Paul H. Brown
L. Decker Dawson
Gary M. Hoover
Stephen C. Jumper
Tim C. Thompson
| | | | | | | |
Name | | Age | | | Position |
| | | | | |
| L. Decker Dawson | | | 8588 | | | Chairman of the Board of Directors and Chief Executive Officer |
| Stephen C. Jumper | | | 4447 | | | President, Chief OperatingExecutive Officer and Director |
Howell W. Pardue | | | 69 | | | Executive Vice President |
C. Ray Tobias | | | 48 | | | Executive Vice President |
Christina W. Hagan | | | 50 | | | Executive Vice President, Secretary, Treasurer and Chief Financial Officer |
Edward L. Huff | | | 68 | | | Senior Vice President |
K.S. Forsdick | | | 54 | | | Vice President |
A. Mark Nelson | | | 45 | | | Vice President |
| Paul H. Brown | | | 7477 | | | Director |
| Gary M. Hoover, Ph.D. | | | 6569 | | | Director |
| Jack D. Ladd | | | 59 | | | Director |
| Ted R. North | | | 62 | | | Director |
| Tim C. Thompson | | | 7174 | | | Director |
The Board of Directors elects executive officers annually. Executive officers hold office until their successors are elected and have qualified.
Set forth below are descriptions of the principal occupations during at least the past five years of the Company’s executive officers and nominees for director.
L. Decker Dawson. Mr. Dawson founded the Company in 1952. He served as our President of the Company until being elected as Chairman of the Board of Directors and Chief Executive Officer in January 2001. In January 2006, Mr. Dawson was reelected as Chairman of the Board of Directors and retired as our Chief Executive Officer. Prior to 1952, Mr. Dawson was a geophysicist with Republic Exploration Company, a geophysical company. Mr. Dawson served as President of the Society of Exploration Geophysicists(1989-1990), received its Enterprise Award in 1997 and was awarded honorary membership in 2002. He was Chairman of the Board of Directors of the International Association of Geophysical Contractors in 1981 and is an honorary life member of such association. He was inducted into the Permian Basin Petroleum Museum’s Hall of Fame in 1997.
Stephen C. Jumper. Mr. Jumper, a geophysicist, joined theour Company in 1985, was elected Vice President of Technical Services in September 1997 and was subsequently elected President, Chief Operating Officer and Director in January 2001. In January 2006, Mr. Jumper was elected President, Chief Executive Officer and Director. Prior to 1997, Mr. Jumper served the Company as our manager of technical services with an emphasis on3-D processing. Mr. Jumper has served the Permian Basin Geophysical Society as Second Vice President (1991), First Vice President (1992), and as President (1993).
Howell W. Pardue. Mr. Pardue joined the Company in 1976 as Vice President of Data Processing and Director. Mr. Pardue was elected Executive Vice President of Data Processing in 1997. Prior to joining the Company, Mr. Pardue was employed in data processing for 17 years by Geosource, Inc. and its predecessor geophysical company. Mr. Pardue left the Board of Directors in 2005 when the size of the Board was reduced.
C. Ray Tobias. Mr. Tobias joined the Company in 1990, and was elected Vice President in September 1997 and Executive Vice President and Director in January 2001. Mr. Tobias supervises client relationships and survey cost quotations to clients. He has served on the Board of Directors of the International Association of Geophysical Contractors and is Past President of the Permian Basin
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Geophysical Society. Prior to joining the Company, Mr. Tobias was employed by Geo-Search Corporation where he was an operations supervisor. Mr. Tobias left the Board of Directors in 2005 when the size of the Board was reduced.
Christina W. Hagan. Ms. Hagan joined the Company in 1988, and was elected Chief Financial Officer and Vice President in 1997 and Senior Vice President and Secretary in January 2003. In January 2004, Ms. Hagan was elected as Executive Vice President. Prior thereto, Ms. Hagan served the Company as Controller and Treasurer. Ms. Hagan is a certified public accountant.
Edward L. Huff. Mr. Huff joined the Company in 1956, and was elected Vice President in September 1997 and Senior Vice President in January 2004. Prior to election as Vice President, Mr. Huff served as instrument operator, crew manager and field supervisor for the Company. He has managed the Company’s field operations since 1987.
K.S. Forsdick. Mr. Forsdick joined the Company in 1993 and was elected Vice President in January 2001. Mr. Forsdick is responsible for soliciting, designing and bidding seismic surveys for prospective clients. Prior to joining the Company, Mr. Forsdick was employed by Grant Geophysical Company and Western Geophysical Company and was responsible for marketing and managing land and marine seismic surveys for domestic and international operations. He has served on the Governmental Affairs Committee of the International Association of Geophysical Contractors.
A. Mark Nelson. Mr. Nelson joined the Company in 1993 and was elected Vice President in January 2004. Mr. Nelson has over twenty five years of seismic experience, holds a masters degree in Environmental Science and is a registered environmental professional. He has also served as the Chairman of the Health, Safety and Environmental Committee of the International Association of Geophysical Contractors, is a member of the National Registry of Environmental Professionals and of the American Society of Safety Engineers.
Paul H. Brown.*Mr. Brown has served the Company as a directorone of our directors since September 1999. Mr. Brown, an independent management consultant with various companies since May 1998, was President and Chief Executive Officer at WEDGE Energy Group, Inc. from January 1985 to May 1998.
Gary M. Hoover, Ph.D.*Dr. Hoover has served the Company as a directorone of our directors since December 2002. Dr. Hoover, prior to his retirement in October 2002, was Senior Principal Geophysicist withcurrently an independent consultant, retired from Phillips Petroleum Company.Company in 2002. His responsibilities for the previous ten years with Phillips included geophysical research management, geoscience technology coordination, exploration and production technology consultation and active research into new seismic data acquisition techniques. Dr. Hoover served as Vice President of the Society of Exploration Geophysicists(1990-1991) and received its Life Membership Award in 2000. Dr. Hoover holds a doctorate in physics from Kansas State University.
Jack D. Ladd.* Mr. Ladd was elected as a Director by the Board of Directors on March 25, 2008. He is currently the Dean and Professor of Management in The School of Business at the University of Texas of the Permian Basin. From 2004 until 2007, Mr. Ladd held the positions of Assistant Professor in the School of Business and Director of the John Ben Shepperd Public Leadership Institute at the University of Texas of the Permian Basin. Prior to 2004, Mr. Ladd practiced law and was a shareholder of Stubbeman, McRae, Sealy, Laughlin & Browder, Inc., a law firm in Midland, Texas. Mr. Ladd is a director of two public corporations other than the Company: Thorium Power, Ltd. and Mexco Energy Corporation.
Ted R. North.*Mr. North was elected as a Director by the Board of Directors effective August 1, 2008. Mr. North was a partner at Grant Thornton LLP from August 1987 to his retirement on July 31, 2008. He served as the Managing Partner and in other positions of responsibility in the Midland, Texas and Oklahoma City offices of Grant Thornton. He is a Certified Public Accountant with over 30 years of public accounting experience.
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Tim C. Thompson.*Mr. Thompson has served the Company as directorone of our directors since 1995. Mr. Thompson, an independent management consultant with various companies since May 1993, was President and Chief Executive Officer of Production Technologies International, Inc. from November 1989 to May 1993.
| | |
| * | | Indicates independence has been determined by the Board of Directors in accordance with NASDAQ rules.rules and the Exchange Act. |
MEETINGS AND COMMITTEES OF DIRECTORS
During the fiscal year ended September 30, 2005,2008, the Board of Directors held tenseven regularly scheduled meetings. All of the Directors attended these meeting,meetings, except that four members of the Board of Directors wereone director was absent from one meeting each and one member was absent from two meetings.meeting.
Audit Committee. The Audit Committee is a standing committee of the Board of Directors and currently consists of Messrs. Brown, Hoover and Thompson, all of whom are non-employee directors and “independent” as defined in Rule 4200(a)(15) of the NASDAQ listing standards and the Exchange Act. The Board of Directors has determined that Mr. Thompson, who currently serves as the Chairman of the
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Audit Committee, is an “audit committee financial expert” (as that term is defined under the applicable SEC rules and regulations) based on the Board’s qualitative assessment of Mr. Thompson’s level of knowledge, experience (as described above in his biographical statement) and formal education. The functions of the Audit Committee are to determine whether our management has established internal controls which are sound, adequate and working effectively; to ascertain whether the Company’sour assets are verified and safeguarded; to review and approve external audits; to review audit fees and appointment of the Company’sour independent public accountants; and to review non-audit services provided by the independent public accountants. The Audit Committee held tenfourteen meetings during the fiscal year ended September 30, 2005.2008. All members of the Audit committeeCommittee attended these meetings, except that one member was absent from one meeting.two meetings. The Audit Committee operates under a written charter adopted and approved by the Board of Directors adoptedthat is annually reviewed and approved by the BoardAudit Committee. The charter is posted on our website athttp://www.dawson3d.com in the “Corporate Governance” area of Directors on June 16, 2005 and attached to this proxy statement asExhibit A.the “Investor Relations” section. The report of the Audit Committee for fiscal year 20052008 is included in this proxy statement on page 14.18.
Compensation Committee. The Compensation Committee is a standing committee of the Board of Directors and currently consists of Messrs. Brown, Hoover and Thompson, all of whom are non-employee directors and “independent” as defined in Rule 4200(a)(15) of the NASDAQ listing standards and the Exchange Act. The primary function of the Compensation Committee is to determine compensation for theour officers of the Company that is competitive and enables the Company to motivate and retain the talent needed to lead and grow the Company’sour business. The Compensation Committee held one meetingtwo meetings during the fiscal year ended September 30, 2005.2008. All members of the Compensation Committee attended thiseach meeting. The report of the Compensation Committee for fiscal year 20052008 is included in this proxy statement on page 8.11. The Compensation Committee has not retained a compensation consultant to review the compensation practices of the Company’s peers or to advise the Compensation Committee on compensation matters.
The Compensation Committee currently operates under a written charter adopted and approved by the Board of Directors on OctoberDecember 3, 2004. The charter is posted on our website athttp://www.dawson3d.com in the “Corporate Governance” area of the “Investor Relations” section.
Nominating Committee. The Nominating Committee is a standing committee of the Board of Directors and currently consists of Messrs. Brown, Hoover and Thompson, all of whom are non-employee directors and “independent” as defined in Rule 4200(a)(15) of the NASDAQ listing standards and the Exchange Act. The Nominating Committee held one meetingtwo meetings during the fiscal year ended September 30, 2005,2008, at which all members of the Nominating Committee were present. The primary function of the Nominating Committee is to determine the slate of Director nominees for election to the Company’sour Board of Directors. The Nominating Committee considers candidates recommended by security holders,our stockholders, directors, officers and outside sources, and considers criteria such as businesseach nominee’s personal and professional integrity, experience, ethicalskills, ability and willingness to devote the time and effort necessary to be an effective board member with the commitment to acting in the best interests of our Company and our stockholders. The Nominating Committee also gives consideration to having an
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appropriate mix of backgrounds and skills on our Board of Directors, the qualifications that the Committee believes must be met by prospective nominees, qualities or skills that the Committee believes are necessary for one or more of our directors to possess and standards for the overall structure and personal qualifications in evaluating all such nominees. composition of our Board of Directors.
In accordance with Article 11,II, Section 13 of the Company’sour Bylaws, stockholders who wish to have their nominees for election to the Board of Directors considered by the Nominating Committee must submit such nomination to theour Secretary of the Company for receipt not less than 80 days prior to the date of the next Annual Meeting of stockholders and include (i) the name and address of the stockholder making the nomination, (ii) information regarding such nominee as would be required to be included in the proxy statement, (iii) a representation of the stockholder as to the class and number of shares of the Company’s stock that are beneficially owned by such stockholder, and the stockholder’s intent to appear in person or by proxy at the meeting to propose such nomination, and (iv) the written consent of the nominee to serve as a director if so elected.
The Nominating Committee currently operates under a written charter adopted and approved by the Board of Directors on December 3, 2004. FollowingThe charter is posted on our website athttp://www.dawson3d.com in the election“Corporate Governance” area of the “Investor Relations” section.
DIRECTOR COMPENSATION
All of our non-employee directors receive annual compensation of $12,000. Each non-employee director also receives a fee of $1,000 for each regular Board of Directors atmeeting. In addition, the Annual Meeting, the Nominating Committee will be composedchairman of the three independent,Audit Committee receives an additional fee of $500 per month. Each non-employee director also receives a 1,000-share grant of our common stock annually. We also reimburse the reasonable expenses incurred by our directors in attending meetings and other company business.
Directors who are also full-time officers or employees of our Company receive no additional compensation for serving as directors. Currently, two members of our Board of Directors, Mr. Dawson and Mr. Jumper, are also executive officers of the Company. As an employee, Mr. Dawson receives a salary and certain other benefits as described in the “Director Compensation for Fiscal 2008” table below. Mr. Jumper’s compensation is described under “Compensation Discussion & Analysis” and “Executive Compensation,” below.
The table below summarizes the total compensation paid or earned by each of our non-employee directors and Mr. Dawson during fiscal 2008.
Director Compensation For Fiscal 2008
| | | | | | | | | | | | | | | | | |
| | | Fees Earned
| | | | | | | | | | |
| | | or Paid in
| | | Stock
| | | All Other
| | | | |
Name | | Cash ($) | | | Awards ($)(1)(2) | | | Compensation ($) | | | Total ($) | |
| |
| L. Decker Dawson | | | 125,000 | | | | — | | | | 293 | | | | 125,293 | |
| Tim C. Thompson | | | 25,000 | | | | 69,640 | | | | — | | | | 94,640 | |
| Paul H. Brown | | | 19,000 | | | | 69,640 | | | | — | | | | 88,640 | |
| Gary M. Hoover | | | 19,000 | | | | 69,640 | | | | — | | | | 88,640 | |
| Jack D. Ladd | | | 10,000 | (3) | | | — | | | | — | | | | 10,000 | |
| Ted R. North | | | 2,000 | (3) | | | — | | | | — | | | | 2,000 | |
| | |
| (1) | | The amounts in this column reflect the dollar amount we recognized as an expense with respect to stock awards for financial statement reporting purposes during the year ended September 30, 2008, in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004) “Share-based Payment” (SFAS No. 123(R)). These amounts also reflect the grant date fair value of each stock award ($69.64 per share) as computed in accordance with SFAS No. 123(R). See Note 1 to our audited financial statements included in our 2008 Annual Report onForm 10-K for the assumptions made in our valuation of these stock awards. |
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| | |
| (2) | | In fiscal 2008 each non-employee director then serving received a 1,000-share grant of stock from the Dawson Geophysical Company 2006 Stock and Performance Incentive Plan. At September 30, 2008, the directors listed in the above table held the following aggregate outstanding shares of common stock: Mr. Dawson — 108,192, Mr. Thompson — 7,000, Mr. Brown — 2,000, and Mr. Hoover — 4,000. |
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| (3) | | Mr. Ladd was elected as a Director on March 25, 2008. Mr. North was elected as a Director effective August 1, 2008. Accordingly, their cash compensation reflects those periods of service. |
COMPENSATION DISCUSSION & ANALYSIS
Overview of Compensation Program
The Compensation Committee of the Board of Directors currently Messrs. Brown, Hooverhas responsibility for establishing, implementing and Thompson.
MANAGEMENT COMPENSATION
monitoring adherence to our compensation philosophy. The compensation levels of the Company are believedCompensation Committee seeks to be competitive and in line with those of comparable companies and to align the interests of the Company’s employees with those of its stockholders through potential stock ownership.
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SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the annual and long-termprovide total compensation paid to or for (i) the Company’s Chief Executive Officer and (ii) those of the Company’s four other most highly compensatedour executive officers whose total annual salarythat is fair, reasonable and bonus exceeded $100,000 in fiscal year 2005 (collectively,competitive.
In this compensation discussion and analysis, the executive officers named below who are current employees are referred to as the “Named Officers”), for services rendered to the Company during fiscal years 2003, 2004 and 2005.Executive Officers.”
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Long Term | |
| | | | | | | | | | | Compensation | |
| | | | | | | Awards | |
| | | | | Annual Compensation | | | |
| | | | | | | Securities | |
| | | Fiscal | | | | | Other Annual | | Underlying Options | |
| Name and Principal Position | | Year | | | Salary | | | Bonus(1) | | | Compensation | | (No. of Shares) | |
| | | | | | | | | | | | | | | |
| L. Decker Dawson | | | 2005 | | | $ | 102,289 | | | $ | — | | | $ | — | | | | — | |
| | Chief Executive Officer | | | 2004 | | | | 102,000 | | | | — | | | | — | | | | — | |
| | | | | 2003 | | | | 96,755 | | | | 11,111 | | | | — | | | | — | |
| Stephen C. Jumper | | | 2005 | | | $ | 197,354 | | | $ | 10,432 | | | $ | — | | | | 10,000 | |
| | President, Chief Operating Officer | | | 2004 | | | | 175,000 | | | | — | | | | — | | | | 10,000 | |
| | | | | 2003 | | | | 163,353 | | | | 11,111 | | | | — | | | | 10,000 | |
| C. Ray Tobias | | | 2005 | | | $ | 138,609 | | | $ | 6,659 | | | $ | — | | | | 5,000 | |
| | Executive Vice President | | | 2004 | | | | 125,000 | | | | — | | | | — | | | | 5,000 | |
| | | | | 2003 | | | | 117,987 | | | | 9,259 | | | | — | | | | 10,000 | |
| Christina W. Hagan | | | 2005 | | | $ | 138,269 | | | $ | 6,974 | | | $ | — | | | | 5,000 | |
| | Executive Vice President | | | 2004 | | | | 114,615 | | | | — | | | | — | | | | 5,000 | |
| | | | | 2003 | | | | 91,538 | | | | 7,407 | | | | — | | | | 10,000 | |
| Edward L. Huff | | | 2005 | | | $ | 128,641 | | | $ | 7,716 | | | $ | — | | | | 5,000 | |
| | Senior Vice President | | | 2004 | | | | 112,200 | | | | — | | | | — | | | | 5,000 | |
| | | | | 2003 | | | | 109,158 | | | | 7,407 | | | | — | | | | 10,000 | |
| |
(1) | Any bonus that might be paid for fiscal 2005 is not yet calculable and, in accordance with Securities and Exchange Commission regulations, will be reported in the proxy statement for the annual meeting of stockholders for fiscal year 2006. |
The following table sets forth the number of options granted during the fiscal year ended September 30, 2005 to the Named Officers to purchase shares of Common Stock and the potential realizable value of those options.
OPTION GRANTS DURING FISCAL YEAR 2005
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Individual Grants(1) | | | |
| | | | | | Potential Realizable | |
| | | Number of | | | | | Value at Assumed | |
| | | Securities | | | % of Total | | | | | Annual Rates of Stock | |
| | | Underlying | | | Options | | | | | Price Appreciation for | |
| | | Options | | | Granted to | | | Exercise or | | | | | Option Term(2) | |
| | | Granted | | | Employees in | | | Base Price | | | Expiration | | | | |
| Name | | (3) | | | Fiscal Year | | | ($/share) | | | Date | | | 5% ($) | | | 10% ($) | |
| | | | | | | | | | | | | | | | | | | |
| Stephen C. Jumper | | | 10,000 | | | | 22.2 | % | | | 17.91 | | | | 11/9/2009 | | | | 188,712 | | | | 263,937 | |
| C. Ray Tobias | | | 5,000 | | | | 11.1 | % | | | 17.91 | | | | 11/9/2009 | | | | 94,356 | | | | 131,968 | |
| Christina W. Hagan | | | 5,000 | | | | 11.1 | % | | | 17.91 | | | | 11/9/2009 | | | | 94,356 | | | | 131,968 | |
| Edward L. Huff | | | 5,000 | | | | 11.1 | % | | | 17.91 | | | | 11/9/2009 | | | | 94,356 | | | | 131,968 | |
| |
(1) | No options were granted to Mr. Dawson during fiscal year 2005. |
| |
(2) Stephen C. Jumper | The amounts in these columns are the result of calculations at the 5% and 10% rates set by the Securities and Exchange Commission and are not intended to forecast possible future appreciation, if any, of our stock price. The actual value realized will depend on the difference between the market value of the Common Stock on the date the option is exercised and the exercise price. | Chief Executive Officer, President |
| Christina W. Hagan | | Chief Financial Officer, Executive Vice President, Secretary |
(3) C. Ray Tobias | The options vest and become exercisable ratably over four years (25% per year) beginning on the first anniversary of the date of grant. |
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The following table sets forth certain information with respect to the exercise of options to purchase Common Stock during the fiscal year ended September 30, 2005, and unexercised options held at September 30, 2005 by each of the Named Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2005
AND FISCAL YEAR-END OPTION VALUES
| | | | | | | | | | | | | | | | | |
| | | | | | | Number of | | | |
| | | | | | | Unexercised | | | |
| | | | | | | Options at | | | Value of Unexercised | |
| | | | | | | 9/30/2005 | | | in-the-Money Options | |
| | | | | | | | | | at 9/30/2005(1) | |
| | | | | | | Exercisable/ | | | | |
| | | Shares Acquired | | | Value | | | Unexercisable | | | Exercisable/ | |
| Name(2) | | on Exercise | | | Realized | | | (No. of Shares) | | | Unexercisable | |
| | | | | | | | | | | | | |
| Stephen C. Jumper | | | — | | | | — | | | | 25,000/25,000 | | | $ | 185,749/$276,616 | |
| C. Ray Tobias | | | — | | | | — | | | | 8,750/16,250 | | | $ | 61,991/$160,591 | |
| Christina W. Hagan | | | — | | | | — | | | | 23,750/16,250 | | | $ | 176,924/$160,591 | |
| Edward L. Huff | | | 5,000 | | | $ | 40,141 | | | | 3,750/16,250 | | | $ | 21,850/$160,591 | |
| Chief Operating Officer, Executive Vice President |
(1) Howell W. Pardue | The closing price per share on September 30, 2005 was $30.25 as reported by the Nasdaq National market. | Executive Vice President |
|
(2) Kermit S. Forsdick | Mr. Dawson does not hold any options to purchase shares of the company’s Common Stock. | Vice President |
Defined Benefit Plans
Compensation Philosophy and Other Arrangements. Long-term incentive compensation for senior executive officers is not a policy of the Company. Accordingly, no awards or payouts have been made. The Company has no retirement or pension plan except for its 401(k) Plan and its Incentive Stock Option Plans. These plans are described below.Objectives
Directors who are not also employees of the Company receive $1,000 per month, $1,000 per meeting and 1,000 shares of Common Stock per year for serving as directors. In addition, the Audit Committee Chairman receives an additional $500 per month.
COMPENSATION PLANS
The following table summarizes certain information regarding securities authorized for issuance under our equity compensation plans as of September 30, 2005.
Equity Compensation Plan Information
| | | | | | | | | | | | | |
| | | | | | | Number of Securities | |
| | | | | | | Remaining Available for | |
| | | | | | | Future Issuance under | |
| | | Number of Securities to | | | Weighted-average | | | Equity Compensation Plans | |
| | | be Issued upon Exercise | | | Exercise Price of | | | (Excluding Securities | |
| | | of Outstanding Options | | | Outstanding Options | | | Reflected in Column (a)) | |
| Plan Category | | (a) | | | (b) | | | (c) | |
| | | | | | | | | | |
| Equity compensation plans approved by security holders | | | 224,500 | | | $ | 8.87 | | | | 319,000 | |
| Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| Total | | | 224,500 | | | $ | 8.87 | | | | 319,000 | |
Stock Option Plans. Dawson Geophysical Company has reserved a total of 500,000 shares of its Common Stock for issuance as restricted stock and pursuant to stock options granted under its 2000 Incentive Stock Plan (the “2000 Plan”). The 2000 Plan is administered by the Company’s Compensation
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Committee. The 2000 Plan provides that up to a total of 50,000 of such shares authorized for issuance may be awarded and issued as restricted stock to key employees, officers and non-employee members of the Board of Directors of the Company with or without payment therefor. The remainder of such shares, and any shares not issued pursuant to stock grants, may be issued to officers and key employees of the Company pursuant to stock options granted under the 2000 Plan. Options under the 2000 Plan are granted at an exercise price not less than the market price of the Company’s stock on the date of grant. Each option granted is exercisable after the period or periods specified in the individual option agreement, but prior to the expiration of five years after the date of grant. Commencing one year after the date of grant, optionees generally may purchase up to one-fourth of the shares covered by a particular grant, and each option grant becomes exercisable with respect to an additional one-fourth of the shares covered in each of the next three anniversaries of the date of grant. The 2000 Plan covers a ten-year period and expires on January 12, 2009.
The Dawson Geophysical Company 2004 Incentive Stock Plan provides for the award of stock grants and options to purchase shares of the Company’s Common Stock. For a description of this plan and a description of our Board’s proposal to amend this plan, which will be considered by stockholders at the annual meeting, see “Proposal 3: Amendment to the 2004 Stock Incentive Plan” beginning on page 11 of this proxy statement.
During the fiscal year ended 2005, 46,750 shares of Common Stock were issued pursuant to the exercise of options granted under the 2000 Plan. During fiscal 2005, there were no options to purchase shares of common stock granted under the 2000 Plan. As of September 30, 2005, the total number of outstanding options under the Company’s 2000 Plan and 2004 Plan was 224,500.
401(k) Plan. Effective January 1, 2002, the Company initiated a 401(k) plan as part of its employee benefits package in order to retain quality personnel. During fiscal year 2005, the Company elected to match 100% of employee contributions up to a maximum of 5% of the participant’s gross salary. The Company’s matching contributions for the fiscal year ended 2005 were approximately $555,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To the Stockholders of Dawson Geophysical Company:
The Company’s Compensation Committee makes recommendations regardingbelieves that compensation of the Company’s executive officers, including the CEO, subject to approval of the entire Board of Directors.
Compensation for executive officers isshould be based onupon the principle that compensation must be competitive to enable the Company to motivate and retain the talent needed to lead and grow the Company’s business, and to provide rewards which are closely linked tomake the Company grow, reward successful performance and individual performance.closely align the interests of our executives with the Company. The ultimate objective of our compensation program is to improve stockholder value.
Executive
In setting compensation for alllevels, the Compensation Committee evaluates both performance and overall compensation. The review of executive officers, including the CEO, is based onofficers’ performance againstincludes a combinationmix of financial and non-financial measures. In addition to business results, employees are expected to uphold a commitment to integrity, maximize the development of each individual, and continue to improve the environmental quality of the Company’s services and operations.
In upholdingorder to continue to attract and retain the best employees, the Compensation Committee believes the executive compensation packages provided to the Company’s executives, including the Named Executive Officers, should include both cash and stock-based compensation.
The Compensation Committee has not retained a compensation consultant to review the compensation practices of the Company’s peers or to advise the Compensation Committee on compensation matters.
Competitive Considerations
We believe the competition for talented employees goes well beyond the seismic industry to include oil and gas exploration and development companies and oilfield service companies. Many of the companies with whom we compete for top level talent are larger and have more financial resources than we do. Both our Compensation Committee and Chief Executive Officer (“CEO”) consider known information regarding the compensation practices of likely competitors when reviewing and setting the compensation of all our officers, including the Named Executive Officers.
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Role of Chief Executive Officer in Compensation Decisions
On an annual basis, our CEO reviews the performance of each of the other Named Executive Officers and, based on this review, makes recommendations to the Compensation Committee with respect to the compensation of the Named Executive Officers, excluding himself. Our CEO considers internal pay equity issues, individual contribution and performance, competitive pressures and company performance in making his recommendations to the Compensation Committee. The Compensation Committee may accept or adjust such recommendations in its discretion. The Compensation Committee has the sole responsibility for evaluating the compensation of our CEO.
Establishing Executive Compensation
Consistent with our compensation objectives, the Compensation Committee has structured our annual and long-term incentive-based executive compensation to attract and retain the best talent, reward financial success and closely align executives’ interests with the Company’s interests. In setting the compensation, the Compensation Committee reviews total direct compensation for the Named Executive Officers, which includes salary, annual cash incentives and long-term equity incentives. The appropriate level and mix of incentive compensation is not based upon a formula, but is a subjective determination made by the Compensation Committee.
We do not have a policy of stock ownership requirements. In addition, we do not have any employment contracts or change of control agreements, although equity issued pursuant to our 2006 Stock and Performance Incentive Plan is subject to accelerated vesting as described below in “Potential Payments Upon a Change of Control or Termination.”
The Compensation Committee reviews compensation matters from time to time during the year. The Compensation Committee typically recommends the accrual of amounts for the cash bonus and profit sharing plan shortly prior to or during the first quarter of a fiscal year and then recommends the allocation of the accrued amounts in the first quarter of the following fiscal year. In addition, the Compensation Committee generally performs its annual review of officer salaries during the middle of each fiscal year.
Elements of Compensation
For fiscal 2008, the components of compensation for our Named Executive Officers included the following elements:
| | | | |
Element | | Form of Compensation | | Purpose |
|
| Base Salary | | Cash | | Provide competitive, fixed compensation to attract and retain executive talent. |
| Short-Term Incentive | | Cash Bonus and Profit Sharing | | Create a strong financial incentive for achieving financial success and for the competitive retention of executives. |
| Long-Term Equity Incentive | | Stock Option and Restricted Stock Grants | | Provide incentives to strengthen alignment of executive team interests with Company interests, reward long-term achievement and promote executive retention. |
| Health, Retirement and Other Benefits | |
Eligibility to participate in plans generally available to our employees, including 401(k); profit-sharing; health; life insurance and disability plans | |
Plans are part of broad-based employee benefits. |
| Executive Benefits and Perquisites | |
Club memberships | |
Provide benefits to promote marketing of the Company. |
7
Base Salary
The Compensation Committee believes base salary is a critical element of executive compensation because it provides executives with a base level of monthly income. We do not have a formal salary program with salary grades or salary ranges. Instead salary increases are awarded periodically based on individual performance, when allowed by economic conditions. The Compensation Committee determines the base salary of each Named Executive Officer based on his or her position and responsibility. During its review of base salaries for executives, the Compensation Committee primarily considers the internal value of the position relative to other positions, external value of the position or comparable position, individual performance, and ability to represent our Company’s values. For Named Executive Officers other than the CEO, the Compensation Committee also considers the recommendations of the CEO.
The Compensation Committee typically considers base salary levels annually as part of its review of our performance and from time to time upon a promotion or other change in job responsibilities. As a result of its fiscal 2008 review and in recognition of outstanding performance by the Named Executive Officers and our Company, the Compensation Committee recommended to the Board of Directors for approval base salary increases for the following Named Executive Officers effective as of June 13, 2008. The following table reflects these increases:
| | | | | | | | | |
| | | Salary Increase
| |
| | | Effective June, 2008 | |
Name | | From | | | To | |
| |
| Stephen C. Jumper | | | 310,000 | | | | 350,000 | |
| Christina W. Hagan | | | 187,500 | | | | 210,000 | |
| C. Ray Tobias | | | 200,000 | | | | 230,000 | |
| Howell W. Pardue | | | 165,000 | | | | 173,000 | |
| Kermit S. Forsdick | | | 162,500 | | | | 196,625 | (1) |
| | |
| (1) | | Mr. Forsdick’s base salary increase in the table above also reflects a salary increase effective January 2008 due to his relocation from Midland to Houston. |
Short-Term Incentive Compensation
The Named Executive Officers participate in our profit sharing program, along with all other eligible employees. The profit sharing program is designed to award our employees for the financial success of the Company. With respect to each fiscal year, our Board of Directors, acting on the recommendation of our Compensation Committee, determines a pool amount available to be allocated in the first quarter of the following fiscal year to all eligible employees, including the Named Executive Officers. For fiscal 2008, our Board of Directors set the pool at 5% of our pre-tax net income for fiscal 2008. The distribution of the pool to eligible employees is based upon a variety of factors including base salary, internal value of the position and non-financial objectives, executivesseniority. The fiscal 2008 and fiscal 2007 profit sharing awards paid to our Named Executive Officers are included in the Summary Compensation Table on page 12. In September 2008, our Board of Directors preliminarily set the fiscal 2009 allocation for the profit sharing plan at 5% of our pre-tax net income for fiscal 2009.
We also use short-term incentive compensation to meet market and competitive demands. Accordingly, eligible employees, including each Named Executive Officer, were awarded discretionary cash bonuses in November 2008 and December 2007. Bonus amounts were based upon a variety of factors including perceived competitive pressures, base salary, internal value of the position and seniority. The fiscal 2008 and fiscal 2007 bonus amounts paid to our Named Executive Officers are included in the Summary Compensation Table on page 12.
Long-Term Equity Incentive Compensation
Long-term equity incentives encourage participants to focus on long-term performance and provide an opportunity for executive officers and certain designated key employees to increase their stake in our Company through grants of restricted common stock and stock options. By using a mix of stock options and restricted
8
stock grants, we are able to compensate our Named Executive Officers for sustained increases in our stock performance as well as long-term growth. The Compensation Committee makes the determination whether to grant stock options or restricted stock by weighing the financial effects on the Company, and the benefits and drawbacks of each type of award for the Named Executive Officers. Such determination is made at the time of the grant.
During the past few years, we have emphasized grants of restricted stock as our primary long-term equity incentive compensation tool due to our management’s belief that such grants have been the best method of rewarding and retaining the Named Executive Officers. However, in the beginning of fiscal 2009, the Compensation Committee decided to award long-term equity incentive compensation in the form of stock option grants. The following factors were considered by the Compensation Committee in reaching its decision to award stock options instead of restricted stock at the beginning of fiscal 2009: the Named Executive Officers’ current unvested equity awards; the general economic climate; and the desire to incentivize our Named Executive Officers to take actions to increase the value of our common stock over the term of the vesting period.
In fiscal 2008 and fiscal 2007, our Compensation Committee approved restricted stock grants to the Named Executive Officers, other officers and certain other employees. In addition to rewarding these individuals for our long-term success and aligning the interests of the Named Executive Officers with the Company, these grants also help us to retain talented employees because the shares cannot be sold during a three-year restricted period. We calculate the accounting cost of the restricted stock by taking the average of the high and low price of our common stock on the date of grant, and we recognize these costs over the vesting period of the restricted stock. The restricted shares granted in fiscal 2008 were awarded under our 2006 Stock and Performance Incentive Stock Plan and the restricted shares granted in fiscal 2007 were awarded under our 2004 Incentive Stock Plan.
In fiscal 2009, our Compensation Committee approved stock option grants to the Named Executive Officers, other officers and certain other employees. In these cases, the exercise price of the stock options equaled the average of the high and low trading price of our common stock on the NASDAQ Global Select Market on the date of grant. We have not onlygranted options with an exercise price that is less than the average of the high and low trading price of our common stock on the NASDAQ Global Select Market on the date of grant, and we have not made grants with a grant date that occurs before the Board of Directors’ action. The stock options granted in fiscal 2009 were awarded under our 2006 Stock and Performance Incentive Stock Plan and vest in equal installments over four years on each anniversary of the date of grant. We did not award any stock options in fiscal 2008 or fiscal 2007.
Our Compensation Committee recommends to our Board of Directors the equity awards to be made to each Named Executive Officer prior to the grant of such equity awards by the Board of Directors. Grants of equity may be made at any time during the year, although typically an award is made to each Named Executive Officer at the beginning of each fiscal year. We do not time the release of material non-public information with the purpose of affecting the value of executive compensation.
The following sets forth information regarding our incentive plans.
Stock Plans. We have three equity compensation plans: the 2006 Stock and Performance Incentive Plan (the “2006 Plan”); the 2004 Incentive Stock Plan (the “2004 Plan”) and the 2000 Incentive Stock Plan (the “2000 Plan”).
The 2006 Plan provides 750,000 shares of authorized but unissued shares of our common stock to be awarded to our officers, directors, employees and consultants. These awards can be made in various forms, including options, grants or restricted stock grants. Stock option grant prices awarded under the 2006 Plan may not be less than the fair market value of the common stock subject to such option on the grant date, and the term of stock options may extend no more than ten years after the grant date. Our Compensation Committee selects the employees and consultants to whom the awards will be granted and determines the number and type of awards to be granted to such individual. Our Board of Directors selects the nonemployee
9
directors eligible to whom awards will be granted and determines the number and type of award to be granted to such individuals. All of our employees, nonemployee directors and consultants are eligible to receive awards under the 2006 Plan. The 2006 Plan has a term of ten years from the date of stockholder approval such that it expires in January 2017.
The 2004 Plan provides 375,000 shares of authorized but unissued common stock of the Company. The Company may award stock options under the 2004 Plan. The option price is the market value of the Company’s common stock at date of grant. Options are exercisable 25% annually from the date of the grant and the options expire five years from the date of grant. The Company may also award stock and restricted stock under the 2004 Plan. Restricted stock vests after three years and is granted at the market value of the Company’s common stock on the date of grant. Of the 375,000 shares, up to 125,000 shares may be awarded to officers, directors, and employees of the Company and up to 125,000 shares may be awarded with restrictions for the purpose of additional compensation.
No equity awards are currently outstanding pursuant to the 2000 Plan and, although shares are available under the 2000 and 2004 Plans, we do not intend to issue shares from these plans in the future.
Health, Retirement and Other Benefits
401(k) Plan. Effective January 1, 2002, we initiated a 401(k) plan as part of our employee benefits package in order to retain quality personnel. This is a tax-qualified retirement savings plan under which all employees, including the Named Executive Officers, are able to contribute to the plan the lesser of up to 100% of their own success, butannual salary or the limits prescribed by the Internal Revenue Service on a before-tax basis. During fiscal year 2008, we elected to match 100% of employee contributions up to a maximum of 6% of the participant’s gross salary. Our matching contributions for all of our employees during fiscal 2008 were approximately $1,117,000. All contributions to the plan as well as our matching contributions are fully vested upon contribution. Our Board of Directors has determined that we will once again match employee contributions up to a maximum of 6% of gross salary during fiscal 2009.
Health and Life. We offer major medical, dental and life insurance to all eligible employees. We also help ensureprovide the following other insurance benefits to the majority of our salaried employees, including the Named Executive Officers:
| | |
| • | Life insurance — up to two times annual earnings with limitations based on age and a maximum benefit of $400,000; and |
|
| • | Long-term disability — 60% of monthly earnings up to $10,000 per month. |
Executive Benefits and Perquisites
We provide our Named Executive Officers with perquisites and other personal benefits that are believed to be reasonable and consistent with the overall compensation program to better enable us to attract and retain superior employees for key positions. Our Compensation Committee reviews the levels of these perquisites and other personal benefits provided to the Named Executive Officers on an annual basis.
10
COMPENSATION COMMITTEE REPORT
To the Stockholders of Dawson Geophysical Company:
The Compensation Committee of the Board of Directors has reviewed and discussed theCompensation Discussion and Analysis, above, with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the business, employees, stockholdersCompensation Discussion and communitiesAnalysisbe included in which we live and work will prosper.this proxy statement for the fiscal year ended September 30, 2008.
| | | |
November 25, 2005December 16, 2008 | | Compensation Committee |
| | |
| | | Paul H. Brown |
| | | Gary M. Hoover |
| | | Tim C. Thompson |
EXECUTIVE COMPENSATION
The following narrative, tables and footnotes describe the “total compensation” earned during fiscal 2008 by our Named Executive Officers. The total compensation presented below in the Summary Compensation Table does not reflect the actual compensation received by our Named Executive Officers in 2008. The actual value realized by our Named Executive Officers in 2008 from long-term incentives (in this case, stock options) is presented in the Option Exercises and Stock Vested table on page 13 of this proxy statement. Long-term incentive awards for 2008 are presented in the Grants of Plan-Based Awards table on page 12 of this proxy statement.
The individual components of the total compensation reflected in the Summary Compensation Table are broken out below:
Salary — The table reflects base salary earned during 2008. See “Compensation Discussion and Analysis — Elements of Compensation — Base Salary.”
Bonus — In 2008, our Named Executive Officers were awarded a cash bonus and participated in our profit sharing plan. See “Compensation Discussion and Analysis — Elements of Compensation — Short-Term Incentive Compensation.”
Stock Awards — The awards disclosed under the heading “Stock Awards” consist of a grant of restricted stock to our Named Executive Officers. Other details about the restricted stock grant are included in the Grant of Plan-Based Awards Table on page 12. See also “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Incentive Compensation.”
11
8
Summary Compensation Table
The following table sets forth information concerning the compensation paid to our Named Executive Officers for services to the Company during the fiscal years ended September 30, 2008 and 2007:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Stock
| | All Other
| | |
Name and
| | | | Salary
| | Bonus
| | Awards
| | Compensation
| | Total
|
Principal Position | | Year | | ($) | | ($)(1) | | ($)(2) | | ($)(3) | | ($) |
| |
| Stephen C. Jumper | | | 2008 | | | | 322,308 | | | | 111,716 | | | | 123,320 | | | | 29,225 | (4) | | | 586,569 | |
| Chief Executive Officer and President | | | 2007 | | | | 291,545 | | | | 92,034 | | | | 54,100 | | | | 17,197 | | | | 454,876 | |
| Christina W. Hagan | | | 2008 | | | | 194,423 | | | | 70,775 | | | | 92,490 | | | | 21,332 | | | | 379,020 | |
| Executive Vice President and Chief Financial Officer | | | 2007 | | | | 180,769 | | | | 59,740 | | | | 40,575 | | | | 12,522 | | | | 293,606 | |
| C. Ray Tobias | | | 2008 | | | | 209,231 | | | | 73,061 | | | | 92,490 | | | | 14,231 | | | | 389,013 | |
| Executive Vice President and Chief Operating Officer | | | 2007 | | | | 187,301 | | | | 60,521 | | | | 40,575 | | | | 12,912 | | | | 301,309 | |
| Howell W. Pardue | | | 2008 | | | | 167,461 | | | | 69,291 | | | | 92,490 | | | | 8,927 | | | | 338,169 | |
| Executive Vice President | | | 2007 | | | | 154,511 | | | | 60,827 | | | | 40,575 | | | | 8,300 | | | | 264,213 | |
| Kermit S. Forsdick | | | 2008 | | | | 178,622 | | | | 64,459 | | | | 61,660 | | | | 10,953 | | | | 315,694 | |
| Vice President | | | 2007 | | | | 151,035 | | | | 53,105 | | | | 27,050 | | | | 10,443 | | | | 241,633 | |
| | |
| (1) | | Includes amounts payable pursuant to our profit-sharing plan and the discretionary cash bonus described above in “Compensation Discussion and Analysis — Elements of Compensation — Short-Term Incentive Compensation.” |
|
| (2) | | The amounts in this column reflect the dollar amount we recognized as an expense with respect to restricted stock awards for financial statement reporting purposes during the year ended September 30, 2008, in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004) “Share-based Payment” (SFAS No. 123(R)). See Note 1 to our audited financial statements included in our 2008 Annual Report on Form10-K for the assumptions made in our valuation of the fiscal 2008 stock awards and see Note 1 to our audited financial statements included in our 2007 Annual Report onForm 10-K for the assumptions made in our valuation of the fiscal 2007 stock awards. |
|
| (3) | | The amount shown in this column includes our matching contributions under our 401(k) plan for the following Named Executive Officers for fiscal 2008 and 2007, respectively: Mr. Jumper — $15,496 and $15,349; Ms. Hagan — $11,665 and $10,846; Mr. Tobias — $12,554 and $11,192; Mr. Pardue — $8,373 and $7,726; and Mr. Forsdick - $9,593 and $9,062. |
|
| (4) | | The amounts shown under the “All Other Compensation” column for Mr. Jumper for fiscal 2008 other than the 401(k) plan payment described in footnote 3 include payment of professional organization, country club and social club dues; life insurance premiums and other miscellaneous reimbursed expenses. These club memberships generally are maintained for business entertainment but may be used for personal use. The entire amount of the annual dues, $12,013, has been included, although we believe that only a portion of this cost represents a perquisite. |
Grants of Plan-Based Awards For Fiscal 2008
The following table reports all grants of plan-based awards made during fiscal 2008 to our Named Executive Officers:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | All Other Stock
| | | Grant Date
| |
| | | | | | | | | Awards: Number of
| | | Fair Value of
| |
| | | | | | | | | Shares of Stock
| | | Stock and Option
| |
Name | | Grant Date | | | Approval Date | | | or Units (#)(1) | | | Awards($)(2) | |
| |
| Stephen C. Jumper | | | 6/2/2008 | | | | 5/27/2008 | | | | 3000 | | | | 207,660 | |
| Christina W. Hagan | | | 6/2/2008 | | | | 5/27/2008 | | | | 2250 | | | | 155,745 | |
| C. Ray Tobias | | | 6/2/2008 | | | | 5/27/2008 | | | | 2250 | | | | 155,745 | |
| Howell W. Pardue | | | 6/2/2008 | | | | 5/27/2008 | | | | 2250 | | | | 155,745 | |
| Kermit S. Forsdick | | | 6/2/2008 | | | | 5/27/2008 | | | | 1500 | | | | 103,830 | |
12
| | |
| (1) | | All grants made to Named Executive Officers in fiscal 2008 were grants of restricted shares made pursuant to the 2006 Plan. These grants vest on the third anniversary of the original grant date. |
|
| (2) | | Represents the aggregate grant date fair value of the award computed in accordance with SFAS No. 123(R). |
For a detailed discussion of each of the awards in the above table and their material terms, refer to “Summary Compensation Table” and “Compensation Discussion and Analysis — Long-Term Equity Incentive Compensation” above.
Outstanding Equity Awards At Fiscal Year-End 2008
The following table provides information regarding the value of all unexercised options and unvested restricted stock previously awarded to our Named Executive Officers:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
| | | | �� | | | | | | | | | | | Number of
| | | Market Value
| |
| | | | | | Number of Securities
| | | | | | | | | Shares or
| | | of Shares
| |
| | | | | | Underlying
| | | | | | | | | Units of
| | | or Units
| |
| | | Number of Securities
| | | Unexercised
| | | Option
| | | Option
| | | Stock That
| | | of Stock
| |
| | | Underlying Unexercised
| | | Options (#)
| | | Exercise
| | | Expiration
| | | Have Not
| | | That Have
| |
Name | | Options (#) Exercisable | | | Unexercisable | | | Price ($) | | | Date | | | Vested (#) | | | Not Vested ($)(2) | |
| |
| Stephen C. Jumper | | | 7,500 | | | | 2,500 | (1) | | | 17.91 | | | | 11/9/2009 | | | | 3000 | (3) | | | 140,070 | |
| | | | | | | | | | | | | | | | | | | | 6000 | (4) | | | 280,140 | |
| Christina W. Hagan | | | 3,750 | | | | 1,250 | (1) | | | 17.91 | | | | 11/9/2009 | | | | 2250 | (3) | | | 105,053 | |
| | | | | | | | | | | | | | | | | | | | 4500 | (4) | | | 210,105 | |
| C. Ray Tobias | | | — | | | | 1,250 | (1) | | | 17.91 | | | | 11/9/2009 | | | | 2250 | (3) | | | 105,053 | |
| | | | | | | | | | | | | | | | | | | | 4500 | (4) | | | 210,105 | |
| Howell W. Pardue | | | — | | | | — | | | | — | | | | — | | | | 2250 | (3) | | | 105,053 | |
| | | | | | | | | | | | | | | | | | | | 4500 | (4) | | | 210,105 | |
| Kermit S. Forsdick | | | — | | | | 500 | (1) | | | 17.91 | | | | 11/9/2009 | | | | 1500 | (3) | | | 70,035 | |
| | | | | | | | | | | | | | | | | | | | 3000 | (4) | | | 140,070 | |
| | |
| (1) | | Shares underlying options that vested on 11/9/2008. |
|
| (2) | | The market value was computed by multiplying the closing market price of the common stock at fiscal year-end 2008 ($46.69) times the number of restricted shares that have not vested. |
|
| (3) | | Vests in one installment on 06/02/11. |
|
| (4) | | Vests in one installment on 10/04/09. |
Option Exercises and Stock Vested for Fiscal 2008
The following table provides information with respect to the options exercised by our Named Executive Officers during fiscal 2008. No restricted stock held by the Named Executive Officers vested during fiscal 2008:
| | | | | | | | | |
| | | Option Awards | |
| | | Number of Shares
| | | Value
| |
| | | Acquired on
| | | Realized on
| |
Name | | Exercise (#) | | | Exercise ($) | |
| |
| Stephen C. Jumper | | | 10,000 | | | | 418,050 | |
| Christina W. Hagan | | | 5,000 | | | | 279,284 | |
| C. Ray Tobias | | | 8,750 | | | | 446,268 | |
| Howell W. Pardue | | | 5,000 | | | | 270,003 | |
| Kermit S. Forsdick | | | 5,500 | | | | 337,080 | |
13
Pension Benefits
Our only retirement plan for our employees, including our Named Executive Officers, is our 401(k) plan. We do not have a pension plan in which our Named Executive Officers are eligible to participate.
Non-Qualified Deferred Compensation
We do not have a non-qualified deferred compensation plan.
Potential Payments Upon A Change Of Control Or Termination
We do not have any employment contracts or change of control agreements. However, our newest stock plan, the 2006 Plan, does permit accelerated vesting of stock awards in the event of a change of control or upon termination of employment as described below.
In the event of a “change of control,” all awards granted under our 2006 Plan immediately vest and become fully exercisable and any restrictions applicable to the award lapse. All stock options and stock appreciation rights will remain exercisable until (a) the expiration of the term of the award or, (b) if the participant should die before the expiration of the term of the award, until the earlier of: (i) the expiration of the term of the award or (ii) two (2) years following the date of the participant’s death. Our 2006 Plan form stock option and restricted stock agreements define a “change of control” as occurring when (i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the total voting power of the Company’s then outstanding securities; (ii) the individuals who were members of the Board of Directors of the Company immediately prior to a meeting of the stockholders of the Company involving a contest for the election of directors shall not constitute a majority of the Board of Directors following such election unless a majority of the new members of the Board were recommended or approved by majority vote of members of the Board of Directors immediately prior to such stockholders’ meeting; (iii) the Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than fifty percent (50%) of the total voting power of the surviving corporation is represented by shares held by former stockholders of the Company prior to such merger or consolidation; or (iv) the Company shall have sold, transferred or exchanged all, or substantially all, of its assets to another corporation or other entity or person.
In addition our form stock option and restricted stock agreements also provide for accelerated vesting upon death or disability or if a participant’s employment is terminated by the Company for reasons other than cause. Stock options which are accelerated under this provision may be exercised in whole or in part until their expiration pursuant to the terms of the stock option agreement or the 2006 Plan.
If a change in control or termination of employment as described above were to have occurred as of September 30, 2008, shares of restricted stock held by our Named Executive Officers would have automatically vested, as follows:
| | |
| • | Mr. Jumper held 3,000 shares of restricted stock that would have become fully vested as a result of such change in control or termination of employment; |
|
| • | Ms. Hagan held 2,250 shares of restricted stock that would have become fully vested as a result of such change in control or termination of employment; |
|
| • | Mr. Tobias held 2,250 shares of restricted stock that would have become fully vested as a result of such change in control or termination of employment; |
|
| • | Mr. Pardue held 2,250 shares of restricted stock that would have become fully vested as a result of such change in control or termination of employment; |
|
| • | Mr. Forsdick held 1,500 shares of restricted stock that would have become fully vested as a result of such change in control or termination of employment. |
14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended 2005, theSeptember 30, 2008, our Compensation Committee was composed of Messrs. P. Brown, Hoover and Thompson. No member of the Compensation Committee was an officer or employee of the Company. None of the Company’sour executive officers served on the board of directors or the compensation committee of any other entity, for which any officers of such other entity served either on our Board of Directors or our Compensation Committee.
PERFORMANCE GRAPHTRANSACTIONS WITH RELATED PERSONS
The following graph compares
Transactions with related persons are reviewed, approved or ratified in accordance with the five-year cumulative total returnpolicies and procedures set forth in our code of business conduct and ethics, our Audit Committee charter, the procedures described below with respect to director and officer questionnaires and the other procedures described below.
Our code of business conduct and ethics provides that directors, officers, and employees must avoid situations that involve, or could appear to involve, “conflicts of interest” with regard to the Company’s interest. Exceptions may only be made after review of fully disclosed information and approval of specific or general categories by senior management (in the case of employees ) or the Board of Directors (in the case of officers or directors). Any employee, officer or director who becomes aware of a conflict or potential conflict of interest should bring the matter to the attention of a supervisor or other appropriate personnel.
A “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company’s Common Stock as comparedCompany. Conflicts of interest generally interfere with the S&P 500 Stock Indexperson’s effective and a peer group made upobjective performance of companies inhis or her duties or responsibilities to the Value-Line Oilfield Services Industry Index. The Oilfield Services Index consistsCompany. Our code of far larger companies that perform a varietybusiness conduct and ethics sets forth several examples of services as compared to land-based acquisition and processinghow conflicts of seismic data performed by the Company.interest may arise, including when:
Comparison of 5 Year Cumulative Total Return*
Among Dawson Geophysical Company, the S & P 500 Index
and the Value Line Oilfield Services Index
| | |
* | $100 invested on 9/30/2000 in stock• | a director, officer or index-including reinvestmentemployee or members of dividends. Fiscal year ending Sept. 30.their immediate family, receive improper personal benefits because of their position with the Company; |
|
| • | the Company gives loans to, or guarantees of obligations of directors, officers, employees or their immediate family members; or |
|
| • | the director, officer, employee or their immediate family members use Company property or confidential information for personal use. |
Our Audit Committee also has the responsibility, according to its charter, to review, assess and approve or disapprove conflicts of interest and related-party transactions.
Each year we require all our directors, nominees for director and executive officers to complete and sign a questionnaire in connection with the solicitation of proxies for use at our annual general meeting of members. The purpose of the questionnaire is to obtain information, including information regarding transactions with related persons, for inclusion in our Proxy Statement or Annual Report.
In addition, we annually review SEC filings made by beneficial owners of more than five percent of any class of our voting securities to determine whether information relating to transactions with such persons needs to be included in our Proxy Statement or Annual Report.
Based on these reviews, our Board of Directors has determined that the Company did not engage in any transactions during the fiscal year ended September 30, 2008 with related persons which would require disclosure under Item 404 ofRegulation S-K as adopted by the SEC, and there are currently no such proposed transactions.
15
9
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes certain information regarding securities authorized for issuance under our equity compensation plans as of September 30, 2008. See information regarding material features of the plans in Note 1, “Summary of Significant Accounting Policies,” “Stock-Based Compensation” to the Financial Statements included in our Annual Report onForm 10-K for the fiscal year ended September 30, 2008.
| | | | | | | | | | | | | |
| | | | | | | | | Number of
| |
| | | | | | | | | Securities Remaining
| |
| | | | | | | | | Available for
| |
| | | | | | | | | Future Issuance
| |
| | | Number of
| | | | | | Under Equity
| |
| | | Securities to
| | | | | | Compensation Plans
| |
| | | be Issued
| | | | | | (Excluding
| |
| | | Upon Exercise
| | | Weighted-Average Exercise
| | | Securities
| |
| | | of Outstanding
| | | Price of
| | | Reflected in
| |
Plan Category | | Options | | | Outstanding Options | | | Column (a)) | |
| | | (a) | | | (b) | | | (c) | |
| |
| Equity compensation plans approved by security holders | | | 23,250 | | | $ | 17.91 | | | | 943,550 | (1) |
| Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
| Total | | | 23,250 | | | $ | 17.91 | | | | 943,550 | (1) |
| | |
| (1) | | Although 238,550 shares are available to be issued under the 2000 Plan and the 2004 Plan, the Company does not intend to grant additional shares from either Plan. There are 705,000 shares available to be issued under the 2006 Plan. |
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of the Company’sour Common Stock, as of November 25, 2005,28, 2008, by each of the Company’sour Directors and executive officers and by all executive officers and Directors of the Company as a group, and by each person known to the Company to be thegroup. As of November 28, 2008, we had no beneficial owner of more than 5% of any class of the Company’sour outstanding Common Stock.
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| | | Amount and Nature of | | | Percent of | |
| Name of Beneficial Owner | | Beneficial Ownership | | | Class(1) | |
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BENEFICIAL OWNERS OF MORE THAN 5%
OF OUR COMMON STOCK |
| Beddow Capital Management Incorporated | | | 451,930 | (2) | | | 6.04 | % |
| | 250 Healdsburg Avenue, Suite 202 | | | | | | | | |
| | Healdsburg, California 95448 | | | | | | | | |
| Rubicon Master Fund | | | 435,000 | (3) | | | 5.81 | % |
| | P.O. Box 309 | | | | | | | | |
| | Ugland House | | | | | | | | |
| | George Town, Cayman Islands | | | | | | | | |
| SECURITY OWNERSHIP OF MANAGEMENT |
| L. Decker Dawson | | | 408,192 | | | | 5.45 | % |
| Christina W. Hagan | | | 58,399 | (4)(5) | | | * | |
| Stephen C. Jumper | | | 57,808 | (4)(5) | | | * | |
| Howell W. Pardue | | | 37,000 | (4)(5) | | | * | |
| C. Ray Tobias | | | 28,775 | (4)(5) | | | * | |
| Edward L. Huff | | | 9,756 | (4)(5) | | | * | |
| A. Mark Nelson | | | 8,891 | (4)(5) | | | * | |
| K.S. Forsdick | | | 7,750 | (4)(5) | | | * | |
| Tim C. Thompson | | | 5,500 | | | | * | |
| Paul H. Brown | | | 3,500 | | | | * | |
| Gary M. Hoover | | | 1,000 | | | | * | |
| All directors and executive officers as a group (11 persons) | | | 626,571 | (4)(5) | | | 8.26 | % |
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| | | Amount and
| | | | |
| | | Nature of
| | | Percent of
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Name of Beneficial Owner | | Beneficial Ownership | | | Class(1) | |
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| SECURITY OWNERSHIP OF MANAGEMENT | | | | | | | | |
| L. Decker Dawson | | | 108,192 | (2) | | | 1.39 | % |
| Christina W. Hagan | | | 52,899 | (3)(4) | | | | * |
| Stephen C. Jumper | | | 46,302 | (3)(4)(5) | | | | * |
| C. Ray Tobias | | | 27,025 | (3)(4) | | | | * |
| Howell W. Pardue | | | 14,500 | (4) | | | | * |
| Kermit S. Forsdick | | | 7,250 | (3)(4) | | | | * |
| Tim C. Thompson | | | 7,000 | | | | | * |
| Gary M. Hoover | | | 4,000 | | | | | * |
| Paul H. Brown | | | 2,000 | | | | | * |
| Jack D. Ladd | | | — | | | | | * |
| Ted R. North | | | — | | | | | * |
| All directors and executive officers as a group (11 persons) | | | 269,168 | | | | 3.45 | % |
| | |
| * | * | Indicates less than 1% of the outstanding shares of Common Stock. |
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| | |
| (1) | | As of November 25, 2005,28, 2008, there were 7,484,0447,794,744 shares of Common Stock issued and outstanding. Unless otherwise indicated, the beneficial owner has sole voting and investment power with respect to all shares listed. |
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| (2) | Based on | Mr. Dawson’s shares are held as an individual and through a Schedule 13F-HR for the period ended September 30, 2005 filed by Beddow Capital Management Incorporated with the Securities and Exchange Commission. Beddow Capital Management Incorporated reports that it has sole voting and investment power with respect to all 451,930 shares.revocable trust. |
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| (3) | Based on a Form 13G dated April 8, 2005 filed by Rubicon Master Fund with the Securities and Exchange Commission on April 19, 2005. Rubicon Master Fund reports that it has shared voting and investment power with Rubicon Fund Management Ltd., Rubicon Fund Management LLP, Paul Anthony Brewer, Jeffrey Eugene Brummette, William Francis Callanan, Vilas Gadkari, Robert Michael Greenshields and Horace Joseph Leitch III with respect to all 435,000 shares. |
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(4) | Includes shares attributable to Common Stock not outstanding but subject to currently exercisable options, as follows: Mr. Jumper — 25,000 shares; Ms. Hagan — 23,750 shares; Mr. Pardue — 6,250 shares; Mr. Tobias — 8,750 shares; Mr. Huff — 3,750 shares; Mr. Forsdick — 3,750 shares; Mr. Nelson — 3,750 shares. |
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(5) | Includes shares attributable to Common Stock not outstanding, but subject to options exercisable within sixty days of the record date, as follows: Mr. Jumper — 7,50010,000 shares; Ms. Hagan — 5,000 shares; Mr. PardueTobias — 3,7501,250 shares; Mr. Forsdick — 500 shares. There are no shares subject to options exercisable within 60 days of the record date. |
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| (4) | | Includes shares attributable to restricted Common Stock, as follows: Mr. Jumper — 9,000 shares; Ms. Hagan — 6,750 shares; Mr. Tobias — 5,0006,750 shares; Mr. HuffPardue — 5,0006,750 shares; Mr. Forsdick — 3,000 shares; 4,500 shares. The restricted stock is subject to forfeiture and may not be sold or transferred during the three-year vesting period. Holders of shares of restricted stock have the right to vote. |
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| (5) | | Mr. Nelson — 1,750 shares.Jumper has pledged 4,000 shares as security to a third party for a loan made by such third party. |
PROPOSAL 2: AMENDMENT OF THE RESTATED ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED SHARES
On September 27, 2005, our Board unanimously adopted a resolution declaring it advisable to amend our Restated Articles of Incorporation to increase the number of shares of Common Stock that we have authority to issue to 50,000,000 shares of Common Stock. Our Board further directed that this amendment to our Restated Articles of Incorporation be submitted for consideration by our stockholders at the Annual Meeting. In the event stockholders approve this amendment, we will amend Article Four of our Restated Articles of Incorporation to increase the number of shares of Common Stock which we are authorized to issue from 10,000,000 to 50,000,000. This amendment will become effective at the close of business on the date the amendment to the Restated Articles of Incorporation are accepted for filing by the Secretary of State of Texas. At November 25, 2005, there were 7,484,044 shares of our Common Stock outstanding and 311,000 reserved for issuance in connection with options and restricted stock awards. The Amendment to the Restated Articles of Incorporation is attached to this proxy statement asExhibit B.
Our Board believes that it is in our best interest to increase the number of authorized but unissued shares of Common Stock in order to have additional shares available to create opportunities for future equity growth. Our Board believes the availability of these additional shares will provide us with the flexibility to issue Common Stock for a variety of purposes the Board may deem advisable without further action by shareholders, unless required by law, regulation or the rules of The Nasdaq National Market. These purposes could include, among other things, the sale of stock to obtain additional funding, the use of additional shares for various equity compensation and other employee benefit plans, the declaration of stock splits or distributions, and other bona fide corporate purposes. We have no present plans, agreements, commitments or understandings with regard to the issuance of the proposed additional shares of Common Stock. The issuance of additional shares of Common Stock could have a dilutive effect on a shareholder’s voting power.
Although an increase in the authorized shares of Common Stock could, under certain circumstances, also be construed as having an anti-takeover effect (for example, by diluting the stock ownership of a person seeking to effect a change in the composition of our Board or contemplating a tender offer or other transaction for the combination of our Company with another company), we are not proposing this amendment to our Restated Articles of Incorporation in response to any effort to accumulate our stock or to obtain control of us by means of a merger, tender offer, or solicitation in opposition to management. Our Board has no knowledge of any effort by any person or group to obtain control of the Company.
Recommendation and Required Affirmative Vote
The affirmative vote of the holders of a majority of our Common Stock entitled to vote and who do vote (in person or by proxy) at the annual meeting is required for approval of the proposal to amend the Restated Articles of Incorporation to increase the number of authorized shares of Common Stock. Our Board believes the amendment of the Restated Articles of Incorporation is in the best interests of the Company and our stockholders.Accordingly, our Board recommends that you vote FOR approval of the proposal.
PROPOSAL 3: AMENDMENT TO THE 2004 STOCK INCENTIVE PLAN
General
The Dawson Geophysical Company 2004 Incentive Stock Plan (the “Plan”) was approved by our Board, with stockholder approval, in fiscal year 2004. Our Board has decided to amend the Plan, subject to stockholder approval, to increase the aggregate number of shares of Common Stock available for issuance
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under the Plan from 375,000 to 625,000, and to eliminate the 125,000 aggregate share limitations imposed upon restricted and unrestricted stock grants and options.
The purpose of the Plan is to encourage stock ownership by certain officers and employees of the Company so that they may acquire or increase their proprietary interest in the success of the Company and to encourage them to remain in the employ of the Company.
If approved by stockholders, the amendment will become effective as of January 24, 2006.
Proposal Regarding the Plan
Plan Amendment. As of November 25, 2005, 311,000 shares remained available for future issuance under the Plan. The amendment of the Plan would result in an additional 250,000 shares of Common Stock (the “Additional Shares”) being available for future issuance under the Plan (the “Plan Amendment”). All such additional shares authorized for issuance by the Company pursuant to the Plan may be distributed as either stock options, stock grants with restrictions (“Restricted Stock”) or stock grants without restrictions (“Unrestricted Stock”). We intend to file a registration statement on Form S-8 under the Securities Act of 1933, as amended, as soon as practicable following stockholder approval of the proposal to amend the Plan to register the additional 250,000 shares available for future issuance under the Plan.
In September 2005, our Board determined that the number of shares that remained available for additional awards under the Plan should be increased to maintain a percentage of Plan shares to the total number of shares outstanding. An equity offering of 1,800,000 shares of Common Stock in March 2005 having diluted the percentage of Plan shares to the total shares outstanding. The authorization of the Additional Shares pursuant to this proposal would restore the ratio of Plan shares to total shares outstanding to approximately eight percent. In addition, the Board determined that in order to simplify the administration of the Plan, the Company should eliminate the Plan share limitations imposed on the separate categories of Restricted Stock and Unrestricted Stock. After approval of the Plan Amendment, the Company will be able to make awards based on management’s judgment of the type of award that would be most effective, rather than an arbitrary limit on the type of award. As a result of these considerations, our Board is proposing the Plan Amendment to our stockholders at the annual meeting. The Plan Amendment is attached to this proxy statement asExhibit C.
Description of the Plan
The material features of the Plan, giving effect to the Plan Amendment, are as described below.
General. As amended, the Plan provides for the award of Restricted Stock, the award of Unrestricted Stock and the award of stock options (collectively “Awards”) to purchase up to 625,000 shares of the Company’s Common Stock. Awards may be granted by the Compensation Committee (as hereinafter defined), in its sole discretion, to officers, directors and employees of the Company, with or without payment therefor, and will reduce the total number of shares available for the issuance of other Awards under the Plan.
Stock options issued under the Plan have an option price that is equal to the market value of the Company’s Common Stock at date of grant, except that the option price shall be 110% of the market value if the option is granted to a stockholder who owns more than a 10% interest in the Company. Generally, options are exercisable 25% annually from the date of the grant and the options expire five years from date of grant. During the fiscal year ended 2005, options to purchase an aggregate of 45,000 shares of Common Stock were granted to employees of the Company under the Plan. As of November 25, 2005, the total number of outstanding options under the Company’s Plan was 45,000 and the total number of shares available for issuance was 311,000.
Administration. The Plan is administered by the compensation committee of the Board (the “Compensation Committee”). The Compensation Committee is authorized to interpret the Plan, make recommendations to the Board with respect to officers, directors and employees of the Company who shall
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be granted Awards, recommendations to the Board regarding the terms and restrictions attributable to Awards, and make all other determinations concerning the Plan.
Eligibility. Executives and other employees of the Company (including officers, whether or not they are directors) may receive stock options from the Company. Restricted Stock and Unrestricted Stock awards may be granted to officers, directors and employees of the Company with or without payment at the discretion of the Compensation Committee.
Term, Amendment and Termination of the Plan. To the extent permitted by law, our Board may at any time suspend, terminate, amend or modify the Plan. However, no amendment or modification may become effective without the approval of such amendment or modification by stockholders of the Company if the amendment changes the number of shares subject to the Plan, changes the designation of the class of employees eligible to receive Awards, decreases the price at which options may be granted, removes the administration of the Plan from the Compensation Committee, renders a member of the Compensation Committee eligible to receive an Award under the Plan while still on the Compensation Committee or amends the Plan in any manner that will cause any stock options issued under it that were otherwise intended to qualify as incentive stock options at the time of grant to fail to meet the requirements of incentive stock options as defined in Section 422 of the Code. The term of the 2004 Plan is five years from the date of its adoption, such that the 2004 Plan expires January 27, 2009.
Recommendation and Required Affirmative Vote
The affirmative vote of the holders of a majority of our Common Stock entitled to vote and who do vote (in person or by proxy) at the annual meeting is required for approval of the proposal to amend the Plan in accordance with the Plan Amendment. Our Board believes that the Plan Amendment is in the best interests of the Company and our stockholders.Accordingly, our Board recommends that you vote FOR approval of the proposal.
PROPOSAL 4: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors has selected KPMG LLP for appointment as the Company’sour independent registered public accounting firm for the fiscal year ending September 30, 2006,2009, subject to ratification by the stockholders. KPMG LLP served as our independent registered public accountants for the Company for the fiscal year ended September 30, 2005.2008. Representatives of that firmKPMG LLP are expected to be present at the Annual Meeting of stockholders to respond to appropriate questions and will have an opportunity to make a statement if they desire to do so.Our Board of Directors recommends that you vote FOR the appointment of KPMG LLP as our independent registered public accountants for the fiscal year ending September 30, 2006.2009.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit Fees. The aggregate fees billed for the fiscal years 20042007 and 20052008 for professional services rendered by the principal independent accountant, KPMG LLP, for the audit of the Company’sour annual financial statements, and review of the Company’sour quarterly reports onForm 10-Q are $66,500 and $170,667audit of our internal controls over financial reporting, were $418,591 and $348,500, respectively.
Audit Related Fees. The aggregate fees billed in fiscal year 2005 for services provided by the principal independent accountant, KPMG LLP, related to the Company’s March 2005 common stock offering and shelf registration statement are $99,023. There were no Audit-Related Fees billed by KPMG during fiscal year 2004.
TaxAudit-Related Fees. The aggregate fees billed for the fiscal years 20042007 and 20052008 for professional services rendered by the principal independent accountant, KPMG LLP, for Audit-Related Fees were $0 and $10,800, respectively. In 2008 KPMG LLP provided services related to the filing of aForm S-8 with respect to the 2006 Plan.
Tax Fees. There were no fees billed in each of the last two fiscal years for tax compliance, tax advice and tax planning are $8,625 and $12,060, respectively.services provided by the principal independent accountant, KPMG LLP.
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All Other Fees. There were no other fees billed in each of the last two fiscal years for products or services provided by the principal independent accountant, KPMG LLP, other than those reported under the captions “Audit Fees”,Fees,” “Audit-Related Fees” and “Tax Fees” above.
The Audit Committee’s policy on pre-approval of auditfees and audit related feesother compensation paid to the independent registered accounting firm requires the Chairman of the Audit Committee to sign all engagement letters of the principal independent accountant prior to commencement of any audit or audit related services, allservices. All fees paid in 2008 were approved in accordance with these procedures. All of which wasthe work performed in connection withauditing our financial statements for the last two fiscal years of the Company by the principal independent accountants, KPMG LLP, has been performed by their full-time, permanent employees.
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REPORT OF THE AUDIT COMMITTEE
To the Stockholders of Dawson Geophysical Company:
It is the responsibility of the members of the Audit Committee to contribute to the reliability of the Company’s Financial Statements.financial statements. In keeping with this goal, the Board of Directors adopted a written charter, (attached to this Proxy Statement as Exhibit A) to governwhich is posted on the Audit Committee.Company’s website athttp://www.dawson3d.com in the “Corporate Governance” area of the “Investor Relations” section. The Audit Committee is satisfied with the adequacy of the charter based upon its evaluation of the charter during fiscal 2005.2008. The Audit Committee met tenfourteen times during fiscal 2005.2008. The members of the Audit Committee are independent directors.
The audit committeeAudit Committee oversees the Company’s financial reporting process on behalf of the entire Board.Board of Directors. Management has the primary responsibility for the Company’s financial statements and the reporting process, including the systems of internal controls. The primary responsibilities of the Audit Committee are to select and retain the Company’s auditors (including review and approval of the terms of engagement and fees), to review with the auditors the Company’s financial reports (and other financial information) provided to the SEC and the investing public, to prepare and publish this report and to assist the Board of Directors with oversight of the following:
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| | • | integrity of the Company’s financial statements,statements; |
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| | • | compliance by the Company with standards of business ethics and legal and regulatory requirements,requirements; |
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| | • | qualifications and independence of the Company’s independent auditorsauditors; and |
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| | • | performance of the Company’s independent auditors and internal auditors. |
The Audit Committee has reviewed and discussed the Company’s audited financial statements with management. It has also discussed with the independent auditors the matters required to be discussed by Statement on AccountingAuditing Standards No. 61,114, “The Auditor’s Communication with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants.With Those Charged With Governance”. Additionally, the Audit Committee has received the written disclosures and the letter from the independent accountants at KPMG LLP, as required by IndependentIndependence Standards Board Standard No. 1, Independence“Independence Discussions with Audit Committees,” and has discussed with the independent accountants that firm’s independence from the Company and its management. The Audit Committee has concluded that non-audit services provided by KPMG LLP do not result in conflict in maintaining that firm’s independence.
Audit fees billed to the Company by KPMG LLP during the Company’s 20052008 fiscal year for the audit of the Company’s annual financial statements and the review of those financial statements included in the Company’s quarterly reports ofForm 10-Q totaled approximately $170,667. The Company was billed approximately $12,060 by KPMG LLP for tax related services. In addition, the Company was billed approximately $99,023 by KPMG LLP for audit related services related to the Company’s March 2005 common stock offering and shelf registration statement.$348,500.
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Based on reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the financial statements for fiscal 20052008 be included in the Company’s Annual Report onForm 10-K.
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| Audit Committee |
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| Paul H. Brown |
| Gary M. Hoover |
| Tim C. Thompson |
November 25, 2005
Audit Committee
Paul H. Brown
Gary M. Hoover
Tim C. Thompson
December 16, 2008
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’sour directors and officers, and persons who own more than 10 percent10% of the Company’sour outstanding Common Stock, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock held by such persons. These persons are also required to furnish the Companyus with copies of all forms they file under this regulation.
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To the Company’sour knowledge, based solely on a review of the copies of such reports furnished to the Companyus and without further inquiry, during the fiscal year ended September 30, 2005, the Company’s2008, our directors, officers and beneficial owners of more than 10 percent10% of Common Stock complied with all applicable Section 16(a) filing requirements.requirements, except in the following instances: (1) A. Mark Nelson filed a late Form 4 reporting a sale of shares; (2) Jack D. Ladd filed a late Form 3; and (3) Kermit S. Forsdick filed a timely Form 4 reporting a cashless exercise of stock options, which was later amended to correct certain items.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The next Annual Meeting of the Company’s stockholders is scheduled to be held on January 23, 2007.27, 2009. Stockholders may submit proposals appropriate for stockholder action at the next Annual Meeting consistent with the regulations of the Securities and Exchange Commission. If a stockholder desires to have such proposal included in the proxy statementProxy Statement and form of proxy distributed by the Board of Directors with respect to such meeting, the proposal must be received at the Company’sour principal executive offices, 508 West Wall, Suite 800, Midland, Texas 79701, Attention: Ms. Christina W. Hagan, Secretary, no later than August 25, 2006.18, 2009.
In addition, the Company’sour Bylaws establish advance notice procedures with regard to certain matters, including shareholderstockholder proposals not included in the Company’sour proxy statement, to be brought before an Annual Meeting. In general, the Secretary of the Companyour corporate secretary must receive notice of any such proposal not less than 80 days prior to the date of the Annual Meeting at the address of the Company’sour principal executive offices shown above. Such notice must include the information specified in Article II, Section 14 of the Company’sour Bylaws.
OTHER MATTERSHOUSEHOLDING
Management knows
The SEC permits a single set of annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. A number of brokerage firms have instituted householding.
As a result, if you hold your shares through a broker and you reside at an address at which two or more stockholders reside, you will likely be receiving only one annual report and proxy statement unless any stockholder at that address has given the broker contrary instructions. However, if any such beneficial stockholder residing at such an address wishes to receive a separate annual report or proxy statement in the future, or if any such beneficial stockholder that elected to continue to receive separate annual reports or proxy statements wishes to receive a single annual report or proxy statement in the future, that stockholder should contact their broker or send a request to our corporate secretary at our principal executive offices, 508 West Wall, Suite 800, Midland, Texas 79701, telephone number(432) 684-3000. We will deliver, promptly upon written or oral request to the corporate secretary, a separate copy of the 2008 Annual Report and this Proxy Statement to a beneficial stockholder at a shared address to which a single copy of the documents was delivered. Similarly, you may also contact us if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
OTHER MATTERS
We know of no other business which will be presented at the Annual Meeting other than as explained herein. TheOur Board of Directors of the Company has approved a process for collecting, organizing and delivering all stockholder communications to each of its members. To contact all directors on the Board of Directors, all directors on a committee of the Board committeeof Directors or an individual member or members of the Board of Directors, a stockholder may mail a written communication to: Dawson Geophysical Company, Attention: Secretary, 508 West Wall, Suite 800, Midland, Texas 79701. All communications received in the mail will be opened by the Company’sour Secretary, Christina W. Hagan, for the purpose of determining whether the contents represent a message to the Board of Directors. The contents of stockholder communications to the Board of Directors will be promptly relayed to the appropriate members. The Company encouragesWe encourage all members of the Board of Directors to attend
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the Annual Meeting of stockholders.Stockholders. All nominees for election to the Board of Directors in 2005 attended.2009 attended the Annual Meeting for fiscal 2007 in their capacity as directors, with the exception of Mr. Ladd and Mr. North, who were not serving on the Board of Directors at the time of the Annual Meeting for fiscal 2007.
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On December 9, 2008, we filed with the SEC an Annual Report onForm 10-K for the fiscal year ended September 30, 2008. The Annual Report onForm 10-K has been provided concurrently with this Proxy Statement to all stockholders entitled to notice of, and to vote at, the Annual Meeting.
Stockholders may also obtain a copy of the Annual Report onForm 10-K and any of our other SEC reports, free of charge, (1) from the SEC’s website at www.sec.gov, (2) from our website at www.dawson3d.com, or (3) by writing to our corporate secretary at our principal executive offices, 508 West Wall, Suite 800, Midland, Texas 79701, telephone number(432) 684-3000. The Annual Report onForm 10-K is not incorporated into this Proxy Statement and is not considered proxy solicitation material. Information contained on our website, other than this Proxy Statement, is not part of the proxy solicitation material and is not incorporated by reference herein.
ADDITIONAL INFORMATION ABOUT THE COMPANY
You can learn more about the Company and our operations by visiting our website atwww.dawson3d.com. www.dawson3d.com. Among other information we have provided there, you will find:
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| | • | The charters of each of our standing committees of the Board.Board of Directors; |
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| | • | Our code of business conduct and ethics.ethics; |
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| | • | Information concerning our business and recent news releases and filings with the SEC.SEC; and |
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| | • | Information concerning our boardBoard of directorsDirectors and stockholder relations. |
For additional information about the Company, please refer to our 20052008 Annual Report, which is being mailed with this proxy statement.Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Christina W. Hagan, Secretary
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| VOTE BY INTERNET — www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic DAWSON GEOPHYSICAL COMPANY voting instruction form. 508 WEST WALL SUITE 800 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy MIDLAND, TX 79701 materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE — 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: DGCOM1 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY DAWSON GEOPHYSICAL COMPANY For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. THE DIRECTORS RECOMMEND A VOTE “FOR” ITEMS 1 AND 2. 0 0 0 Vote on Directors 1. To elect as Directors of Dawson Geophysical Company the nominees listed below. 01) Paul H. Brown 05) Jack D. Ladd 02) L. Decker Dawson 06) Ted R. North 03) Gary M. Hoover 07) Tim C. Thompson 04) Stephen C. Jumper For Against Abstain Vote on Proposal 2. Proposal to ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal 0 0 0 year ending September 30, 2009. The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement of the Company for the Annual Meeting to be held on January 27, 2009. Please date and sign exactly as name appears on this proxy. Joint owners should each sign. If the signer is a corporation, please sign full corporate name by duly authorized officer. Executors, administrators, trustees, etc., should give full title as such. The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned Stockholder(s). If no direction is made, this proxy will be voted FOR items 1 and 2. If any other matters properly come before the meeting the persons named in this proxy will vote in their discretion. For address changes and/or comments, please check this box and 0 write them on the back where indicated. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
| BY ORDERImportant Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K Wrap are available at www.proxyvote.com. DGCOM2 DAWSON GEOPHYSICAL COMPANY 508 West Wall, Suite 800 Midland, TX 79701 432-684-3000 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS |
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| Christina W. Hagan, Secretary |
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EXHIBIT A
DAWSON GEOPHYSICAL COMPANY
AUDIT COMMITTEE CHARTER
Composition
The Audit Committee shall be composed of at least three directors who are independent of the management of Dawson Geophysical Company (the “Company”) and are free of any relationship that, in the opinion of the Board of Directors, would interfere with their exercise of independent judgment as a committee member and are, or will shortly become, financially literate. In addition, the members shall have the financial expertise to fulfill the required responsibilities of the Audit Committee.
Objective of the Audit Committee
The Audit Committee shall assist the Board of Directors in fulfilling its responsibility to the shareholders, potential shareholders, and the investment community relating to corporate accounting, reporting practices of the Company, and the quality and integrity of the financial reports of the Company.
Specific Responsibilities of the Audit Committee
In fulfilling its objective, the Audit Committee shall have the following responsibilities with respect to:
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| ANNUAL MEETING OF STOCKHOLDERS January 27, 2009 The Company’s Risks and Control Environment: |
To review management’s overview of the risks, policies, procedures, and controls surrounding the integrity of financial reporting, and particularly, the adequacy of the Company’s controls in areas representing significant financial and business risks;
To establish, review and update periodically a code of ethical conduct, ensure that management has established a system to enforce the code, and receive updates and briefings from management and others on how compliance with ethical policies and other relevant Company procedures is being achieved;
To review, with the Company’s counsel, legal matters, including litigation, compliance with securities trading policies, the Foreign Corrupt Practices Act and other laws having a significant impact on the Company’s business or its financial statements; and
To investigate any matter brought to its attention within the scope of its duties, and retain outside counsel for this purpose if, in its judgment, that is appropriate;
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| The Hiring and Firing of and Relationship with the Independent Registered Public Accounting Firm: |
To participate, on behalf of the Board of Directors, in the process by which the Company selects the independent registered public accounting firm to audit the Company’s financial statements, evaluate annually the effectiveness and objectivity of such accountants, and recommend the engagement or replacement of the independent registered public accounting firm to the Board of Directors;
To have an open line of communication with the independent registered public accounting firm, who shall have ultimate accountability to the Board of Directors and the Audit Committee, as representatives of the shareholders;
To approve the fees and other compensation paid to the independent registered public accounting firm; and
To review the independence of the independent registered public accounting firm prior to engagement;
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To review with the representatives from the independent registered public accounting firm, at least annually following the engagement, their independence based upon the written disclosures and the letter from the independent registered public accounting firm required by Independent Standards Board Standard No. 1, as modified or supplemented, and To discuss with the Board of Directors any relationships that may adversely affect the independence of the independent registered public accounting firm.
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| The Financial Reporting Process: |
To meet with the representatives from the independent registered public accounting firm and the financial management of the Company with respect to major changes to the Company’s auditing and accounting principles;
To meet with the representatives of the independent registered public accounting firm (independent accountants) and the financial management of the Company, together, and with the representatives from the independent registered public accounting firm, separately, (a) prior to the performance by the independent accountants of the audit to discuss the scope of the proposed audit for the current year and the audit procedures to be utilized; and (b) at the conclusion of the audit to discuss (i) the independent accountants’ judgments about the quality, not just the acceptability, of the Company’s accounting principles as applied in its financial reporting, the consistency of application of the Company’s accounting policies and the clarity, consistency, and completeness of the entity’s accounting information contained in the financial statements and related disclosures, (ii) the adequacy and effectiveness of the accounting and financial controls of the Company, including the internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper, and any recommendations for improvement of such internal control procedures or for new or more detailed controls or procedures of the Company, (iii) any other results of the audit, including any comments or recommendations, and (iv) the view of the independent accountants with respect to the financial, accounting and auditing personnel and the cooperation that the independent accountants received during the course of the audit;
To review and discuss with the representatives of the independent registered public accounting firm and the financial management of the Company the Company’s financial results before they are made public. In general, the Chairman of the Audit Committee may represent the entire committee with respect to the review and discussions about interim financial results; and
To review other reports submitted by the Company to any governmental body of the public, including any certification, report, opinion or review rendered by the independent registered public accounting firm;
Other Responsibilities of the Audit Committee:
To review and update periodically the charter for the Audit Committee;
To review, assess and approve or disapprove conflicts of interest and related-party transactions;
To review accounting and financial human resources and succession planning within the Company;
To meet at least four times annually, or more frequently, as circumstances dictate;
To report to the Board of Directors the matters discussed at each committee meeting;
To enhance the Audit Committee effectiveness through self-assessment; and
To keep an open line of communication with the financial and senior management, any internal audit personnel, the representatives of the independent registered public accounting firm, and the Board of Directors.
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EXHIBIT B
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
The proposal is to amend the preface and subsection (a) of Article Four of the Articles of Incorporation of the Company to read as follows:
“The total number of shares of stock which the corporation shall have authority to issue is fifty-five million (55,000,000) divided into two classes:
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| (a) One class designated as common stock shall consist of Fifty Million (50,000,000) shares having a par value of Thirty-Three and One/third Cents ($0.331/3) per share; and the other class designated as preferred shares shall consist of Five Million (5,000,000) shares having a par value of One Dollar ($1.00) per share.” |
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EXHIBIT C
AMENDMENT TO THE 2004 INCENTIVE STOCK PLAN
The proposal is to amend Sections 4 and 11 of the Dawson Geophysical Company 2004 Incentive Stock Plan to read as follows:
1. The first paragraph of Section 4 of the Plan is hereby deleted in its entirety and replaced with the following:
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| “The stock subject to the options shall be shares of the Company’s authorized but unissued or reacquired $0.331/3 par value per share common stock hereinafter sometimes called the “Stock.” The aggregate number of shares which may be issued under options shall not exceed 625,000 shares of Stock. The limitations established by the preceding sentence shall be subject to adjustment as provided in Article 5(h) of the Plan.” |
2. Section 11 of the Plan is hereby deleted in its entirety and replaced with the following:
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| “The Committee may award to officers, directors and employees of the Company shares of capital stock out of the 625,000 shares of Stock provided for in Article 4 of the Plan for the purpose of additional compensation for outstanding achievement and to encourage ownership of the Stock. These awards, in the discretion of the Committee, may be made with or without payment therefor by any officer, director or employee to whom such capital stock is made under such terms and conditions as the Committee may in its sole discretion provide. Such awards shall not constitute incentive stock options within the meaning of Section 422 of the Code and shall not exceed 625,000 shares of Stock provided for under Article 4 of the Plan. Such awards may be awarded without payment by any officer, director, or employee to whom such capital stock is made under such terms and conditions as the Committee in its sole discretion may provide and may also be awarded with the restrictions that such shares shall not be assignable nor may any other person acquire any rights therein and that the officer, director or employee of the Company remain in the employment of the Company for a period of not less than three years from the date of the award, subject to such other terms and conditions as the Committee may in its sole discretion may provide. Any shares not awarded under this Article 11 of the Plan may be the subject of incentive stock options under the Plan.” |
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PROXY | PLEASE SIGN AND RETURN PROMPTLY. |
ANNUAL MEETING
January 24, 2006 10:00 A.M.
Petroleum Club of Midland
501 West Wall, Midland, TX 79701
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
Please return this proxy card which requires no postage if mailed in the U.S.A.
The undersigned stockholder of Dawson Geophysical Company hereby appoints L. Decker Dawson, Tim C. Thompson, and Paul H. Brown or any one or more of them, attorneys, agents and proxies of the undersigned, with full power of substitution to each of them, to vote all the shares of Common Stock which the undersigned would be entitled to vote at the Annual Meeting of Stockholders to be held January 24, 2006, and at any adjournment or adjournments thereof, with all the powers the undersigned would possess if personally present and voting thereat, (A) as instructed below with respect to the following matters and (B) in their discretion upon other matters which properly come before the meeting.UNLESS A CONTRARY INSTRUCTION IS SPECIFIED BELOW, THIS PROXY WILL BE VOTED FOR ALL ITEMS.
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o | | FORall nominees listed below (except as marked to the contrary below) | | o | | WITHHOLD AUTHORITYto vote for all nominees listed below Paul H. Brown,stockholder(s) hereby appoint(s) L. Decker Dawson Gary M. Hoover, Stephen C. Jumper and Tim C. Thompson. |
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided):
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2. | ProposalThompson, or either of them, as proxies, each with the power to amendappoint his substitute, and hereby authorizes them to represent and to vote, as designated on the Restated Articlesreverse side of Incorporationthis ballot, all of the shares of Common Stock of Dawson Geophysical Company that the stockholder(s) is/are entitled to increasevote at the numberAnnual Meeting of authorized shares.Stockholders to be held at 10:00 A.M., Central Time on January 27, 2009, at the Petroleum Club of Midland, Midland, Texas, and any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSAL 2. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE Address Changes/Comments: ___ ___(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) CONTINUED AND TO BE SIGNED ON REVERSE SIDE |
oFORoAGAINSToABSTAIN
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3. | Proposal to amend the 2004 Incentive Stock Plan of the Company to increase the number of authorized shares. |
oFORoAGAINSToABSTAIN
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4. | Proposal to ratify the selection of KPMG LLP as independent public accountants of the Company for the fiscal year ended September 30, 2006. |
oFORoAGAINSToABSTAIN
The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement of the Company dated December 16, 2005.
Please date and sign exactly as name appears on this proxy. Joint owners should each sign. If the signer is a corporation, please sign full corporate name by duly authorized officer. Executors, administrators, trustees, etc., should give full title as such.
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(Signature of Stockholder) |
