153 East 53rd Street, 57th Floor
New York, New York 10022-4624
42, rue Saint-Dominique
75007 Paris, France
Parkstraat 83
2514 JG The Hague
The Netherlands
To Be Held April 13, 2005
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| By order of the Board of Directors, Ellen Summer Secretary |
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Please sign, date and promptly return the enclosed
proxy card in the enclosed envelope, or grant a proxy and give voting
instructions by telephone or internet, so that you may be represented
at the meeting. Instructions are on your proxy card or on the voting
instruction card included by your broker. Brokers cannot vote for
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| PROXY STATEMENT |
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| March 15, 2005 |
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| General This proxy statement is furnished in connection with the solicitation by the Board of Directors of Schlumberger Limited (Schlumberger N.V.) (“Schlumberger” or the “Company”) of proxies to be voted at the 2005 Annual General Meeting of Stockholders. The approximate mailing date of this proxy statement is March 15, 2005. Business at the meeting is conducted in accordance with the procedures determined by the Chairman of the meeting and is generally limited to matters properly brought before the meeting by or at the direction of the Board of Directors or by a stockholder in accordance with specified requirements requiring advance notice and disclosure of relevant information. Proxies and Voting Procedures Each stockholder of record at the close of business on March 2, 2005 is entitled to one vote for each share registered in the stockholder’s name. A stockholder of record is a person or entity who held shares on that date registered in its name on the records of EquiServe Trust Company, N.A. (“EquiServe”), Schlumberger’s stock transfer agent. Persons who held shares on the record date through a broker, bank or other nominee are considered beneficial owners. On March 2, 2005, there were 589,591,456 outstanding shares of common stock of Schlumberger, excluding 77,514,559 shares held in treasury.
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| 1. Election of Directors |
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| It is intended to fix the number of directors at 12
and to elect a Board of Directors of 12 members, each to hold office
until the next Annual General Meeting of Stockholders and until a
director’s successor is elected and qualified or until a director’s
death, resignation or removal. Each of the nominees, except Michael
E. Marks and Rana Talwar, is now a director and was previously elected
by the stockholders. Unless instructed otherwise, the proxies will
be voted for the election of the 12 nominees named below. If any nominee
is unable or unwilling to serve, proxies may be voted for another
person designated by the Board of Directors. The Board knows of no
reason why any nominee will be unable or unwilling to serve if elected. |
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Nominee, Age and Five-Year Business
Experience |
Director Since |
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JOHN DEUTCH, 66; Institute Professor, Massachusetts Institute of Technology, |
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1997 1987 1993 |
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JAMIE S. GORELICK, 54; Partner, Wilmer Cutler Pickering Hale and Dorr LLP, an |
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2002 | ||||
| ANDREW GOULD, 58; Chairman and Chief Executive Officer since February 2003,
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2002 | ||||
TONY ISAAC, 63; Chief Executive, The BOC Group plc, an international group with four
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2003 | ||||
ADRIAN LAJOUS, 61; Senior Energy Advisor, McKinsey & Company, Houston, Texas,
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2002 | ||||
ANDRE LEVY-LANG, 67; Independent Investor since November 1999; Chairman of the
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1992 | ||||
MICHAEL E. MARKS, 54; Chief Executive Officer of Flextronics, an electronics
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— | ||||
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1988 | ||||
TORE I. SANDVOLD, 57; Chairman, Sandvold Energy AS, an advisory company in the
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2004 | ||||
NICOLAS SEYDOUX, 65; Chairman, Gaumont, a French filmmaking enterprise, Paris. aligng(8) (10) |
1982 | ||||
LINDA GILLESPIE STUNTZ, 50; Partner, Stuntz, Davis & Staffier P.C., a law firm,
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1993 | ||||
RANA TALWAR, 56; Chairman, Sabre Capital Worldwide Inc., Tortola, BVI, a private
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— | ||||
| (1) | Mr. Deutch is a director of Citigroup, a banking
and insurance organization, where he serves on its Audit, Public Affairs
and Governance and Nominating Committees; Cummins Inc., a manufacturer
of diesel engines and components, where he serves on its Technology,
Finance and Governance and Nominating Committees; and Raytheon Corporation,
a defense technology company, where he serves on its Governance and
Nominating and Public Affairs Committees. Mr. Deutch’s adult son,
Paul Deutch, is employed by a unit of Schlumberger. The employment
of Mr. Deutch’s son was not influenced by John Deutch’s position as
a director of the Company. |
| (2) | Ms. Gorelick is a director of United Technologies
Corporation, a provider of high technology products and services,
where she serves on its Audit, Finance and Public Issues Review Committees
and serves on the boards of the John D. and Catherine T. MacArthur
Foundation and the Carnegie Endowment for International Peace. She
is a member of the Council on Foreign Relations. |
| (3) | Mr. Gould is a director of Rio Tinto plc and Rio
Tinto Limited, a mineral resources group, and is a member of its Audit
and Remuneration Committees. |
| (4) | Mr. Isaac is a director of International Power plc
and is Chairman of its Audit Committee and serves on its Remuneration
and Appointments Committees. |
| (5) | Mr. Lajous is Chairman of Oxford Institute for Energy
Studies, Oxford, U.K.; Senior Energy Advisor at Morgan Stanley, London;
and was a Senior Fellow at the Kennedy School of Government, Harvard
University, 2003 – 2004. |
| (6) | Mr. Lévy-Lang is a director and member of the Compensation
Committee of AGF, a French insurance company, a director and member
of the Audit and Compensation Committees of SCOR, a French reinsurance
company, a director and member of the Nominating Committee of Dexia,
a Belgian financial services company, and a director of Paris-Orleans,
a holding company for the Rothschild Group of Companies. |
| (7) | Mr. Marks is a director at SanDisk, a memory products
company headquartered in California, and a member of its Compensation
and Corporate Governance Committees and a director of KLA Tencor,
a semiconductor fabrication equipment company headquartered in California,
where he serves on its Compensation and Corporate Governance Committees. |
| (8) | Mr. Primat and Mr. Seydoux are cousins. |
| (9) | Mr. Sandvold is a director of Teekay Shipping Corporation,
a leading provider of international crude oil and petroleum product
transportation services, where he is a member of its Audit Committee,
and also serves on the boards of Lambert Energy Advisory Ltd., E.on
Rührgas Norge AS, Energy Policy Foundation of Norway Stavanger University
and Offshore Northern Seas (ONS). |
| (10) | Mr. Seydoux is a director of Arte, a Franco-German
TV company. |
| (11) | Mrs. Stuntz is a director of Raytheon Company, a
defense technology company, where she is a member of its Audit Committee. |
| (12) | Mr. Talwar is a director of Pearson PLC, an international
media company in London, and a member of its Personnel, Nominating
and Treasury Committees; a director of Fortis, an integrated financial
services provider in Belgium and the Netherlands, and a member of
its Risk and Capital Committees; Chairman of Centurion Bank, India,
a director of Moscow Bank for Reconstruction and Development, a member
of the Governing Body of the London Business School and the Indian
School of Business and a director of the National Society for the
Prevention of Cruelty to Children in the U.K. |
| Beneficial
Ownership of Common Stock |
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| Name and
Address |
Number of Shares |
Percentage of Class |
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| FMR Corp. (1) 85 Devonshire Street Boston, Massachusetts 02109 |
42,414,209 | 7.19% | |
| Capital Research and Management Company (2) 333 South Hope Street Los Angeles, CA 90071 |
38,442,700 | 6.52% | |
| (1) | Based on an amendment to a Statement on Schedule
13G dated February 14, 2005. Such filing indicates that FMR Corp.
has sole voting power with respect to 2,670,818 shares and sole dispositive
power with respect to 42,414,209 shares. FMR Corp. is the parent of
Fidelity Management & Research Company, investment adviser to the
Fidelity group of investment companies. The filing indicates that
the common stock was acquired in the ordinary course of business and
not for the purpose of changing or influencing the control of the
Company. |
| (2) | Based on a Statement on Schedule 13G dated February
9, 2005. Such filing indicates that Capital Research and Management
Company acts as investment adviser to various investment companies
registered under Section 8 of the Investment Company Act of 1940.
The filing indicates that the common stock was acquired in the ordinary
course of business and not for the purpose of changing or influencing
the control of the Company. |
| Name | Shares | ||
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| Dalton Boutte | 143,703 | (1) | |
| John Deutch | 5,600 | (2) | |
| Xavier Flinois | 16,347 | ||
| Jamie S. Gorelick | 2,400 | (3) | |
| Andrew Gould | 906,420 | (4) | |
| Tony Isaac | 0 | (5) | |
| Adrian Lajous | 3,300 | (6) | |
| André Lévy-Lang | 7,500 | ||
| Michael E. Marks | 0 | ||
| Satish Pai | 74,963 | (7) | |
| Jean-Marc Perraud | 167,832 | (8) | |
| Didier Primat | 17,660,628 | (9) | |
| Tore I. Sandvold | 2,000 | ||
| Chakib Sbiti | 144,757 | (10) | |
| Nicolas Seydoux | 239,660 | (11) | |
| Linda Gillespie Stuntz | 8,800 | (12) | |
| Rana Talwar | 0 | ||
| All directors, director nominees and executive officers as a group (24 persons) | 20,059,180 | (13) | |
| (1) | Includes 137,869 shares which may be acquired by Mr. Boutte within 60 days through the exercise of stock options. |
| (2) | Includes 600 shares owned by Mr. Deutch’s wife, as to which he disclaims beneficial ownership, and excludes 500 shares which he deferred receipt under the Stock and Deferral Plan for Non-Employee Directors. |
| (3) | Excludes 2,500 shares which she deferred receipt under the Stock and Deferral Plan for Non-Employee Directors. |
| (4) | Includes 794,540 shares which may be acquired by Mr. Gould within 60 days through the exercise of stock options. |
| (5) | Excludes 2,500 shares which he deferred receipt under the Stock and Deferral Plan for Non-Employee Directors. |
| (6) | Held through a limited liability company in which Mr. Lajous has an indirect interest. |
| (7) | Includes 71,745 shares which may be exercised by Mr. Pai within 60 days by the exercise of stock options. |
| (8) | Includes 152,633 shares which may be acquired by Mr. Perraud within 60 days through the exercise of stock options. |
| (9) | Includes 560,000 shares as to which Mr. Primat shares investment power and 4,499,008 shares held for account of the minor children of Mr. Primat as to which he has joint voting and investment power. |
| (10) | Includes 139,257 shares which may be acquired by Mr. Sbiti through the exercise of stock options. |
| (11) | Excludes 15,364 shares owned by Mr. Seydoux’s wife, as to which he has no voting and investment power. |
| (12) | Includes 3,000 shares as to which Mrs. Stuntz shares voting power and 300 shares owned by a minor child in a trust for which Mrs. Stuntz serves as trustee. |
| (13) | Includes 1,895,933 shares which may be acquired by
executive officers as a group within 60 days through the exercise
of stock options and excludes 5,500 shares for which directors deferred
receipt under the Stock and Deferral Plan for Non-Employee Directors. |
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| * | Chair |
Nominating and Governance Committee
The Nominating and Governance Committee is comprised of five independent directors, who meet the independence requirements of the New York Stock Exchange’s listing standards. The Nominating and Governance Committee assists the Board in identifying individuals qualified to become directors under criteria approved by the Board. The Nominating and Governance Committee recommends to the Board the number and names of persons to be proposed by the Board for election as directors at the annual general meeting of stockholders and may also recommend to the Board persons to be appointed by the Board or to be elected by the stockholders to fill any vacancies which occur on the Board. The Nominating and Governance Committee is responsible for periodically reviewing director compensation and benefits, reviewing corporate governance trends, and recommending to the Board any improvements to the Company’s corporate governance guidelines as it deems appropriate. The Nominating and Governance Committee also recommends directors to serve on and to chair the Board Committees and leads the Board’s appraisal process. The Nominating and Governance Committee operates pursuant to a written charter, which is available on the Company’s website at www.slb.com/ir. Stockholders may also obtain a copy of the charter without charge by writing to the Secretary of the Company at 153 East 53rd Street, 57th Floor, New York, New York, 10022-4624.
Finance Committee
The Finance Committee advises the Board and senior management on various matters, including dividends, financial policies and the investment and reinvestment of funds. The Finance Committee periodically reviews the administration of the Schlumberger employee benefit plans and those of its subsidiaries. In addition, the Finance Committee recently revised its charter expressly to include the review of financial risk management, financial aspects of acquisitions submitted to the Board, and the Investor Relations and Stockholder Services of the Company. The Finance Committee operates pursuant to a written charter, which is available on the Company’s website at www.slb.com/ir. Stockholders may also obtain a copy of the charter without charge by writing to the Secretary of the Company at 153 East 53rd Street, 57th Floor, New York, New York, 10022-4624.
Technology Committee
The Technology Committee advises the Board and senior management on various matters, including the quality and relevance of programs dealing with scientific research, development, information and manufacturing technology, and also advises on research strategy and university relationships. The Technology Committee operates pursuant to a written charter, which is available on the Company’s website at www.slb.com/ir. Stockholders may also obtain a copy of the charter without charge by writing to the Secretary of the Company at 153 East 53rd Street, 57th Floor, New York, New York, 10022-4624.
Director Independence
The Board of Directors had determined that each director and nominee is independent, as defined for purposes of the New York Stock Exchange’s listing standards, other than Mr. Gould, who is Chairman and Chief Executive Officer of Schlumberger. In making this determination, the Board affirmatively determined that each independent director or nominee had no material relationship with Schlumberger or management, and that none of the express disqualifications contained in the NYSE rules applied to any of them. As contemplated by NYSE rules, the Board has adopted categorical standards to assist it in making independence determinations, under which relationships that fall within the categorical standards are not required to be disclosed in the proxy statement and their impact on independence need not be separately discussed. The Board, however, considers all material relationships with each director in making its independence determinations. A relationship falls within the categorical standards if it:
| • | Is a type of relationship addressed in Section 303A 2(b) of the NYSE Listed Company Manual, but under those rules does not preclude a determination of independence; or | |
| • | Consists of charitable contributions by the Company to an organization where a director is an executive officer and does not exceed the greater of $1 million or 2% of the organization’s gross revenue in any of the last 3 years. |
Director Nominations
In obtaining the names of possible nominees, the Nominating and Governance Committee makes its own inquiries and will receive suggestions from other directors, management, stockholders and other sources, and its process for evaluating nominees identified in unsolicited recommendations from security holders is the same as its process for unsolicited recommendations from other sources. In the case of Mr. Marks and Mr. Talwar, who are being nominated as directors for the first time this year, both were recommended by one of the director search firms retained by the Nominating and Governance Committee. All potential nominees must be considered by the Nominating and Governance Committee before being contacted by other Company directors or officers as possible nominees and before having their names formally considered by the full Board. The Nominating and Governance Committee will consider nominees recommended by security holders who meet the eligibility requirements for submitting stockholder proposals for inclusion in the next proxy statement and submit their recommendations in writing to Chair, Nominating and Governance Committee, care of the Secretary, Schlumberger Limited, 153 East 53rd Street, 57th Floor, New York, New York 10022-4624 by the deadline for such 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 the candidate as a director, a description of all direct or indirect arrangements or understandings between the recommending security 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 the Company, if elected.
Stockholder Communication with Board Members
The Board has established a process for security holders to send communications, other than sales-related communications, to one or more of its members. Any such communication should be sent by letter addressed to the member or members of the Board to whom the communication is directed, care of the Secretary, Schlumberger Limited, 153 East 53rd Street, 57th Floor, New York, New York 10022-4624. All such communications will be forwarded to the Board member or members specified.
Director Presiding at Executive Sessions
The Board of Directors schedules executive sessions without any management members present in conjunction with each regularly scheduled Board meeting, and at the request of a director. Mr. Nicolas Seydoux, Chair of the Nominating and Governance Committee, presides at these executive sessions of non-management directors.
Director Attendance at Annual General Meeting
The Board’s policy regarding director attendance at the Annual General Meeting of Stockholders is that directors are welcome to attend, and that the Company will make all appropriate arrangements for directors that choose to attend. In 2004, Messrs. Gould and Seydoux attended the Annual General Meeting.
Corporate Governance Guidelines and Code of Ethics
Copies of Schlumberger’s Corporate Governance Guidelines and Schlumberger’s Code of Ethics are available at the Company’s corporate governance website located at www.slb.com/ir. Stockholders may also obtain copies of Schlumberger’s Corporate Governance Guidelines and Schlumberger’s Code of Ethics without charge by writing to the Secretary of the Company at 153 East 53rd Street, 57th Floor, New York, New York, 10022-4624.
SUBMITTED BY THE AUDIT COMMITTEE OF THE SCHLUMBERGER
BOARD OF DIRECTORS
| Jamie S. Gorelick | André Lévy-Lang, Chair | ||
| Tony Isaac | Linda G. Stuntz | ||
| Adrian Lajous | |||
Summary of Cash and Certain Other Compensation
The following table shows the compensation paid by the Company and its subsidiaries to the Chief Executive Officer, the next four most highly compensated executive officers as at December 31, 2004, and to one other person who served as an executive officer during the year but who was not an executive officer as of December 31, 2004 (the “named officers”), for the fiscal years ending December 31, 2004, 2003 and 2002.
| Long Term Compensation |
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| Annual Compensation | Awards | ||||||||
| Name and Principal Position | Year | Salary ($)(4) |
Bonus ($)(4) |
Securities Underlying Options (#) (5) |
All
Other Compensation ($) (6) |
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| A. Gould | 2004 | 1,500,000 | 2,100,000 | 415,000 | 157,500 | ||||
| Chairman and | 2003 | 1,500,000 | 1,125,000 | 300,000 | 108,000 | ||||
| Chief Executive Officer | 2002 | 966,667 | 300,000 | 300,000 | 124,700 | ||||
| C. Sbiti (1) | 2004 | 618,047 | 848,269 | 90,000 | 61,561 | ||||
| Executive Vice President | 2003 | 559,284 | 629,195 | 100,000 | 49,452 | ||||
| J.-M. Perraud | 2004 | 600,000 | 858,000 | 50,000 | 59,100 | ||||
| Executive Vice President and | 2003 | 550,000 | 385,000 | 60,000 | 38,040 | ||||
| Chief Financial Officer | 2002 | 430,395 | 84,000 | 50,000 | 30,301 | ||||
| X. Flinois (2) | 2004 | 48,574 | 1,165,756 | 0 | 0 | ||||
| Former Executive Vice President | 2003 | 520,325 | 472,195 | 0 | 0 | ||||
| Dalton Boutte (3) | 2004 | 519,125 | 555,464 | 50,000 | 30,857 | ||||
| Executive Vice President | |||||||||
| Satish Pai (1) | 2004 | 470,541 | 448,455 | 30,000 | 53,673 | ||||
| Vice President Oilfield Technologies | |||||||||
| 1) | Messrs. Sbiti and Pai are paid in Euros. | ||||||||||
| 2) | Mr. Flinois was paid in Pounds Sterling. In connection with the sale of the Sema business, Mr. Flinois left the Company and received a transaction bonus. | ||||||||||
| 3) | Mr. Boutte is paid in Pounds Sterling. | ||||||||||
| 4) | Salary and bonus amounts include cash compensation earned and received and any amounts deferred under the Schlumberger Restoration Savings Plan. | ||||||||||
| 5) | The Company has granted no stock appreciation rights or restricted stock. | ||||||||||
| 6) | The 2004 amounts disclosed in this column
include:
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| (a)($) | (b)($) | (c)($) | (d) ($) | (e) ($) | |||||
| Mr. Gould | 12,300 | N/A | 72,600 | 72,600 | N/A | ||||
| Mr. Sbiti | N/A | 61,561 | N/A | N/A | N/A | ||||
| Mr. Perraud | 12,300 | N/A | 23,400 | 23,400 | N/A | ||||
| Mr. Flinois | N/A | 0 | N/A | N/A | N/A | ||||
| Mr. Boutte | 6,150 | N/A | 22,657 | N/A | 2,050 | ||||
| Mr. Pai | 12,300 | 4,079 | 16,539 | 20,755 | N/A |
The Company’s matching credits under the Schlumberger Restoration Savings Plan are vested one-third at two years of service, two-thirds at three years, fully at four years or upon the earliest of age 60, death or change of control. The amounts accumulated under the Schlumberger Restoration Savings Plan and the International Staff Profit Sharing Plan will be paid upon the satisfaction of certain conditions on termination or retirement, death, disability or in the case of the Schlumberger Restoration Savings Plan, a change in control.
The following table sets forth certain information concerning options granted during 2004 to the named executive officers. Any value realized upon exercise of the options will depend upon the market price of Schlumberger common stock at the time the option is exercised relative to the exercise price of the option.
| Individual Grants | |||||||||
| Name | Number
of Securities Underlying Options Granted (#) (1) |
%
of Total Options Granted to Employees in Fiscal Year |
Exercise Price ($/SH) (2) |
Expiration Date |
Grant
Date Present Value ($)(3) |
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| A. Gould | 415,000 | 14.02 | 55.90 | 01/21/14 | 4,477,850 | ||||
| C. Sbiti | 90,000 | 3.04 | 65.235 | 07/21/14 | 1,143,000 | ||||
| J.-M. Perraud | 50,000 | 1.69 | 65.235 | 07/21/14 | 635,000 | ||||
| X. Flinois | 0 | — | — | — | — | ||||
| D. Boutte | 50,000 | 1.69 | 65.235 | 07/21/14 | 635,000 | ||||
| S. Pai | 30,000 | 1.01 | 65.235 | 07/21/14 | 381,000 | ||||
| (1) | The Company has not granted any stock appreciation rights.
Options listed above become exercisable in installments of 25% each
year following the date of grant. The gain on each option grant is
capped at 125% of the exercise price. All outstanding stock options
become fully exercisable prior to liquidation or dissolution of the
Company or prior to any reorganization, merger or consolidation of
the Company where the Company is not the surviving corporation unless
such merger, reorganization or consolidation provides for the assumption
of such stock options. |
| (2) | The exercise price of the options is equal to the average
of the high and the low per share prices of the common stock on the
options’ dates of grant and may be paid in cash or by tendering
shares of common stock. Applicable tax obligations may be paid in
cash or by the withholding of shares of common stock. |
| (3) | The following assumptions were used to calculate the
grant date present value under the Black-Scholes method: |
| Assumption | January 21, 2004 | July 21, 2004 | |||
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| Expected Life of Option | 4.5 years | 4.5 years | |||
| Risk Free Rate | 2.88 | % | 3.73 | % | |
| Volatility | 31.38 | % | 27.75 | % | |
| Dividend Yield | 1.51 | % | 1.54 | % | |
| Stock Price Appreciation Cap | 125 | % | 125 | % | |
| 4-Year Graded Vesting Discount | 92.72 | % | 92.72 | % | |
| (includes 3% Annual Forfeiture Rate) |
Stock Option Exercises and
December 31, 2004 Stock Option Value Table
| Name | Shares
Acquired on Exercises (#) |
Value Realized ($)(1) |
Number
of Securities Underlying Unexercised Options at FY-End (#) Exercisable / Unexercisable |
Value
of Unexercised In-The-Money Options at FY-End ($) (2) Exercisable / Unexercisable |
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| A. Gould | 0 | — | ___630,790 | 915,000 | 6,762,845 | 12,942,850 | |||||
| C. Sbiti | 17,584 | 575,085 | 119,257 | 208,000 | 1,480,896 | 2,542,900 | |||||
| J-M. Perraud | 0 | — | 150,633 | 143,000 | 2,557,722 | 1,424,050 | |||||
| X. Flinois | 56,720 | 711,473 | 0 | 0 | — | — | |||||
| D. Boutte | 11,870 | 319,592 | 127,869 | 174,000 | 1,028,780 | 1,875,750 | |||||
| S. Pai | 2,198 | 61,603 | 66,745 | 119,200 | 605,218 | 1,217,190 | |||||
| (1) | Market value of stock on date of exercise less exercise price. |
| (2) | Closing price of stock on December 31, 2004 ($66.95) less exercise price. |
Pension Plans
Schlumberger and certain of its subsidiaries maintain pension plans for employees, including executive officers, providing for lifetime pensions upon retirement after a specified number of years of service. Employees may participate in one or more pension plans in the course of their careers with the Company or its subsidiaries, in which case they become entitled to a pension from each plan based upon the benefits accrued during the years of service related to each plan. These plans are funded on an actuarial basis through cash contributions made by the Company or its subsidiaries. Certain plans also permit or require contributions by employees.
The following graph compares the yearly percentage change in the cumulative total stockholder return on Schlumberger common stock, assuming reinvestment of dividends on the last day of the month of payment into common stock of Schlumberger, with the cumulative total return on the published Standard & Poor’s 500 Stock Index and the cumulative total return on Value Line’s Oilfield Services Industry Group over the preceding five-year period. The following graph is presented pursuant to Securities and Exchange Commission rules. Schlumberger believes that while total stockholder return is an important corporate performance indicator, it is subject to the vagaries of the market. In addition to the creation of stockholder value, the Schlumberger executive compensation program is based on financial and strategic results and the other factors set forth and discussed in the Compensation Committee Report beginning on page 14.
AMONG SCHLUMBERGER LIMITED, S&P 500 INDEX AND VALUE LINE’S OILFIELD
SERVICES INDUSTRY INDEX
The Compensation Committee is comprised of four directors who meet the independence requirements of the New York Stock Exchange’s listing standards.
Philosophy of Compensation Principles
The Company’s compensation philosophy is to provide programs that maintain the short- and long-term motivation of our employees, insuring that cash compensation is directly related to performance through financial and non-financial objectives. The Company manages this through an annual objectives-setting process and review, which extends globally through the entire exempt population. The Company’s long-term compensation (stock options) is tied to stockholder interests through plan design. Additionally, the Company maintains a stock purchase plan designed to allow all employees, where permitted by local law, to own equity in the Company.
| • | maintain good governance practices; | |
| • | encourage motivation of short-and long-term performance; and | |
| • | align plan benefits with stockholder interests. |
Components of Compensation
Base Salary
| • | Base salary range midpoints are targeted to be at the median of the comparator markets (as described below) | |
| • | Base salaries are reviewed annually |
| • | Annual performance-based cash incentives are targeted to be above the median of the comparator market in years of excellent or outstanding performance. | |
| • | In years of less than excellent performance, we expect our total
cash compensation to be at or below the median of the comparator market. |
| • | Stock options are awarded annually to retain high value employees and to reward a specific achievement. The use of stock options has long been a vital component of our overall compensation philosophy. | |
| • | Stock options are granted with an exercise price equal to the fair market value on the date of grant; vest 25% annually over four years; and have a ten-year life. The gain on appreciation for all options granted since July 2003 is capped at 125% of the price on the date of grant. | |
| • | Exempt employees are eligible for stock options. Company management conducts a review annually to identify high value employees and those who have made a significant achievement or received a key promotion during the year. Recommending an employee for a stock option grant at Schlumberger is a highly selective and discretionary process. Each grant typically includes fewer than 10% of our exempt population. Nominations are based on performance and results. | |
| • | Option grants are based on performance, potential impact on the
Company, support of long-term retention, comparison to the competitive
market and internal peer jobs. The Committee approves the size of
each general grant and approves by name each recommendation of 5,000
shares or more. The Committee also reviews key statistics of each
general grant, including nationality and gender diversity. |
Selection of Market Comparator Companies
The Committee approves the companies used in the executive competitive analysis, which are recommended by the Committee’s outside consultants. In 2005, the Committee approved changes in the peer groups to reflect changes in business as a result of certain divestitures made by the Company.
| • | The first peer group includes 26 companies in the oil services, exploration and production, refining and pipeline industries, including 11 direct competitors in the oilfield services industry, which are part of the Value Line comparator companies. These 26 companies have median revenues and assets similar to Schlumberger. | |
| • | The second peer group includes 89 companies of similarly sized revenues
($5-$25 billion, median revenue $10 billion). However, excluded from
this peer group are companies from industry sectors that are least
comparable to Schlumberger’s areas of focus and do not have a global
presence. |
The Committee has set January as the time each year that executive compensation will be reviewed, including base salary, annual performance-based cash incentives and stock option awards. Special stock option grants may be awarded for specific achievements and promotions during the quarterly Compensation Committee
meetings of the Board.
Compensation Elements for Executive Officers
Base Salary
Each executive officer position is compared to similar jobs in industry-specific comparator companies and to the broader group of comparator companies of similar revenue size, as explained above. A base salary increase is awarded according to individual performance against objectives, comparison to internal peer positions, the Company’s relative performance during the year and competitive market movement. A base salary is generally set for a number of years.
Annual Performance-Based Cash Incentives
At the executive officer level, the annual performance-based cash incentive program is a combination of financial and personal objectives. Award opportunities vary by position and are expressed as a percentage of base salary. One-half of an executive’s incentive is a combination of financial objectives relating to the executive’s business group and the Company’s overall performance, such as EPS. A minimum performance level is set, below which no incentive is paid for this half of the bonus opportunity. For executive officers (and certain other high level management positions), if the financial performance exceeds preset, approved objectives, this half of the award can increase from 100% to up to 200% of the incentive opportunity for this half of the award (increasing the total annual incentive opportunity to 150% of the total award). The second half of the incentive is related to personal objectives that may include market share, acquisitions, divestitures, growth or any relevant business priority. Each executive officer’s performance results and recommended incentive payout are reviewed and approved by the Compensation Committee.
Long-Term Incentives
Stock options are a key element of executive compensation. The size of the grant is based on performance, significant promotion, comparison of competitive market practices for similar-size jobs, as well as total career grants compared with internal peer jobs.
Ownership Guidelines (For Executive Officers and other Key Staff Positions)
The Committee and management believe strongly in linking stockholder and executive values, so stock ownership guidelines were established in 2004. The guidelines include ownership requirements for the CEO at 5 times base salary; Executive Vice Presidents at 3 times base salary; Officers at 1.5 times base salary and key staff positions at 1 times base salary. In addition, each executive under the guidelines must hold in shares at least 30% of their gain on the stock option exercise for a period of six months. Those who do not meet the guidelines after the six-month period must continue to hold the shares until the guidelines are met. There is no specified timeline to achieve the guidelines, as many of our executives hold their options for the life of the grant.
Personal Benefits for Executive Officers
Schlumberger executives enjoy the same benefits other employees are offered, including medical exams and supplemental plans chosen and paid for by employees who want the additional coverage.
Compensation for Named Officers
Base Salary
Mr. Perraud was awarded a base salary increase in 2004. Mr. Pai’s base salary was adjusted when he transferred from the US to the Paris Headquarters, based on conversion from USD to the Euro. Messrs. Perraud and Pai are positioned between the 50th and the 75th percentiles of the comparator market. Messrs. Sbiti and Boutte have not received an increase in base salary since 2003.
Annual Performance-Based Cash Incentives
Incentives are paid in February for the prior year’s performance against agreed-to objectives. These objectives include specific goals for the financial performance of the officer’s business group, the overall Company performance and several personal objectives. The financial half of the performance-based cash incentives for Messrs. Sbiti, Boutte and Pai were a combination of financial measures for their groups and EPS for Schlumberger. Their awards are commensurate with the financial performance of their businesses as measured against their goals and the corporate EPS goal, which was exceeded. The second half of their incentive focused on business objectives for Oilfield Services, WesternGeco and the Technologies Group of Oilfield Services, respectively.
Stock Options
Messrs. Sbiti, Perraud, Boutte and Pai were granted capped stock options in 2004 and 2005 with vesting over four years and a ten-year term.
Compensation for Chief Executive Officer and Chairman of the Board
Mr. Gould’s base salary was set at $1,500,000 in 2003, when he became CEO of the Company. He did not receive a base salary increase in 2004. In years when the Company’s performance significantly exceeds expectations, Mr. Gould’s incentive opportunity can reach a maximum level of 150% of base salary. Early each year the Compensation Committee approves the objectives the CEO will work toward during the year. In 2004, the financial half of the performance-based incentive was an EPS goal, which was exceeded.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE SCHLUMBERGER
BOARD OF DIRECTORS
| Linda G. Stuntz, Chair | Adrian Lajous | ||
| Jamie S. Gorelick | Nicolas Seydoux |
2. Financial Statements
| • | to allow formations of legal entities more easily; | |
| • | to allow for the choice of language, currency and capital structure; | |
| • | to allow more flexibility in management structures; | |
| • | to provide for minority stockholder and creditor protection; and | |
| • | to facilitate compatibility with Anglo-American legal systems. |
| • | amendments required in order to comply with the recent changes in Netherlands Antilles law; and | |
| • | amendments that we are voluntarily adopting in order to (1) take advantage of the flexibility provided by the recent changes in the Netherlands Antilles law, or (2) clarify or update certain provisions of the Articles of Incorporation, which have not been amended since 2001. |
| • | The provision relating to our domicile is being revised to reflect the Island territory within the Netherlands Antilles where we maintain our corporate seat. [Section 1.3] | |||||
| • | The provision relating to share capital is being revised to reflect new nomenclature used in the revised Netherlands Antilles law. The terms “authorized,” “issued” and “paid-up” capital are no longer used, and a new term “nominal capital” has been introduced. The term “nominal capital” means the sum of the par values of all of the issued and outstanding shares of capital stock at any time. [Sections 4.1, 4.3 and 4.5] We are also amending other provisions to maintain the present limit on the Board’s ability to issue common shares, preferred shares, options and warrants. We are not increasing the number of shares of capital stock that the Board may issue from those in effect prior to adoption of the revised Netherlands Antilles law, which remains at 1.5 billion shares of common stock and 200 million shares of preferred stock. | |||||
| • | The provision requiring that 20% of our “authorized capital” be duly issued and fully paid is being deleted. The revised Netherlands Antilles law no longer recognizes the term “authorized capital.” [Former Section 4.2] In addition, the provisions limiting our right to repurchase our capital stock would be revised to eliminate this 20% requirement and to clarify that such repurchases may occur so long as our “equity” (i.e., our net asset value) before and after the repurchase at least equals the nominal capital (i.e., the aggregate par value of our outstanding shares) and one common share remains outstanding. The revised restrictions are similar to provisions contained in the corporation law of many U.S. states. [Section 6.1] | |||||
| • | We are adding a provision providing that the initial issuance of shares occurs by deed (i.e., a written instrument) signed by Schlumberger and the party taking the share. [Section 4.2] | |||||
| • | We are adding a provision to reflect that Schlumberger cannot issue shares to itself. [Section 4.2] | |||||
| • | The provision regarding the contents of our stockholders’ register are being modified to reflect requirements under the revised Netherlands Antilles law, which have become more detailed than as reflected in the current Articles of Incorporation. [Section 7.3] | |||||
| • | The provisions relating to the procedures to effect transfers of shares are being revised to reflect new share transfer procedures. If shares are listed on a stock exchange, such transfers may be effected in accordance with the rules, procedure or system applied by the exchange. Accordingly, our common shares, which are listed on the New York Stock Exchange, may be transferred pursuant to normal New York Stock Exchange trading mechanisms. If shares are not so listed, transfers must be made by a deed of transfer (i.e., a written instrument) signed by the transferor and the transferee, which transfer will then need to be acknowledged by or served upon Schlumberger. [Section 7.5] These changes would also be applicable in the event of a division of joint ownership. [Section 7.7] | |||||
| • | The provision relating to suspension and dismissal of directors by the stockholders is being amended to reflect that a suspension terminates under the revised Netherlands Antilles law if the person concerned has not been dismissed by the stockholders within two months after the day of suspension. [Section 8.3] | |||||
| • | We are adding a provision to provide that records and other data carriers used in relation to attendance of and voting at general meetings shall be kept during a period of 10 years or for the period required by applicable law. [Section 12.1] | |||||
| • | The provisions relating to stockholder meetings would be revised as follows: | |||||
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| • | The provision limiting distributions of profits in the event of losses that are not covered by reserves is being deleted, as it no longer reflects the revised Netherlands Antilles law. [Former Section 17.3] In its place, we are adding a provision providing that distributions can only occur if our equity at least equals the nominal capital and as a result of the distribution will not fall below the nominal capital. [Section 17.5] The new provision is similar to provisions contained in the corporation law of many U.S. states. | |||||
| • | The provisions relating to stockholder action by written consent
are being deleted because the revised Netherlands Antilles law only
allows such action if all stockholders cast a vote, which is impracticable
in the context of a publicly traded company. [Former Sections 20.1
and 20.2] |
The following resolutions, which will be presented to the Annual General Meeting of Stockholders, will adopt the proposed mandatory amendments to the Articles of Incorporation:
| RESOLVED, that the mandatory amendments to the Articles of Incorporation
of Schlumberger N.V. be, and they hereby are, adopted to read in their
entirety as described in Schlumberger’s Proxy Statement dated March
15, 2005 and in the form presented to this meeting; and further RESOLVED, that each lawyer of STvB Advocaten (Curaçao) N.V., Netherlands Antilles counsel to Schlumberger, is authorized to execute and file in the Netherlands Antilles the notarial deed of amendment effectuating such amendments. |
Voluntary Amendments
The amendments we are voluntarily proposing to adopt are as follows:
| • | The provisions of our Articles of Incorporation relating to seat transfer are being revised to authorize the Board to move our corporate seat, or to convert Schlumberger to a legal entity under the laws of another jurisdiction, as, when and in the manner permitted by the laws of the Netherlands Antilles. The new provision is in addition to the current provisions which allow the Board to move our corporate seat under a specific ordinance. [Section 1.4] This amendment will give us added flexibility to change our jurisdiction of organization and our corporate form if such changes are warranted, subject to any necessary approvals that at the time are required under Netherlands Antilles or other applicable law or regulation. | |
| • | The provision stating that stockholders do not have preemptive rights to acquire shares issued in the future would be revised to clarify that Schlumberger can enter into contractual agreements providing for preferential and preemptive purchase rights with respect to shares of our capital stock and to options, warrants or rights to purchase such shares. [Article 5] Language in Schlumberger’s current Articles of Incorporation is not entirely clear but could be read to preclude contracts granting stockholders the right to buy securities. This was not the intent of the current provisions, and this amendment will clarify any such ambiguity. | |
| • | We are adding a provision confirming that a right of usufruct or a right of pledge may be vested on the shares in accordance with the revised Netherlands Antilles law, but that Schlumberger is only obligated to recognize the registered stockholder as owner of the shares for all purposes. [Section 7.6] This amendment confirms provisions of Netherlands Antilles law regarding the allocation of economic benefits attendant to the ownership of shares, but clarifies that Schlumberger need only look to the registered holder for voting and other purposes. | |
| • | The provisions relating to our management would be revised: [Articles 8 and 9] |
| • | to clarify that the Board can appoint directors to fill vacancies on the Board in between annual general meetings; | ||
| • | to clarify the authority of the Board to adopt and amend By-laws setting forth the functions and authority of each of the directors, the division of tasks, the designation and authority of one or more committees of the Board and the way of taking action; | ||
| • | to clarify that the Board can limit the management authority of one or more directors; and | ||
| • | to clarify that the Chairman, Vice-Chairman and specified officers so authorized by the Board may represent and bind Schlumberger acting alone. |
| These amendments will enable Schlumberger to manage its business more effectively and confirm practices regarding the delegation of powers and responsibilities, while also confirming various historical corporate governance practices. | ||
| • | The provisions relating to indemnification would be modified to confirm that Schlumberger’s power to indemnify officers, directors and others is subject to any prohibitions required by applicable law. [Sections 10.1 and 10.2] This amendment would remove any implication that Schlumberger intends to indemnify its officers, directors and others where prohibited by law. | |
| • | The provisions relating to stockholder meetings would be revised to provide that annual general meetings can be held in Curaçao or anywhere in the Netherlands Antilles as permitted under the revised Netherlands Antilles law (the Articles of Incorporation currently provide that such meetings must be held on Curaçao, Bonaire, St. Eustatius, Saba or the Dutch part of St. Maarten). [Section 11.1] This amendment will give Schlumberger added flexibility in determining where to hold stockholder meetings. | |
| • | The provision regarding closing our stock transfer books and setting the record date would be expanded to clarify that it applies for purposes of determining stockholders entitled to receive distributions or allotment of any rights (the Articles of Incorporation currently refer only to the receipt of dividends) or to exercise of rights in respect of any change, conversion or exchange of shares. [Section 12.3] This amendment will remove possible ambiguity with respect to holders entitled to receive distributions and allotments of rights or to exercise certain other rights. | |
| • | We would add a provision to provide that no legal entity over which we exercise control can vote our shares other than in a fiduciary capacity. [Section 13.6] This provision is consistent with provisions that exist in Delaware and many U.S. states. | |
| • | The provision requiring that the annual accounts be prepared within eight months after the end of the fiscal year and submitted to the stockholders for approval would be revised to change the time for preparation of the accounts to the period allowed under applicable law, which is currently six months from the end of the year (subject to an extension of six months by action at a general meeting of stockholders due to special circumstances) as provided under Netherlands Antilles law. [Section 16.1] This amendment will enable Schlumberger to delay the release of its financial statements (to the extent such delay is approved by its stockholders) as contemplated by Netherlands Antilles law. | |
| • | We would add a provision to provide that one person, or any two or more legal entities belonging to the same group, holding shares representing at least 90% of our equity can require the remaining stockholders to transfer their shares to such 90% stockholder in accordance with the revised Netherlands Antilles law. [Article 20] This provision is somewhat similar to statutes that exist in Delaware and most U.S. states, which typically require ownership of 90% of a company’s outstanding equity in order to effect a “short-form” merger. In order to effect a compulsory share transfer, Schlumberger would have to institute an action in a Netherlands Antilles court and pay the transferring stockholders the value of the shares to be transferred as determined by the judge (based on the advice of one or three experts). A judge can deny a request for a compulsory share transfer if a stockholder would suffer serious material damage through the transfer. | |
| • | The official version of the Articles of Incorporation would be prepared
in English rather than Dutch, as it is no longer a requirement of
the revised Netherlands Antilles law that the Articles of Incorporation
be prepared in Dutch. [Article 22] We believe that the presentation
of the Articles of Incorporation in English is more practical given
that it is the more commonly used and understood language in the financial
markets. |
| RESOLVED, that the voluntary amendments to the Articles of Incorporation
of Schlumberger N.V. be, and they hereby are, adopted to read in their
entirety as described in Schlumberger’s Proxy Statement dated March
15, 2005 and in the form presented to this meeting; provided, however,
that if both the mandatory amendments and the voluntary amendments
are adopted, then the Articles of Incorporation of Schlumberger N.V.
will be amended to read in their entirety as set forth in Appendix
1 to Schlumberger’s Proxy Statement dated March 15, 2005 and in the
form presented to this meeting; and further RESOLVED, that each lawyer of STvB Advocaten (Curaçao) N.V., Netherlands Antilles counsel to Schlumberger, is authorized to execute and file in the Netherlands Antilles the notarial deed of amendment effectuating such amendments. |
The affirmative vote of the holders of a majority of the shares outstanding and entitled to vote is required for the adoption of the foregoing resolutions for proposal 3(a) and proposal 3(b). Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote. Accordingly, abstentions and broker non-votes will have the same effect as no votes.
Recommendation of the Board
The Board recommends that you vote “FOR” the approval of the amendments to the Articles of Incorporation.
The 2005 Plan provides for the grant to our employees of stock options covering 9,000,000 shares of our common stock. A stock option gives the holder the right to purchase a specified number of shares of stock, at a fixed exercise price, in the future. We have historically used stock options as our primary form of equity compensation, and we intend to continue to use stock options as our primary form of equity compensation.
| • | retain employees with a high degree of training, experience and ability; | |
| • | attract new employees whose services are considered unusually valuable; | |
| • | encourage the sense of proprietorship of such persons; and | |
| • | promote the active interest of such persons in our development and
financial success. |
Our compensation philosophy is to pay for performance through competitive compensation programs that relate directly to our short and long-term goals, and to reward executives, managers and professionals who achieve these goals. We believe the following factors are important to an understanding of our equity-based compensation program and the merits of the 2005 Plan:
| • | We believe stock options, which have been a part of our equity compensation program for over 46 years, provide a significant incentive to our employees for improved performance. We believe that stock options enable us to attract and retain employees who are critical for our development and financial success, while also aligning those employees’ interests with those of our stockholders. Since a stock option derives its value from an increase in the price of the underlying stock after the date of grant, employees are rewarded only upon improved stock price performance. | |
| • | Our stock option plans, including the 2005 Plan, have been designed to minimize the risk of potentially adverse equity-based compensation practices. Our stock option plans, including the 2005 Plan, do not permit the following activities: |
| • | granting of stock options at a price below the fair market value on the grant date; | ||
| • | repricing, or reducing the exercise price of a stock option; | ||
| • | substituting a new option grant with an exercise price lower than the exercise price of an outstanding option grant; or | ||
| • | reload grants. |
| • | The 2005 Plan does not permit accelerated vesting. The Compensation Committee does not have the power to accelerate the vesting of awards granted under the 2005 Plan. | |
| • | We have capped the per-share gain an employee can realize from the exercise of stock options. Beginning with stock options granted in July 2003, we have “capped” the per-share gain that can be realized on the exercise of a stock option to 125% of the original exercise price. Although the 2005 Plan does not require us to continue this practice, we do not currently intend to change this practice. | |
| • | We were an early adopter of Statement of Financial Accounting Standards No. 123 (“SFAS 123”), “Accounting for Stock-Based Compensation.” In the third quarter of 2003, we adopted SFAS 123 for stock option expenses, retroactive to January 1, 2003. Under SFAS 123, compensation expense associated with stock options is measured at the grant date based on the value of the award and is recognized over the vesting period. Under Accounting Principles Board Opinion No. 25 (APB 25), which we used prior to adopting SFAS 123, no compensation expense was recognized when stock options are granted. | |
| • | We do not believe the “overhang” from stock option plans is significant. We maintain three stock option plans that have previously been approved by our stockholders. Under those plans 30,062,025 shares are reserved for issuance in respect of outstanding options and 5,006,110 shares are reserved for future grants, which reflects “overhang” of approximately 6.0%. If the 2005 Plan is approved, an additional 9,000,000 shares would be available for future grants and “overhang” would increase to approximately 7.5%. We define “overhang” as the total number of shares related to options granted but not yet exercised, plus shares available for grant, divided by total shares outstanding at the end of the reporting period. We do not include shares issuable under our discounted stock purchase plan when calculating our overhang. | |
| • | We believe our average three-year “burn rate” is reasonable. Our average three-year burn rate is approximately 0.8%. We calculate “burn rate” as the total number of equity awards (all in the form of stock options) granted in any given year divided by the number of common shares outstanding. The number of equity awards used in the burn rate calculation is not discounted by cancelled or forfeited options or shares acquired or retained by us. We do not include shares issuable under our discounted stock purchase plan when calculating our burn rate. | |
| • | We believe our average three-year dilution due to the exercise of stock options is reasonable. Our average three-year dilution due to the exercise of stock options is approximately 0.2%. We calculate “dilution” as the number of shares of our common stock issued during a year due to the exercise of stock options, less common shares reacquired by us during the year, divided by the total shares outstanding at the end of such year. If continued, our share buyback program, which was approved by the Board of Directors in July 2004 and expires in December 2006, could reduce dilution. During 2004, we issued 5,490,068 shares of our common stock upon the exercise of stock options (net of shares reacquired in payment of the exercise price of such stock options) and repurchased 5,148,200 shares of our common stock, which resulted in 2004 dilution of 0.06%. | |
| • | We have established stock ownership guidelines for executive officers. In 2004, we established executive stock ownership guidelines to align the interests of our executives with those of our stockholders and to promote our commitment to sound corporate governance. The ownership guidelines specify a number of shares that each executive officer is expected to own (approximately one to five times the executive’s annual base salary, depending on the executive’s scope of responsibilities). The ownership guidelines also require our executives, when they exercise a stock option, to retain at least 30% of the difference between the market price and the exercise price in shares of common stock for a period of six months. After the six-month period, the executive must continue to hold the shares, unless the executive holds a number of shares equal to or greater than the guideline amount divided by the stock price on that day. The ownership guidelines also prohibit speculative trading activity in our stock by our executives. |
Key Terms
The following is a summary of the key provisions of the 2005 Plan.
| Plan Term: | Options may be granted under the 2005 Plan on or before January
20, 2015. |
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| Eligible Participants: | All employees of Schlumberger and our subsidiaries who are executive,
administrative, professional or technical personnel and who have responsibilities
affecting the management, direction, development and financial success
of the company and our subsidiaries. The Compensation Committee will determine which employees will participate in the 2005 Plan. As of January 1, 2005, approximately 10,000 employees are optionees under our stock option plans. |
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| Ineligible Participants: | The following persons are not eligible to participate in the 2005
Plan:
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| Shares Authorized: | 9,000,000, subject to adjustment to reflect stock splits, reorganizations
and similar events. The shares subject to issuance under the 2005 Plan consist of authorized and unissued shares or previously issued shares reacquired and held by us or any subsidiary. Under the following circumstances, shares that were once subject to issuance upon the exercise of stock options may again become available for future option grants under the 2005 Plan:
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| Shares Authorized Under 2005 Plan as a Percent of
Outstanding Common Stock: |
1.5% |
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| Shares Authorized Under All Option Plans as a Percent
of Outstanding Common Stock: |
6.0% |
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| Award Types: | Non-qualified and incentive stock options. |
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| Award Terms: |
Stock options will have a term no longer than 10 years. |
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| Vesting: | Stock options will never vest or become exercisable unless the optionee
remains employed by us or a subsidiary for at least one year after
the grant date. Otherwise, vesting is determined by the Compensation
Committee (subject to specific provisions on death, termination of
employment or retirement). Please read “Vesting and Exercise of Stock Options” below for more information. |
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| Not Permitted: |
|
Vesting and Exercise of Stock Options
Vesting
Subject to specific provisions on death, termination of employment and retirement (described below), the Compensation Committee will determine at the time of grant when each stock option will vest, provided that no stock option may vest less than one year from the date of grant. The Compensation Committee’s current practice is to grant options that vest in four equal annual installments beginning on the first anniversary of the grant date.
Exercise Price
The exercise price of stock options granted under the 2005 Plan may not be less than the fair market value (the mean between the high and low sales prices on the New York Stock Exchange on the grant date) of the common stock on the date of grant. As of March 2, 2005, the mean between the high and low sales prices of Schlumberger common stock on the New York Stock Exchange was $75.015 per share.
Option Term
The option term may not be longer than 10 years.
Payment of Purchase Price
The purchase price to be paid upon exercise of a stock option may be paid, subject to the rules established by the Compensation Committee, as follows:
| • | in cash or by certified check; | |
| • | by the tender or delivery of shares of our common stock with a fair market value at the time of exercise equal to the total option price; or | |
| • | by a combination of the preceding methods. |
Termination of Employment and Subsequent Events
The following is a summary of consequences in the event an option holder’s employment is terminated (other than due to retirement):
| Event | Consequences | |
Termination of employment with consent of Schlumberger and not for cause |
The Compensation Committee may permit stock options to be exercised at any time within three months after termination, provided that stock options may be exercised only before their expiration and only to the extent they are exercisable on the date of termination. |
|
Death while employed by Schlumberger or after termination of employment but prior to full exercise of stock options that were exercisable on the date of such termination |
Stock options may be exercised before expiration of their term by a person entitled to do so under the option holder’s will or the laws of descent and distribution, but only if such exercise occurs within 60 months after death (or, if earlier, the date of termination of employment) and only to the extent they are exercisable on the date of death. |
|
Termination of employment for cause or without the consent of Schlumberger (other than due to death). |
The option holder’s rights terminate immediately. |
Retirement and Subsequent Events
The following is a summary of consequences in the event an option holder’s employment is terminated due to retirement:
| Event | Consequences | |
Termination of employment due to retirement |
Stock options will be exercisable at any time during the 60-month period after termination by retirement or during the remainder of the option period, whichever is shorter (the “post-retirement exercise period”), but only to the extent they are exercisable on the date of termination. |
|
| Death after retirement during post-retirement exercise period | Stock options may be exercised during a 60-month period after the date of retirement by a person entitled to do so under the option holder’s will or the laws of descent and distribution, provided that the stock options may be exercised only before their expiration and only to the extent they were exercisable on the date of death. |
Transferability
Stock options granted under the 2005 Plan are not assignable or otherwise transferable except by will or the laws of descent and distribution.
Administration
The Compensation Committee, which is made up of at least three directors who meet the applicable independence requirements of the New York Stock Exchange and all other applicable laws and regulations, will administer the 2005 Plan. The Compensation Committee has full power and authority to:
| • | interpret the 2005 Plan and supervise its administration; | |
| • | determine the persons to whom stock options will be granted; | |
| • | determine, subject to certain limitations, the number of shares to be covered by each stock option; | |
| • | determine whether stock options will be designated “incentive stock options” or “non-qualified stock options”; and | |
| • | determine all other terms of each stock option consistent with the provisions of the 2005 Plan. |
Amendment or Termination
The Board of Directors may amend, alter, suspend or discontinue the 2005 Plan at any time as permitted by law, provided that the Board of Directors may not amend the 2005 Plan without the approval of the stockholders:
| • | if, except as described below under “Adjustments,” the amendment would permit the decrease of the purchase price of a stock option after the grant date or grant to the holder of an outstanding stock option a new stock option with a lower exercise price in exchange for an outstanding stock option; or | |
| • | if the amendment or alteration would constitute a material revision to the 2005 Plan requiring stockholder approval under applicable legal requirements or the applicable requirements of the New York Stock Exchange or such other securities exchange on which our common stock is listed. |
Adjustments
In the event of any subdivision or consolidation of shares or other capital readjustment, or the payment of a stock dividend or other increase or reduction of the number of shares of our common stock outstanding without compensation therefor in money, services or property, then the number of shares subject to the 2005 Plan will be proportionally adjusted and the number of shares with respect to which stock options granted under the 2005 Plan may thereafter be exercised shall:
| • | in the event of an increase in the number of outstanding shares, be proportionately increased, and the cash consideration (if any) payable per share shall be proportionately reduced; and | |
| • | in the event of a reduction in the number of outstanding shares, be proportionately reduced, and the cash consideration (if any) payable per share shall be proportionately increased. |
U.S. Federal Income Tax Consequences
The following discussion of tax consequences relates only to U.S. federal income tax matters. The tax consequences of participating in the 2005 Plan may vary according to country of participation. Also, the tax consequences of participating in the 2005 Plan may vary with respect to individual situations and it should be noted that income tax laws, regulations and interpretations thereof change frequently. Participants should rely upon their own tax advisors for advice concerning the specific tax consequences applicable to them, including the applicability and effect of state, local and foreign tax laws.
Required Vote
A majority of the votes cast is required for approval of the 2005 Plan, provided that the total vote cast on the proposal represents over 50% of all outstanding shares. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal. Broker non-votes and abstentions could prevent the total votes cast on the proposal from representing over 50% of the outstanding shares, but will not otherwise have an effect on the vote.
Recommendation of the Board
The Board of Directors recommends that you vote “FOR” the Schlumberger 2005 Stock Option Plan.
We are requesting that our stockholders vote in favor of approving an amendment to the Schlumberger Discounted Stock Purchase Plan (as amended, the “DSPP”), which would increase the number of shares available for purchase under the DSPP by 6,000,000 shares. The proposed amendment was approved by the Board on January 20, 2005 and, if approved by our stockholders, will be effective as of January 20, 2005. No other changes are being made to the DSPP.
Purpose of the DSPP and Proposed Amendment
The DSPP is designed to encourage and assist all employees of Schlumberger and its subsidiaries to acquire an equity interest in Schlumberger through the purchase of common stock. The proposed amendment is designed to insure that a sufficient number of shares will be available under the DSPP for future purchase periods. A total of 1,444,434 shares currently remain available for purchase under the DSPP; during 2004, a total of 1,362,419 shares were purchased under the DSPP. If the proposed amendment is approved, an aggregate of 7,444,434 shares will be available for purchase under the DSPP.
Administration
The DSPP is administered by a committee of at least three persons appointed by the Board (the “DSPP Committee”). The DSPP Committee has the full power and authority to:
| • | employ and compensate agents for the purpose of administering the accounts of participating employees; | |
| • | construe and interpret the DSPP; | |
| • | determine all questions of eligibility; and | |
| • | compute the amount and determine the manner and time of payment of all benefits. |
Key Terms
The following is a summary of the key provisions of the DSPP Plan.
| Eligible Participants: | All employees of Schlumberger and its subsidiaries, including officers,
are eligible to participate in the DSPP, except as described below
under “Ineligible Participants.” As of January 1, 2005, there were
approximately 44,520 employees who were eligible to participate in
the DSPP. |
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| Ineligible Participants: | The following employees are not eligible to participate in the DSPP
(unless otherwise required by applicable law):
|
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| Shares Available for Issuance Under the DSPP: |
1,444,434 shares currently remain available for purchase under the
DSPP. If the proposed amendment is approved, an aggregate of 7,444,434
shares will be available for purchase under the DSPP. The number of shares available for issuance under the DSPP is subject to adjustment to reflect stock splits, reorganizations, mergers and similar events. |
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| Purchase Periods: | There are two purchase periods each calendar year: January 1 to
June 30 and July 1 to December 31. |
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| Purchase Price: | The cost to a participant for shares of our common stock purchased
during a purchase period is equal to 92.5% of the lower of:
“Fair market value” is determined by averaging the highest and lowest composite sale prices per share of our common stock on the New York Stock Exchange Composite Transactions Quotations on a date. |
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| Method of Payment: | Each DSPP participant may make contributions through payroll deductions
from one to ten percent of his or her eligible compensation. A participant’s
contributions, together with interest on such contributions and dividends
on shares held in the DSPP, where applicable, are used to purchase
shares of common stock at the end of each purchase period. If a participant’s contributions during a purchase period exceed $11,250, or if the purchase of shares with such allocations would exceed the share limitations discussed above under “Ineligible Participants,” such excess amounts will be refunded to the participant as soon as practicable. A participant may not purchase shares of our common stock under the DSPP having a fair market value in excess of $25,000 per year. |
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| Withdrawal of Shares: | A participant may elect to withdraw previously purchased shares
held in his or her account at any time (without withdrawing from the
DSPP). |
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| Termination of Rights to Participate in the DSPP: |
The right to participate in the DSPP terminates immediately when
a participant ceases to be employed by us for any reason (including
death, unpaid disability or when the participant’s employer ceases
to be a subsidiary) or the participant otherwise becomes ineligible
or withdraws his or her contributions from the DSPP. |
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| Modification and Termination of the DSPP: |
Subject to limited exceptions, the Board may amend or terminate
the DSPP at any time. No amendment will be effective unless within
one year after it is adopted by the Board it is approved by the holders
of a majority of the votes cast at a meeting if such amendment would
otherwise cause the rights granted under the DSPP to purchase shares
of our common stock to fail to meet the requirements of Section 423
of the Code. Section 423 currently requires stockholder approval of
a plan amendment that would (1) change the number of shares subject
to the DSPP, or (2) change the class of employees eligible to participate
in the DSPP. |
The following discussion of tax consequences relates only to U.S. federal income tax matters. The tax consequences of participating in the DSPP may vary according to country of participation. Also, the tax consequences of participating in the DSPP may vary with respect to individual situations and it should be noted that income tax laws, regulations and interpretations thereof change frequently. Participants should rely upon their own tax advisors for advice concerning the specific tax consequences applicable to them, including the applicability and effect of state, local and foreign tax laws.
| • | the excess of the fair market value of the common stock on the date of disposition over the price paid for the common stock; or | |
| • | the fair market value of the common stock on the Enrollment Date multiplied by the original 7.5% discount. |
Plan Benefits
Since participation in the plan is voluntary and we are unable to predict the future value of our common stock, we cannot currently determine the benefits or amounts that will be received in the future by any person or group under the DSPP. The following table sets forth the number of shares purchased under the DSPP during 2004 by our Chief Executive Officer, the named executive officers, executive officers as a group and all employees as a group, including all current officers who are not executive officers.
| Name and Position |
Dollar Value ($) |
Number of Shares |
|||
| A. Gould, Chairman and Chief Executive Officer | — | 0 | |||
| C. Sbiti, Executive Vice President | — | 0 | |||
| J. M. Perraud, Executive Vice President and Chief Financial Officer | — | 0 | |||
| X. Flinois, Former Executive Vice President | — | 0 | |||
| D. Boutte, Executive Vice President | — | 0 | |||
| S. Pai, Vice President | 9,492 | 180 | |||
| All executive officers as a group | 153,166 | 2,867 | |||
| All non-executive officer employees as a group | 73,568,164 | 1,359,552 |
Required Vote
A majority of the votes cast (excluding abstentions) which are represented in person or by proxy is required for approval of the amendment to the DSPP.
Recommendation of the Board
The Board of Directors recommends that you vote “FOR” the amendment to the Schlumberger Discounted Stock Purchase Plan.
Equity Compensation Plan Information
The table below sets forth the following information as of the end of Schlumberger’s 2004 fiscal year for (i) all compensation plans previously approved by our stockholders and (ii) all compensation plans not previously approved by our stockholders. The table does not reflect shares of our common stock reserved for issuance under the 2005 Stock Option Plan or in connection with the January 2005 amendment to the Schlumberger Discounted Stock Purchase Plan, both of which are being submitted for stockholder approval at the Annual General Meeting.
| (a) | (b) | (c) | ||||
| Plan category |
Number of securities
to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average
exercise price of such outstanding options, warrants and rights |
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|||
Equity compensation |
||||||
| plans approved by security holders | 30,062,025 | 59.83 | 6,450,544 | |||
| Equity compensation | ||||||
| plans not approved by security holders | N/A | N/A | N/A | |||
| Total | 30,062,025 | 59.83 | 6,450,544 |
PricewaterhouseCoopers LLP have been selected by the Board of Directors as independent registered public accountants to audit the accounts of the Company for the year 2005. A majority of the votes cast is required for such approval. A representative of PricewaterhouseCoopers LLP will attend the 2005 Annual General Meeting and will have the opportunity to make a statement and respond to questions.
Fees Paid to PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP has billed the Company and its subsidiaries fees as set forth in the table below for (i) the audit of the Company’s 2004 and 2003 annual financial statements and reviews of quarterly financial statements and other audit services and (ii) the other services described below that were billed in 2004 and 2003.
| Year Ended December 31, |
||||||
| 2004 |
2003 |
|||||
| (in thousands) | ||||||
| Audit Fees (1) | $ | 24,589 | $ | 18,960 | ||
| Audit-Related Fees (2) | 1,174 | 4,280 | ||||
| Tax Fees (3) | 1,269 | 1,593 | ||||
| All Other Fees (4) | 229 | 2,538 | ||||
| Total | $ | 27,261 | $ | 27,371 | ||
| (1) | Includes fees for statutory audits of $1.6 million in 2004 and $2.7 million in 2003 and fees for carve-out audits of $6.7 million in 2004 and $9.4 million in 2003. |
| (2) | Consists of fees for employee benefit plan audits, due diligence relating to acquisition transactions, internal controls support and other audit-related items. |
| (3) | Consists primarily of fees for tax compliance and fees for tax advice and other tax services. |
| (4) | Consists primarily of expatriate tax services, tax certificates and other agreed upon procedures. |
The Audit Committee considers the provision of services by PricewaterhouseCoopers LLP not related to the audit of the Company’s financial statements and the review of the Company’s interim financial statements when evaluating PricewaterhouseCoopers LLP’s independence.
Audit Committee’s Pre-Approval Policy and Procedures
The Audit Committee pre-approves all engagements of Schlumberger’s independent registered public accounting firm to provide services to the Company and its subsidiaries. The Audit Committee has adopted a schedule for annual approval of the audit and related audit plan, as well as approval of other anticipated audit related services; anticipated tax compliance, tax planning and tax advisory services; and other anticipated services. In addition, the Audit Committee (or an authorized committee member acting under delegated authority of the committee) will consider any proposed services not approved as part of this annual process. During 2004, no matters were taken on without pre-approval under the de minimis provisions of the Sarbanes- Oxley Act.
The Board of Directors Recommends a Vote FOR Item 6.
Stockholder Proposals for 2006 Annual General Meeting
In order for a stockholder proposal to be considered for inclusion in the proxy statement for the 2006 Annual General Meeting of Stockholders, written proposals must be received by the Secretary of the Company, 153 East 53rd Street, 57th Floor, New York, New York 10022-4624, no later than November 15, 2005.
Other Matters
Stockholders may obtain a copy of Form 10-K filed with the Securities and Exchange Commission without charge by writing to the Secretary of the Company at 153 East 53rd Street, 57th Floor, New York, New York 10022-4624.
| By order of the Board of Directors, |
|
| Ellen Summer Secretary |
|
| New York, N.Y. March 15, 2005 |
Proposed Articles of Incorporation of the Corporation with Limited Liability
Schlumberger N.V.
ARTICLES OF INCORPORATION OF THE
CORPORATION WITH LIMITED LIABILITY
SCHLUMBERGER N.V.
NAME AND DOMICILE
ARTICLE 1
| 1.1. | The name of the Company is: SCHLUMBERGER N.V. |
| 1.2. | Abroad and in transactions with foreign entities, persons or organizations,
the name SCHLUMBERGER LIMITED may be used. |
| 1.3. | The Company is incorporated in the Netherlands Antilles and has
its corporate seat in Curaçao. |
| 1.4. | The Board of Directors has the authority to move the corporate seat
of the Company to, or to convert the Company into a legal entity under
the laws of, another jurisdiction, as, when, and in the manner permitted
by the laws of the Netherlands Antilles. In particular, the Company
may change its place of domicile in accordance with the Netherlands
Antilles Ordinance on Transfer of Domicile to Third Countries pursuant
to a resolution of the Board of Directors. |
ARTICLE 2
| 2.1. | The objects of the Company are: |
| (a) | to design, develop, produce and supply technology, services, products and systems and to, throughout the world, engage in any business or activity related thereto; | |
| (b) | to enter into and carry on any mercantile business in any country and to receive by assignment or purchase or to otherwise acquire any accounts receivable, bank accounts, securities, bills of exchange, notes, bonds, letters of credit, stocks or other instruments of value or documents of title in any country and to collect and hold the proceeds thereof; | |
| (c) | to invest its assets in securities, including shares and other certificates of participation and bonds, debentures or notes, as well as other claims for interest bearing or non-interest bearing debts, however denominated, and in certificates, receipts, options, warrants or other instruments representing rights to receive, purchase or subscribe for securities or evidencing or representing any other rights or interest therein in any and all forms, as well as derivatives and commodities; | |
| (d) | to borrow money and to issue evidences of indebtedness therefor, as well as to lend money; | |
| (e) | to undertake, conduct, assist, promote or engage in any scientific, technical or business research and development; | |
| (f) | to organize and to own, directly or indirectly, and to operate, under the laws of any state or other government, domestic or foreign, corporations and other organizations, companies, undertakings, entities, trusts, other arrangements or persons; to subscribe for any such corporation, organization, company, undertaking, entity, trust, other arrangement or person; and to dissolve, liquidate, wind up, reorganize, merge or consolidate any such corporation, organization, company, undertaking, entity, trust, other arrangement or person; | |
| (g) | to obtain income from the disposition or grant of rights to use copyrights, patents, designs, secret processes and formulae, trademarks and other analogous property, from royalties (including rentals) for the use of industrial, commercial or scientific equipment, and from compensation or other consideration received for technical assistance or services; | |
| (h) | to establish, participate in and manage limited liability and other corporations, organizations, companies, undertakings, entities, trusts, other arrangements or persons of every kind or nature whatsoever, and to engage in industry and trade; | |
| (i) | to guarantee or otherwise secure, and to transfer ownership, to mortgage, to pledge or otherwise to encumber assets as security for, and otherwise take action to support, the obligations of the Company and the obligations of other corporations, organizations, companies, undertakings entities, trusts, other arrangements or persons, with or without consideration; | |
| (j) | to place in trust all or any of its properties, including securities. |
| 2.2. | The Company is entitled to do all that in any way may be useful or necessary for the attainment of the above objects or that is connected therewith in the widest sense. |
DURATION
ARTICLE 3
CAPITAL AND SHARES
ARTICLE 4
| 4.1. | The nominal capital of the Company (nominal capital being defined
in the law and in these Articles of Incorporation as the sum of the
par values of all of the issued and outstanding shares in the Company’s
capital stock at any time) shall not exceed SEVENTEEN MILLION UNITED
STATES DOLLARS (US$17,000,000.-), divided into (a) one billion five
hundred million (1,500,000,000) shares of common stock of the par
value of One United States Cent (US$0.01) per share (the “Authorized
Common Share Capital”) and (b) two hundred million (200,000,000) shares
of preferred stock of the par value of One United States Cent (US$0.01)
per share, which may be issued in different series (the “Authorized
Preferred Share Capital” and, together with the Authorized Common
Share Capital, the “Authorized Capital”). Shares of common stock may
be referred to as “common shares” and shares of preferred stock may
be referred to as “preferred shares”. The common shares and the preferred
shares, if any, may sometimes be referred to herein as the “shares”.
Holders of common shares and preferred shares may sometimes be referred
to as the “stockholders”. |
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| 4.2. | The actual issue of shares shall be effected by way of written instrument
signed by the Company and the acquirer or as otherwise permitted by
applicable law. The Company cannot issue shares to itself. |
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| 4.3. | Subject to the provisions of paragraph 1 of this Article, common
shares, options to purchase or subscribe for common shares and warrants
or rights to subscribe for common shares, shall be issued at such
times, under such conditions and for such consideration, not less
than the par value per share in the case of the issuance of such share,
as may be determined from time to time by the Board of Directors. |
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| 4.4. | With respect to the issuance of shares, options, warrants or rights to purchase or subscribe for shares, the Board of Directors may enter into and conclude agreements without necessity of any action by the general meeting of stockholders: | ||||||||||||||||||
|
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| 4.5. | Subject to the provisions of paragraphs 1 and 6 of this Article,
preferred shares may be issued from time to time in one or more series
on such terms and conditions as may be determined by the Board of
Directors by the affirmative vote of at least three-fourths of the
members of the Board of Directors, after considering the interests
of the holders of common shares, for consideration not less than the
par value thereof and not less than fair value taking into account
the terms and conditions for the issuance thereof and the relative
voting, dividend and liquidation rights of such preferred shares. |
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| 4.6. | Prior to the issuance of any series of preferred shares, the Board of Directors shall specify: | ||||||||||||||||||
|
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| 4.7. | Certificates for preferred shares may be issued bearing a legend
describing the terms and conditions thereof specified by the Board
of Directors. |
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| 4.8. | Preferred shares of all series shall rank prior to the common shares
with respect to dividend and liquidation preferences as determined
by the Board of Directors at the time of issuance of any series of
preferred shares. Any series of preferred shares may be ranked by
the Board of Directors as to dividend and liquidation preferences,
provided that no series issued after any other series shall rank prior
to such other series as to such preferences. Any such series may be
ranked pari passu with any one or more other series as the Board of
Directors may so determine. |
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| 4.9. | Upon liquidation of the Company, the holders of any series of preferred shares shall be entitled to receive, before any distribution is made to the holders of any other series of preferred shares ranking junior to such series as to liquidation preference, and before any distribution to the holders of common shares, the amount of the liquidation preference of such shares which shall not exceed the sum of: | ||||||||||||||||||
|
ARTICLE 5
| 6.1. | The Company may, for its own account and for valuable consideration,
from time to time acquire fully paid shares of its stock, on such
terms and conditions as the Board of Directors may determine, provided
that at least one (1) common share remains outstanding with others
than the Company and provided further that to the extent required
by applicable law (x) the equity (as referred to in article 2:114.2
in conjunction with articles 2:118.7 and 2:118.5 of the Netherlands
Antilles Civil Code (“NACC”)) of the Company at the time of acquisition
at least equals the nominal capital and (y) as a result of the acquisition,
the equity will not fall below the nominal capital. The authority
to make any such acquisition is vested in the Board of Directors. |
| 6.2. | Any shares so acquired may be canceled by the Board of Directors
without the prior approval of the general meeting of stockholders. |
| 6.3. | The Company shall not acquire any voting rights by reason of ownership
of shares of its stock and, in connection with any general meeting
of stockholders, shares owned by the Company shall not be counted
as outstanding, or as present or represented, for the purpose of determining
a quorum or for any other purpose, other than determining the nominal
capital. |
| 6.4. | Shares of its stock owned by the Company may be sold at such times,
under such conditions and for such consideration as may be determined
from time to time by the Board of Directors. |
| 7.1. | The shares shall be in registered form. |
| 7.2. | Share certificates for common shares may be issued at the request
of the stockholder. |
| 7.3. | The shares shall be entered into a register, which, provided a printed
record can be produced therefrom, may be in computerized form (the
“Register”) which is kept by the Board of Directors or by a registrar
designated thereto by the Board of Directors (the “Registrar”). Each
entry shall mention the name of the stockholder, his address, the
number of shares held and the numbers of the share certificates, if
any, representing such shares and such other information required
to be included under Article 2:109 NACC or other applicable law. The
Register shall not be open for inspection by third parties or stockholders
with respect to shares other than those registered in their name,
except with respect to shares that have not been paid in full and
except further, with respect to the Registrar, if said Registrar has
been requested, or if demand of said Registrar has been made, to disclose
any piece of information in the Register and failure to disclose such
information would lead to liability of the Registrar. Each stockholder
is under the obligation to provide his address to the Company in writing. |
| 7.4. | Every transfer and devolution of a share shall be entered in the
Register and every such entry shall be signed or otherwise acknowledged
by or on behalf of the Board of Directors or by the Registrar. |
| 7.5. | The transfer of shares shall be effected by way of a written instrument
of transfer (“deed of transfer”) signed by the transferor and the
transferee and either serving that deed of transfer upon the Company
or by written acknowledgment of the transfer by the Company. Acknowledgement
occurs by means of a signed annotation on the deed of transfer or
a written statement from the Company addressed to the transferee for
which purpose a (new) share certificate may serve. If it concerns
shares on which an amount still has to be paid up, acknowledgement
can only occur on a deed of transfer that has a formally fixed date
as required by applicable law (Article 2:110.2 NACC). The transfer
of shares listed on a stock exchange may also be effected in accordance
with the trading system applied by such exchange. |
| 7.6. | Shares may be pledged by the holder thereof and a usufruct on shares
can be granted, provided that, regardless of the terms of such pledge
or usufruct, the Company will not be under the obligation to honor
voting rights or rights of distribution of the usufructee or pledgee
and provided further that the Company for the purposes of recognizing
ownership, the right to vote, the right to receive dividends or other
distributions and notices or for any other matter relating to a “stockholder”
as set out in these Articles of Incorporation, shall only recognize
the registered owner of the shares. |
| 7.7. | The provisions of the preceding paragraphs shall also apply in the
event of a division of joint ownership. |
| 7.8. | If any stockholder shall establish to the satisfaction
of the Board of Directors or the Registrar that his share certificate
has been lost or destroyed, then, at his request, a duplicate may
be issued under such conditions and guarantees (which, if required
by the Registrar or the Board of Directors, may include the provision
of an indemnity bond issued by an insurance company or other type
of financial institution or entity) as the Board of Directors or the
Registrar shall determine. By the issuance of the new share certificates
on which shall be recorded that it is a duplicate, the old certificate
in place of which the new one has been issued shall become null and
void. The Board of Directors or the Registrar may authorize the exchange
of new share certificates for mutilated share certificates. In such
case the mutilated share certificates shall be delivered to the Company
and shall be canceled immediately. The cost of a duplicate or new
certificate and any proper expenses incurred by the Company in connection
with the issuance thereof may, at the option of the Board of Directors
or the Registrar, be charged to the stockholder. |
ARTICLE 8
| 8.1. | The management of all the affairs, property and business of the
Company shall be vested in a Board of Directors, who shall have and
may exercise all powers except such as are exclusively conferred upon
the stockholders by law or by these Articles of Incorporation. |
| 8.2. | The Board of Directors may adopt and amend By-laws setting forth
the functions and authority of each of the directors, the division
of tasks, the designation and authority of one or more committees
of the Board of Directors and the way of taking action. Irrespective
of the foregoing, the Board of Directors can also limit the management
authority of one or more directors. Individual directors shall exercise
their powers in accordance with any applicable resolutions of the
Board of Directors. |
| 8.3. | The directors shall be elected at a general meeting of stockholders
by a majority of votes cast, in person or by proxy, by the stockholders
entitled to vote. The Board of Directors shall be authorized to appoint
directors to fill any vacancies on the Board of Directors, any such
appointment to be effective until the next general meeting of stockholders.
The number of persons constituting the whole Board of Directors shall
be not less than five (5) nor more than twenty-four (24), as fixed
and elected by the general meeting of stockholders. The number of
persons constituting the whole Board of Directors shall, until changed
at any succeeding general meeting of stockholders, be the number so
fixed and elected. Directors may be suspended or dismissed at any
general meeting of stockholders. A suspension as referred to in this
Article automatically terminates if the person concerned has not been
dismissed within two (2) months after the day of suspension. At any
general meeting of stockholders at which action is taken to increase
the number of the whole Board of Directors or to suspend or dismiss
a director, or at any subsequent general meeting, the stockholders
may fill any vacancy or vacancies created by such action. |
| 8.4. | Each director shall be elected to serve until the next annual general
meeting of stockholders and until his successor shall be elected and
qualify, or until his death, resignation or removal. |
| 8.5. | Directors need not be Netherlands Antilles citizens or residents
of the Netherlands Antilles or stockholders of the Company. |
| 8.6. | In the event that one or more of the directors is prevented from
or is incapable of acting as a director, the remaining directors (or
the remaining director, if there should be only one) may appoint one
or more persons to fill the vacancy or vacancies thereby created on
the Board of Directors until the next general meeting of stockholders,
provided that if at any time the number of directors then in office
shall be reduced to less than a majority of the number constituting
the whole Board of Directors, the remaining directors or director
shall forthwith call a general meeting of stockholders for the purpose
of filling the vacancies on the Board of Directors, and provided further
that in the event that all of the directors are prevented from or
are incapable of acting as directors, the Company shall be temporarily
managed by any person or persons previously appointed by the Board
of Directors so to act, who shall forthwith call a general meeting
of stockholders for the purpose of electing a Board of Directors.
Until such general meeting of stockholders is held the person so designated
shall only take such acts of management that can not suffer any delay.
If no such general meeting of stockholders shall be called, and if
no such person shall have been appointed, any person or persons holding
in the aggregate at least five percent (5%) of the outstanding shares
of common stock of the Company may call a general meeting of stockholders
for the purpose of electing a Board of Directors. |
| 8.7. | A majority of the whole Board of Directors shall constitute a quorum
for the conduct of any business and the action of the majority of
the directors present in person or by proxy as hereinafter provided,
at a meeting at which a quorum is so present, shall constitute the
action of the Board of Directors. |
| 8.8. | Meetings of the Board of Directors may be held in or outside the
Netherlands Antilles. |
| 8.9. | Meetings may be held through telephone conference, video conference
or other real time communication allowing all persons participating
in the meeting to hear each other or through any other device permitted
by then applicable law, and participation in a meeting through any
such lawful device or arrangement shall constitute presence at such
meeting. |
| 8.10. | Directors may in writing, by telegram, telefax, electronic mail
or other communication device appoint a proxy to act at any meeting
of the Board of Directors, such proxy to be restricted, however, to
the particular meeting specified therein. Such proxy must be another
director of the Company, provided, however, that at any meeting of
the Board of Directors a director may not act as proxy for more than
one director. |
| 8.11. | When action by the Board of Directors is required or permitted to
be taken, action at a meeting may be dispensed with if all commercially
reasonable efforts have been taken to notify all the directors and
if three-fourths of the directors shall consent in writing, by telegram,
telefax, electronic mail or other communication device to such action
taken or being taken, and provided further that all directors are
promptly notified of such action being taken or having been taken. |
| 9.1. | The Board of Directors shall at least annually elect or appoint
the following officers: a Chairman, a Chief Executive Officer, a Secretary
and a Treasurer, each to serve until his successor is elected and
qualified or until his earlier death, resignation or removal. The
Board of Directors from time to time also may elect or appoint a Chief
Financial Officer, a President, a Vice Chairman of the Board of Directors,
one or more Executive Vice Presidents, one or more Vice Presidents
(who may have such additional descriptive designations as the Board
of Directors may determine), and any such other officers and agents
as it determines proper, all of whom shall hold office at the pleasure
of the Board of Directors. The same person may hold any two or more
of the aforesaid offices but no officer shall execute, acknowledge
or verify an instrument in more than one capacity if such instrument
is required by law or by these Articles of Incorporation to be executed,
acknowledged or verified by two or more officers. The Chairman and
the Vice Chairman, if any, shall be chosen from among the Board of
Directors, but the other officers of the Company need not be members
of the Board of Directors. |
| 9.2. | The Company shall be represented at law and otherwise, and shall be bound with respect to third parties, by the Board of Directors and by: |
| (a) | any of those directors authorized by the Board of Directors to represent the Company, acting alone, who shall have the following titles and occupy the following offices: |
| (i) | Chairman; or | |||||
| (ii) | Vice-Chairman; |
| (b) | any of the persons, who may, but are not required to, be directors, authorized by the Board of Directors to represent the Company, acting alone, who shall have the following titles and occupy the following offices: |
| (i) | Chief Executive Officer; | |||||
| (ii) | President; | |||||
| (iii) | Chief Financial Officer; | |||||
| (iv) | one or more Executive Vice Presidents; | |||||
| (v) | one or more Vice Presidents; | |||||
| (vi) | Chief Operating Officer; | |||||
| (vii) | Controller; | |||||
| (viii) | Treasurer; or | |||||
| (ix) | Secretary. |
| 9.3. | The Board of Directors may also from time to time authorize other
persons, who may or may not be directors or officers, to represent
the Company, who shall have such titles and occupy such additional
offices as the Board of Directors may determine. |
|
| 9.4. | The general meeting of stockholders may grant specific authority
to the Chief Executive Officer, the President or any member of the
Board of Directors to represent the Company with respect to any particular
matter as specified by such general meeting of stockholders. |
|
| 9.5. | The persons holding the above-mentioned offices or any other offices
which the Board of Directors may from time to time authorize as herein
provided shall, respectively, have such power and authority as the
Board of Directors may from time to time grant to the holders of the
offices held by them. |
|
| 9.6. | The Board of Directors may grant general or specific authority to
additional agents or to committees, giving such agents or committees
such general or limited powers or duties as it may deem appropriate. |
|
| 9.7. | In the event of a conflict of interest between the Company and one
or more directors, the Company shall be represented as determined
from time to time by the Board of Directors. |
|
| 9.8. | The Board of Directors may adopt and may amend and repeal such rules,
regulations and resolutions, including By-laws, as it may deem appropriate
for the conduct of the affairs and the management of the Company,
including rules, regulations and resolutions setting forth the specific
powers and duties of the holders of the above-mentioned offices and
other persons authorized by the Board of Directors to represent the
Company. Such rules and regulations and resolutions must be consistent
with these Articles of Incorporation. |
|
| 9.9. | The directors, the holders of the above-mentioned offices and other
persons authorized by the Board of Directors to represent the Company
shall receive such compensation as the Board of Directors may from
time to time prescribe. |
| 10.1. | The Company shall have the power, to the extent not prohibited by
applicable law, to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Company)
by reason of the fact that such person is or was a director, officer,
employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
or entity, against expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Company,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe that such person’s conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in
good faith and in a manner which such person reasonably believed to
be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had reasonable cause
to believe that such person’s conduct was unlawful. The Company shall
indemnify any present or former officer or director of the Company
to the fullest extent allowed by the preceding provisions of this
paragraph 1 of this Article in the event of a “Change of Control”.
“Change of Control” means a change in control of the Company which
shall be deemed to have occurred if at any time (i) any entity, person
or organization is or becomes the legal or beneficial owner, directly
or indirectly, of securities of the Company representing 30% or more
of the combined voting power of the Company’s then outstanding shares
without the prior approval of at least two-thirds of the members of
the Board of Directors in office immediately prior to such entity,
person or organization attaining such percentage interest; (ii) the
Company is a party to a merger, consolidation, share exchange, sale
of assets or other reorganization, or a proxy contest, as a consequence
of which members of the Board of Directors in office immediately prior
to such transaction or event constitute less than a majority of the
Board of Directors thereafter; or (iii) during any 15-month period,
individuals who at the beginning of such period constituted the Board
of Directors (including for this purpose any new director whose election
or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period) cease for any
reason to constitute at least a majority of the Board of Directors. |
|
| 10.2. | The Company shall have the power, to the extent not prohibited by
applicable law, to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that such person is or was a director,
officer, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise or entity against expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to
the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue or matter as to which
such person shall have been finally adjudged to be liable to the Company
for improper conduct unless and only to the extent that the court
in which such action or suit was brought or any other court having
appropriate jurisdiction shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity
for such expenses, judgments, fines and amounts paid in settlement
which the court in which the action or suit was brought or such other
court having appropriate jurisdiction shall deem proper. The Company
shall indemnify any present or former officer or director of the Company
to the fullest extent allowed by the preceding provisions of this
paragraph 2 of this Article in the event of a Change of Control, as
defined in paragraph 1 of this Article. |
|
| 10.3. | To the extent that a present or former director or officer of the
Company has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in paragraphs 1 and
2 of this Article, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys’
fees) actually and reasonably incurred by such person in connection
therewith. |
|
| 10.4. | Any indemnification under paragraphs 1 and 2 of this Article (unless
ordered by a court) shall be made by the Company only as authorized
by contract approved, or by-laws, resolution or other action adopted
or taken, by the Board of Directors or by the stockholders or as required
by the last sentences of paragraphs 1 prior to the definition of Change
of Control and 2 of this Article. |
|
| 10.5. | Expenses (including attorneys’ fees) incurred by a present or former
director or a present officer in defending any civil or criminal,
administrative or investigative action, suit or proceeding shall be
paid by the Company in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such person to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the Company
as authorized by this Article. Such expenses (including attorneys’
fees) incurred by former officers or other employees and agents may
be so paid upon such terms and conditions, if any, as the Company
deems appropriate. |
|
| 10.6. | The indemnification and advancement of expenses provided by or granted
pursuant to the other paragraphs of this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any law, by-law,
agreement, vote of stockholders or disinterested directors, or otherwise,
both as to action in such person’s official capacity and as to action
in another capacity while holding such office, and shall, unless otherwise
provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of
such a person. |
|
| 10.7. | The Company shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee
or agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or entity against
any liability asserted against such person and incurred by such person
in any such capacity, or arising out of his status as such, whether
or not the Company would have the power to indemnify such person against
such liability under the provisions of this Article. |
|
| 10.8. | For purposes of this Article, reference to the Company shall include,
in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation
or merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent, or is or was serving
at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or entity, shall stand in the same position
under the provisions of this Article with respect to the resulting
or surviving corporation as such person would have had with respect
to such constituent corporation if its separate existence had continued. |
|
| 10.9. | For purposes of this Article, references to “other enterprises”
shall include employee benefit plans; references to “fines” shall
include any excise taxes assessed on a person with respect to any
employee benefit plan; and references to “serving at the request of
the Company” shall include any service as a director, officer, employee
or agent of the Company which imposes duties on, or involves services
by, such director, officer, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner “not
opposed to the best interests of the Company” as referred to in this
Article. |
|
| MEETINGS OF STOCKHOLDERS
ARTICLE 11 |
||
| 11.1. | All general meetings of stockholders shall be held in Curaçao or
anywhere else in the Netherlands Antilles. |
|
| 11.2. | The annual general meeting of stockholders shall be held within
the maximum period allowed under applicable law, on a date determined
from year to year by the Board of Directors, for the purpose of electing
directors, reporting on the course of business during the preceding
fiscal year, approving of the balance sheet and the profit and loss
account for the preceding fiscal year and for any other purposes required
by law, and for such additional purposes as may be specified in the
notice of such meeting. |
|
| 11.3. | Special general meetings of stockholders may be called at any time
upon the direction of the Chairman, the Vice Chairman, the Chief Executive
Officer, the President or the Board of Directors or by one or more
stockholders representing at least ten percent (10%) of the votes
that can be cast on the topics they wish to be addressed at such meeting
and that have a reasonable interest in having such a meeting convened,
in accordance with Article 2:129 NACC, or by one or more holders of
shares representing in the aggregate a majority of the shares then
outstanding, or as provided for in Article 8.6. |
|
| 11.4. | Notice of meetings of stockholders, whether annual general meetings
or special general meetings, stating the time and place of the meeting,
shall be given to the stockholders not less than twenty (20) or more
than sixty (60) days prior to the date of the meeting in question
by notice to each stockholder at the address thereof appearing in
the Register. |
|
| 11.5. | All notices of general meetings of stockholders shall state the
matters to be considered at the meeting. |
|
| 11.6. | Without limiting the manner by which notice otherwise may be given
effectively to stockholders or directors, any notice given by the
Company shall be effective if given by a form of electronic transmission
consented to by the person to whom the notice is given. Any such consent
shall be revocable by written notice received by the Company. |
|
| 11.7. | Notice given pursuant to paragraph 6 of this Article shall be deemed
given: (1) if by facsimile telecommunication, when directed to a number
at which the recipient has consented to receive notice; (2) if by
electronic mail, when directed to an electronic mail address at which
the recipient has consented to receive notice; (3) if by a posting
on an electronic network together with separate notice to the recipient
of such specific posting, upon the later of (A) such posting and (B)
the giving of such separate notice; and (4) if by any other form of
electronic transmission, when directed to the recipient. An affidavit
that the notice has been given by a form of electronic transmission
shall, in the absence of fraud or bad faith, be prima facie evidence
of the facts stated therein. |
|
| 11.8. | For purposes of these Articles of Incorporation, “electronic transmission”
means any form of communication, not directly involving the physical
transmission of paper, that creates a record that may be retained,
retrieved, and reviewed by a recipient thereof. |
|
| ARTICLE 12 |
||
| 12.1. | Every stockholder has the right to attend any general meeting in
person or by proxy, which proxy to the extent permitted by applicable
law may be given by electronic transmission, and to address the meeting.
Records and other data carriers used in relation to attendance of
and voting at general meetings shall be kept during a period of ten
(10) years or for the period required by applicable law. |
|
| 12.2. | Each holder of common shares and each holder of preferred shares
shall be entitled to one vote for each common share or preferred share
held. |
|
| 12.3. | For the purpose of determining stockholders entitled to notice of
and to vote at any general meeting of stockholders, or entitled to
receive payment of any dividend, or other distribution or allotment
of any rights, or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of shares, or in
order to make a determination of stockholders for any other proper
purpose, the Board of Directors of the Company may provide that the
stock transfer books shall be closed for a stated period or that a
record date be fixed. If the stock transfer books shall be closed
for the purpose of determining stockholders entitled to notice of
or to vote at a general meeting of stockholders, such books shall
be closed for at least ten (10) days but not to exceed, in any case,
sixty (60) days immediately preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance
a date as the record date for any such determination of stockholders,
such date in any case to be not more than sixty (60) days and, in
case of a general meeting of stockholders, not less than ten (10)
days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer
books are not closed and no record date is fixed for the determination
of stockholders entitled to notice of or to vote at a general meeting
of stockholders, or stockholders entitled to receive payment of a
dividend or other distribution or allotment, the date on which notice
of the meeting is mailed or the date on which the resolution of the
Board of Directors declaring such dividend or other distribution or
allotment is adopted, as the case may be, shall be the record date
for such determination of stockholders. When a determination of stockholders
has been made as herein provided, such determination shall apply to
any adjournment thereof except where the determination has been made
through the closing of stock transfer books and the stated period
of closing has expired. |
|
| 13.1. | Except as otherwise provided herein, no action may be taken at any
general meeting of stockholders unless a quorum consisting of the
holders of at least one-half of the outstanding shares entitling the
holders thereof to vote at such meeting are present at such meeting
in person or by proxy. |
| 13.2. | If a quorum is not present in person or by proxy at any general
meeting of stockholders, a second general meeting shall be called
in the same manner as such original meeting of stockholders, to be
held within two (2) months, at which second meeting, regardless of
the number of shares represented (but subject to the provisions of
Articles 18, 19 and 21), valid resolutions may be adopted with respect
to any matter stated in the notice of the original meeting and also
in the notice of such second meeting or which by law is required to
be brought before the stockholders despite the absence of a quorum. |
| 13.3. | Subject to the provisions of Articles 18, 19 and 21, the vote in
favor by a majority of the votes cast (excluding any abstentions)
shall be necessary to adopt any resolution at any general meeting
of stockholders. |
| 13.4. | The Board of Directors from time to time shall appoint a person
to preside at general meetings of stockholders. |
| 13.5. | At any general meeting of stockholders, a stockholder may vote upon
all matters before the meeting, even if the decision to be taken would
grant him, in a capacity other than as a stockholder, any right against
the Company or would in such other capacity relieve him of any obligation
to the Company. |
| 13.6. | Shares belonging to a legal entity, if a majority of the shares
entitled to vote in the election of directors of such entity are held,
directly or indirectly, by the Company, shall neither be entitled
to vote nor be counted for quorum purposes, except in the event that
such shares are held by such legal entity in a fiduciary capacity
for others than for the Company itself. |
SEPARATE MEETINGS
ARTICLE 14
| 14.1. | Separate meetings of holders of each series of preferred shares
(each a “Series Meeting”) can be held and may be convened by any two
or more members of the Board of Directors. |
| 14.2. | Notice of a Series Meeting shall be given not less than ten (10)
days prior to the date of the Series Meeting to the address of each
holder of preferred shares of the relevant series appearing in the
Register. |
| 14.3. | The notice shall contain the agenda of the Series Meeting or shall
mention that it is deposited for inspection by the holder of the relevant
shares at the offices of the Company. |
| 14.4. | The Series Meetings do not have to be held in the Netherlands Antilles
but may be held in conjunction with any general meeting of stockholders. |
| 14.5. | To a Series Meeting all the provisions of these Articles of Incorporation
and the laws of the Netherlands Antilles as to General Meetings of
Stockholders shall, mutatis mutandis, apply, if not otherwise provided
in this Article. |
FISCAL YEAR
ARTICLE 15
ARTICLE 16
| 16.1. | Within the period allowed under applicable law the Board of Directors
shall prepare the annual accounts and the annual report with respect
to the preceding fiscal year. Subsequently, the annual accounts together
with the auditors’ report shall be submitted to the stockholders for
inspection and approval at the annual general meeting of stockholders
in accordance with paragraph 2 of Article 11, together with the annual
report. From the date at which the notice of the annual general meeting
of stockholders is sent until the close of the annual general meeting
of stockholders, the annual accounts together with the auditors’ report
and the annual report shall be available for inspection by the stockholders
at the office of the Company, and at any additional place, if specified
in the notice of such meeting. |
| 16.2. | The Board of Directors, with due observance of dividend entitlements
of the holders of preferred shares, is authorized to allocate such
part of the profits to the retained earning reserves as it deems fit. |
DISTRIBUTION OF PROFITS
ARTICLE 17
|
|||||||||||
DISPOSITION OF THE COMPANY’S ASSETS ARTICLE 18 |
LIQUIDATION
ARTICLE 19
BUY OUT
ARTICLE 20
AMENDMENTS
ARTICLE 21
| 21.1. | Notwithstanding any provision of Article 13, these Articles of Incorporation
may be amended only pursuant to a resolution duly adopted at a general
meeting of stockholders by the holder or holders of at least the majority
of the shares of the Company at the time outstanding and entitled
to vote, the notice of which meeting shall have set forth the exact
text of the proposed amendment or amendments or shall have stated
that a copy of such text has been deposited at the office of the Company
in Curaçao for inspection by the stockholders of the Company, and
shall remain available for inspection until the conclusion of said
meeting. |
| 21.2. | Any amendment to these Articles of Incorporation that would increase or decrease the authorized number of preferred shares or par value thereof, or the number of shares of any series thereof, or that would alter or change the powers, preferences or any special rights of the preferred shares, or of any series thereof, so as to affect them adversely, shall require the approval of the holders of a majority of all preferred shares, or of the preferred shares of the series adversely affected (voting together as a single class), as the case may be. |
OFFICIAL LANGUAGE
ARTICLE 22
(As Established Effective January 20, 2005)
This Stock Option Plan (the “Plan”) is intended as an incentive to key employees of Schlumberger Limited (the “Company”) and its subsidiaries. Its purposes are to retain employees with a high degree of training, experience and ability, to attract new employees whose services are considered unusually valuable, to encourage the sense of proprietorship of such persons and to promote the active interest of such persons in the development and financial success of the Company.
2. Administration of the Plan
3. Grants of Stock Options
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 8 hereof, there shall be subject to the Plan 9,000,000 shares of Common Stock, par value $0.01 per share, of the Company (the “Shares”). The Shares subject to the Plan shall consist of authorized and unissued shares or previously issued shares reacquired and held by the Company or any subsidiary. Until termination of the Plan, the Company and/or one or more subsidiaries shall at all times make available a sufficient number of Shares to meet the requirements of the Plan. After termination of the Plan, the number of Shares reserved for purposes of the Plan from time to time shall be only such number of Shares as are issuable under then outstanding Stock Options.
5. Terms of Stock Options
|
|
| (A) | No Stock Option may be exercised after the expiration of ten (10) years from the date such option is granted. | |
| (B) | No Stock Option shall vest or become exercisable with respect to any portion of the shares thereunder unless and until the recipient remains in the employment of the Company or a subsidiary for a period of at least one (1) year from the date of grant of the option (which provision shall not be construed to impair in any way the right of the Company or subsidiary to terminate such employment). |
|
|
|
(v) Retirement and Subsequent Events. |
| 6. Assignability of Stock Options Stock Options granted under the Plan shall not be assignable or otherwise transferable by the recipient except by will or the laws of descent and distribution. Otherwise, Stock Options granted under this Plan shall be exercisable during the lifetime of the recipient (except as otherwise provided in the Plan or in the documentation of the grant for Stock Options other than “incentive stock options”) only by the recipient for his or her individual account, and no purported assignment or transfer of such Stock Options thereunder, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the purported assignee or transferee any interest or right therein whatsoever but immediately upon any such purported assignment or transfer, or any attempt to make the same, such Stock Options thereunder shall terminate and become of no further effect. 7. Taxes The Committee may make such provisions and rules as it may deem appropriate for the withholding of taxes in connection with any Stock Options granted under the Plan. An optionee, subject to such rules as the Committee may prescribe from time to time, may elect to satisfy all or any portion of the tax required to be withheld by the Company in connection with the exercise of such option by electing to have the Company withhold a number of shares having a Fair Market Value on the date of exercise equal to or less than the amount required to be withheld. An optionee’s election pursuant to the preceding sentence must be made on or before the date of exercise and must be irrevocable. 8. Reorganizations and Recapitalizations of the Company
9. Registration under Securities Act of 1933 and Exchange Listing It is intended that the Stock Options and Shares covered by the Plan will be registered under the Securities Act of 1933, as amended. At the time any Shares are issued or transferred to satisfy the exercise of a Stock Option granted under the Plan, such Shares will have been listed (or listed subject to notice of issuance) on the New York Stock Exchange. 10. Plan Term The Plan shall be effective January 20, 2005, subject to approval within twelve (12) months from the effective date by the holders of a majority of the votes cast at a meeting of Company stockholders. In the event the Plan is not so approved, the Plan shall automatically terminate and be of no further force or effect. No Stock Options shall be granted pursuant to this Plan after January 20, 2015. 11. Amendment or Termination The Board of Directors may amend, alter, suspend or discontinue the Plan at any time insofar as permitted by law, but no amendment or alteration shall be made without the approval of the stockholders:
12. Government Regulations Nothwithstanding any of the provisions hereof or of any Stock Option granted hereunder, the obligation of the Company or any subsidiary to sell and deliver Shares under such Stock Option or to make cash payments in respect thereto shall be subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required, and the recipient shall not exercise or convert any option granted hereunder, and the Company or any subsidiary will not be obligated to issue any Shares or make any payments under any such option if the exercise thereof or if the issuance of such Shares or if the payment made shall constitute a violation by the recipient or the Company or any subsidiary of any provision of any applicable law or regulation of any governmental authority. 13. Non-United States Participants The Committee may grant awards to persons outside the United States under such terms and conditions as may, in the judgment of the Committee, be necessary or advisable to comply with the laws of the applicable foreign jurisdictions and, to that end, may establish sub-plans, modified option exercise procedures and other terms and procedures. Notwithstanding the above, the Committee may not take any actions hereunder, and no Stock Options shall be granted, that would violate the Exchange Act, the Code, any securities law, any governing statute, or any other applicable law. |
(As Amended and Restated January 21, 1998)
Fifth Amendment