|
1,035,464
|
|
Steven W. Muck
|
|
|
540,000
|
|
|
|
270,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,464
|
|
|
|
825,464
|
|
|
|
|
(1) |
|
The amounts provided under “Base Salary” represent the
product of two times the executive’s base salary on
December 31, 2007. |
|
(2) |
|
The amounts provided under “Target Bonus” represent
the product of two times the executive’s 2007 target bonus. |
|
(3) |
|
Options to purchase Common Stock granted prior to
February 5, 2007 became fully vested upon the change of
control resulting from the merger of Hanover and Universal on
August 20, 2007. Options to purchase Common Stock granted
after February 5, 2007 would be forfeited upon termination
of employment. |
|
(4) |
|
Restricted stock granted prior to February 5, 2007 became
fully vested upon the change of control resulting from the
merger of Hanover and Universal on August 20, 2007.
Restricted stock granted after February 5, 2007 would be
forfeited upon termination of employment. |
|
(5) |
|
Health care benefits include the reimbursement of COBRA monthly
premiums for an
18-month
period as stated in the Hanover change of control agreements.
The calculations are based upon 2007 COBRA premiums. |
Universal Change of Control Agreements. Each
of Messrs. Snider, Anderson and Childers is party to a
change of control agreement with Universal (the “Universal
change of control agreements”), pursuant to which certain
benefits may be paid or provided to the executive due to a
change of control, but only if his employment is terminated
within one year from the date of such change of control.
Although the merger of Hanover and Universal constituted a
change of control under the Universal change of control
agreements, each of Messrs. Snider, Anderson and Childers
continued his employment with Exterran and thus has not been
entitled to any payout under his agreement; however, if any of
these executives’ employment with Exterran is terminated
without cause or the executive terminates his employment for
good reason before August 20, 2008, then Exterran will pay
the executive in a lump sum in cash within 30 days after
the date of termination (provided, however, that to the extent
the executive is a specified employee for purposes of
Section 409A of the Code, payment of amounts subject to
Section 409A will be delayed for six months from the date
of termination) the following:
|
|
|
|
•
|
an amount equal to the total of the executive’s earned but
unpaid base salary through the date of termination and a
prorated annual bonus based upon the greater of the annual bonus
that would be payable to the executive for that year or the
executive’s highest annual bonus over the preceding three
years;
|
37
|
|
|
|
•
|
an amount equal to two times the executive’s current annual
base salary and two times the greater of the annual bonus that
would be payable to the executive for that year or the
executive’s highest annual bonus over the preceding three
years;
|
|
|
•
|
an amount equal to two times the executive’s basic and
matching contributions credited to the executive under the
401(k) Plan and any other deferred compensation plan during the
12-month
period immediately preceding the month of the executive’s
date of termination, such amount being grossed up so that the
amount the executive actually receives after payment of any
federal or state taxes payable equals the amount described above;
|
|
|
•
|
for a period of two years following the executive’s date of
termination, Exterran will provide company medical and welfare
benefits to the executive or the executive’s family equal
to those benefits which would have been provided to such
executive in accordance with the benefits if the
executive’s employment had not been terminated;
|
|
|
•
|
the amount forfeited by the executive under the deferred
compensation plan, 401(k) Plan or any similar plan;
|
|
|
•
|
all stock options, restricted stock, restricted stock units or
other stock-based awards held by the executive that are not
vested, will vest; and
|
|
|
•
|
in the event that any payment or distribution made by Exterran
to or for the benefit of the executive would be subject to a
federal excise tax, then the executive is entitled to receive an
additional
gross-up
payment.
|
Payments to Exterran’s executive officers under the
Universal change of control agreements would be made in exchange
for a commitment from the executive to not (1) disclose any
confidential information concerning Exterran, (2) employ or
seek to employ any key employee of Exterran or solicit or
encourage such key employee to terminate his or her employment
with Exterran during the two-year period following the
termination of the executive’s employment and
(3) engage in a competitive business for a period of
one-year following the executive’s termination.
Assuming a termination of employment on December 31, 2007,
and assuming a Common Stock value of $81.80 per share and an
Exterran Partners common unit value of $32.00 per unit (the
December 31, 2007 closing prices, respectively), we
estimate that Messrs. Snider, Anderson and Childers would
receive the following (excluding any tax
gross-ups)
under the Universal change of control agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
|
|
|
|
|
|
|
|
|
Exterran
|
|
|
|
|
|
|
|
|
|
Highest
|
|
|
Salary and
|
|
|
|
|
|
|
|
|
Partners,
|
|
|
|
|
|
|
|
|
|
Paid
|
|
|
Highest
|
|
|
Stock
|
|
|
Restricted
|
|
|
L.P. Unit
|
|
|
Benefits and
|
|
|
|
|
|
|
Bonus
|
|
|
Paid Bonus
|
|
|
Options
|
|
|
Stock
|
|
|
Awards
|
|
|
Perquisites
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)(6)
|
|
|
($)
|
|
|
Stephen A. Snider
|
|
|
859,250
|
|
|
|
2,862,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
71,108
|
|
|
|
3,792,858
|
|
J. Michael Anderson
|
|
|
354,870
|
|
|
|
1,353,740
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
39,578
|
|
|
|
1,748,188
|
|
D. Bradley Childers
|
|
|
283,553
|
|
|
|
1,191,106
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
46,439
|
|
|
|
1,521,098
|
|
|
|
|
(1) |
|
The amounts included in this column represent the greater of
(a) the highest paid bonus received by each executive over
the preceding three-year period or (b) the bonus payable at
the target level for the current fiscal year. |
|
(2) |
|
The amounts included in this column are calculated by adding
each executive’s current base salary and highest paid bonus
multiplied by a factor of two, as specified in each Universal
change of control agreement. |
|
(3) |
|
Options to purchase Common Stock granted prior to
February 5, 2007 became fully vested upon the change of
control resulting from the merger of Hanover and Universal on
August 20, 2007. Options to purchase Common Stock granted
after February 5, 2007 would be forfeited upon termination
of employment. |
38
|
|
|
(4) |
|
Restricted stock granted prior to February 5, 2007 became
fully vested upon the change of control resulting from the
merger of Hanover and Universal on August 20, 2007.
Restricted stock granted after February 5, 2007 would be
forfeited upon termination of employment. |
|
(5) |
|
Options to purchase Exterran Partners common units and unit
appreciation rights granted by Universal in 2006 (and assumed by
Exterran after the merger) will continue to vest in accordance
with the terms of award, irrespective of any termination of the
executive’s employment. The number of unit options and unit
appreciation rights unvested and outstanding at year end held by
the Named Executive Officers is provided in column (c) of
the Outstanding Equity Awards at Fiscal Year-End Table above. |
|
(6) |
|
The amounts included in this column represent each
executive’s right to the reimbursement of COBRA premiums,
401(k) match and Employee Supplemental Savings Plan matching
contributions for a two-year period. |
Exterran Change of Control Agreements. We have
elected, as a policy matter, not to offer employment agreements
to our executive officers. Generally, each of our executive
officers, including each of the Named Executive Officers, has
entered into a change of control agreement with Exterran. The
change of control agreements are designed to aid in the
retention of our executives and provide continuity of management
in the event of any actual or potential change of control of
Exterran. Each such agreement provides that if, during the
one-year period following a change of control, the
executive’s employment is terminated other than for cause,
death or disability, or the executive terminates for good
reason, then the executive will receive in a lump sum in cash
within five days after the date of termination (provided,
however, that to the extent the executive is a specified
employee for purposes of Section 409A of the Code, payment
of amounts subject to Section 409A will be delayed for six
months from the date of termination) the following:
|
|
|
|
•
|
an amount equal to the total of the executive’s earned but
unpaid base salary through the date of termination, plus the
executive’s target annual incentive bonus that would be
payable to the executive for that year prorated to the date of
termination, plus any earned but unpaid annual bonus for the
prior year, plus any portion of the executive’s earned but
unused vacation pay for that year;
|
|
|
•
|
an amount equal to two times (three times in the case of
Mr. Snider) the sum of the executive’s current annual
base salary and the target annual incentive bonus award that
would be payable to the executive for that year;
|
|
|
•
|
an amount equal to two times (three times in the case of
Mr. Snider) the executive’s basic and matching
contributions credited to the executive under the Exterran
401(k) Plan and any other deferred compensation plan during the
12-month
period immediately preceding the month of the executive’s
date of termination, such amount being grossed up so that the
amount the executive actually receives after payment of any
federal or state taxes equals the amount described above;
|
|
|
•
|
any amount previously deferred, or earned but not paid, by the
executive under the incentive and non-qualified deferred
compensation plans or programs as of the date of termination;
|
|
|
•
|
for a period of two years (three years in the case of
Mr. Snider) following the executive’s date of
termination, Exterran will provide company medical and welfare
benefits to the executive or the executive’s family equal
to those benefits which would have been provided to such
executive in accordance with the benefits if the
executive’s employment had not been terminated;
|
|
|
•
|
all stock options, restricted stock, restricted stock units or
other stock-based awards, and all common units, unit
appreciation rights, unit awards or other unit-based awards and
all cash-based incentive awards held by the executive that are
not vested, will vest; and
|
|
|
•
|
in the event that any payment or distribution made by Exterran
to or for the benefit of the executive would be subject to a
federal excise tax, then the executive is entitled to receive an
additional
gross-up
payment.
|
All payments to a Named Executive Officer under the change of
control agreements would be made in exchange for a commitment
from the executive to not (1) disclose any confidential
information concerning Exterran during the two-year period
following the termination of the executive’s employment,
(2) employ or
39
seek to employ any key employee of Exterran or solicit or
encourage such key employee to terminate his or her employment
with Exterran during the two-year period (a three-year period in
the case of Mr. Snider) following the termination of the
executive’s employment and (3) engage in a competitive
business for a period of two years (three years in the case of
Mr. Snider) following the executive’s termination.
Additionally, the Exterran Partners LTIP provides that, upon a
change of control (defined in the Exterran Partners LTIP to
include (1) any “person” or “group,”
other than affiliates, becoming the beneficial owner of 50% or
more of the voting power of the outstanding equity interests of
Exterran or Exterran Partners, (2) a person other than
Exterran, Exterran GP LLC or one of their affiliates becoming
the general partner of Exterran Partners or (3) the sale or
other disposition of all or substantially all of the assets of
Exterran, Exterran GP LLC or Exterran Partners), all awards of
phantom units (including the related DERs) and unit options
automatically vest and become payable or exercisable, as the
case may be. The Exterran Partners LTIP does not require that
the recipient of awards under the Exterran Partners LTIP have
his or her employment with Exterran or Exterran GP LLC terminate
following such change of control in order for automatic vesting
to occur. This feature was incorporated into the Exterran
Partners LTIP and the awards under the Exterran Partners LTIP
because it was consistent with the long-term incentive plans of
other publicly-traded partnerships, reflecting their relatively
unique situations as controlled publicly-traded entities with
few of their own officers or employees.
Assuming the occurrence of a triggering event under the Exterran
change of control agreements and the Exterran Partners LTIP on
December 31, 2007, and assuming a Common Stock value of
$81.80 per share and an Exterran Partners common unit value of
$32.00 per unit (the December 31, 2007 closing prices,
respectively), we estimate that the Named Executive Officers
would receive the following benefits (excluding any tax
gross-ups as
provided for in the change of control agreements):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exterran
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L.P. Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards and
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
Unit
|
|
|
Benefits
|
|
|
|
|
|
|
Target
|
|
|
and Target
|
|
|
Stock
|
|
|
Restricted
|
|
|
Appreciation
|
|
|
and
|
|
|
|
|
|
|
Bonus
|
|
|
Bonus
|
|
|
Options
|
|
|
Stock
|
|
|
Rights
|
|
|
Perquisites
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)(6)
|
|
|
($)
|
|
|
Stephen A. Snider
|
|
|
572,000
|
|
|
|
3,432,000
|
|
|
|
252,391
|
|
|
|
1,745,039
|
|
|
|
1,038,854
|
|
|
|
106,662
|
|
|
|
7,146,946
|
|
J. Michael Anderson
|
|
|
225,400
|
|
|
|
1,094,800
|
|
|
|
70,988
|
|
|
|
490,800
|
|
|
|
779,146
|
|
|
|
39,578
|
|
|
|
2,700,712
|
|
D. Bradley Childers
|
|
|
218,400
|
|
|
|
1,060,800
|
|
|
|
70,988
|
|
|
|
490,800
|
|
|
|
519,427
|
|
|
|
46,439
|
|
|
|
2,406,854
|
|
Brian A. Matusek
|
|
|
170,000
|
|
|
|
1,020,000
|
|
|
|
—
|
|
|
|
595,504
|
|
|
|
—
|
|
|
|
34,926
|
|
|
|
1,820,430
|
|
Steven W. Muck
|
|
|
135,000
|
|
|
|
810,000
|
|
|
|
—
|
|
|
|
476,403
|
|
|
|
—
|
|
|
|
36,118
|
|
|
|
1,457,521
|
|
|
|
|
(1) |
|
The amounts included in this column represent a full year bonus
with an assumed payout at target performance. |
|
(2) |
|
The amounts included in this column are calculated by adding
each Named Executive Officer’s current base salary and
target bonus multiplied by a factor of two (three in the case of
Mr. Snider), as specified in each Named Executive
Officer’s change of control agreement. |
|
(3) |
|
The amounts included in this column represent the value of
options to purchase Common Stock. All stock options become fully
vested upon a change of control. The number of options currently
unvested and outstanding at year end for each Named Executive
Officer is provided in column (c) of the Outstanding Equity
Awards at Fiscal Year-End Table above, and the value of such
awards has been calculated using the market closing price on
December 31, 2007. |
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The amounts included in this column represent the value of
restricted stock. Upon a change of control, all restricted
shares will fully vest and the restrictions will lapse. The
number of restricted shares that are unvested and outstanding at
year end for each Named Executive Officer is provided in column
(f) of the Outstanding Equity Awards at Fiscal Year-End
Table above, and the value of such awards has been calculated
using the market closing price on December 31, 2007. |
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The amounts included in this column represent the value of
(a) options to purchase Exterran Partners common units and
(b) unit appreciation rights (related to Exterran Partners
common units) payable by Exterran. The unit option awards and
unit appreciation rights will continue to vest in accordance
with the terms of each award, irrespective of any termination of
the Named Executive Officer’s employment. The number of
unit options and unit appreciation rights unvested and
outstanding at year end for each Named Executive Officer is
provided in column (c) of the Outstanding Equity Awards at
Fiscal Year-End Table above, and the value of such awards has
been calculated using the market closing price on
December 31, 2007. |
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The amounts included in this column represent each Named
Executive Officer’s right to the reimbursement of COBRA
premiums, 401(k) match and Employee Supplemental Savings Plan
matching contributions for a two-year period (a three-year
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related
Party Policy
We recognize that transactions with related persons can present
potential or actual conflicts of interest and create the
appearance that decisions are based on considerations other than
the best interests of us and our stockholders. Therefore, our
Audit Committee has adopted a policy on related party
transactions to provide guidance and set standards for the
approval and reporting of transactions between us and
individuals with a direct or indirect affiliation with us and to
ensure that those transactions are in our best interest. Our
policy requires that our subsidiaries report all related party
transactions to the Financial Reporting Department on a
quarterly basis. Additionally, proposed related party
transactions must be submitted to the Audit Committee for
approval prior to entering into the transaction. In the event a
senior officer becomes aware of any pending or ongoing related
party transaction that has not been previously approved or
ratified, the transaction must be promptly submitted to the
Audit Committee or its Chair for ratification, amendment or
termination of the related party transaction. If a related party
transaction is ongoing, the Audit Committee may establish
guidelines for management and will annually assess the
relationship with such related party.
Transactions
with Directors
Our Audit Committee reviewed and approved the following
transactions (with Ms. Clark abstaining with respect to the
transaction with Marathon Oil Company):
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We engage in commercial business transactions with Marathon Oil
Company, pursuant to which we provide equipment and services are
provided by us at market prices and pursuant to our standard
terms and conditions. Ms. Clark, a member of our Board,
serves as Executive Vice President and Chief Financial Officer
of Marathon. During the twelve months ended December 31,
2007, we (including, prior to August 20, 2007, Hanover and
Universal) recorded revenue from sales to Marathon Oil of
approximately $18 million (which represents less than 1% of
our 2007 revenue). Although the Audit Committee does not believe
that Ms. Clark has a direct or indirect material interest
in these transactions and, as a result, these transactions do
not meet the SEC’s disclosure requirements for related
party transactions, the Audit Committee believes disclosure of
these transactions is appropriate.
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On August 20, 2007, Mr. Danner, a non-employee
director, entered into a consulting agreement with us pursuant
to which we engaged Mr. Danner, on a month-to-month basis,
to provide consulting services. In consideration of the services
rendered, we paid Mr. Danner a consulting fee of
approximately $29,500 per month and reimbursed Mr. Danner
for expenses incurred on our behalf. The consulting agreement
terminated in February 2008.
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The Board determined that no charitable organizations with which
any member of the Board or their immediate family members were
affiliated during 2007 received support from us.
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Transactions
with Exterran Partners, L.P.
Distributions
and Payments to Exterran Partners
We own (a) 6,325,000 subordinated units and 2,014,395
common units of Exterran Partners, which constitute 49%
ownership of Exterran Partners; and (b) 340,383 general
partner units, which constitute the entire 2% general partner
interest in Exterran Partners, resulting collectively in a 51%
effective ownership interest in Exterran Partners. We are,
therefore, a “related person” to Exterran Partners as
such term is defined by the SEC.
The following summarizes the distributions and payments made or
to be made to or by Exterran Partners to us, and the other
unitholders, in connection with the formation, ongoing operation
and any liquidation of Exterran Partners. These distributions
and payments were determined by and among affiliated entities
and, consequently, were not the result of arm’s-length
negotiations.
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Distributions of available cash to Exterran Partners’
general partner and its affiliates
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Exterran Partners will generally make cash distributions 98% to
its unitholders on a pro rata basis, including us, as the holder
of 6,325,000 subordinated units and 2,014,395 common units, and
2% to Exterran Partners’ general partner, which we
indirectly own. In addition, if distributions exceed the minimum
quarterly distribution and other higher target distribution
levels, then we are entitled to increasing percentages of the
distributions, up to 50% of the distributions above the highest
target distribution level.
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For the year ended December 31, 2007, we received aggregate
distributions of approximately $0.4 million on general partner
units, $1.5 million on common units and $8.7 million on
subordinated units. On February 14, 2008, we received a
quarterly distribution with respect to the period from October
1, 2007 to December 31, 2007, of approximately $0.2 million on
general partner units, including distributions on incentive
distribution rights, $0.9 million on common units and $2.7
million on subordinated units.
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Payments to Exterran Partners’
general partner and its affiliates
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Subject to certain caps, Exterran Partners reimburses us for the
payment of all direct and indirect expenses incurred on Exterran
Partners’ behalf. For further information regarding the
reimbursement of these expenses, please read
“— Omnibus Agreement” below.
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Withdrawal or removal of Exterran
Partners’ general partner
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If we withdraw or are removed in our general partner capacity,
our general partner interest and its incentive distribution
rights will either be sold to the new general partner for cash
or converted into common units, in each case for an amount equal
to the fair market value of those interests.
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Liquidation
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Upon liquidation of Exterran Partners, the partners of Exterran
Partners, including us, will be entitled to receive liquidating
distributions according to their respective capital account
balances.
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Pursuant to the terms of Exterran Partners’ Omnibus
Agreement (as described below), Exterran Partners reimburses us
for (1) allocated expenses of operational personnel who
perform services for Exterran Partners’ benefit,
(2) direct costs incurred with operating and maintaining
Exterran Partners’ assets and (3) its allocated
selling, general and administrative expenses. We do not receive
any management fee or other compensation for management of
Exterran Partners. Subject to certain caps, Exterran is
reimbursed for certain expenses
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incurred on Exterran Partners’ behalf, including the
compensation of our employees who perform services on Exterran
Partners’ behalf. These expenses include all expenses
necessary or appropriate to the conduct of Exterran
Partners’ business and that are allocable to Exterran
Partners. Exterran Partners’ partnership agreement provides
that we, in our general partner capacity, will determine in good
faith the expenses that are allocable to Exterran Partners.
Except as provided in the Omnibus Agreement, there is no cap on
the amount that may be paid or reimbursed by Exterran Partners
to us for compensation or expenses incurred on Exterran
Partners’ behalf.
Omnibus
Agreement
Upon the closing of Exterran Partners’ initial public
offering, Exterran Partners entered into an omnibus agreement
with us, Exterran Partners’ general partner and others. In
connection with the purchase by Exterran Partners of
approximately $233 million in compression units and
customer contracts from us in July 2007, Exterran Partners
entered into the First Amendment to the Omnibus Agreement with
us, Exterran Partners’ general partner and others. On
August 20, 2007, in connection with the closing of the
merger between Hanover and Universal, Exterran Partners entered
into the First Amended and Restated Omnibus Agreement with us
and others (as amended and restated, the “Omnibus
Agreement”). The following describes the provisions of the
Omnibus Agreement. The Omnibus Agreement (other than the
indemnification obligations described below under
“— Indemnification for Environmental and Related
Liabilities”) will terminate upon a change of control of
our general partner or the removal or withdrawal of Exterran
Partners’ general partner, and certain provisions will
terminate upon a change of control of Exterran.
Non-competition
Under the Omnibus Agreement, we agreed not to offer or provide
compression services in the United States to the contract
compression services customers that are contract compression
service customers of Exterran Partners. Compression services are
defined to include the provision of natural gas contract
compression services, but exclude fabrication of compression
equipment, sales of compression equipment or material, parts or
equipment that are components of compression equipment, leasing
of compression equipment without also providing related
compression equipment service and operating, maintenance,
service, repairs or overhauls of compression equipment owned by
third parties. In addition, under the Omnibus Agreement,
Exterran Partners agreed not to offer or provide compression
services to our domestic contract compression services customers.
As a result of the merger between Hanover and Universal, at the
time of execution of the Omnibus Agreement some of Exterran
Partners customers were also our contract operations services
customers, which we refer to as overlapping customers. We and
Exterran Partners have agreed, subject to the exceptions
described below, not to provide contract operations services to
an overlapping customer at any site at which the other was
providing such services to an overlapping customer on the date
of execution of the Omnibus Agreement, each being referred to as
an “Exterran Partners site” or “Exterran
site.” After the date of the agreement, if an overlapping
customer requests contract operations services at an Exterran
Partners site or an Exterran site, whether in addition to or in
the replacement of the equipment existing at such site on the
date of the agreement, Exterran Partners will be entitled to
provide contract operations services if such overlapping
customer is an Exterran Partners overlapping customer and we
will be entitled to provide such contract operations services if
such overlapping customer is an Exterran overlapping customer.
Additionally, any additional contract operations services
provided to an Exterran Partners overlapping customer will be
provided by Exterran Partners and any additional services
provided to an Exterran overlapping customer will be provided by
us.
We also have agreed that new customers for contract compression
services (neither Exterran Partners’ customers nor our
customers for U.S. contract compression services) are for
Exterran Partners’ account unless the new customer is
unwilling to contract with Exterran Partners or unwilling to do
so under Exterran Partners’ form of compression services
agreement. If a new customer is unwilling to enter into such an
arrangement with Exterran Partners, then we may provide
compression services to the new customer. In the event that
either Exterran Partners or we enter into a contract to provide
compression services to a new
43
customer, either Exterran Partners or we, as applicable, will
receive the protection of the applicable non-competition
arrangements described above in the same manner as if such new
customer had been a compression services customer of either
Exterran Partners or us at the time of entry into the Omnibus
Agreement.
The non-competition arrangements described above do not apply to:
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services to a particular Exterran customer or customers, with
our approval;
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Our provision of contract compression services to a particular
customer or customers of Exterran Partners’, with the
approval of the conflicts committee of the board of directors of
Exterran GP LLC;
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Exterran Partners’ purchase and ownership of not more than
five percent of any class of securities of any entity which
provides contract compression services to our contract
compression services customers;
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Our purchase and ownership of not more than five percent of any
class of securities of any entity which provides contract
compression services to Exterran Partners’ contract
compression services customers;
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Our ownership of Exterran Partners;
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Exterran Partners’ acquisition, ownership and operation of
certain businesses that provide contract compression services to
our contract compression services customers if we have been
offered the opportunity to purchase the business for its fair
market value from Exterran Partners and we decline to do so.
However, if neither the Omnibus Agreement nor the
non-competition arrangements described above have already
terminated, Exterran Partners will agree not to provide contract
compression services to our customers that are also customers of
the acquired business at the sites at which we are providing
contract operations services to them at the time of the
acquisition;
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Our acquisition, ownership and operation of certain businesses
that provide contract compression services to our contract
operations services customers if Exterran Partners has been
offered the opportunity to purchase the business for its fair
market value from us and Exterran Partners declines to do so
with the concurrence of the conflicts committee of the board of
directors of Exterran GP LLC. However, if neither the Omnibus
Agreement nor the non-competition arrangements described above
have already terminated, we will agree not to provide contract
operations services to Exterran Partners’ customers that
are also customers of the acquired business at the sites at
which Exterran Partners is providing contract operations
services to them at the time of the acquisition; or
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a situation in which one of Exterran Partners’ customers
(or its applicable business) and a customer of ours (or our
applicable business) merge or are otherwise combined, in which
case each of Exterran Partners and we may continue to provide
contract operations services to the applicable combined entity
or business without being in violation of the non-competition
provisions, but we and the conflicts committee of the board of
directors of Exterran GP LLC must negotiate in good faith to
implement procedures or such other arrangements, as necessary,
to protect the value to each of us and Exterran Partners of the
business of providing contract operations services to each such
customer or its applicable business, as applicable.
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Unless the Omnibus Agreement is terminated earlier as described
above, the non-competition provisions of the omnibus agreement
will terminate on August 20, 2010 or the date on which a
change of control of Exterran occurs, whichever event occurs
first. If a change of control of Exterran occurs, and neither
the omnibus agreement nor the non-competition arrangements have
already terminated, we will agree for the remaining term of the
non-competition arrangements not to provide contract operations
services to Exterran Partners’ customers at the sites at
which Exterran Partners is providing contract operations
services to them at the time of the change of control.
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Indemnification
for Environmental and Related Liabilities
Under the Omnibus Agreement, we have agreed to indemnify
Exterran Partners for three years after the closing of Exterran
Partners’ initial public offering, which occurred in
October 2006, against certain potential environmental claims,
losses and expenses associated with the operation of Exterran
Partners’ assets and occurring before the closing date of
the initial public offering. Our maximum liability for this
indemnification obligation will not exceed $5 million and
we will not have any obligation under this indemnification until
Exterran Partners’ aggregate losses exceed $250,000. We
will have no indemnification obligations with respect to
environmental claims made as a result of additions to or
modifications of environmental laws promulgated after the
closing date of Exterran Partners’ initial public offering.
Exterran Partners has agreed to indemnify us against
environmental liabilities related to Exterran Partners’
assets to the extent we are not required to indemnify Exterran
Partners.
Additionally, we will indemnify Exterran Partners for losses
attributable to title defects, retained assets and income taxes
attributable to pre-closing operations. Exterran Partners will
indemnify us for all losses attributable to the post-closing
operations of the assets contributed to Exterran Partners, to
the extent not subject to our indemnification obligations. For
the year ended December 31, 2007, there were no requests
for indemnification by either party.
Purchase
of New Compression Equipment from Exterran
Pursuant to the Omnibus Agreement, Exterran Partners is
permitted to purchase newly fabricated compression equipment
from us or our affiliates at our cost to fabricate such
equipment plus a fixed margin of 10%, which may be modified with
the approval of us and the conflicts committee of the board of
directors of Exterran GP LLC. For the year ended
December 31, 2007, Exterran Partners purchased
$24.5 million of new compression equipment from us.
Transfer
of Compression Equipment with Exterran
Pursuant to the Omnibus Agreement, in the event that we
determine in good faith that there exists a need on the part of
our contract operations services business or on Exterran
Partners’ part to transfer compression equipment between us
and Exterran Partners so as to fulfill the compression services
obligations of either of us or Exterran Partners, such equipment
may be so transferred if it will not cause Exterran Partners to
breach any existing contracts or to suffer a loss of revenue
under an existing compression services contract or incur any
unreimbursed costs.
In consideration for such transfer of compression equipment, the
transferee will either (1) transfer to the transferor
compression equipment equal in value to the appraised value of
the compression equipment transferred to it; (2) agree to
lease such compression equipment from the transferor; or
(3) pay the transferor an amount in cash equal to the
appraised value of the compression equipment transferred
to it.
Unless the Omnibus Agreement is terminated earlier as discussed
above, the transfer of compression equipment provisions of the
Omnibus Agreement described above will terminate in August 2010.
For the year ended December 31, 2007, Exterran Partners had
revenue from us and cost of sales related to leases of
compression equipment of $1.4 million and
$4.9 million, respectively.
Reimbursement
of Operating and Selling, General and Administrative
Expense
We provide all operational staff, corporate staff and support
services reasonably necessary to run Exterran Partners’
business. The services provided by us may include, without
limitation, operations, marketing, maintenance and repair,
periodic overhauls of compression equipment, inventory
management, legal, accounting, treasury, insurance
administration and claims processing, risk management, health,
safety and environmental, information technology, human
resources, credit, payroll, internal audit, taxes, facilities
management, investor relations, enterprise resource planning
system, training, executive, sales, business development and
engineering.
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Costs incurred by us directly attributable to Exterran Partners
are charged to Exterran Partners in full. Costs incurred by us
that are indirectly attributable to Exterran Partners and our
other operations are allocated among Exterran Partners and our
other operations. The allocation methodologies vary based on the
nature of the charge and include, among other things, revenue,
employee headcount and net assets. Included in Exterran
Partners’ selling, general and administrative expense for
the year ended December 31, 2007 was $10.4 million of
indirect costs incurred by Exterran.
We have agreed that, for a period that will terminate on
December 31, 2008, Exterran Partners’ obligation to
reimburse us for (1) any cost of sales that we incur in the
operation of Exterran Partners’ business will be capped at
an amount equal to $18.00 per operating horsepower (after taking
into account any such costs Exterran Partners incurs and pays
directly) on a quarterly basis; and (2) any selling,
general and administrative costs allocated to Exterran Partners
will be capped at $4.75 million per quarter (after taking
into account any such costs Exterran Partners incurs and pays
directly). These caps may be subject to increases in connection
with expansions of Exterran Partners’ operations through
the acquisition or construction of new assets or businesses.
For the year ended December 31, 2007, Exterran
Partners’ cost of sales exceeded the cap by
$8.6 million and Exterran Partners’ selling, general
and administrative expenses exceed the cap by $0.3 million.
The excess amount over the cap is being accounted for by us as a
capital contribution to Exterran Partners.
GENERAL
INFORMATION
2009
Annual Meeting of Stockholders
Any proposals of stockholders that are intended for inclusion in
our Proxy Statement for our 2009 annual meeting of stockholders
must be received by our Corporate Secretary no later than
December 16, 2008. Notice of a stockholder proposal
submitted for consideration at the 2009 Annual Meeting but not
for inclusion in our Proxy Statement must be received no later
than February 18, 2009. If a stockholder proposal is not
received by us by February 18, 2009, it will be considered
untimely and our proxy for the 2009 annual meeting of
stockholders may confer discretionary authority to vote on such
matter without any discussion of such matter in the Proxy
Statement for the meeting. Stockholder proposals must be in
writing and delivered to our principal executive office at 4444
Brittmoore Road, Houston, Texas 77041, Attention: Corporate
Secretary.
Annual
Reports
Our 2007 Annual Report to Stockholders and Annual Report on
Form 10-K
is being mailed to our stockholders with this Proxy Statement.
We will provide to any stockholder or potential investor,
without charge, upon written or oral request, by first class
mail or other equally prompt means within one business day of
receipt of such request, a copy of our Annual Report on
Form 10-K
for the year ended December 31, 2007. Please direct any
such requests to the attention of the Corporate Secretary,
Exterran Holdings, Inc., 4444 Brittmoore Road, Houston, Texas
77041 or by telephone at
(281) 405-5175.
Such document is also available at the website of the SEC, which
can be found at
http://www.sec.gov.
46
The
following Annual Meeting materials are available on the
Internet:
Proxy Statement
2007 Annual Report
Visit www.exterran.com/exhproxymaterials
EXTERRAN HOLDINGS, INC.
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders to be held May 6, 2008
I hereby appoint Gordon T. Hall, Stephen A. Snider and Donald C. Wayne, and each of them, with full power of substitution, as proxies to vote all the shares of common stock of Exterran Holdings, Inc. that I am entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 a.m., local time, on May 6, 2008, and at any adjournments or postponements thereof, upon the matters set forth in the accompanying Notice of Annual Meeting
of Stockholders and Proxy Statement, and in their discretion upon such other matters as may properly come before the meeting.
If you execute and return this proxy card, the proxies will vote your shares in the manner specified in this proxy card.
If you execute and return this proxy card but do not specify the manner in which the proxies should vote your shares, the proxies will vote your shares FOR all the nominees for director and FOR the proposal described herein.
(Continued
and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
EXTERRAN HOLDINGS, INC.
May 6, 2008
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
â Please
detach along perforated line and mail in the envelope provided. â
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YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALL THE NOMINEES FOR DIRECTOR AND
“FOR” THE RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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FOR
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AGAINST
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Election of Directors: Election of the following persons to serve as directors of Exterran Holdings, Inc. until the 2009 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified.
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Ratification of the appointment of Deloitte
& Touche LLP as Exterran Holdings, Inc.’s independent registered public accounting firm.
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NOMINEES: |
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FOR ALL NOMINEES
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Janet F. Clark
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TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD.
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Ernie L. Danner
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WITHHOLD AUTHORITY
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Uriel E. Dutton
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FOR ALL NOMINEES
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Gordon T. Hall
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ELECTRONIC ACCESS TO FUTURE DOCUMENTS |
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J.W.G. Honeybourne |
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If you would like to receive future shareholder communications over the Internet exclusively and no longer receive any material by mail, please visit http://www.amstock.com. Click on Shareholder Account Access to enroll. Please enter your account number and tax identification number to log in, then select Receive Company Mailings via E-Mail and provide your e-mail address.
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FOR ALL EXCEPT
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John E. Jackson |
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(See instructions below)
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William C. Pate |
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Stephen M. Pazuk
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Stephen A. Snider
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s),
mark “FOR ALL EXCEPT” and fill in the circle next to
each nominee you wish to
withhold, as shown here:
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To change the address on your account, please check the box at right and indicate your
new address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method.
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Mark here if
you plan to attend the meeting.
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Signature
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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ANNUAL MEETING OF STOCKHOLDERS OF
EXTERRAN HOLDINGS, INC.
May 6, 2008
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PROXY VOTING INSTRUCTIONS
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MAIL
- Date, sign and mail your proxy card in the
envelope provided as soon as possible.
- or -
TELEPHONE
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Call toll-free 1-800-PROXIES
(1-800-776-9437) in the United States or
1-718-921-8500
from foreign countries and follow the instructions. Have your proxy card available when you call.
- OR
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INTERNET - Access “www.voteproxy.com” and follow
the on-screen instructions. Have your proxy card
available when you access the web page.
- OR
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IN PERSON - You may vote your shares in person
by attending the Annual Meeting.
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You may enter your voting instructions at 1-800-PROXIES in the United States or 1-718-921-8500 from
foreign countries or www.voteproxy.com up until 11:59 PM Eastern Time the day before the cut-off or meeting date.
â Please
detach along perforated line and mail in the envelope provided
IF you are not voting via telephone or the Internet. â
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YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALL THE NOMINEES FOR DIRECTOR AND
“FOR” THE RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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FOR
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AGAINST
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ABSTAIN |
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Election of Directors: Election of the following persons to serve as directors of Exterran Holdings, Inc. until the 2009 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified.
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Ratification of the appointment of Deloitte & Touche LLP as Exterran Holdings, Inc.’s independent registered public accounting firm.
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TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD.
ELECTRONIC ACCESS TO FUTURE DOCUMENTS
If you would like to receive future shareholder communications over the Internet exclusively and no longer receive any material by mail, please visit http://www.amstock.com. Click on Shareholder Account Access to enroll. Please enter your account number and tax identification number to log in, then select Receive Company Mailings via E-Mail and provide your e-mail address.
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NOMINEES: |
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FOR ALL NOMINEES
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Janet F. Clark
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Ernie L. Danner
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WITHHOLD AUTHORITY
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Uriel E. Dutton |
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FOR ALL NOMINEES
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Gordon T. Hall
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J.W.G. Honeybourne |
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FOR ALL EXCEPT
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John E. Jackson |
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(See instructions below) |
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William C. Pate |
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Stephen M. Pazuk
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Stephen A. Snider
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INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s),
mark “FOR ALL EXCEPT” and fill in the circle next to
each nominee you wish to
withhold, as shown here: =
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Mark here if
you plan to attend the meeting.
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To change the address on your account, please check the box at right and indicate your
new address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method.
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Signature
of Stockholder
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Date:
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Signature
of Stockholder
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Date:
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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