SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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MITCHAM INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
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MITCHAM INDUSTRIES, INC.
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77340
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 18, 2002
To our Shareholders:
The Annual Meeting of the Shareholders (the "Annual Meeting") of
Mitcham Industries, Inc., a Texas corporation (the "Company"), will be held on
July 18, 2002, at the Houston Marriott North, 225 North Sam Houston Parkway
East, Houston, Texas at 10:00 a.m., CST for the purpose of considering and
voting on the following matters:
1. The election of six directors to serve until the next Annual Meeting
and until their successors are elected and qualified.
2. The approval of the selection of Hein + Associates LLP as the
Company's independent auditors for the fiscal year ended January 31, 2003.
3. The transaction of such other business as may properly come before
the meeting and any adjournment thereof.
The Board of Directors has established the close of business on May 30,
2002 as the record date for determining the shareholders entitled to notice and
to vote at the Annual Meeting and any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO ASSURE YOUR
REPRESENTATION AT THE ANNUAL MEETING, EVEN IF YOU PLAN TO ATTEND, PLEASE
COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ACCOMPANYING ENVELOPE.
Sincerely,
P. Blake Dupuis
Secretary
June 12, 2002
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MITCHAM INDUSTRIES, INC.
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77340
----------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 18, 2002
----------
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of the Company of proxies from the holders of record
of the common stock, par value $.01 per share ("Common Stock"), at the close of
business on May 30, 2002, for use at the Annual Meeting to be held at 10:00
a.m., CST, on July 18, 2002, and any adjournment thereof. This Proxy Statement,
the attached proxy and the Company's Annual Report for the fiscal year ended
January 31, 2002 are being mailed together on or about June 12, 2002, to
shareholders entitled to notice of and to vote at the Annual Meeting. The
principal executive office of the Company is 44000 Highway 75 South, Huntsville,
Texas 77340.
Properly executed proxies will be voted as directed. If no direction is
indicated therein, proxies received in response to this solicitation will be
voted FOR: (i) the election of the six nominees for director; (ii) the
ratification of the indicated independent auditors; and (iii) as recommended by
the Board of Directors with regard to any other matters, or if no recommendation
is given, in their own discretion.
A proxy on the enclosed form may be revoked by the shareholder at any
time before it is voted by filing with the Secretary of the Company a written
revocation, by voting in person at the meeting, or by delivering a proxy bearing
a later date. Attendance at the Annual Meeting will not, in itself, constitute
revocation of the proxy.
The Company will bear all costs of this Proxy Statement and the proxy
and the cost of soliciting proxies relating to the Annual Meeting. It is
anticipated that the solicitation of proxies for the Annual Meeting will be made
only by use of the mails and will cost approximately $9,000. However, the
Company may use the services of its directors, officers and employees to solicit
proxies personally or by telephone, without additional salary or compensation to
them. The Company will request that the brokerage houses, custodians, nominees,
and fiduciaries forward the proxy soliciting materials to the beneficial owners
of the Company's shares held of record for such persons, and the Company will
reimburse such persons for their related reasonable out-of-pocket expenses.
VOTING OF SECURITIES
At the close of business on May 30, 2002, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were 8,750,601 issued and outstanding shares of Common Stock,
each of which is entitled to one vote. Common Stock is the only class of
outstanding securities of the Company entitled to notice of and to vote at the
Annual Meeting.
The Company's Bylaws provide that the presence, either in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum for
the transaction of business. Assuming such a majority is present, the election
of directors will require a plurality of the votes cast at the Annual Meeting.
The ratification of the selected independent auditors will require the
affirmative vote of a majority of the shares entitled to vote and that voted or
abstained at the Annual Meeting. Abstentions from and broker non-votes on the
proposal to elect directors will be counted for purposes of determining the
presence of a quorum, but will not be included in the total shares voted for or
against any nominee. A broker non-vote occurs if a broker or other nominee
holding shares for a beneficial owner does not vote on a proposal because he
does not have discretionary authority to vote shares and has not received
instructions from the beneficial owner with respect to such proposal. Thus,
abstentions from the proposals will have the same legal effect as a vote against
the proposals, but a broker non-vote will not be counted for purposes of
determining whether a majority is achieved.
2
PRINCIPAL HOLDERS OF SECURITIES AND SECURITY OWNERSHIP
OF MANAGEMENT
PRINCIPAL HOLDERS OF SECURITIES. The following table sets forth the
beneficial ownership of Common Stock as of May 30, 2002, with respect to each
person known by the Company to be the beneficial owners of 5% or more of the
Company's shares of outstanding Common Stock. All persons listed have sole
disposition and voting power with respect to the indicated shares except as
otherwise noted.
COMMON STOCK
BENEFICIALLY OWNED
-------------------------------------------
NAME AND ADDRESS
OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
------------------- ---------------- ----------------
Billy F. Mitcham, Jr....................................... 676,480(1) 7.6%
P. O. Box 1175
Huntsville, Texas 77342
R. Chaney & Partners IV L.P................................ 1,274,300(2) 14.6%
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010
Wellington Management Company, LLP......................... 596,900(3) 6.8%
75 State Street
Boston, Massachusetts 02109
Dimensional Fund Advisors, Inc............................. 705,000(4) 8.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
----------
(1) Includes an aggregate of 265,000 shares of Common Stock owned
directly by Billy F. Mitcham, Jr. and an aggregate of 214,564
shares owned by Billy F. Mitcham, Sr. (77,040 shares), Paul C.
Mitcham (79,930 shares), and two trusts established for the
benefit of Mr. Mitcham, Jr.'s sons (the "Mitcham Children's
Trusts") (57,594 shares), as to which Mr. Mitcham, Jr. has
sole voting rights under a Voting Agreement. Also includes
shares underlying currently exercisable options, and options
that will become exercisable within 60 days after May 30,
2002, to purchase an aggregate of 196,916 shares of Common
Stock, as follows: Billy F. Mitcham, Jr. (151,166 shares) and
Billy F. Mitcham, Sr. (45,750 shares).
(2) As of November 6, 1998, based upon information contained in a
Form 4, filed jointly by R. Chaney & Partners IV L.P. ("Fund
IV"), R. Chaney & Partners III L.P. ("Fund III"), R. Chaney
Investments, Inc. ("Investments") and R. Chaney & Partners,
Inc. ("Partners") with the Securities and Exchange Commission.
The Form 4 indicates that Fund IV beneficially owns and has
sole disposition and voting power over 1,009,300 shares and
Fund III beneficially owns and has sole disposition and voting
power over 265,000 shares. Investments is the sole general
partner of Fund IV, Partners is the sole general partner of
Fund III and Robert H. Chaney is the sole shareholder of
Investments and Partners.
(3) As of December 31, 2001, based upon information contained in a
Schedule 13G/A, dated February 12, 2002, filed by Wellington
Management Company, LLP ("Wellington") with the SEC. All
securities reported in Wellington's Schedule 13G/A are owned
by certain of its clients, no one of which is known by
Wellington to own more than 5% of the Company's shares of
outstanding Common Stock. Wellington has shared disposition
power with respect to all of these shares and shared voting
power with respect to 423,800 of these shares.
(4) As of December 21, 2001, based upon information contained in a
Schedule 13G/A, dated February 12, 2002, filed by Dimensional
Fund Advisors ("Dimensional") with the SEC. All securities
reported in Dimensional's Schedule 13G/A are owned by certain
of its clients, no one of which is known by Dimensional to own
more than 5% of the Company's shares of outstanding Common
Stock.
3
SECURITY OWNERSHIP OF MANAGEMENT. The following table sets forth the
beneficial ownership of Common Stock as of May 30, 2002, by (i) the executive
officers whose total annual salary and bonus exceeded $100,000 in the fiscal
year ended January 31, 2002 (the "Named Executives"); (ii) each director and
nominee; and (iii) all directors and executive officers as a group. All persons
listed have sole disposition and voting power with respect to the indicated
shares except as otherwise noted.
COMMON STOCK
BENEFICIALLY OWNED
-------------------------------------------
NAME AND ADDRESS
OF BENEFICIAL OWNER(1) NUMBER OF SHARES PERCENT OF CLASS
---------------------- ---------------- ----------------
Billy F. Mitcham, Jr................................. 676,480(2) 7.6%
William J. Sheppard.................................. 142,593(3) 1.6%
P. Blake Dupuis...................................... 120,500(4) 1.4%
Christopher C. Siffert............................... 43,332(5) *
R. Dean Lewis........................................ 42,000(5) *
John F. Schwalbe..................................... 44,000(5) *
Peter H. Blum........................................ 136,903(6) 1.6%
All directors and executive officers as a group
(7 persons).......................................... 1,205,808(7) 12.9%
----------
*Less than 1%
(1) The business address of each shareholder is the same as that
of the Company's principal executive offices.
(2) Includes an aggregate of 265,000 shares of Common Stock owned
directly by Billy F. Mitcham, Jr. and an aggregate of 214,564
shares owned by Billy F. Mitcham, Sr. (77,040 shares), Paul C.
Mitcham (79,930 shares) and the Mitcham Children's Trusts
(57,594 shares), as to which Mr. Mitcham, Jr. has sole voting
rights under a Voting Agreement. Also includes shares
underlying currently exercisable options, and options that
will become exercisable within 60 days after May 30, 2002, to
purchase an aggregate of 196,916 shares of Common Stock, as
follows: Billy F. Mitcham, Jr. (151,166 shares) and Billy F.
Mitcham, Sr. (45,750 shares).
(3) Includes shares underlying currently exercisable options, and
options that will become exercisable within 60 days, to
purchase 142,166 shares of Common Stock.
(4) Includes shares representing currently exercisable options,
and options that will become exercisable within 60 days, to
purchase 110,500 shares of Common Stock.
(5) Represents shares underlying currently exercisable options
that will become exercisable within 60 days.
(6) Includes 30,000 shares underlying currently exercisable
options, 22,624 shares underlying warrants that will become
exercisable within 60 days, and 2,000 shares owned by Mr.
Blum's spouse's IRA.
(7) Includes shares underlying currently exercisable options, and
options and warrants that will become exercisable within 60
days, to purchase an aggregate of 608,914 shares of Common
Stock, as follows: the 196,916 shares referred to in footnote
(2) above, and an aggregate of 434,622 shares attributable to
William J. Sheppard (142,166 shares), P. Blake Dupuis (110,500
shares), Christopher C. Siffert (43,332 shares), R. Dean Lewis
(42,000 shares), John F. Schwalbe (44,000 shares) and Peter H.
Blum (30,000 shares - options; 22,624 shares - warrants).
4
ELECTION OF DIRECTORS
Six directors will be elected at the Annual Meeting. Shares or proxies
may not be voted for more than six nominees for directors. Each director so
elected will hold office until the next Annual Meeting and until his successor
is elected and qualified. All six director nominees are currently directors of
the Company.
The persons named as proxies in the proxy have been designated by the
Board of Directors and intend to vote such proxy "FOR" the persons named below
in the election of the Board of Directors, except to the extent authority to
vote is withheld from one or more nominees. If any such nominee is unable to
serve as a director, it is intended that the shares represented by proxies will
be voted in the absence of contrary indication for any substitute nominee that
the Board of Directors designates.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE SIX NOMINEES
NAMED BELOW.
INFORMATION ABOUT NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS. The
following states each director nominee's and each executive officer's present
position with the Company, principal occupation, age, and, for the executive
officers who are directors, the year in which he was first elected a director
(each serving continuously since first elected). Christopher C. Siffert, Vice
President - Corporate Controller, is not a director or nominee.
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
---- -------------------- --- --------------
Billy F. Mitcham, Jr. Chairman of the Board, President and Chief Executive 54 1987
Officer. Mr. Mitcham has more than 20 years of
experience in the geophysical industry. From 1979 to
1987, he served in various management capacities with
Mitcham Associates, an unrelated equipment leasing
company. From 1975 to 1979, Mr. Mitcham served in
various capacities with Halliburton Services,
primarily in oilfield services.
William J. Sheppard Executive Vice President - International Operations 54 1994
and a director of the Company. Mr. Sheppard has more
than 25 years of experience in the geophysical
industry. From 1987 until October 1994, Mr. Sheppard
was the President of Alberta Supply Company, a
Canadian seismic equipment sales and services company.
P. Blake Dupuis Executive Vice President - Finance, Secretary and 48 2000
Treasurer and a director of the Company. From
September 1996 to July 1998, Mr. Dupuis served as
Chief Financial Officer of UTI Energy Corp. From
April 1996 to September 1996, Mr. Dupuis served as
Chief Financial Officer of Adcor-Nicklos Drilling
Company and from December 1993 to April 1996, he
served as Chief Financial Officer of Coastwide Energy
Services, Inc. Mr. Dupuis is a Certified Public
Accountant.
5
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
---- -------------------- --- --------------
Christopher C. Siffert Vice President - Corporate Controller. From November 34 --
1994 to January 1998, Mr. Siffert served as Internal
Audit Manager for Houston Cellular Telephone Company
and from July 1990 to November 1994 he was employed by
Arthur Andersen LLP as a Senior Audit Supervisor. Mr.
Siffert is a Certified Public Accountant.
R. Dean Lewis Mr. Lewis is the Dean of the Business School at Sam 58 1995
Houston State University and he has served in this
capacity since October 1995. From 1987 to October
1995, Mr. Lewis was the Associate Dean and Professor
of Marketing at Sam Houston State University. Prior
to 1987, Mr. Lewis held a number of executive
positions in the banking and finance industries.
John F. Schwalbe Mr. Schwalbe has been a Certified Public Accountant in 58 1994
private practice since 1978, with primary
emphasis on tax planning, consultation, and
compliance.
Peter H. Blum Since November 1998, Mr. Blum has been President of 45 2000
Bear Ridge Capital, L.L.C., a private investment
banking firm. During 1997 and 1998, Mr. Blum served
as Senior Managing Director of GBI Capital Management,
now known as Landenburg Thalman Capital Management.
From December 1996 through 1997, Mr. Blum was a
Managing Director and head of the energy group at
Rodman & Renshaw. From 1992 until December 1996, Mr.
Blum was managing director of the energy group at
Mabon Securities. Mr. Blum serves as a director and
Executive Vice President of Mallon Resources
Corporation, an oil and gas exploration and production
company.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended January 31, 2002, the Board of Directors
of the Company held five meetings. The Board of Directors has two standing
committees - the Audit Committee and the Compensation Committee. The Board does
not have a Nominating Committee. Each director participated in at least 75% of
all meetings of the Board of Directors and all meetings of committees on which
he served.
AUDIT COMMITTEE. The Audit Committee, which is comprised of Messrs.
Schwalbe, Lewis, and Blum, held one meeting during the fiscal year ended January
31, 2002.
COMPENSATION COMMITTEE. The Compensation Committee, which is comprised
of Messrs. Schwalbe, Lewis, and Blum, held two meetings during the fiscal year
ended January 31, 2002. Its functions are to: (1) review the Company's general
compensation strategy; (2) recommend the salaries and bonuses of the Company's
executive officers; and (3) review and administer the Company's stock option
plans.
6
COMPENSATION OF DIRECTORS
The Company pays directors who are not employees of the Company a
$15,000 annual fee. The Board may also make discretionary option grants to its
non-employee directors.
EXECUTIVE COMPENSATION
The following table shows all compensation earned for services rendered
to the Company during the fiscal years ended January 31, 2000, 2001 and 2002 by
the Chairman of the Board, President and Chief Executive Officer of the Company
and the Company's other Named Executives.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ------------
SHARES
FISCAL YEAR UNDERLYING
NAME AND ENDED OPTIONS ALL OTHER
PRINCIPAL POSITION JANUARY 31, SALARY($) BONUS($) GRANTED (#) COMPENSATION ($)
------------------ ----------- --------- -------- ----------- ----------------
Billy F. Mitcham, Jr. 2002 228,098 20,000 80,000 0
Chairman of the Board, 2001 201,379 50,000 45,000 0
President and Chief 2000 187,820 49,584 70,500 0
Executive Officer
William J. Sheppard 2002 118,412 5,000 20,000 0
Executive Vice 2001 108,665 25,000 30,000 0
President - 2000 100,482 27,709 70,500 0
International Operations
P. Blake Dupuis 2002 144,295 15,000 30,000 0
Executive Vice 2001 128,373 35,000 45,000 0
President - Finance 2000 118,600 32,359 10,500 0
Secretary and Treasurer
Christopher C. Siffert 2002 95,779 10,000 15,000 0
Vice President - 2001 86,373 20,000 20,000 0
Corporate Controller 2000 75,500 22,129 10,000 0
----------
7
OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth
information concerning stock option grants made in the fiscal year ended January
31, 2002 to the Named Executives named in the Summary Compensation Table. There
were no grants of stock appreciation rights to said individuals during the year.
INDIVIDUAL GRANTS
------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATE OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ------------ ----------- ---------- -------- ---------
Billy F. Mitcham, Jr. 80,000(1) 38.1 5.00 07/18/11 251,558 637,497
William J. Sheppard 20,000(1) 9.5 5.00 07/18/11 62,889 159,734
P. Blake Dupuis 30,000(1) 14.3 5.00 07/18/11 94,334 239,061
Christopher C. Siffert 15,000(1) 7.1 5.00 07/18/11 47,167 119,531
----------
(1) The options terminate on the earlier of their expiration date,
10 years after grant or three months after termination of
employment, subject to certain exceptions. The options become
exercisable in three equal annual installments beginning one
year after the grant date, but vesting may be accelerated on
the consummation of a specified change of control.
(2) The indicated 5% and 10% rates of appreciation are provided to
comply with Securities and Exchange Commission regulations and
do not necessarily reflect the views of the Company as to the
likely trend in the stock price. Actual gains, if any, on
stock option exercises and the sale of Common Stock holdings
will depend on, among other things, the future performance of
the Common Stock and overall stock market conditions.
OPTION EXERCISES AND YEAR-END OPTION VALUES. The following table
provides information as to options exercised by the Named Executives in the 2002
fiscal year and year-end value of unexercised options held by the Named
Executives.
AGGREGATE OPTION EXERCISES IN 2002 FISCAL YEAR AND
JANUARY 31, 2002 OPTION VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
JANUARY 31, JANUARY 31,
2002(#) 2002($)
------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
---- --------------- ------------ ------------- ----------------
Billy F. Mitcham, Jr. 0 0 86,000/133,500 32,430/16,215
William J. Sheppard 0 0 102,000/63,500 52,590/16,215
P. Blake Dupuis 0 0 82,000/63,500 4,830/2,415
Christopher C. Siffert 0 0 28,332/31,668 4,600/2,300
----------
(1) Market value of shares covered by in-the-money options on
January 31, 2002 ($4.25), minus the exercise price.
8
EMPLOYMENT AGREEMENT. The initial term of Billy F. Mitcham, Jr.'s
employment agreement with the Company, which began on January 15, 1997, was for
a period of five years. However, the term of the agreement is automatically
extended for successive one-year periods unless either party gives written
notice of termination at least 30 days prior to the end of the current extension
period. The Employment Agreement provides for an annual salary and a bonus at
the discretion of the Board of Directors. The employment agreement may be
terminated prior to the end of any extension period if Mr. Mitcham dies; if it
is determined that Mr. Mitcham has become disabled (as defined); if Mr. Mitcham
gives three months prior notice of resignation; if the Company gives Mr. Mitcham
notice of termination "without cause"; or if the Board of Directors determines
that Mr. Mitcham has breached the agreement in any material respect, has
appropriated a material business opportunity of the Company or has engaged in
fraud or dishonesty with respect to the Company's business or is convicted of or
indicted for any felony criminal offense or any crime punishable by
imprisonment. If Mr. Mitcham terminates his employment within 60 days following
(i) a material reduction in his duties and responsibilities (without his
consent) or (ii) a reduction in, or failure by the Company to pay when due, any
portion of his salary, he will be entitled to payments equal to $450,000,
payable ratably over the 24 months following such termination. For a period of
two years after the termination of his employment agreement, Mr. Mitcham is
prohibited from engaging in any business activities which are competitive with
the Company's business and from diverting any of the Company's customers to a
competitor. The Company has no employment agreements with any of its other
executive officers.
CHANGE OF CONTROL AND TERMINATION AGREEMENTS. In February 1999, the
Company entered into severance and change of control agreements with Messrs.
Sheppard and Dupuis. Under the terms of those agreements, if a covered executive
officer's employment terminates during the 24-month period after a "change of
control" of the Company (as defined in the agreements) (such period, the
"Protection Period") other than the officer's voluntary resignation (except as
stated below) or retirement or a termination of employment for "cause" (as
defined in the agreements) or by reason of death or disability, the officer will
be entitled to receive certain severance payments and other benefits. The
officer's voluntary resignation for "good reason" (as defined in the agreements)
will also entitle the officer to the severance benefits and other benefits. The
severance payment amount, payable monthly over the 24 months after termination,
will be equal to two times such officer's annual base salary on the effective
date of the change of control or the date of the termination of employment. In
addition, the officer under those circumstances will be entitled to receive
continued medical and dental coverage under the Company's applicable plans (to
the extent permitted by law or by the plan carriers) for the period of time
remaining in the Protection Period after his termination is effective, or until
the officer becomes eligible to obtain comparable coverage from a subsequent
employer. In addition, any stock options and restricted stock that have not
fully vested shall accelerate and immediately become fully vested. The initial
term of the two agreements was through December 31, 2001, and is automatically
extended for successive one-year periods absent prior written notice from the
Company that it is terminating the agreements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. The Company's
executive compensation program is designed to attract, motivate and retain
talented management personnel and to reward management for the Company's
successful financial performance and for increasing shareholder value. The
Company's executive compensation has three components: base salaries, annual
performance bonuses and long-term incentive stock-based awards.
BASE SALARIES. We determine the salary ranges for the Company's
executive officers based upon their responsibilities and the salary levels of
similarly positioned officers in comparable companies. Our philosophy has been
to establish base salaries in the median-to-low end of the range of such
salaries at comparable companies, because long-term stock-based compensation is
considered more important than annual base salaries in aligning the executive's
financial rewards to the shareholders' financial interests for the long term.
For fiscal 2002, the executive officers received salary increases ranging from
approximately 8 - 15%.
9
ANNUAL PERFORMANCE BONUSES. Annual bonuses are awarded on a
discretionary basis. In making our determination of whether to award an annual
bonus and the amount of the bonus, we consider several factors, including
financial performance of the Company in relation to planned expectations and
performance of the Company in relation to industry conditions, each executive
officer's performance, level of responsibility or duties, successful completion
of particular projects or acquisition and implementation of new technical
knowledge. In fiscal 2002, we awarded cash bonuses to the Company's executive
officers ranging from approximately 4 - 10% of their base salaries.
LONG-TERM STOCK-BASED COMPENSATION. We believe that a substantial
percentage of executive compensation should be tied to equity-based plans and
thereby directly related to improvement in shareholder value over the long term.
In determining the number of options to grant, we make a subjective
determination based on the same factors as we do in determining bonuses. For
fiscal 2002, we approved the grant to executive officers of the options shown in
the Summary Compensation Table for that fiscal year, with a three-year vesting
period.
JOHN F. SCHWALBE
R. DEAN LEWIS
PETER H. BLUM
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
PERFORMANCE GRAPH. The graph below compares the cumulative total return
of the Company's Common Stock to the S&P's Smallcap 600 stock index and to the
S&P's Oil and Gas (Drilling & Equipment) index for the period from January 31,
1997 to January 31, 2002. The graph assumes that the value of an investment in
the Company's Common Stock and each index was $100 at January 31, 1997, and that
all dividends were reinvested.
[GRAPH]
1/31/97 1/31/98 1/31/99 1/31/00 1/31/01 1/31/02
------- ------- ------- ------- ------- -------
Mitcham Industries, Inc. $100.00 $209.42 $ 47.10 $ 42.03 $ 62.32 $ 49.28
S&P Smallcap 600 $100.00 $121.12 $120.39 $132.80 $159.78 $164.65
S&P Oil & Gas (Drilling &
Equipment) $100.00 $123.07 $ 79.93 $110.92 $148.14 $ 91.49
10
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Effective September 20, 1993, the Company and Billy F. Mitcham, Jr.
entered into a Voting Agreement (the "Voting Agreement") with Billy F. Mitcham,
Sr., Paul C. Mitcham and two trusts established for the benefit of Mr. Mitcham,
Jr.'s sons. Under the Voting Agreement, the holders of shares subject thereto
have agreed that Mr. Mitcham, Jr. has the authority to vote an additional
214,564 shares, or 2.5%, of the Company's outstanding Common Stock. Mr. Mitcham,
Jr. had voting control of an aggregate of 676,480 shares, or 7.6%, of the
Company's Common Stock, as of May 30, 2002. The Voting Agreement will terminate
on the earlier of the agreement of the parties, the transfer by the parties
thereto of their shares or the expiration of 25 years. See "Principal Holders of
Securities and Security Ownership of Management."
In June 2001, the Company entered into an agreement with Bear Ridge
Capital, L.L.C. ("BRC"), under which it engaged BRC to assist the Company in
arranging a private placement of up to $25 million of the Company's debt or
equity securities. Mr. Peter H. Blum, one of the Company's directors, is the
sole member of BRC. As consideration for the services BRC was to perform, the
Company paid BRC a nonrefundable retainer of $57,000, $42,000 of which was
creditable against compensation due to BRC on the consummation of a private
placement transaction, and issued BRC warrants to purchase 20,000 shares of the
Company's Common Stock at an exercise price of $5.00 per share. Upon the
consummation of a private placement transaction, BRC was entitled to
compensation equal to 2.5% of the gross proceeds of the transaction. As of May
30, 2002, due to the anti-dilution provisions contained in the warrants, BRC is
entitled to purchase up to 22,624 shares of the Company's Common Stock at an
exercise price of $4.42 per share. See "Principal Holders of Securities and
Security Ownership of Management."
REPORT OF AUDIT COMMITTEE
The Audit Committee has reviewed and discussed with management the
Company's audited financial statements as of and for the year ended January 31,
2002. In particular, the committee discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants.
The Committee has reviewed the written disclosures and the letter from
the independent auditors required by Independent Standard No. 1, Independence
Discussions with Audit Committee, as amended, by the Independence Standards
Board, and has discussed with the auditors their independence.
The aggregate audit and other fees (for tax services) billed by the
Company's auditors for the fiscal year ended January 31, 2002 were $93,500 and
$47,670, respectively.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the financial statements
referred to above be included in the Company's Annual Report on Form 10-K for
the year ended January 31, 2002.
JOHN F. SCHWALBE
R. DEAN LEWIS
PETER H. BLUM
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
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RATIFICATION OF SELECTION OF INDEPENDENT auditors
The Board of Directors has selected Hein + Associates LLP, which has
served as independent auditors of the Company since 1993, as independent
auditors to audit the books, records and accounts of the Company for the fiscal
year ended January 31, 2003. The Board of Directors recommends a vote FOR
approval of such selection. A representative of Hein + Associates LLP is
expected to be present at the Annual Meeting and will have the opportunity to
make a statement, if such representative chooses to do so, and will be available
to respond to appropriate questions.
ANNUAL REPORT
The Company's Annual Report covering the fiscal year ended January 31,
2002, accompanies this Proxy Statement. Except for the financial statements
included in the Annual Report that are specifically incorporated by reference
herein, the Annual Report is not incorporated in this Proxy Statement and is not
to be deemed part of this proxy soliciting material. Additional copies of the
Annual Report are available upon request.
FORM 10-K
The Company will furnish without charge to each person whose proxy is
being solicited, upon the request of any such person, a copy of the Company's
Annual Report on form 10-K for the fiscal year ended January 31, 2002, as filed
with the SEC (excluding exhibits), including the financial statements and
schedules thereto. Requests for copies of such report should be directed in
writing to the Secretary, Mitcham Industries, Inc., Post Office Box 1175,
Huntsville, Texas 77342.
OTHER MATTERS
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. Section 16(a) of the
Exchange Act requires the Company's directors, executive officers and persons
who own more than 10% of a registered class of the Company's Common Stock to
file initial reports of ownership and changes in ownership with the SEC and to
furnish the Company with copies of all Section 16(a) forms they file. The
Company believes that all filings required to be made under Section 16(a) were
timely made.
OTHER MATTERS. At the date hereof, the Board of Directors does not know
of any other business to be presented at the Annual Meeting of Shareholders. If
any other matter properly comes before the meeting, however, it is intended that
the persons named in the accompanying proxy will vote such proxy in accordance
with the discretion and instructions of the Board of Directors.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders wishing to submit proposals for consideration by the
Company's Board of Directors at the Company's 2003 Annual Meeting of
Shareholders should submit them in writing to the attention of the Secretary of
the Company no later than February 8, 2003, so that it may be considered by the
Company for inclusion in its proxy statement and form of proxy for that meeting.
12
A shareholder who wishes to make a proposal at the 2003 Annual Meeting
of Shareholders without complying with the requirements of Rule 14a-8 (and
therefore without including the proposal in the Company's proxy materials) must
notify the Company of that proposal by April 25, 2003. If a shareholder fails to
timely give notice, then the persons named as proxies in the proxy cards
solicited by the Company's Board of Directors for that meeting will be entitled
to vote the proxy cards held by them regarding that proposal, if properly raised
at the meeting, in their discretion or as directed by the Company's management.
By Order of the Board of Directors,
P. Blake Dupuis
Secretary
June 12, 2002
13
P R O X Y
MITCHAM INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD JULY 18, 2002
The proxies are directed to vote as specified below and in their discretion
on all other matters coming before the meeting. If no direction is made,
the proxy will vote FOR all nominees listed below and the approval of
independent auditors. This proxy is solicited by the Board of Directors.
1. ELECTION OF DIRECTORS -- Billy F. Mitcham, Jr., William J. Sheppard, P.
Blake Dupuis, R. Dean Lewis, John F. Schwalbe and Peter H. Blum.
[ ] Vote FOR from all nominees listed above, except vote withheld
from (to withhold authority to vote for any individual
nominee, write in the names on the line below:)
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[ ] Vote WITHHELD from all nominees
2. APPROVAL OF INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] I plan to attend the meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
MITCHAM INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD JULY 18, 2002
The undersigned appoints Billy F. Mitcham, Jr. and P. Blake Dupuis, and each
of them, as attorneys and proxies of the undersigned, with power of
substitution, to represent the undersigned at the Annual Meeting of Shareholders
of Mitcham Industries, Inc. (the "Company") to be held July 18, 2002, and at any
adjournment thereof, and to vote all shares of Common Stock of the Company which
the undersigned is entitled to vote on all matters coming before said meeting.
Dated: , 2002
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Signature
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Signature if held jointly
THIS PROXY MUST BE SIGNED EXACTLY
AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should
give full title as such. If the signer
is a corporation, please sign full
corporate name by duly autho-
rized officer. If signer is a
partnership, please sign partnership
name by authorized person.