OMB APPROVAL
--------------------------
OMB Number: 3235-0059
Expires: February 28, 2006
Estimated average burden
hours per response...12.75
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Newpark Resources, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
3) Filing Party:
--------------------------------------------------------------------------------
4) Date Filed:
--------------------------------------------------------------------------------
PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
NEWPARK
(LOGO)
April 15, 2004
DEAR FELLOW STOCKHOLDER:
You are cordially invited to attend the 2004 Annual Meeting of
Stockholders of Newpark Resources, Inc., which will be held on Wednesday, June
9, 2004, at 10:00 a.m., Central Daylight Time, in Conference Room B at I Lakeway
Center, 3900 North Causeway Blvd., Metairie, Louisiana 70002. Both your Board of
Directors and I hope you will be able to attend.
There are three items on this year's agenda to which we direct your
attention: (1) to elect eight directors to the Board; (2) to consider and act
upon a proposal to adopt the 2004 Non-Employee Directors' Stock Option Plan; and
(3) to ratify the selection of auditors. These items are described fully in the
enclosed Notice of Annual Meeting of Stockholders and Proxy Statement.
Whether or not you plan to attend the meeting, it is important that you
study carefully the information provided in the Proxy Statement and vote. Please
sign, date and mail the enclosed proxy card in the prepaid envelope so that your
shares may be voted in accordance with your wishes.
SINCERELY,
/s/ JAMES D. COLE
JAMES D. COLE
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
NEWPARK RESOURCES, INC.
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 9, 2004
----------
TO THE STOCKHOLDERS OF NEWPARK RESOURCES, INC.
The Annual Meeting of Stockholders of Newpark Resources, Inc., a
Delaware corporation ("Newpark"), will be held on Wednesday, June 9, 2004, at
10:00 a.m., Central Daylight Time, in Conference Room B at I Lakeway Center,
3900 North Causeway Blvd., Metairie, Louisiana, for the following purposes:
(1) To elect a Board of Directors;
(2) To consider and act upon a proposal to adopt the 2004
Non-Employee Directors' Stock Option Plan;
(3) To consider and act upon a proposal to ratify the selection of
auditors; and
(4) To transact such other business as may properly come before
the meeting.
Only stockholders of record at the close of business on April 14, 2004
will be entitled to notice of and to vote at the meeting and any adjournments of
the meeting.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, PLEASE COMPLETE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. The giving
of your proxy will not affect your right to vote in person should you later
decide to attend the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
NEWPARK RESOURCES, INC.
/s/ EDAH KEATING
Edah Keating
Secretary
Metairie, Louisiana
Dated: April 15, 2004
NEWPARK RESOURCES, INC.
3850 NORTH CAUSEWAY BLVD., SUITE 1770
METAIRIE, LOUISIANA 70002
----------
PROXY STATEMENT
APRIL 15, 2004
----------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Newpark Resources, Inc. ("Newpark"), for
the Annual Meeting of Stockholders to be held on June 9, 2004, and any
postponements or adjournments of the Annual Meeting. This Proxy Statement and
the accompanying Notice of Annual Meeting and form of proxy were first mailed to
stockholders on or about April 16, 2003.
Any stockholder giving a proxy may revoke it before it is voted by
notifying the Secretary of Newpark in writing before or at the meeting, by
providing a proxy bearing a later date, or by attending the meeting and
expressing a desire to vote in person. Subject to this revocation, all proxies
will be voted as directed by the stockholder on the proxy card. IF NO CHOICE IS
SPECIFIED, PROXIES WILL BE VOTED "FOR" THE DIRECTORS NOMINATED BY THE BOARD OF
DIRECTORS, "FOR" THE PROPOSAL ADOPTING THE 2004 NON-EMPLOYEE DIRECTORS' STOCK
OPTION PLAN, "FOR" THE RATIFICATION OF THE SELECTION OF AUDITORS, AND IN THE
DISCRETION OF THE PERSONS ACTING AS PROXIES UPON ANY OTHER MATTERS.
Your cooperation in promptly returning the enclosed proxy will reduce
Newpark's expenses and enable its management and employees to continue their
normal duties for your benefit with minimum interruption for follow-up proxy
solicitation.
Only stockholders of record at the close of business on April 14, 2004
are entitled to receive notice of and to vote at the meeting. On that date,
Newpark had outstanding 83,852,369 shares of common stock, each of which is
entitled to one vote upon each proposal presented at the meeting. The presence
at the Annual Meeting, either in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date is
necessary to constitute a quorum for the transaction of business.
A plurality of the votes cast is required for the election of
directors, while the affirmative vote of a majority of the votes cast is
required to approve each of the other matters to be acted upon at the Annual
Meeting. Abstentions and broker non-votes (which occur if a broker or other
nominee does not have discretionary authority and has not received voting
instructions from the beneficial owner with respect to the particular item) are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to the stockholders and have the same legal effect
as a vote against a particular proposal. Broker non-votes, if any, are not
counted as votes cast in the election of directors but will have the same legal
effect as votes against each of the other proposals to be acted upon at the
Annual Meeting.
The cost of preparing, printing and mailing the Proxy Statement, the
Notice and the enclosed form of proxy, as well as the cost of soliciting proxies
relating to the Annual Meeting, will be borne by Newpark. The original
solicitation of proxies by mail may be supplemented by telephone,
3
telegram and personal solicitation by officers and other regular employees of
Newpark, but no additional compensation will be paid to these individuals on
account of these activities. Newpark will reimburse banks, brokerage houses and
other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding proxy materials to their principals.
ELECTION OF DIRECTORS
NOMINEES AND VOTING
Eight directors are to be elected at the Annual Meeting. All directors
hold office until the next Annual Meeting and until their respective successors
are elected and qualified. Directors need not be stockholders. The Board of
Directors has nominated for election as directors the eight persons named below,
all of whom have indicated that they are able and willing to serve as directors.
All nominees are incumbent directors.
The Board of Directors recommends that the stockholders vote "FOR" the
election of its nominees. Unless directed otherwise, the Board's proxies intend
to vote the shares of common stock represented by the proxies in favor of the
election of these nominees. If for any reason any of these nominees will be
unable to serve, the Board's proxies will vote instead for such other person or
persons as the Board of Directors may recommend.
The following table sets forth certain information as of April 14,
2004, with respect to the Board's nominees:
DIRECTOR
NAME OF NOMINEE AGE SINCE
--------------- --- -----
James D. Cole.............................................................. 63 1976
Alan J. Kaufman............................................................ 66 1987
James H. Stone............................................................. 78 1987
Wm. Thomas Ballantine...................................................... 59 1993
David P. Hunt.............................................................. 62 1995
Roger C. Stull............................................................. 63 2000
F. Walker Tucei, Jr........................................................ 61 2003
Jerry W. Box............................................................... 65 2003
BUSINESS EXPERIENCE OF DIRECTORS DURING THE PAST FIVE YEARS
JAMES D. COLE joined Newpark in 1976, serving as Executive Vice
President until May 1977, when he was elected President and Chief Executive
Officer. Mr. Cole served as President of Newpark until the appointment of Mr.
Ballantine as President in September 2000. Mr. Cole has served as a director
since joining Newpark and was elected Chairman of the Board of Directors in
April 1996.
ALAN J. KAUFMAN, who retired in May 1997, had been engaged in the
private practice of medicine since 1969. Dr. Kaufman is a neurosurgeon.
JAMES H. STONE is Chairman of the Board of Stone Energy Corporation,
which is engaged in oil and gas exploration.
WM. THOMAS BALLANTINE joined Newpark in December 1988, serving as Vice
President of Operations, and was elected Executive Vice President in 1992. He
was elected a Director of Newpark in October 1993 and President and Chief
Operating Officer of Newpark in September 2000.
4
DAVID P. HUNT joined Newpark's Board of Directors in November 1995.
Prior to joining Newpark and until his retirement in 1995, Mr. Hunt was employed
by Consolidated Natural Gas Company for 32 years, having most recently served as
President and Chief Executive Officer of New Orleans based CNG Producing
Company, an oil and gas exploration and production company.
ROGER C. STULL joined Newpark's Board of Directors in June 2000. Mr.
Stull is currently a principal in Stull Investments, L.L.C., a private
investment company formed by Mr. Stull in August 1998. From 1963 until the
company was sold in August 1998, Mr. Stull was the principal stockholder and the
Chairman of the Board and Chief Executive Officer of Penhall International,
Inc., one of the largest renters and operators of specialty equipment for the
industrial market, particularly the construction industry, in the United States.
F. WALKER TUCEI, JR. was elected to Newpark's Board of Directors in
January 2003. Mr. Tucei retired from Arthur Andersen LLP in 1999 after more than
35 years in public accounting. Mr. Tucei is Chairman of the Audit Committee of
the Archdiocese of New Orleans. He is on the board of several businesses and
civic organizations in the New Orleans area.
JERRY W. BOX was elected to Newpark's Board of Directors in March 2003.
Mr. Box retired as President and Chief Operating Officer of Oryx Energy Company
in 1999, after more than 30 years in the oil and gas exploration industry. Mr.
Box also currently serves on the boards of Magnum Hunter Resources, an
independent exploration and development company traded on the New York Stock
Exchange, and Ascent Energy, a privately held oil and gas development company
based in McKinney, Texas.
No family relationships exist between any of the directors or officers
of Newpark.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
Newpark maintains an Audit Committee, the current members of which are
F. Walker Tucei, Jr. (Chairman), David P. Hunt, Alan J. Kaufman and Roger C.
Stull. The Board of Directors has determined that Mr. Tucei and Mr. Hunt, who
are independent under applicable New York Stock Exchange listing standards, are
"audit committee financial experts" as defined by applicable SEC rules. The
Audit Committee engages a firm of independent auditors to examine Newpark's
consolidated financial statements based on an annual performance evaluation and
a determination of the auditors' independence, approves the services to be
rendered by the independent auditors, reviews the financial condition and
results of operation of Newpark and makes inquiries as to the adequacy of
Newpark's financial and accounting controls. The Audit Committee met six times
during 2003 and took action by unanimous written consent one time.
Newpark maintains a Compensation Committee whose current members are
Jerry W. Box (Chairman), David P. Hunt, Alan J. Kaufman, James H. Stone and
Roger C. Stull. The Compensation Committee administers Newpark's employee stock
option plans and is responsible for establishing and administering the
compensation for the executive officers of Newpark. The Compensation Committee
met once during 2003 and took action by unanimous written consent four times.
Newpark maintains a Nominating and Corporate Governance Committee whose
current members are David P. Hunt (Chairman), Jerry W. Box, James H. Stone and
F. Walker Tucei, Jr. The Nominating and Corporate Governance Committee assists
and advises the Board of Directors with respect to the size, composition and
functions of the Board, identifies potential candidates for the Board,
recommends a slate of qualified nominees for election to the Board at each
annual meeting of
5
Newpark's stockholders, and develops a set of corporate governance principles
applicable to Newpark. The Nominating and Corporate Governance Committee met
once during 2003.
Newpark's Board of Directors held four meetings during 2003, and took
action by unanimous written consent one time. Each director attended at least
75% of the meetings of the Board of Directors and of each committee on which he
served.
The Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee all operate pursuant to written charters, copies
of which are available in the corporate governance section of Newpark's website
at www.newpark.com.
COMPENSATION OF DIRECTORS
Effective July 1, 2003, Newpark increased the amount of the annual fee
payable to each Newpark director who was not otherwise employed full time by
Newpark from $15,000 to $25,000 and ceased paying additional fees to each
director for attending Board and committee meetings. Mr. Hunt receives an
additional $5,000 per year as a fee for serving as the Lead Independent Director
in charge of coordinating the activities of Newpark's independent directors.
Messrs. Box and Tucei each receive an additional $2,500 per year for serving as
the chairmen of the Compensation Committee and Audit Committee, respectively.
All of the independent directors' fees are paid on a quarterly basis. All
directors were reimbursed for travel expenses incurred in attending meetings of
the Board and committee meetings. The same compensation arrangements will apply
in 2004.
On January 29, 2003, the date of his initial election to the Board, Mr.
Tucei was granted a stock option to purchase 10,000 shares of common stock at an
exercise price of $4.24, the fair market value of the common stock on that date.
On March 12, 2003, the date of his initial election to the Board, Mr. Box was
granted a stock option to purchase 10,000 shares of common stock at an exercise
price of $4.37, the fair market value of the common stock on that date. Further,
in accordance with the provisions of the 1993 Non-Employee Directors' Stock
Option Plan, as amended, on June 11, 2003, the date of their re-election to the
Board at the 2003 Annual Meeting, Messrs. Box, Hunt, Kaufman, Stone, Stull and
Tucei were each granted a stock option to purchase 10,000 shares of common stock
at an exercise price of $6.15 per share, the fair market value of the common
stock on the date of grant.
If stockholders approve the adoption of the 2004 Non-Employee
Directors' Stock Option Plan and approve their election as directors, Messrs.
Box, Hunt, Kaufman, Stone, Stull and Tucei will each be granted a stock option
to purchase 10,000 shares of common stock at an exercise price equal to the fair
market value of the common stock on June 9, 2004. In addition, each new
non-employee director, on the date of his or her election to the Board of
Directors (whether elected by the stockholders or the Board of Directors),
automatically will be granted a stock option to purchase 10,000 shares of common
stock at an exercise price equal to the fair market value of the common stock on
the date of grant. The plan also provides for the automatic additional grant to
each non-employee director of stock options to purchase 10,000 shares of common
stock each time the non-employee director is re-elected to the Board.
CORPORATE GOVERNANCE
Newpark is committed to adhering to sound principles of corporate
governance and has adopted a Corporate Governance Policy that the Board of
Directors believes promotes the effective functioning of the Board of Directors,
its committees and Newpark.
6
Director Independence
The Board of Directors has determined that Messrs. Box, Hunt, Kaufman,
Stone, Stull and Tucei, being all of the directors serving on the Audit
Committee, Compensation Committee and Nominating and Corporate Governance
Committees, are "independent," as that term is defined in the listing standards
of the New York Stock Exchange ("NYSE") presently in effect. This determination
was based on the fact that, except for Mr. Stone, no director is a partner,
stockholder, or officer of an organization that has a relationship with Newpark,
and none of the express disqualifications contained in the NYSE rules apply to
any of them. Mr. Stone is Chairman of Stone Energy Corporation, which is a
customer of one or more Newpark operating companies. However, the Board of
Directors determined that the relationship between Newpark, Stone Energy and Mr.
Stone (other than as a stockholder, director or committee member) is not
material to Newpark, Stone Energy or Mr. Stone, based principally on the
following factors:
(i) The revenues derived by Newpark from the services and products
provided to Stone Energy are less than $1 million and represent less than 2% of
Stone Energy's consolidated gross revenues;
(ii) Mr. Stone confirmed that he did not direct Stone Energy to do
business with Newpark, and he does not participate in the decision-making
process with respect to the business relationship between Stone Energy and
Newpark; and
(iii) In the single instance in 1999 in which Mr. Stone and Newpark
both invested in Environmental Safeguards, Inc., in the same transaction, Mr.
Stone's investment was fully disclosed to Newpark and was approved by a majority
of the disinterested directors at the time. Mr. Stone and Newpark continue to be
passive minority investors in Environmental Safeguards, Inc., and there is no
conflict between their interests.
Lead Independent Director
The Board of Directors has designated Mr. Hunt as the Lead Independent
Director with the duty of coordinating the activities of the independent
directors. The Lead Independent Director's responsibilities include coordinating
and moderating executive sessions of the independent directors, acting as a
liaison between the independent directors and management, assessing the quality,
quantity and timeliness of the flow of information between management and the
Board of Directors, acting as chair of the Nominating and Corporate Governance
Committee, directing the retention of consultants who report directly to the
Board of Directors or the independent directors, and performing such other tasks
as may be delegated by the Board of Directors. A complete description of the
responsibilities of the Lead Independent Director is available in the corporate
governance section of Newpark's website at www.newpark.com.
Director Nominations
The Nominating and Corporate Governance Committee is responsible for
periodically evaluating and making recommendations to the Board of Directors
with respect to the size and composition of the Board. The Committee seeks to
identify prospective directors who will strengthen the Board and evaluates
prospective directors, including incumbent directors, in accordance with the
criteria set forth in Newpark's Corporate Governance Policy and such other
criteria as may be set by the Board or the Committee. The Nominating and
Governance Committee will consider nominees recommended by securities holders
who meet the eligibility requirements for submitting stockholder proposals for
inclusion in the next proxy statement and submit their
7
recommendations in writing to the following address: Chair, Nominating and
Governance Committee, care of the Corporate Secretary, Newpark Resources, Inc.,
3850 N. Causeway Blvd., Suite 1770, Metairie, LA 70002, by the deadline for
stockholder proposals referred to at the end of this proxy statement.
Unsolicited recommendations must contain all of the information that would be
required in a proxy statement soliciting proxies for the election of a candidate
as a director, a description of all direct or indirect arrangements or
understandings between the recommending securities holder and the candidate, all
other companies to which the candidate is being recommended as a nominee for
director, and a signed consent of the candidate to cooperate with reasonable
background checks and personal interviews, and to serve as a director of
Newpark, if elected.
Candidates recommended by the Nominating and Corporate Governance
Committee must include a sufficient number of persons who upon election would be
independent directors having the skills, experience and other characteristics
necessary to provide qualified persons to fill all Board committee positions
required to be filled by independent directors.
Stockholder Communication with Board Members
The Board has established a process for securities holders to send
communications, other than sales-related communications, to one or more of its
members. Any such communications should be sent by letter addressed to the
member or members of the Board to whom the communication is directed, care of
the Corporate Secretary, Newpark Resources, Inc., 3850 N. Causeway Blvd., Suite
1770, Metairie, LA 70002. All such communications will be forwarded to the Board
member or members specified.
Director Attendance at Annual Meeting
The Board's policy regarding director attendance at the Annual Meeting
of Stockholders is that all directors are encouraged to attend, and that Newpark
will make all appropriate arrangements for directors that choose to attend. All
of Newpark's directors attended the 2003 Annual Meeting of Stockholders.
Corporate Governance Policy and Code of Ethics
Copies of Newpark's Corporate Governance Policy and its Code of Ethics
are available in the corporate governance section of Newpark's website at
www.newpark.com.
EXECUTIVE OFFICERS
As of April 14, 2004, the executive officers of Newpark, their ages and
positions are as follows:
NAME AGE POSITION
---- --- --------
James D. Cole.................. 63 Chairman of the Board and Chief Executive Officer
Wm. Thomas Ballantine.......... 59 President and Chief Operating Officer
Matthew W. Hardey.............. 51 Vice President of Finance and Chief Financial Officer
For a description of the business experience of Messrs. Ballantine and
Cole during the past five years, see "ELECTION OF DIRECTORS--Business Experience
of Directors During the Past Five Years", above.
8
MATTHEW W. HARDEY joined Newpark in May 1988 as Treasurer and Assistant
Secretary and was elected Vice President of Finance and Chief Financial Officer
in April 1991. From 1973 until joining Newpark, Mr. Hardey was employed in the
commercial banking business.
OWNERSHIP OF COMMON STOCK
The following table sets forth information with respect to the
beneficial ownership of Newpark's outstanding common stock as of April 14, 2004,
by (i) each person who is known by Newpark to be the beneficial owner of more
than five percent (5%) of Newpark's outstanding common stock (based on Schedules
13G filed with the Securities and Exchange Commission), (ii) each director and
each nominee for director of Newpark, (iii) the executive officers of Newpark
named in the Summary Compensation Table below and (iv) all directors and
executive officers as a group. Except as otherwise indicated below, each person
named in the table has sole voting and investment power with respect to all
shares of common stock beneficially owned by that person, except to the extent
that authority is shared by spouses under applicable law.
SHARES BENEFICIALLY OWNED(1)
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ ------ -------
Columbia Wanger Asset Management, L.P.(2)................................ 8,234,000 9.82%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
State Street Research & Management Company............................... 5,485,000 6.54%
One Financial Center, 31st Floor
Boston, MA 02111-2690
Strong Capital Management, Inc.(3)....................................... 4,532,954 5.41%
100 Heritage Reserve
Menomonee Falls, WI 53051
Credit Suisse Asset Management, LLC...................................... 3,895,400 4.65%
466 Lexington Avenue
New York, NY 10017
James D. Cole(4)........................................................ 1,215,773 1.45%
Alan J. Kaufman(5)...................................................... 993,459 1.18%
James H. Stone(6)....................................................... 948,367 1.13%
Roger C. Stull(7)....................................................... 183,967 *
Matthew W. Hardey........................................................ 145,003 *
David P. Hunt........................................................... 144,967 *
Wm. Thomas Ballantine................................................... 120,229 *
F. Walker Tucei, Jr..................................................... 16,600 *
Jerry W. Box............................................................. 11,600 *
All directors and executive officers as a group (9 persons).............. 3,799,421 4.53%
----------
* Indicates ownership of less than one percent.
(1) Includes shares which may be purchased upon the exercise of stock
options which are exercisable as of April 14, 2004, or become
exercisable within 60 days thereafter, for the following: Mr.
Cole--80,001 shares; Dr. Kaufman--89,967 shares; Mr. Stone--59,967
shares; Mr. Stull--27,967 shares; Mr. Hardey--101,667 shares; Mr.
Hunt--122,967 shares; Mr. Ballantine--108,334 shares; Mr. Tucei--6,600
shares; Mr. Box--6,600 shares; and all directors and executive officers
as a group--604,070 shares.
(2) Shared voting and shared dispositive power with respect to all
8,234,000 shares.
(3) Shared voting and shared dispositive power with respect to all
4,532,954 shares.
9
(4) Includes 280,000 shares held by four separate Trusts of which Mr. Cole
is a Trustee and of which the beneficiaries are children of Mr. Cole.
Mr. Cole disclaims ownership of the 280,000 shares held by the four
Trusts.
(5) Includes 14,000 shares held in a Trust of which the beneficiaries are
children of Dr. Kaufman and 12,600 shares held by his spouse. Dr.
Kaufman disclaims beneficial ownership of these shares.
(6) Includes 32,700 shares held either as custodian for or in a Trust of
which the beneficiaries are children of Mr. Stone. Also includes 4,000
shares held in a partnership in which a company controlled by Mr. Stone
is the majority partner, and 100,000 shares owned by the Stone Family
Fund, LLC, of which Mr. Stone is the sole managing member and holds a
4% membership interest.
(7) Includes 500 shares held in a Trust of which the beneficiary is a
grandchild of Mr. Stull. Mr. Stull disclaims beneficial ownership of
these shares.
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid to Newpark's Chief
Executive Officer, Newpark's President and Chief Operating Officer and Newpark's
Vice President of Finance and Chief Financial Officer (the only executive
officers of Newpark) for services rendered in all capacities to Newpark for the
years ended December 31, 2003, 2002 and 2001.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------------------
------------------------------------------------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(1) COMPENSATION(2)
--------------------------- --------------- --------------- --------------- --------------- ---------------
James D. Cole 2003 $ 320,000 $ 0 40,000 $ 11,045
Chief Executive Officer 2002 280,000 0 100,000 9,848
2001 280,000 280,000 -- 7,938
Wm. Thomas Ballantine 2003 260,000 0 20,000 10,350
President and Chief 2002 220,000 0 85,000 7,652
Operating Officer 2001 220,000 110,000 -- 6,618
Matthew W. Hardey 2003 200,000 0 20,000 7,206
Vice President of 2002 170,000 0 75,000 4,947
Finance and Chief 2001 170,000 85,000 -- 5,894
Financial Officer
----------
(1) Number of shares of common stock underlying options granted on June 11,
2003 under the 1995 Incentive Stock Option Plan.
(2) Includes contributions by Newpark to a defined contribution 401(k) Plan
of $3,323 in 2003, $5,492 in 2002 and $5,100 in 2001 for Mr. Cole,
$5,400 in 2003, $4,815 in 2002 and $5,100 in 2001 for Mr. Ballantine,
and $4,038 in 2003, $4,119 in 2002 and $5,100 in 2001 for Mr. Hardey.
Additional amounts indicated represent excess group term life insurance
premiums paid by Newpark for the benefit of each of the named executive
officers.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information at December 31, 2003
and for the year then ended with respect to stock options granted to the
individuals named in the Summary Compensation
10
Table above. No options have been granted at an option price below the fair
market value of the common stock on the date of grant.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENTAGE OF ANNUAL RATE OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------------------
NAME GRANTED(1) 2003 SHARE (2) DATE 5% 10%
-------------------- --------------- --------------- --------------- --------------- --------------- ---------------
James D. Cole ...... 40,000 4.75% $ 6.15 06/11/10 $ 100,147 $ 233,384
W. Thomas Ballantine 20,000 2.37% $ 6.15 06/11/10 $ 50,073 $ 116,692
Matthew W. Hardey .. 20,000 2.37% $ 6.15 06/11/10 $ 50,073 $ 116,692
----------
(1) The options are non-statutory stock options granted on June 11, 2003
under the 1995 Incentive Stock Option Plan and first become exercisable
on June 11, 2004, vesting at the rate of one-third per year over the
three years following the date of grant.
(2) At the discretion of the Compensation Committee, the exercise price may
be paid by delivery of shares of common stock owned by the executive
valued at the fair market value on the date of exercise, and the tax
withholding obligations related to the exercise of the stock options
may be satisfied by offset of the underlying shares, subject to certain
conditions. The Compensation Committee retains the discretion, subject
to plan limits, to modify the terms of outstanding options and to
reprice the options.
(3) The potential realizable value shown under these columns represent the
future value of the options (net of the exercise price) assuming the
market price of the common stock appreciates annually by 5% and 10%,
respectively. These rates of appreciation are prescribed by the
Securities and Exchange Commission and are not intended to forecast
possible future appreciation of Newpark's common stock.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUE
The following table sets forth information for the named executive
officers with respect to the exercise of stock options during 2003 and the
unexercised stock options held by them as of December 31, 2003.
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
SHARES UNDERLYING UNEXERCISED OPTIONS MONEY OPTIONS AT DECEMBER 31,
ACQUIRED VALUE HELD AT DECEMBER 31, 2003 2003
ON REALIZED --------------------------------- ---------------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------- --------------- --------------- --------------- --------------- --------------- ---------------
James D. Cole ........ -- -- 33,334 106,666 0 0
Wm. Thomas Ballantine -- -- 73,334 76,666 0 0
Matthew W. Hardey .... -- -- 70,000 70,000 0 0
EQUITY COMPENSATION PLAN TABLE
The following table sets forth certain information with respect to the
compensation plans Newpark maintained as of December 31, 2003 under which its
equity securities may be issued to employees or non-employees, including under
any individual compensation arrangements:
11
(a) (b) (c)
------------------------- ------------------------- -------------------------
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE UNDER EQUITY COMPENSATION
BE ISSUED UPON EXERCISE EXERCISE PRICE OF PLANS (EXCLUDING
OF OUTSTANDING OPTIONS OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN (a))
-------------------------------------- ------------------------- ------------------------- -------------------------
Equity compensation plans approved
by security holders
Options .............................. 5,875,569(1) $ 7.38 1,823,202(2)
Other rights(3) ...................... 231,500 -- 768,500
Equity compensation plans not approved
by security holders(4) ............. 68,668 -- --
------------------------- ------------------------- -------------------------
Total ........................... 5,944,232 2,591,702
========================= ========================= =========================
----------
(1) Includes options issued under the 1988 Incentive Stock Option Plan, the
1993 Non-Employee Directors' Stock Option Plan and the 1995 Incentive
Stock Option Plan.
(2) Includes 239,609 shares remaining available for purchase under
Newpark's 1999 Employee Stock Purchase Plan. Also includes 1,583,593
shares remaining under the 1995 Incentive Stock Option Plan. No
additional options may be issued under the 1988 Incentive Stock Option
Plan or the 1993 Non-Employee Directors' Stock Option Plan.
(3) Represents awards of share equivalents issued or issuable under the
2003 Long Term Incentive Plan that will vest and become payable in
Newpark common stock if certain performance criteria are met, as more
fully described in Note L in the Notes to our Consolidated Financial
Statements.
(4) The equity compensation plan not approved by stockholders is the
Long-Term Stock and Cash Incentive Plan adopted by Newpark in March
1997. By policy, Newpark has limited participation in this Plan to
certain key employees of companies acquired since March 1997. Each
award under the plan consists of a grant of shares of stock or an
amount of cash to be paid on a deferred basis subject to a restriction
period, typically three or four years. A maximum of 676,909 shares of
common stock and a maximum of $1,500,000 in cash may be awarded
pursuant to this plan. At December 31, 2003, $1,418,000 had been
awarded and 676,909 shares of common stock had been issued under the
Plan, with 68,663 of these shares remaining subject to restriction.
EMPLOYMENT AGREEMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
James D. Cole serves as Chairman of the Board and Chief Executive
Officer of Newpark pursuant to an employment agreement that automatically renews
for successive one-year periods unless terminated by either party. Mr. Cole
receives an annual base salary of $320,000.
In March 2003, Newpark entered into agreements with Mr. Cole, Mr.
Ballantine and Mr. Hardey, under which the executive officer will be entitled to
certain payments from Newpark if the executive's employment is terminated
following a change in control of Newpark, unless the termination is (i) because
of the executive's death or disability, (ii) by Newpark for "Cause" (as defined
in the agreements) or (iii) by the executive other than for "Good Reason" (as
defined in the agreements). The agreements provide for a payment to the
executive of two times the executive's base salary and the maximum incentive
opportunity available to them under Newpark's incentive compensation plan for
the fiscal year immediately preceding the change in control, reduced to the
extent necessary to prevent the payments made to the executive from exceeding
the limits imposed by Section 280G of the Internal Revenue Code of 1986 (the
"Code"). The agreements also provide for accelerated vesting of all stock
options, performance restricted stock awards and deferred compensation upon
termination following a change in control, as well as outplacement counseling
and continued life and health insurance coverage for two years following
termination. No termination benefit is required to be paid if the executive's
employment terminates prior to a change in control.
12
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be
"soliciting material" or "filed" or "incorporated by reference" in future
filings with the Securities and Exchange Commission, or subject to the
liabilities of Section 18 of the Exchange Act, except to the extent that Newpark
specifically incorporates it by reference into a document filed under the
Securities Act of 1933, as amended, or the Exchange Act.
The Audit Committee of the Board of Directors is composed of four
independent directors who satisfy the requirements of independence as
established by the New York Stock Exchange listing standards and the Securities
and Exchange Commission. While each member of the Audit Committee has experience
in financial and accounting matters, the Board of Directors has determined that
Mr. Tucei and Mr. Hunt are financial experts as defined under rules recently
adopted by the Securities and Exchange Commission.
The Audit Committee operates under a written charter adopted by the
Board of Directors, a copy of which is available in the corporate governance
section of Newpark's web site at www.newpark.com.
Newpark's management is responsible for Newpark's internal accounting
controls, financial reporting processes and compliance with laws and regulations
and ethical business standards. Newpark's independent auditors, Ernst & Young
LLP, are responsible for performing an independent audit of Newpark's
consolidated financial statements in accordance with auditing standards
generally accepted in the United States and issuing a report thereon. The Audit
Committee's responsibility is to monitor and oversee these processes.
In keeping with that responsibility, the Audit Committee has met and
held discussions with management and the independent auditors. Management
represented to the Audit Committee that Newpark's consolidated financial
statements were prepared in accordance with generally accepted accounting
principles in the United States, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and the
independent auditors. In addition, the Audit Committee has discussed with
Newpark's independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61 (Communication with Audit Committees).
The Audit Committee has received the written disclosures and the letter
from the independent auditors required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and has discussed with
the independent auditors their independence.
Based on the Audit Committee's discussions with management and the
independent auditors, and the Audit Committee's review of the representations of
management and the report of the independent auditors, the Audit Committee has
recommended to the Board of Directors that the audited consolidated financial
statements be included in Newpark's Annual Report on Form 10-K for the year
ended December 31, 2003 filed with the Securities and Exchange Commission. The
Audit Committee also engaged Ernst & Young LLP as Newpark's independent auditors
for the 2004 fiscal year. See "SELECTION OF AUDITORS" for additional information
on the decision to again appoint Ernst & Young LLP as Newpark's independent
auditors.
13
Aggregate fees for professional services rendered to Newpark by Ernst &
Young LLP for the years ended December 31, 2003 and December 31, 2002 were
$622,847 and $437,278, respectively, and were comprised of the following:
YEAR AUDIT FEES(1) AUDIT-RELATED FEES(2) TAX FEES(3) ALL OTHER FEES
---- --------------------- --------------------- --------------------- ---------------------
2003 $ 340,447 $ 29,900 $ 252,500 --
2002 $ 309,878 -- $ 127,400 --
----------
(1) Audit Fees consisted of audit work performed in the preparation of
financial statements, statutory audits, consents and other services
related to SEC matters.
(2) Audit-Related Fees consisted principally of planning with respect to
new statutory and regulatory requirements.
(3) Tax Fees were for services related to preparation of tax returns and
tax planning and advice.
Ernst & Young LLP was first elected as Newpark's auditors in June 2002,
and Newpark did not pay any fees to Ernst & Young LLP for the year ended
December 31, 2001.
Pre-Approval Policies Regarding Audit and Non-Audit Fees
The Audit Committee applies the following procedures regarding the
engagement of Newpark's independent auditor to perform services for Newpark:
Prior to performing any audit services, the independent auditor will
provide the Audit Committee with an engagement letter during the first quarter
of each year outlining the scope of the audit services proposed to be performed
during the fiscal year and the expected fees for such services. If the
engagement letter is approved, the Audit Committee will engage the independent
auditor.
For non-audit services, Newpark's management will submit to the Audit
Committee for approval the list of non-audit services that it recommends the
Audit Committee engage the independent auditor to provide for the fiscal year.
Prior to the performance of any of these services, Newpark's management and the
independent auditor will each confirm to the Audit Committee that each non-audit
service on the list is permissible under all applicable legal requirements. In
addition to the list of planned non-audit services, a budget estimating
non-audit service spending for the fiscal year will be provided. The Audit
Committee will approve both the list of permissible non-audit services and the
budget for these services. The Audit Committee will be informed routinely as to
the non-audit services actually provided by the independent auditor pursuant to
this pre-approval process.
To ensure prompt handling of unexpected matters, the Audit Committee
has delegated to Mr. Tucei the authority to amend or modify the list of approved
permissible non-audit services and fees. Mr. Tucei will report any action taken
to the Audit Committee.
The independent auditor must ensure that all audit and non-audit
services provided to Newpark have been approved by the Audit Committee. The
Controller will be responsible for tracking all independent auditor fees against
the budget for these services and report at least annually to the Audit
Committee.
ALAN J. KAUFMAN ROGER C. STULL
DAVID P. HUNT F. WALKER TUCEI, JR.
14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors sets Newpark's
compensation policies applicable to executive officers, determines the
compensation of the executive officers, subject to review by the Board of
Directors, and administers Newpark's employee stock option plans (the 1993
Non-Employee Directors' Stock Option Plan was administered by the entire Board
of Directors) and its executive incentive plans (the 2003 Executive Incentive
Compensation Plan, the 2003 Long-Term Incentive Plan and the Executive Deferred
Compensation Plan). The current members of the Compensation Committee are
Messrs. Hunt, Kaufman, Stone, Stull and Box, each of whom is a non-employee
director. The Compensation Committee has prepared the following report for
inclusion in this Proxy Statement.
Chief Executive Officer Compensation
Mr. Cole's compensation for 2003 was based on his rights under his
employment agreement with Newpark. This employment agreement was entered into in
1990 and provided for an initial term which expired on January 1, 1993.
Thereafter, the employment agreement automatically renews for successive
one-year periods unless terminated by either party. Mr. Cole received a base
salary of $320,000 in 2003 under the Employment Agreement.
Mr. Cole participates in Newpark's 2003 Executive Incentive
Compensation Plan, as discussed below. Mr. Cole did not receive any bonus under
this plan in 2003. Mr. Cole also participates in Newpark's defined contribution
plan and in Newpark's stock option program. On June 11, 2003, the Compensation
Committee granted Mr. Cole a stock option to purchase 40,000 shares of common
stock.
Executive Officers Compensation
The compensation of executive officers other than Mr. Cole for 2003 was
determined initially by Mr. Cole, subject to review and approval by the
Compensation Committee. In determining salaries, Mr. Cole and the Compensation
Committee considered available information about the pay scales of companies of
similar size in the oilfield services industry. The Compensation Committee
believes that the salaries of these executive officers for 2003 are comparable
to the salaries of executive officers with similar responsibilities at other
oilfield services companies.
Newpark's key executive officers and management employees are eligible
to participate in Newpark's 2003 Executive Incentive Compensation Plan.
Participants in the plan are awarded cash bonuses if Newpark achieves certain
based performance goals as set annually by the Compensation Committee. These
performance goals include earnings-based measures (either on a company-wide
basis or for specific operating units) and a discretionary portion determined by
the Compensation Committee. By tying executive bonuses to Newpark's performance,
the 2003 Executive Incentive Compensation Plan provides incentive for key
executive and management employees to enhance stockholder value. No bonuses were
paid to Newpark's executive officers under this plan in 2003.
Newpark's incentive stock option program provides additional incentives
to key employees to work to maximize stockholder value and provides a link
between the interests of senior managers and stockholders. By utilizing vesting
periods, the option program encourages key employees to remain in the employ of
Newpark and provides a long-term perspective to the compensation available under
the option program. The Compensation Committee granted stock options to both Mr.
Ballantine and Mr. Hardey in June 2003.
15
Internal Revenue Code Amendments
The Compensation Committee continues to consider the anticipated tax
treatment to Newpark regarding the compensation and benefits paid to its Chief
Executive Officer and the other executive officers of Newpark in light of the
1993 addition to Section 162(m) of the Code. The Compensation Committee will
from time to time consider changes to Newpark's compensation structure,
including amendments to its equity-based incentive plans, necessary to preserve
the deductibility of all compensation paid by Newpark which is subject to
Section 162(m) of the Code. While Newpark does not expect to pay its executive
officers compensation in 2004 in excess of the Section 162(m) deductibility
limit, the Board of Directors and the Compensation Committee retain discretion
to authorize the payment of compensation that does not qualify for income tax
deductibility under Section 162(m).
2004 Membership
If the Board's nominees are elected at the Annual Meeting, the Board
intends to appoint David P. Hunt, Alan J. Kaufman, James H. Stone, Roger C.
Stull and Jerry W. Box to serve on the Compensation Committee.
DAVID P. HUNT ROGER C. STULL
ALAN J. KAUFMAN JERRY W. BOX
JAMES H. STONE
PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total
stockholder return of Newpark common stock from December 31, 1998 through
December 31, 2003 with the New York Stock Exchange Market Value Index, Newpark's
broad equity market index, and the Media General Oil & Gas Equipment/Services
Index, Newpark's peer group index. The graph assumes that the value of the
investment in Newpark common stock and each index was $100 on December 31, 1998
and that all dividends, if any, were reinvested. The comparisons in this table
are not intended to forecast or indicate possible future price performance.
16
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
OF NEWPARK RESOURCES, INC., NEW YORK STOCK EXCHANGE MARKET
VALUE INDEX, AND MEDIA GENERAL OIL & GAS EQUIPMENT/SERVICES INDEX
[PERFORMANCE GRAPH]
ASSUMES $100 INVESTED ON JANUARY 1, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 2003
1998 1999 2000 2001 2002 2003
------ ------ ------ ------ ------ ------
Newpark Resources, Inc. 100.00 89.91 140.37 115.96 63.85 70.31
Peer Group Index 100.00 134.14 185.13 130.36 121.28 147.95
Broad Market Index 100.00 109.50 112.11 102.12 83.42 108.07
APPROVAL OF 2004 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
On March 10, 2004, the Board of Directors unanimously adopted the 2004
Non-Employee Directors' Stock Option Plan (the "2004 Plan"), subject to approval
by the stockholders at the 2004 Annual Meeting. Under the 2004 Plan,
non-employee directors of Newpark or any of its subsidiaries will be
automatically granted options to purchase 10,000 shares of Common Stock upon
their election to the board of directors and upon each director's re-election as
a director by the stockholders. The Board of Directors (or a Committee
authorized by the Board of Directors to administer the 2004 Plan) may grant
additional options to non-employee directors in its discretion. The maximum
number of shares of common stock issuable upon the exercise of options granted
under the 2004 Plan is 1,000,000, subject to automatic adjustment upon a stock
split, stock dividend or other recapitalization event.
The Board of Directors believes the opportunity to receive options
under the 2004 Plan provides an important incentive to non-employee directors to
make significant and extraordinary contributions to the long-term performance
and growth of Newpark. The 2004 Plan has substantially the same provisions as
the expired 1993 Non-Employee Directors Stock Option Plan.
17
SUMMARY OF THE 2004 PLAN
The following summary of the material terms of the 2004 Plan is
qualified in its entirety by reference to the full text of the 2004 Plan, a copy
of which is attached as Exhibit A to this Proxy Statement. Please refer to
Exhibit A for more detailed information about the 2004 Plan.
Administration. The 2004 Plan is administered by Newpark's Board of
Directors or a duly authorized committee of the Board of Directors. The Board or
its committee has complete authority to adopt rules and regulations and to make
all other determinations deemed necessary or desirable for the administration of
the 2004 Plan.
Eligibility. Members of the Board of Directors who are not employees or
executive officers of Newpark or any of its subsidiaries or of any parent
corporation of Newpark are eligible for awards under the 2004 Plan.
Automatic Grants. Assuming the approval of the 2004 Plan by the
stockholders and their re-election to the Board of Directors, Messrs. Hunt,
Kaufman, Stull, Tucei, Stone and Box will each receive options to purchase
10,000 shares of common stock on the date of the annual meeting and each year
thereafter that they are re-elected to the Board. Any new non-employee director
elected to the Board at the annual meeting or thereafter (whether elected by the
stockholders or appointed by the Board) will be granted options to purchase
10,000 shares of common stock upon his or her election, and each year thereafter
that he or she is re-elected to the Board. If no annual meeting of stockholders
occurs in one or more calendar years, and the non-employee director continues in
office, the non-employee director will automatically be granted additional
options to purchase 10,000 shares of common stock on the anniversary of the last
previous annual meeting.
Discretionary Grants. In addition to the automatic grants of stock
options described above, the Board or its committee has authority, subject to
the express provisions of the 2004 Plan, to grant stock options to one or more
non-employee directors, to determine the number of stock options to be granted
to non-employee directors, to determine the time or times at which stock options
will be granted, to establish the exercise price and the other terms and
conditions upon which stock options may be exercised, to remove or adjust any
restrictions and conditions upon stock options and to accelerate or otherwise
modify the exercisability of any stock options.
Shares Subject to the 2004 Plan. Subject to adjustment upon a stock
split, stock dividend or other recapitalization event, the maximum number of
shares of common stock that may be issued under the 2004 Plan is 1,000,000.
Exercise Price. The exercise price of the shares of common stock
subject to each stock option automatically granted to a non-employee director
upon his or her first election to the board or upon his or her re-election to
the Board must be at least equal to the fair market value of such shares on the
date of such grant. The fair market value of a share of common stock is equal to
the closing price of the stock for the last preceding day on which Newpark's
shares were traded. The Board or its committee has the discretion to grant stock
options to non-employee directors from time to time with exercise prices that
are less than the fair market value of the common stock on the date of grant
when it deems it to be advisable to provide special incentives over and above
the incentives provided by the grant of a stock option at fair market value. The
Board currently has no plans to grant any stock options to non-employee
directors with exercise prices that are less than the fair market value of the
common stock.
18
Employment. A stock option, once granted to a non-employee director,
will remain in effect in accordance with its terms, even if the non-employee
director later enters the employ of Newpark or one of its subsidiaries.
Term and Vesting of Options. The stock option term is for a period of
ten years from the date of grant. Each stock option automatically granted to a
non-employee director upon his or her first election to the Board of Directors
is subject to vesting over a five-year period, with 20% of the option becoming
exercisable on each successive anniversary of the date of grant. Each stock
option automatically granted to a non-employee director upon his or her
re-election to the Board of Directors is subject to vesting over a three-year
period, with one-third of the option becoming exercisable on each successive
anniversary of the date of grant. No options may be exercised until stockholder
approval of the 2004 Plan has been obtained, and no options may be granted under
the 2004 Plan after March 9, 2014.
Continuous Service. Except as otherwise provided below, a non-employee
director may not exercise a stock option unless the non-employee director
continuously serves on the Board from the date of grant to the date of exercise.
Upon the termination of the service of a non-employee director as a director of
Newpark for any reason other than death or disability, the stock options then
currently exercisable remain exercisable after termination for a period of the
longer of three months or the number of months equal to one month for each full
year of the director's continuous service as a non-employee director (up to a
maximum of 18 months), subject to earlier termination at the end of their fixed
term. If the service of a non-employee director terminates because of death, the
stock options then currently exercisable remain in full force and effect and may
be exercised at any time during the option term. If the service of a
non-employee director terminates because of disability, the stock options then
currently exercisable remain exercisable after termination for a period of the
longer of twelve months or the number of months equal to one month for each full
year of the director's continuous service as a non-employee director (up to a
maximum of 18 months), subject to earlier expiration at the end of their fixed
term. The Board, however, retains discretion to extend the time periods provided
for the exercise of stock options upon the termination of the service of a
non-employee director.
Change of Control. All outstanding options under the 2004 Plan will
immediately become exercisable in full in the event of certain changes in
control of Newpark.
Exercise. Each stock option may be exercised in whole or in part by
delivering it for surrender or endorsement to Newpark together with payment of
the exercise price. The exercise price may be paid in cash, by cashier's or
certified check or, if authorized by the Board or a committee of the Board, by
surrender of previously owned shares of Common Stock.
Restrictions on Transfer. Stock options granted under the 2004 Plan may
contain terms which (i) permit the transfer of all or a portion of the stock
options by a non-employee director to, and the exercise of the stock options by,
(i) the spouse, children or grandchildren of the non-employee director, (ii) a
trust or trusts for the exclusive benefit of the family members, (iii) a
corporation, partnership or limited liability company in which only the
non-employee director and these family members have beneficial interests or (iv)
any other person or entity specifically approved by the Board on a case-by-case
basis. Unless the Board determines otherwise, any stock options so transferred
may not be further transferred except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order. Any
transferred stock options will continue to be subject to the same terms and
conditions as were applicable to them prior to transfer, including the
termination of the stock options at the expiration of their term or following
the termination of the directorship of the non-employee director to whom the
stock options were issued.
19
Suspension, Amendment or Termination. The Board may at any time
suspend, amend or terminate the 2004 Plan. Stockholder approval is required,
however, to materially increase the benefits accruing to non-employee directors,
materially increase the number of securities which may be issued (except for
adjustments under anti-dilution clauses) or materially modify the requirements
as to eligibility for participation.
Non-statutory Stock Options. Stock options granted under the 2004 Plan
are non-statutory stock options and are not eligible for the tax benefits
applicable to incentive stock options.
Registration Statement. Newpark will file a registration statement
under the Securities Act of 1933 with respect to the shares of common stock
issuable upon the exercise of outstanding stock options under the 2004 Plan.
U.S. Federal Income Tax Consequences. A non-employee director
recognizes no taxable income upon the grant of a stock option under the 2004
Plan. In general, upon the exercise of the option, the non-employee director
will recognize ordinary income in an amount equal to the excess of the fair
market value of the shares purchased at the date of exercise over the exercise
price. Shares acquired upon the exercise of an option by the payment of cash
will have a basis equal to their fair market value on the date of exercise and
have a holding period beginning on that date. Different rules apply if a
non-employee director exercises a stock option by surrendering previously owned
shares of Common Stock. Gain or loss recognized on a disposition of the shares
purchased generally will qualify as long-term capital gain or loss if the shares
have a holding period of more than twelve months.
Newpark generally is allowed an income tax deduction for amounts that
are taxable to non-employee directors as ordinary income under the foregoing
rules.
Withholding Taxes. Newpark has the right to require a non-employee
director to pay Newpark the amount of any taxes that Newpark is required to
withhold with respect to the grant, vesting or exercise of any award under the
2004 Plan. Newpark may permit or require a non-employee director to satisfy this
tax withholding obligation by paying cash, by having Newpark withhold an amount
from the participant's cash compensation, by withholding from the option shares
otherwise issuable upon exercise, or by any other method deemed appropriate by
the Board of Directors or committee. The use of shares of Newpark common stock
to satisfy any withholding requirement will be treated, for Federal income tax
purposes, as a sale of those shares for an amount equal to the fair market value
of the stock on the date when the amount of taxes to be withheld is determined.
The preceding discussion is based on Federal tax laws and regulations
presently in effect, which are subject to change, and the discussion does not
purport to be a complete description of the Federal income tax aspects of the
2004 Plan. A participant may also be subject to state and local taxes in
connection with the grant of stock options under the 2004 Plan.
The following table shows the awards that will be granted under the
2004 Plan if the Plan is approved by the stockholders.
20
NEW PLAN BENEFITS
2004 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
2004 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
-------------------------------------------
NAME AND POSITION NUMBER OF OPTIONS DOLLAR VALUE
--------------------------------------------------------------------------- ------------------- -------------------
James D. Cole, Chief Executive Officer(1) ................................. 0 $ 0
Wm. Thomas Ballantine, President and Chief Operating Officer(1) ........... 0 $ 0
Matthew W. Hardey, Vice President of Finance and Chief Financial Officer(1) 0 $ 0
Executive Group ........................................................... 0 $ 0
Non-Executive Director Group .............................................. 60,000 *(2)
Non-Executive Officer Employee Group(1) ................................... 0 $ 0
----------
(1) Executive officers and other officers and employees are not eligible to
participate in the 2004 Plan.
(2) The dollar value of the options to be granted is not currently
determinable.
Included in the total number of shares shown for the "Non-Executive
Director Group" above are stock option grants to be made in 2004, all subject to
stockholder approval of the 2004 Plan, to the following non-employee directors
of the Company:
2004 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
-------------------------------------------
NAME OF NON-EMPLOYEE DIRECTOR NUMBER OF OPTIONS DOLLAR VALUE
-------------------------------------------------- ------------------- -------------------
Jerry W. Box ..................................... 10,000 *(1)
David P. Hunt .................................... 10,000 *(1)
Alan J. Kaufman .................................. 10,000 *(1)
James H. Stone ................................... 10,000 *(1)
Roger C. Stull ................................... 10,000 *(1)
F. Walker Tucei, Jr. ............................. 10,000 *(1)
----------
(1) The dollar value of the options to be granted is not currently
determinable.
The Board of Directors recommends that you vote "FOR" approval of the
2004 Non-Employee Directors' Stock Option Plan.
SELECTION OF AUDITORS
The Audit Committee has selected the accounting firm of Ernst & Young
LLP to serve as independent auditors for the current fiscal year. Ernst & Young
LLP has served as Newpark's independent auditors since June 27, 2002.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting and will have the opportunity to make statements if they so desire and
respond to appropriate questions from the stockholders.
On June 27, 2002, upon the recommendation of the Audit Committee,
Newpark dismissed Arthur Andersen LLP ("Arthur Andersen") as its independent
public accountants. The dismissal of Arthur Andersen and appointment of Ernst &
Young were reported in a current report on a Form 8-K filed with the SEC on July
2, 2002.
Arthur Andersen's reports on Newpark's consolidated financial
statements for the years ended December 31, 2000 and December 31, 2001 and the
interim period through June 27, 2002 did not contain an adverse opinion or
disclaimer of opinion, nor were these reports qualified or modified as to
uncertainty, audit scope or accounting principles.
During Newpark's fiscal years ended December 31, 2000 and December 31,
2001 and through June 27, 2002, there were (i) no disagreements with Arthur
Andersen on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure,
21
which disagreement(s), if not resolved to Arthur Andersen's satisfaction, would
have caused Arthur Andersen to make a reference to the subject matter of the
disagreement(s) in connection with Arthur Andersen's report; and (ii) no
reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. Newpark
provided Arthur Andersen with a copy of the foregoing disclosures, and a copy of
Arthur Andersen LLP's letter to Newpark stating its agreement with these
statements was filed as Exhibit 16 to Newpark's Form 8-K on June 28, 2002.
The Board of Directors recommends that the stockholders vote "FOR" the
ratification of its selection of Ernst & Young LLP as Newpark's auditors.
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2005 Annual
Meeting of Stockholders must be received by Newpark by December 31, 2004, to be
considered by Newpark for inclusion in Newpark's proxy statement and form of
proxy relating to that meeting. Proposals should be directed to the attention of
the Corporate Secretary, Newpark Resources, Inc., 3850 North Causeway Blvd.,
Suite 1770, Metairie, Louisiana 70002.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires Newpark's
officers and directors, and persons who own more than ten-percent of a
registered class of Newpark's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Officers, directors and greater than ten-percent
stockholders are required by Securities and Exchange Commission regulations to
furnish Newpark with copies of all Section 16(a) forms they file.
Based solely on review of the copies of these forms furnished to
Newpark, or written representations that no Forms 5 were required, Newpark
believes that during the period from January 1, 2003 to December 31, 2003 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
OTHER MATTERS
Neither Newpark nor any of the persons named as proxies knows of
matters other than those described above to be voted on at the Annual Meeting.
However, if any other matters are properly presented at the Annual Meeting, it
is the intention of the persons named as proxies to vote in accordance with
their judgment on these matters, subject to direction by the Board.
Newpark's Annual Report on Form 10-K for the year ended December 31,
2003 accompanies this Proxy Statement, but is not to be deemed a part of the
proxy soliciting material.
While you have the matter in mind, please complete, sign and return the
enclosed proxy card.
22
EXHIBIT A
NEWPARK RESOURCES, INC.
2004 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(ADOPTED BY THE BOARD OF DIRECTORS ON MARCH 10, 2004)
1. PURPOSE.
This Newpark Resources, Inc., 2004 Non-Employee Directors'
Stock Option Plan (this "Plan") is intended to promote the best interests of
Newpark Resources, Inc., a Delaware corporation ("Newpark"), and its
stockholders by providing to each member of Newpark's Board of Directors (the
"Board") who is a Non-Employee Director (as defined in paragraph 3 herein) of
Newpark with an opportunity to acquire a proprietary interest in Newpark by
receiving options (each a "Stock Option") to purchase Newpark's common stock,
$.01 par value ("Common Stock"), as herein provided. It is intended that this
Plan will promote an increased incentive and personal interest in the welfare of
Newpark by those individuals who are primarily responsible for shaping the
long-range plans of Newpark. In addition, Newpark seeks both to attract and
retain on its Board persons of exceptional competence and to provide a further
incentive to serve as a director of Newpark.
2. ADMINISTRATION.
2.1 This Plan shall be administered by the Board or by a duly
authorized committee of the Board. At such times as the Board is administering
this Plan, all references in this Plan to the "Committee" shall mean the Board.
2.2 In addition to the automatic grants of Stock Options
provided for in paragraph 4 of this Plan, the Committee shall have full and
complete authority, in its discretion: to grant Stock Options to one or more
Non-Employee Directors; to determine the number of Stock Options to be granted
to a Non-Employee Director; to determine the time or times at which Stock
Options shall be granted; to establish the exercise price and the other terms
and conditions upon which Stock Options may be exercised; to remove or adjust
any restrictions and conditions upon Stock Options; to specify, at the time of
grant, provisions relating to the exercisability of Stock Options and to
accelerate or otherwise modify the exercisability of any Stock Options; and to
adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan. All interpretations
and constructions of this Plan by the Committee, and all of its actions
hereunder, shall be binding and conclusive on all persons for all purposes.
2.3 Newpark shall indemnify and hold harmless each Committee
member and each director of Newpark, and the estate and heirs of such Committee
member or director, against all claims, liabilities, expenses, penalties,
damages or other pecuniary losses, including legal fees, which such Committee
member or director, his or her estate or his or her heirs may suffer as a result
of his or her responsibilities, obligations or duties in connection with this
Plan, to the extent that insurance, if any, does not cover the payment of such
items.
3. ELIGIBILITY.
Each member of the Board who is not an employee or executive
officer of Newpark or any of its Subsidiaries (as herein defined) or of any
parent corporation of Newpark (a "Non-Employee Director") shall be eligible to
be granted Stock Options under this Plan. Eligibility shall be determined: (i)
with respect to each director serving on the Board on the date this Plan was
adopted by the Board (i.e., March 10, 2004) on that date; and (ii) with respect
to each director elected after this Plan was
23
adopted by the Board, on the date such director is so elected. A Stock Option,
once granted to a Non-Employee Director, shall remain in effect in accordance
with its terms even if the optionee later enters the employ of Newpark or a
Subsidiary or parent. "Subsidiary" shall mean each corporation which is a
"subsidiary corporation" of Newpark within the definition contained in Section
424(f) of the Internal Revenue Code of 1986, as amended (the "Code").
4. GRANTS.
4.1 Subject to stockholder approval of this Plan, each
Non-Employee Director who is first elected a director after March 10, 2004, will
be granted a Stock Option to purchase 10,000 shares of Common Stock
automatically on the date of such election.
4.2 Subject to stockholder approval of this Plan, each
Non-Employee Director (whether in office on March 10, 2004, or subsequently
elected) shall be granted a Stock Option to purchase 10,000 shares of Common
Stock automatically on the date of each annual meeting of stockholders (or
stockholder action in lieu thereof) at which such Non-Employee Director is
re-elected, commencing with the annual meeting in 2004. If no annual meeting of
stockholders (or stockholder action in lieu thereof) occurs in one or more
calendar years, and such Non-Employee Director continues in office, such Stock
Option shall be granted automatically on the anniversary of the last previous
annual meeting of stockholders or stockholder action in lieu thereof.
4.3 Subject to the provisions of paragraph 11 of this Plan,
the number of shares of Common Stock issued and issuable upon the exercise of
Stock Options granted under this Plan shall not exceed 1,000,000.
5. PURCHASE PRICE.
The purchase price (the "Exercise Price") of shares of Common
Stock subject to each Stock Option ("Option Shares") granted pursuant to
paragraph 4 shall equal the fair market value ("Fair Market Value") of such
shares on the date of grant (the "Date of Grant") of such Stock Option. The Fair
Market Value of a share of Common Stock on any date shall be equal to the
closing price of the Common Stock for the last preceding day on which Newpark's
shares were traded, and the method for determining the closing price shall be
determined by the Committee. Notwithstanding the foregoing, the Exercise Price
of shares of Common Stock subject to each Stock Option granted at the discretion
of the Committee pursuant to paragraph 2.2 shall be determined by the Committee
in its sole and absolute discretion, and may be less than the fair market value
of the Option Shares on the date of grant, but shall not be less than $1.00 per
share.
6. OPTION PERIOD.
The term of each Stock Option shall commence on the Date of
Grant of the Stock Option and shall be ten years. Subject to the other
provisions of this Plan, (i) each Stock Option granted pursuant to paragraph 4.1
shall be exercisable during its term as to 20% of the Option Shares during the
twelve months beginning on the first anniversary of the Date of Grant; 20% of
the Option Shares during the twelve months beginning on the second anniversary
of the Date of Grant; 20% during the twelve months beginning on the third
anniversary of the Date of Grant; 20% during the twelve months beginning on the
fourth anniversary of the Date of Grant; and 20% during the twelve months
beginning on the fifth anniversary of the Date of Grant; and (ii) each Stock
Option granted pursuant to paragraph 4.2 shall be exercisable during its term as
to one-third of the
24
Option Shares during the twelve months beginning on the first anniversary of the
Date of Grant; one-third of the Option Shares during the twelve months beginning
on the second anniversary of the date of grant; and one-third of the Option
Shares during the twelve months beginning on the third anniversary of the date
of grant; provided, however, that no Stock Option granted pursuant to this Plan
shall be exercisable unless and until stockholder approval of the Plan has been
obtained. If an optionee shall not in any period purchase all of the Option
Shares which the optionee is entitled to purchase in such period, the optionee
may purchase all or any part of such Option Shares at any time after the end of
such period and prior to the expiration of the Option.
7. EXERCISE OF OPTIONS.
7.1 Each Stock Option may be exercised in whole or in part
(but not as to fractional shares) by delivering it for surrender or endorsement
to Newpark, attention of the Corporate Secretary, at Newpark's principal office,
together with payment of the Exercise Price and an executed Notice and Agreement
of Exercise in the form prescribed by paragraph 7.2. Payment may be made in
cash, by cashier's or certified check, or by surrender of previously owned
shares of Common Stock valued pursuant to paragraph 5 (if the Committee
authorizes payment in stock).
7.2 Exercise of each Stock Option is conditioned upon the
agreement of the Non-Employee Director to the terms and conditions of this Plan
and of such Stock Option as evidenced by the Non-Employee Director's execution
and delivery of a Notice and Agreement of Exercise in a form to be determined by
the Committee in its discretion. Such Notice and Agreement of Exercise shall set
forth the agreement of the Non-Employee Director that: (a) no Option Shares will
be sold or otherwise distributed in violation of the Securities Act of 1933, as
amended (the "Securities Act"), or any other applicable federal or state
securities laws; (b) each Option Share certificate may be imprinted with legends
reflecting any applicable federal and state securities law restrictions and
conditions; (c) Newpark may comply with said securities law restrictions and
issue "stop transfer" instructions to its Transfer Agent and Registrar without
liability; (d) each Non-Employee Director will furnish to Newpark a copy of each
Form 4 or Form 5 filed by said Non-Employee Director under Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and will
timely file all reports required under federal securities laws; and (e) each
Non-Employee Director will report all sales of Option Shares to Newpark in
writing on a form prescribed by Newpark.
7.3 No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied
with. Newpark will use reasonable efforts to maintain the effectiveness of a
Registration Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when no such
Registration Statement will be currently effective. The exercise of Stock
Options may be temporarily suspended without liability to Newpark during times
when no such Registration Statement is currently effective, or during times
when, in the reasonable opinion of the Committee, such suspension is necessary
to preclude violation of any requirements of applicable law or regulatory bodies
having jurisdiction over Newpark. If any Stock Option would expire for any
reason except the end of its term during such a suspension, then, if exercise of
such Stock Option is duly tendered before its expiration, such Stock Option
shall be exercisable and exercised (unless the attempted exercise is withdrawn)
as of the first day after the end of such suspension. Newpark shall have no
obligation to file any Registration Statement covering resales of Option Shares.
25
8. CONTINUOUS DIRECTORSHIP.
Except as provided in paragraph 10 below, a Non-Employee
Director may not exercise a Stock Option unless from the Date of Grant to the
date of exercise such Non-Employee Director continuously serves as a director of
Newpark.
9. RESTRICTIONS ON TRANSFER.
Stock Options granted under this Plan may contain terms
specifically authorized by the Committee, in its sole discretion, which (i)
permit transfer of all or any portion of such Stock Options by an optionee to
(a) the spouse, children (including step-children and adopted children) or
grandchildren of the optionee ("Immediate Family Members"), (b) a trust or
trusts for the exclusive benefit of Immediate Family Members, (c) a corporation,
partnership, limited partnership or limited liability company in which no
persons or entities other than such optionee and Immediate Family Members have
beneficial interests, or (d) such other persons or entities as the Committee may
specifically approve, on a case-by-case basis, and (ii) permit the exercise of
such Stock Options by such transferees. Unless the Committee shall determine
otherwise in its sole discretion, transferred Stock Options may not be further
transferred by the transferees thereof except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order.
Notwithstanding any transfer permitted in accordance with the foregoing
provisions, transferred Stock Options shall continue to be subject to the same
terms and conditions as were applicable immediately before such transfer (other
than permitting such Stock Options to be exercised by a permitted transferee),
including but not limited to the provisions of this Plan and option agreements
governing (x) the exercise of Stock Options, (y) the termination of Stock
Options at the expiration of their term or following termination of the
directorship of the Non-Employee Director to which the Stock Options were issued
and (z) the payment of withholding taxes. No interest under this Plan of any
Non-Employee Director or transferee shall be subject to attachment, execution,
garnishment, sequestration, the laws of bankruptcy or any other legal or
equitable process. Except as otherwise specifically provided by the Committee in
accordance with this paragraph 9, each Stock Option granted under this Plan may
not be transferred except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order and shall be exercisable during
a Non-Employee Director's lifetime only by such Non-Employee Director or by such
Non-Employee Director's legal representative.
10. TERMINATION OF SERVICE.
10.1 Unless otherwise determined by the Committee, in its sole
discretion, upon termination of the directorship of a Non-Employee Director by
reason of death, all outstanding Stock Options to the extent exercisable on the
date of death of the Non-Employee Director shall remain in full force and effect
and may be exercised pursuant to the provisions thereof at any time prior to
expiration at the end of the fixed term thereof. Unless otherwise determined by
the Committee, in its sole discretion, upon termination of the directorship of a
Non-Employee Director by reason of Disability, all outstanding Stock Options to
the extent exercisable on the date of termination of directorship may be
exercised pursuant to the provisions thereof at any time until the earlier of
(a) the end of the fixed term of such Stock Options and (b) the later of the
expiration of (i) twelve months following termination of the Non-Employee
Director's directorship and (ii) a number of months (but not more than eighteen
months) following termination of the Non-Employee Director's directorship equal
to one month for each full year of such Non-Employee Director's continuous
service as a Non-Employee Director. Unless otherwise determined by the
Committee, in its sole discretion, all Stock Options to the extent not
outstanding and presently exercisable by such Non-Employee Director at
26
the date of death or termination of directorship by reason of Disability, shall
terminate as of the date of death or such termination of directorship and shall
not be exercisable thereafter.
10.2 Unless otherwise determined by the Committee, in its sole
discretion, upon the termination of the directorship of a Non-Employee Director
for any reason other than the reasons set forth in paragraph 10.1, all
outstanding Stock Options to the extent exercisable on the date of termination
of directorship may be exercised pursuant to the provisions thereof at any time
until the earlier of (a) the end of the fixed term of such Stock Options and (b)
the later of the expiration of (i) three months following termination of the
Non-Employee Director's directorship and (ii) a number of months (but not more
than eighteen months) following termination of the Non-Employee Director's
directorship equal to one month for each full year of such Non-Employee
Director's service as a Non-Employee Director. Unless otherwise determined by
the Committee, in its sole discretion, all Stock Options to the extent not then
outstanding and presently exercisable by such Non-Employee Director at the date
of termination of directorship shall terminate as of the date of such
termination of directorship and shall not be exercisable thereafter.
10.3 For purposes of this Plan, "Disability" shall mean total
and permanent incapacity of a Non-Employee Director, due to physical impairment
or legally established mental incompetence, to perform the usual duties of a
director, which disability shall be determined: (i) on medical evidence by a
licensed physician designated by the Committee, or (ii) on evidence that the
Non-Employee Director has become entitled to receive primary benefits as a
disabled employee under the Social Security Act in effect on the date of such
disability.
11. ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
11.1 The number and class of shares subject to each Stock
Option outstanding from time to time, the Exercise Price thereof (but not the
total price), the maximum number of Stock Options that may be granted under this
Plan, and the minimum number of shares as to which a Stock Option may be
exercised at any one time, shall be proportionately adjusted in the event of any
increase or decrease in the number of the issued shares of Common Stock which
results from a split-up or consolidation of shares, payment of a stock dividend
or dividends exceeding a total of two and one-half percent (2.5%) for which the
record dates occur in any one fiscal year, a recapitalization (other than the
conversion of convertible securities according to their terms), a combination of
shares or other like capital adjustment (a "Capital Adjustment"), so that upon
exercise of the Stock Option, the Non-Employee Director shall receive the number
and class of shares such Non-Employee Director would have received had such
Non-Employee Director been the holder of the number of shares of Common Stock
for which the Stock Option is being exercised upon the date of such Capital
Adjustment. A similar adjustment shall be made to the number of Option Shares
for which Stock Options shall be granted automatically to Non-Employee Directors
after March 10, 2004, as contemplated by paragraph 4 of this Plan, as a result
of any Capital Adjustment occurring after March 10, 2004.
11.2 Upon a reorganization, merger or consolidation of Newpark
with one or more corporations as a result of which Newpark is not the surviving
corporation or in which Newpark survives as a subsidiary of another corporation,
or upon a sale of all or substantially all of the property of Newpark to another
corporation, or any dividend or distribution to stockholders of more than ten
percent (10%) of Newpark's assets, adequate adjustment or other provisions shall
be made by Newpark or other party to such transaction so that there shall remain
and/or be substituted for the Option Shares provided for herein, the shares,
securities or assets which would have been issuable or payable in respect of or
in exchange for such Option Shares then remaining, as if the Non-Employee
27
Director had been the owner of such shares as of the applicable date. Any
securities so substituted shall be subject to similar successive adjustments.
11.3 Subject to paragraph 19, in the event of a change in
control ("Change in Control") of Newpark, all outstanding Stock Options shall
immediately become and shall thereafter be exercisable in full until expiration
at the end of the fixed term thereof or until earlier terminated in accordance
with paragraph 10 or paragraph 16. A Change in Control of Newpark shall be
deemed to have occurred (a) on the date Newpark first has actual knowledge that
any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act or any amendment or replacement of such sections) has become the beneficial
owner (as defined in Rule 13(d)-3 under the Exchange Act or any amendment or
replacement of such Rule), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
Newpark's then outstanding securities or (b) on the date the stockholders of
Newpark approve (i) a merger of Newpark with or into any other corporation in
which Newpark is not the surviving corporation or in which Newpark survives as a
subsidiary of another corporation, (ii) a consolidation of Newpark with any
other corporation, or (iii) the sale or disposition of all or substantially all
of Newpark's assets or a plan of complete liquidation.
12. WITHHOLDING TAXES.
Newpark shall have the right at the time of grant, vesting or
exercise of any Stock Option to make adequate provision for any federal, state,
local or foreign taxes which it reasonably believes are or may be required by
law to be withheld with respect to such grant, vesting or exercise ("Tax
Liability"), to ensure the payment of any such Tax Liability. Newpark may
provide for the payment of any Tax Liability by any of the following means or a
combination of such means, as determined by the Committee in its sole and
absolute discretion in the particular case: (i) by requiring the Non-Employee
Director to tender a cash payment to Newpark, (ii) by withholding from the
Non-Employee Director's cash compensation, (iii) by withholding from the Option
Shares which would otherwise be issuable upon exercise of the Stock Option that
number of Option Shares having an aggregate fair market value (determined in the
manner prescribed by paragraph 5) as of the date the withholding tax obligation
arises in an amount which is equal to the Non-Employee Director's Tax Liability
or (iv) by any other method deemed appropriate by the Committee. Satisfaction of
the Tax Liability of a Non-Employee Director may be made by the method of
payment specified in clause (iii) above upon the satisfaction of such additional
conditions as the Committee shall deem in its sole and absolute discretion as
appropriate in order for such withholding of Option Shares to qualify for the
exemption provided for in Section 16b-3 of the Exchange Act.
13. AMENDMENTS AND TERMINATION.
The Board of Directors may at any time suspend, amend or
terminate this Plan. No amendment or modification of this Plan may be adopted,
except subject to stockholder approval, which would: (a) materially increase the
benefits accruing to Non-Employee Directors under this Plan, (b) materially
increase the maximum number of Option Shares which may be issued under this Plan
(except for adjustments pursuant to paragraph 11), or (c) materially modify the
requirements as to eligibility for participation in this Plan.
14. SUCCESSORS IN INTEREST.
The provisions of this Plan and the actions of the Committee
shall be binding upon all heirs, successors and assigns of Newpark and of
Non-Employee Directors.
28
15. OTHER DOCUMENTS.
All documents prepared, executed or delivered in connection
with this Plan shall be, in substance and form, as established and modified by
the Committee or by persons under its direction and supervision; provided,
however, that all such documents shall be subject in every respect to the
provisions of this Plan, and in the event of any conflict between the terms of
any such document and this Plan, the provisions of this Plan shall prevail.
16. MISCONDUCT OF A NON-EMPLOYEE DIRECTOR.
Notwithstanding any other provision of this Plan, all
unexercised Stock Options held by a Non-Employee Director shall automatically
terminate as of the date his or her directorship is terminated, if such
directorship is terminated on account of any act of fraud, embezzlement,
misappropriation or conversion of assets or opportunities of Newpark, or if the
Non-Employee Director takes any other action materially inimical to the best
interests of Newpark, as determined by the Committee in its sole and absolute
discretion. Upon termination of such Stock Options, such Non-Employee Director
shall forfeit all rights and benefits under this Plan.
17. TERM OF PLAN.
This Plan was adopted by the Board effective as of March 10,
2004. No Stock Options may be granted under this Plan after March 9, 2014.
18. GOVERNING LAW.
This Plan shall be construed in accordance with, and governed
by, the laws of the State of Delaware.
19. STOCKHOLDER APPROVAL OF PLAN.
No Stock Option granted pursuant to this Plan shall be
exercisable unless and until the stockholders of Newpark have approved this
Plan, and all other legal requirements have been fully complied with. If
stockholder approval of this Plan is not obtained on or before March 9, 2005,
this Plan shall be null and void and of no further force or effect.
20. PRIVILEGES OF STOCK OWNERSHIP.
The holder of a Stock Option shall not be entitled to the
privileges of stock ownership as to any shares of Common Stock not actually
issued to such holder.
IN WITNESS WHEREOF, this Plan been executed as of March 10, 2004.
NEWPARK RESOURCES, INC.
By: /s/ James D. Cole
--------------------------------------
James D. Cole, Chairman of the Board
29
ANNUAL MEETING OF STOCKHOLDERS OF
NEWPARK RESOURCES, INC.
JUNE 9, 2004
PLEASE DATE, SIGN AND MAIL
YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON
AS POSSIBLE.
o PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED o
------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
------------------------------------------------------------------------------------------------------------------------------------
1. Election of Directors:
[ ] FOR ALL NOMINEES NOMINEES: FOR AGAINST ABSTAIN
[ ] Jerry W. Box 2. Proposal to adopt the 2004 Non-Employee [ ] [ ] [ ]
[ ] WITHHOLD AUTHORITY [ ] William Thomas Ballantine Director's Stock Option Plan.
FOR ALL NOMINEES [ ] James D. Cole
[ ] David P. Hunt 3. Proposal to ratify the selection of auditors. [ ] [ ] [ ]
[ ] FOR ALL EXCEPT [ ] Alan J. Kaufman
(See instructions below) [ ] James M. Stone
[ ] Roger C. Stull THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED,
[ ] F. Walker Tucci, Jr. WILL BE VOTED FOR THE ELECTION OF THE NOMINEES OF THE BOARD OF
DIRECTORS, FOR THE ADOPTION OF THE 2004 NON-EMPLOYEE DIRECTORS' STOCK
OPTION PLAN, FOR THE RATIFICATION OF AUDITORS, AND OTHERWISE IN THE
DISCRETION OF ANY OF THE PERSONS ACTING AS PROXIES.
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), mark "FOR ALL EXCEPT" and fill in the
circle next to each nominee you wish to withhold,
as shown here:[X]
--------------------------------------------------------------
--------------------------------------------------------------
To change the address on your account, please check
the box at right and indicate your new address in the [ ]
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method.
--------------------------------------------------------------
Signature of Stockholders Date Signature of Stockholders Date
------------------- ------------- ------------------- -------------
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is
a corporation, please sign full corporation name by duly authorized officer, giving full title as such. If
signer is a partnership, please sign in partnership name by authorized person.
NEWPARK RESOURCES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 9, 2004
The undersigned, revoking any previous proxies for such stock, hereby
appoints James D. Cole and Edah Keating, and each of them, proxies of the
undersigned with full power of substitution to each, to vote all shares of
common stock of NEWPARK RESOURCES, INC. which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of NEWPARK RESOURCES, INC. to be held
on June 9, 2004, and all postponements or adjournments thereof, with all the
power the undersigned would possess if personally present, with authority to
vote (i) as specified by the undersigned on the reverse side and (ii) in the
discretion of any proxy upon such other business as may properly come before the
meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)