UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement
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BY RULE 14A-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TORCH OFFSHORE, INC.
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(TORCH LOGO)
TORCH OFFSHORE, INC.
401 WHITNEY AVENUE, SUITE 400
GRETNA, LOUISIANA 70056
April 14, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at the International House Hotel, 221 Camp Street, New Orleans, Louisiana
on Thursday, May 15, 2003 at 10:00 a.m. For those of you who cannot be present
at this Annual Meeting of the Stockholders, the Company urges that you
participate by indicating your choices on the enclosed proxy and completing and
returning it at your earliest convenience.
This booklet includes the Notice of the Annual Meeting and the proxy statement,
which contains information about the Board of Directors and its committees.
Other matters on which action is expected to be taken during the meeting are
also described.
It is important that your shares are represented at the meeting, whether or not
you are able to attend personally. Accordingly, please sign, date and mail
promptly the enclosed proxy in the envelope provided. This will save us the
additional expenses associated with soliciting proxies and ensure that your
shares are represented at the annual meeting.
On behalf of the Board of Directors, thank you for your continued support.
Sincerely,
/s/ LYLE G. STOCKSTILL
Lyle G. Stockstill
Chairman of the Board and
Chief Executive Officer
(TORCH LOGO)
TORCH OFFSHORE, INC.
401 WHITNEY AVENUE, SUITE 400
GRETNA, LOUISIANA 70056
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 2003
To the Stockholders of
Torch Offshore, Inc.:
The Annual Meeting of Stockholders of Torch Offshore, Inc. (the "Company") will
be held at the International House Hotel, 221 Camp Street, New Orleans,
Louisiana on Thursday, May 15, 2003 at 10:00 a.m. for the purpose of considering
and voting upon the following matters:
1. To elect the directors of the Company to serve during the
ensuing year.
2. To approve the appointment of Ernst & Young LLP as independent
public accountants of the Company for 2003.
3. To transact such other business as may properly come before
the meeting or any reconvened meeting after an adjournment
thereof.
These matters are more fully described in the proxy statement accompanying this
Notice.
The Board of Directors has fixed April 7, 2003 as the record date for
determining stockholders of the Company entitled to notice of, and to vote at,
the meeting or any reconvened meeting after an adjournment thereof, and only
holders of record of common stock of the Company at the close of business on
that date will be entitled to notice of, and to vote at, the meeting or any
reconvened meeting after an adjournment.
You are cordially invited to attend the meeting in person. Even if you plan to
attend the meeting, however, you are requested to mark, sign, date and return
the accompanying proxy as soon as possible.
By Order of the Board of Directors,
/s/ LYLE G. STOCKSTILL
Lyle G. Stockstill
Chairman of the Board and
Chief Executive Officer
Gretna, Louisiana
April 14, 2003
TORCH OFFSHORE, INC.
401 WHITNEY AVENUE, SUITE 400
GRETNA, LOUISIANA 70056
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PROXY STATEMENT FOR THE
2003 ANNUAL MEETING OF STOCKHOLDERS OF
TORCH OFFSHORE, INC.
TO BE HELD ON MAY 15, 2003
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INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Torch Offshore, Inc., a Delaware corporation (the
"Company"), of proxies from the holders of the Company's common stock, par value
$0.01 per share (the "Common Stock"), for use at the 2003 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the time and place and for the
purposes set forth in the accompanying notice. The approximate date on which
this Proxy Statement and the accompanying proxy will first be mailed to
stockholders is April 14, 2003. In addition to the solicitation of proxies by
mail, proxies may also be solicited by telephone, telegram or personal interview
by employees of the Company. The Company will pay all costs of soliciting
proxies. The Company will also reimburse brokers or other persons holding Common
Stock in their names or in the names of their nominees for their reasonable
expenses in forwarding proxy material to the beneficial owners.
All duly executed proxies received prior to the Annual Meeting will be voted in
accordance with the choices specified thereon and, in connection with any other
business that may properly come before the meeting, in the discretion of the
persons named in the proxy. AS TO ANY MATTER FOR WHICH NO CHOICE HAS BEEN
SPECIFIED IN A DULY EXECUTED PROXY, THE SHARES REPRESENTED THEREBY WILL BE VOTED
FOR THE ELECTION AS DIRECTOR OF THE NOMINEES LISTED HEREIN, FOR APPROVAL OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS, AND IN THE DISCRETION OF THE PERSONS NAMED IN THE PROXY IN
CONNECTION WITH ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING. A stockholder giving a proxy may revoke it at any time before it is
voted at the Annual Meeting by filing with the Secretary at the Company's
executive offices a written instrument revoking it, by delivering a duly
executed proxy bearing a later date or by appearing at the Annual Meeting and
voting in person. The executive offices of the Company are located at 401
Whitney Avenue, Suite 400, Gretna, Louisiana 70056. For a period of ten days
prior to the Annual Meeting, a complete list of stockholders entitled to vote at
the Annual Meeting will be available for inspection for proper purposes by
stockholders of record during ordinary business hours at the Company's executive
offices.
RECORD DATE AND VOTING SECURITIES
As of the close of business on April 7, 2003, the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting, the
Company had outstanding and entitled to vote 12,660,030 shares of Common Stock.
Each share entitles the holder to one vote on each matter submitted to a vote of
stockholders.
The requirement for a quorum at the Annual Meeting is the presence in person or
by proxy of holders of a majority of the outstanding shares of Common Stock.
Proxies indicating stockholder
1
abstentions and shares represented by "broker nonvotes" (i.e., shares held by
brokers or nominees for which instructions have not been received from the
beneficial owners or persons entitled to vote and for which the broker or
nominee does not have discretionary power to vote on a particular matter) will
be counted for purposes of determining whether there is a quorum at the Annual
Meeting. Votes cast by proxy or in person at the Annual Meeting will be counted
by the persons appointed as election inspectors for the Annual Meeting.
MATTERS TO BE CONSIDERED
AT THE 2003 ANNUAL MEETING OF STOCKHOLDERS
PROPOSAL ONE: ELECTION OF DIRECTORS
The Board of Directors currently consists of six members, all of whom have been
nominated by the Board of Directors to stand for re-election at the Annual
Meeting. Each director elected at the Annual Meeting will hold the office until
the Annual Meeting of Stockholders in 2004 or until his or her successor is
elected and qualified.
In accordance with the Company's Bylaws, the affirmative vote of a plurality of
the votes cast by holders of Common Stock entitled to vote in the election of
directors at a meeting of stockholders at which a quorum is present is required
for the election of the nominees as directors. Accordingly, although abstentions
and broker nonvotes are considered shares present at the Annual Meeting for the
purpose of determining a quorum, they will have no effect on the election of
directors.
The Board of Directors is not aware of any reason why any nominee will be unable
to stand for election as a director or serve if elected, but if any such nominee
should become unavailable, the Board of Directors may nominate, and the persons
named in the accompanying Proxy may vote for, a substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEES
LISTED BELOW.
DIRECTOR NOMINEES
The following sets forth information concerning the nominees to become directors
of the Company, including each nominee's age as of April 7, 2003, position with
the Company, if any, and business experience during the past several years.
Lyle G. Stockstill, age 59, is one of our co-founders and has served as our
Chairman of the Board and Chief Executive Officer since 1978. Mr. Stockstill has
over 38 years of experience in all aspects of offshore pipelay and construction
operations. Mr. Stockstill has previously held positions at Brown & Root, Inc.
and Taylor Diving & Salvage Co., Inc. and has worked both domestically and
internationally. Mr. Stockstill is the husband of Lana J. Hingle Stockstill.
Lana J. Hingle Stockstill, age 59, is one of our co-founders and has served as
Senior Vice President - Administration, Secretary and as a director since 1978.
In March 2003, her title was changed to Chief Administrative Officer. Mrs.
Stockstill has 30 years of experience handling our administrative duties and the
administrative duties of other oil service companies. Mrs. Stockstill holds a
Bachelor of Arts degree from Louisiana State University. Mrs. Stockstill is the
wife of Lyle G. Stockstill.
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Curtis Lemons, age 75, has been a director since November 1998 and is a member
of the Audit Committee and the Compensation Committee of the Board of Directors.
Mr. Lemons retired in 1985. He has 31 years of experience in the offshore oil
and natural gas industry in the Gulf of Mexico and in international locations.
From 1955 to 1985, Mr. Lemons was employed by Conoco Inc., an integrated energy
company, in senior management positions, including Vice President of Production
- South China Sea, General Manager - North Sea, and Production Manager - Europe.
From 1954 to 1955, Mr. Lemons was employed by The California Company (now
ChevronTexaco Corporation), as a drilling engineer. Mr. Lemons holds a Bachelor
of Science degree in Petroleum Engineering from Texas A&M University.
Andrew L. Michel, age 60, has been a director since February 2002 and is a
member of the Compensation Committee of the Board of Directors. Mr. Michel is
also a director of the TSC Holdings Group of Companies, Inc. (TSC). TSC, through
its subsidiaries, performs marine surveys and reef restoration work and provides
remotely operated vehicles (ROV's) and management consulting services. The
Company also publishes two industry magazines. From 1996 to 2001, Mr. Michel
served as Vice President of Deepwater Development for Global Industries, Ltd., a
major offshore contracting firm. Prior to that, he was owner and principal
consultant at ROV Technologies, Inc., a company founded in 1986 that was the
first engineering consulting firm dedicated exclusively to ROV technology. From
1968 to 1986, he was employed by Taylor Diving & Salvage Co., Inc., a subsidiary
of Halliburton Company that provides diving services, as Vice President of the
Technical Services Division and was responsible for, among other things, forming
and managing the world's first ROV operations.
John Reynolds, age 32, has been a director since May 2000 and is a member of the
Audit Committee and the Compensation Committee of the Board of Directors. In
July 1998, Mr. Reynolds co-founded Lime Rock Partners LLC and has been a
managing member since its formation. From 1992 to July 1998, Mr. Reynolds was
employed in a number of positions by Goldman Sachs & Co., most recently as a
Vice President and the senior research analyst responsible for the oil services
sector. Mr. Reynolds currently serves on the boards of directors of Roxar ASA,
an oil service and reservoir management company, and New Patriot Drilling Corp.,
a private drilling contractor. He holds a Bachelor of Arts degree from Bucknell
University.
Ken Wallace, age 77, has been a director since May 2000 and is a member of the
Audit Committee and the Compensation Committee of the Board of Directors. Mr.
Wallace retired in 1983. From 1973 to 1983, Mr. Wallace was President and a
director of Taylor Diving & Salvage Co., Inc. From 1964 to 1973, Mr. Wallace
held numerous positions for Taylor Diving & Salvage Co., Inc., including Vice
President of Research and Development, Senior Vice President of Operations and
Executive Vice President. Mr. Wallace also spent 24 years in the United States
Navy.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors has established an Audit Committee and a Compensation
Committee as standing committees of the Board of Directors. The Board of
Directors does not have a standing nominating committee or other committee
performing a similar function. The members of the Audit Committee and the
Compensation Committee of the Board of Directors indicated in the above
summaries are not employees of the Company.
The Audit Committee of the Board of Directors (i) recommends the annual
selection of independent public accountants to conduct audits of the Company's
financial statements, (ii) approves the plan and scope of the annual audit of
the financial statements and any additional
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services provided by the independent public accountants and the fees for the
audit and any such additional services, (iii) reviews the annual audited
financial statements prior to publication and discusses the results of the audit
with management and the independent public accountants, and (iv) discusses with
management and the independent public accountants the design, quality and
adequacy of the Company's internal controls. The Audit Committee charter, which
is attached as Appendix A to this Proxy Statement, contains a detailed
description of the Audit Committee's duties and responsibilities.
The Compensation Committee reviews and recommends to the Board of Directors the
compensation and benefits of the Company's executive officers, establishes and
reviews general policies relating to the Company's compensation and benefits,
and administers the Torch Offshore, Inc. 2001 Long-Term Incentive Plan (the
"2001 Incentive Plan").
During 2002, the Board of Directors met seven times. The Audit Committee met
four times and the Compensation Committee met three times. During 2002, all
directors attended at least 75% of the aggregate of all meetings of the Board of
Directors and the committees of the Board of which they were members. Andrew L.
Michel resigned from the Audit Committee in September 2002.
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive cash compensation for
their services as directors. During 2002, our non-employee directors received an
annual fee of $12,000, which was paid in monthly cash installments of $1,000.
All non-employee directors were to be paid a fee of $1,000 for each Committee
meeting attended in person; however, in February 2003, the Board of Directors
approved the removal of the fee of $1,000 for each Committee meeting attended in
person by the non-employee directors retroactive to January 1, 2002. In
addition, the monthly installments were amended to $1,167 per month, or a total
of $14,000 per annum, payable in a combination of cash or common stock at the
discretion of the Board of Directors, beginning on January 1, 2003. All
directors are reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors or Committees thereof and for other expenses
incurred in their capacity as directors. During fiscal 2002 in connection with a
presentation to management, Mr. Michel received a consulting fee of
approximately $8,000.
Each of our directors is eligible to participate in our 2001 Incentive Plan. The
terms of our 2001 Incentive Plan provide that each of our non-employee directors
will be awarded options to purchase 1,000 shares of our Common Stock on the
first business day of the month following each annual meeting at which they are
elected. The options will become exercisable six months and one day from the
date of the grant and will expire ten years from the date of the grant. All
grants are subject to the general terms and conditions of the 2001 Incentive
Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and executive
officers and persons who own more than 10% of a registered class of the
Company's equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership. Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all such forms they file. Based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, the Company believes that all its directors and executive
officers complied on a timely basis with all applicable filing requirements
under Section 16(a) of the Exchange Act during 2002.
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EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth information regarding
the compensation of the Chief Executive Officer and each of the three other most
highly compensated executive officers of the Company who were serving as
executive officers as of December 31, 2002 (together with the Chief Executive
Officer, the "named executive officers") and a former executive officer of the
Company in 2002, 2001 and 2000.
Long-Term
Annual Compensation Compensation
-------------------------- --------------------------
Securities
Restricted Underlying All Other
Stock Awards Options Compensation
Name and Principal Position Year Salary Bonus (1) (shares) (2)
------------------------------- ---- ------- --------- ------------ ---------- ------------
Lyle G. Stockstill............. 2002 $260,800 $ -- $ -- 94,000 $ 16,328
Chairman of the Board and 2001 253,600 -- -- -- 14,601
Chief Executive Officer 2000 245,000 -- -- -- 13,244
Willie Bergeron................ 2002 142,712 -- 37,580 22,000 11,000
Chief Operating Officer 2001 116,539 -- -- 15,625 6,992
2000 73,846 -- -- -- 4,431
Robert E. Fulton (3)........... 2002 67,662 -- 140,750 -- 28,609
Chief Financial Officer 2001 -- -- -- -- --
2000 -- -- -- -- --
Lana J. Hingle Stockstill...... 2002 133,200 -- -- 22,000 11,000
Chief Administrative 2001 129,500 -- -- -- 7,770
Officer 2000 122,308 -- -- -- 7,338
William J. Blackwell(4)........ 2002 96,923 39,535(5) 93,872 25,000 16,217
Chief Financial Officer 2001 138,000 -- -- 21,875 12,411
2000 133,000 -- -- -- 11,024
(1) Based on the closing price of the Company's common stock on the date of
the grant. On December 31, 2002, the aggregate number of restricted
shares held by Mr. Bergeron, Mr. Fulton and Mr. Blackwell were 2,860,
25,000 and zero, respectively, and the aggregate value of such shares
based upon the $5.45 market value on December 31, 2002, was $15,587,
$136,250 and zero, respectively. The Company does not currently pay
dividends on common stock; however, it would pay dividends on the
restricted stock should its dividend policy change.
(2) Amounts include: (a) 401(k) contributions as follows: Mr. Stockstill,
$11,000 in 2002, $10,470 in 2001 and $10,200 in 2000; Mr. Bergeron,
$11,000 in 2002, $6,992 in 2001 and $4,431 in 2000; Mrs. Stockstill,
$11,000 in 2002, $7,770 in 2001 and $7,338 in 2000; Mr. Blackwell,
$11,000 in 2002, $8,280 in 2001 and $7,980 in 2000; and (b) health
insurance premiums as follows: Mr. Stockstill, $5,328 in 2002, $4,131
in 2001 and $3,044 in 2000; Mr. Fulton, $2,244 in 2002; Mr. Blackwell,
$5,217 in 2002, $4,131 in 2001 and $3,044 in 2000; and (c) signing
bonuses as follows: Mr. Fulton, $5,000 in 2002; and (d) relocation and
living allowances as follows: Mr. Fulton, $21,365 in 2002.
(3) Mr. Fulton began his employment with the Company on July 30, 2002.
(4) Mr. Blackwell ceased employment on August 8, 2002.
(5) Paid in connection with Mr. Blackwell's resignation from the Company.
5
Stock Options Granted in 2002. The following table sets forth certain
information on grants of stock options during 2002 to the named executive
officers and a former executive officer of the Company.
Individual Grants
-------------------------------------------------
Number of Potential Realizable
Securities Percentage Value at Assumed Annual
Underlying of Total Rates of Stock Price
Options Options Appreciation for
Granted in Granted to Exercise Option Term (3)
2002 Employees Price per Expiration -------------------------
Name (shares) in 2002 Share (2) Date 5% ($) 10% ($)
------------------ ---------- --------- --------- ---------- -------------- --------
Lyle G. Stockstill........... 94,000 (1) 40.3% $ 8.77 5/16/12 518,448 1,313,849
Willie Bergeron.............. 22,000 (1) 9.4% $ 8.77 5/16/12 121,339 307,497
Robert E. Fulton............. -- -- -- -- -- --
Lana J. Hingle Stockstill.... 22,000 (1) 9.4% $ 8.77 5/16/12 121,339 307,497
William J. Blackwell ........ 25,000 (1) 10.7% $ 8.77 5/16/12 -- (4) -- (4)
(1) These options were granted pursuant to the 2001 Incentive Plan on May
16, 2002 and become exercisable in increments of 20% on each of the
first, second, third, fourth and fifth anniversaries of the date of
grant.
(2) The exercise price of the options granted is equal to the closing price
per share of Common Stock on the Nasdaq National Market on the date of
the grant.
(3) The potential realizable value through the expiration date of options
has been determined on the basis of the per share market price at the
time the options were granted, compounded annually over 10 years, net
of the exercise price. These values have been determined based upon
assumed rates of appreciation and are not intended to forecast the
possible future appreciation, if any, of the price or value of the
Common Stock.
(4) Mr. Blackwell's options were forfeited upon his resignation on
August 8, 2002.
Option Exercises and 2002 Year-End Option Values. The following table sets forth
certain information with respect to unexercised options to purchase Common Stock
granted in 2002 to the named executive officers and a former executive officer
of the Company and held by them at December 31, 2002. None of the named
executive officers exercised options in 2002 and none of the outstanding options
were in-the-money at December 31, 2002.
Number of Securities Underlying
Unexercised Options Held at
December 31, 2002
-----------------
Exercisable Unexercisable
----------- -------------
Lyle G. Stockstill........... -- 94,000
Willie Bergeron.............. 3,125 34,500
Robert E. Fulton............. -- --
Lana J. Hingle Stockstill.... -- 22,000
William J. Blackwell ........ -- --
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Fulton and
Bergeron. Pursuant to his agreement, Mr. Fulton has:
o an employment agreement expiring on July 30, 2004, which will
automatically be renewed for successive one-year terms unless
terminated at least thirty days prior to the end of the then current
term;
o a severance benefit equal to twelve months salary (unless terminated
for cause), during which
6
period he has agreed not to compete with the Company; and
o the ability to participate in various employee benefit plans.
Pursuant to his agreement, Mr. Bergeron has:
o an employment agreement expiring on December 31, 2003, which can be
renewed for successive one-year terms upon written agreement between
the employee and the Company;
o a severance benefit equal to twelve months salary (unless terminated
for cause), during which period he has agreed not to compete with the
Company; and
o the ability to participate in various employee benefit plans.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock of the
Company beneficially owned directly or indirectly as of April 7, 2003 by (i)
each person who is known to the Company to own beneficially more than 5% of the
Common Stock, (ii) each of the Company's director nominees and named executive
officers (including a former executive officer of the Company) and (iii) all
executive officers and director nominees as a group (including a former
executive officer of the Company).
Number of Percent of
Name of Beneficial Owner (1) Shares Stock
----------------------------------------------------- ---------- ------------
Torch, Inc. ......................................... 7,505,000 59.3%
Riverside Investments LLC (2) (3) ................... 793,290 6.3
The Lyle G. Stockstill Trust No. 1 (4) .............. 1,876,250 14.8
The Lana Hingle Stockstill Trust No. 1 (5) .......... 1,876,250 14.8
Donald J. Webre (6) ................................. 1,876,250 14.8
Geraldine Cook (6) .................................. 1,876,250 14.8
Lyle G. Stockstill (7) .............................. 7,523,800 59.4
Lana J. Hingle Stockstill (8) ....................... 7,509,400 59.3
Robert E. Fulton (9) ................................ 25,000 *
Willie Bergeron (10)................................. 13,730 *
Curtis Lemons (11)................................... 4,500 *
Andrew L. Michel (12)................................ 1,000 *
John Reynolds (2) (13)............................... 831,833 6.6
Ken Wallace (11)..................................... 3,500 *
William J. Blackwell................................. 3,572 *
John A. Levin & Co., Inc. (14)....................... 1,228,775 9.7
All Executive Officers and Directors as a group
(9 persons)........................................ 8,411,335 66.4
* less than one percent
(1) Unless otherwise indicated, the address of each person is c/o Torch
Offshore, Inc., 401 Whitney Avenue, Suite 400, Gretna, Louisiana
70056-2596.
(2) The address of each of Riverside Investments LLC and John Reynolds is
c/o Lime Rock Partners LLC, 518 Riverside Avenue, Building 11, 2nd
Floor, Westport, Connecticut 06880.
(3) Based on a Schedule 13G filed with the Securities and Exchange
Commission (the "SEC") on February 12, 2003, The Beacon Group Energy
Investment Fund II, L.P. (Fund II) is the sole
7
managing member of Riverside Investments LLC. Beacon Energy Investors
II, L.P. (Investors II) is the sole general partner of Fund II. Energy
Fund II GP, LLC (Energy) is the sole general partner of Investors II.
Each of Fund II, Investors II and Energy may be deemed the beneficial
owner of these shares.
(4) Represents shares owned by Torch, Inc. The Lyle G. Stockstill Trust No.
1, which owns 25% of the outstanding capital stock of Torch, Inc.,
disclaims beneficial ownership of the shares shown in the table.
(5) Represents shares owned by Torch, Inc. The Lana Hingle Stockstill Trust
No. 1, which owns 25% of the outstanding capital stock of Torch, Inc.,
disclaims beneficial ownership of the shares shown in the table.
(6) Donald J. Webre and Geraldine Cook are the members of the trustee
investment committee of The Lyle G. Stockstill Trust No. 1. Each of
Donald J. Webre and Geraldine Cook disclaims beneficial ownership of
the shares shown in the table.
(7) Represents 7,505,000 shares owned by Torch, Inc. Mr. Stockstill serves
as Chief Executive Officer and Chairman of the Board of Directors of
Torch, Inc., which is currently comprised of three members. Mrs.
Stockstill serves as Secretary, Treasurer and a Director of Torch, Inc.
Also includes 18,800 shares that may be acquired pursuant to options
that are currently exercisable or will become exercisable within 60
days of April 7, 2003.
(8) Represents 7,505,000 shares owned by Torch, Inc. Mrs. Stockstill serves
as Secretary, Treasurer and a member of the Board of Directors of
Torch, Inc., which is currently comprised of three members. Mr.
Stockstill serves as Chief Executive Officer and Chairman of the Board
of Directors of Torch, Inc. Also includes 4,400 shares that may be
acquired pursuant to options that are currently exercisable or will
become exercisable within 60 days of April 7, 2003.
(9) Includes 25,000 shares issued pursuant to restricted stock awards that
become exercisable in increments of 33% on each of the first, second
and third anniversaries of the grant date beginning on July 30, 2004.
(10) Includes 10,650 shares that may be acquired pursuant to options that
are currently exercisable or will become exercisable within 60 days of
April 7, 2003.
(11) Includes 3,500 shares that may be acquired pursuant to options that are
currently exercisable or will become exercisable within 60 days of
April 7, 2003.
(12) Includes 1,000 shares that may be acquired pursuant to options that are
currently exercisable or will become exercisable within 60 days of
April 7, 2003.
(13) Includes 793,290 shares owned by Riverside Investments LLC and 38,543
shares owned by Friends of Lime Rock LP. Mr. Reynolds serves as
managing member of entities that control the investment decisions of
Riverside Investments LLC and Friends of Lime Rock LP. Riverside
Investments LLC and Friends of Lime Rock LP make all voting and
investment decisions in concert with each other. The shares owned by
Riverside Investments LLC and Friends of Lime Rock LP include 3,500
shares that may be acquired pursuant to options held by Mr. Reynolds
that are currently exercisable or will become exercisable within 60
days of April 7, 2003. Mr. Reynolds holds these options for the benefit
of Riverside Investments LLC and Friends of Lime Rock LP. Mr. Reynolds
disclaims beneficial ownership of the shares shown in the table.
(14) Based on a Schedule 13G filed with the SEC on February 14, 2003. BKF
Capital Group, Inc. (BKF) is the sole shareholder of Levin Management
Co., Inc., a Delaware corporation, which is the sole shareholder of
John A. Levin & Co., Inc. BKF may be deemed the beneficial owner of
these shares. The address of John A. Levin & Co., Inc. is One
Rockefeller Plaza, New York, New York 10020.
8
CERTAIN TRANSACTIONS
The Company entered into a registration rights agreement with Riverside
Investments LLC and Friends of Lime Rock LP (collectively, "Lime Rock"). This
agreement gives Lime Rock the right, on three occasions, to demand that the
Company register all or any portion of its shares of Common Stock for sale under
the Securities Act of 1933, as amended. The gross proceeds of any proposed
demand registration must reasonably be expected to be at least $5.0 million. The
registration rights agreement also provides Lime Rock with the right, if the
Company proposes to register any shares of Common Stock under the Securities
Act, to include their shares of Common Stock in the registration, subject to
certain limitations.
The agreement provides for customary registration procedures. The Company will
pay all registration-related expenses, other than underwriters' discounts and
commissions. The registration rights under the agreement are assignable to any
purchaser of registrable securities. Demand registration rights terminate in
June 2011. The registration rights agreement contains customary indemnification
and contribution provisions by the Company for the benefit of any selling
stockholders and any underwriters.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee was established in June 2001 in connection with the
Company's initial public offering. The Company's Board of Directors granted to
the Compensation Committee the authority to, among other things, review and
recommend to the Board of Directors the compensation and benefits of the
executive officers of the Company. In addition, the Compensation Committee has
the responsibility of establishing and reviewing general policies relating to
the Company's compensation and benefits and administers the 2001 Incentive Plan.
The Compensation Committee has structured its executive compensation policies
to:
o Offer performance-based compensation that takes into account
the Company's financial performance on both a short-term and
long-term basis;
o Provide a total compensation program that considers the
compensation policies of comparable companies with whom the
Company competes so as to attract and retain qualified
executives; and
o Align executive compensation to the financial interests of the
Company's stockholders by providing equity-based incentives.
The three major components to the compensation of the Company's executives are
(i) base salary, (ii) annual incentive compensation in the form of a cash bonus,
and (iii) long-term equity-based compensation. Factors taken into account in
determining these compensation levels include the executive's responsibilities,
experience, leadership, potential future contributions and individual
performance. Long-term equity-based compensation is provided in the form of
stock options, which are tied directly to stockholder return, and restricted
stock. Stock options align the interests of the Company's executives with those
of its stockholders by encouraging executives to enhance the value of the
Company.
The Compensation Committee establishes the base salary levels of the CEO and
other executive officers after review of salaries of other companies in the
oilfield service industry having annual sales or revenues generally similar in
size to the Company. By reviewing the salaries of such
9
other companies from time to time, the Compensation Committee intends to ensure
that the Company's base salaries are generally within the range of base salaries
paid by other companies. The base salaries also take into account the
executives' experiences and levels of responsibility.
These base salaries are reviewed and updated annually, with adjustments made for
updated salary data, increases in the cost of living, job performance, changes
in responsibilities and duties of the executive, if any, and general market
salary levels. No weight or emphasis is placed on any one of these factors.
Long-term equity-based compensation is provided through the 2001 Incentive Plan,
which was adopted effective April 27, 2001. The objectives of the 2001 Incentive
Plan are to retain and attract persons of appropriate training, experience and
ability to serve as employees, consultants and directors of the Company, to
encourage the sense of proprietorship of such persons, and to stimulate the
active interest of such persons in the development and financial success of the
Company. The 2001 Incentive Plan provides long-term equity-based compensation,
with certain terms, conditions and limitations determined by the Compensation
Committee, via awards to employees in the form of (i) incentive stock options,
(ii) nonqualified stock options, (iii) performance stock awards, (iv) stock
awards (including restricted stock), (v) phantom stock, (vi) stock appreciation
rights and (vii) cash awards. All awards are subject to conditions established
by the Compensation Committee which may include continuous service with the
Company, achievement of specific business objectives, increases in specified
indices, attaining specified growth rates and other specified valuations.
In 2002, the Company granted options to purchase an aggregate of 163,000 shares
of Common Stock to executive officers of the Company as well as 40,006
restricted shares.
The Company may periodically grant new options or other long-term equity-based
incentives to provide continuing incentive for future performance. In making the
decision to grant additional options or other long-term equity-based incentives,
the Compensation Committee would expect to consider factors such as the size of
previous grants and the number of options held. In addition, the Compensation
Committee may consider factors including the executive's current ownership stake
in the Company, the degree to which increasing that ownership stake would
provide the executive with additional incentives for future performance, the
likelihood that the grant of those options would encourage the executive to
remain with the Company, and the value of the executive's service to the
Company.
CEO Compensation - The CEO's compensation level is established by the
Compensation Committee in the same manner as for other executive officers
described above. During 2002, Lyle G. Stockstill was granted a base salary of
$260,800. Mr. Stockstill does not have an employment contract with the Company.
Mr. Stockstill was granted 94,000 stock options to purchase shares of Common
Stock of the Company during 2002. In addition, Mr. Stockstill owns a 59%
ownership in the Company through his ownership of Torch, Inc.
The Compensation Committee
Curtis Lemons
Andrew L. Michel
John Reynolds
Ken Wallace
10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There were no Compensation Committee interlocks during fiscal 2002.
TRANSACTIONS WITH MANAGEMENT AND CERTAIN DIRECTORS
Set forth below is a description of certain transactions entered into between
the Company and certain of its officers, directors and stockholders.
The Company purchases catering services for the galleys of some of its vessels
from a company partially owned by Mrs. Stockstill. Purchases for 2002 totaled
$165,000. The Company also purchases fuel from a company partially owned by Mrs.
Stockstill. Purchases for 2002 totaled $234,000.
In December 2002, the Company entered into a five-year lease agreement for a
rental property for client and provider entertainment purposes from an
investment holding company wholly-owned by Mr. Stockstill. The annual lease
payments approximate $51,000. There were no payments made during 2002.
During 2002, the Company purchased a leisure fishing vessel for client and
provider entertainment purposes from an investment holding company wholly-owned
by Mr. Stockstill. The total cost of the vessel was approximately $0.1 million,
of which $41,000 was paid by the Company in cash during 2002, plus
Company-assumed debt of $60,000. The debt will be paid by the Company in monthly
installments over a five-year period.
REPORT OF THE AUDIT COMMITTEE
The audit committee is comprised of three members of the Board of Directors,
Messrs. Lemons, Reynolds and Wallace. Each of the members is independent, as
defined in Rule 4200(a)(15) of the National Association of Securities Dealers'
listing standards. The duties and responsibilities of the Audit Committee are
set forth in a written charter adopted by the Board of Directors.
The Audit Committee has reviewed the relevant requirements of the Sarbanes-Oxley
Act of 2002, the rules, proposed and adopted, of the SEC and the proposed new
listing standards of the Nasdaq National Market regarding audit committee
procedures and responsibilities. Although the Audit Committee's existing
procedures and responsibilities generally complied with the requirements of
these rules and standards, the Board of Directors has adopted amendments to the
Audit Committee's charter to voluntarily implement certain of the rules and to
make explicit its adherence to others. A copy of the Audit Committee's amended
and restated charter is attached to this Proxy Statement as Appendix A.
The composition of the Audit Committee, the attributes of its members and the
responsibilities of the Audit Committee, as reflected in its charter, are
intended to be in accordance with applicable requirements for corporate audit
committees. The Audit Committee reviews and assesses the adequacy of its charter
on an annual basis.
In accordance with the Audit Committee Charter, the Audit Committee assists the
Board of Directors in its general oversight of the quality and integrity of the
Company's financial reporting, internal controls and audit functions. Management
is responsible for the preparation, presentation and integrity of the Company's
financial statements, accounting and financial reporting principles, and
internal controls and procedures designed to ensure compliance with
11
accounting standards, applicable laws and regulations. Ernst & Young LLP, the
Company's independent auditing firm, is responsible for performing an
independent audit of the consolidated financial statements of the Company in
accordance with generally accepted auditing standards in the United States.
Among other matters, the Audit Committee monitors the activities and performance
of the Company's internal and external auditors, including the audit scope,
external audit fees, auditor independence matters, and the extent to which the
independent public accountants may be retained to perform non-audit services.
The Audit Committee and the Board of Directors have ultimate authority and
responsibility to select, evaluate and, when appropriate, replace the Company's
independent public accountants. The Audit Committee also reviews the results of
the internal and external audit work with regard to the adequacy and
appropriateness of the Company's financial, accounting, and internal controls.
Management and independent public accountants' presentations to, and discussions
with, the Audit Committee cover various topics and events that may have
significant financial impact or are the subject of discussions between
management and the independent public accountants. In addition, the Audit
Committee generally oversees the Company's internal compliance programs.
The Audit Committee has reviewed and discussed the Company's audited financial
statements for the fiscal year ended December 31, 2002 with management and has
discussed with Ernst & Young LLP, the independent public accountants for the
Company, the matters required to be discussed by Statement of Auditing Standards
No. 61, "Communications with Audit Committees," as amended, with respect to
those audited financial statements. In addition, the Audit Committee has
received the written disclosures and the letter from Ernst & Young LLP required
by Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," as amended, and has reviewed, evaluated and discussed with
Ernst & Young LLP its independence in connection with its audit of the Company's
most recent financial statements.
Based on its review of the audited financial statements and discussions with
management and the independent public accountants, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002, for filing with the SEC.
The Audit Committee
Curtis Lemons
John Reynolds
Ken Wallace
PERFORMANCE GRAPH
The following performance graph compares the cumulative total stockholder return
on the Common Stock to the cumulative total return on the Nasdaq National Market
as measured by the Nasdaq Composite Index (NASDAQ); the Philadelphia Oil Service
Sector Index (OSX), a price-weighted index of leading oil service companies; and
our Peer Group Index over the period from June 7, 2001, the date of the
Company's initial public offering, to December 31, 2002. Our Peer Group Index
consists of Global Industries, Ltd., Horizon Offshore, Inc. and Stolt Offshore,
Inc. The graph assumes that $100 was invested on June 7, 2001 in the Common
Stock and each index at the initial point of each graph and the reinvestment of
all
12
dividends, if any. The Peer Group Index is weighted at the beginning of each
period based upon the market capitalization of each individual company within
the group. The reported closing prices for the dates specified are utilized for
determining the cumulative total returns. The returns shown assume the
reinvestment of dividends.
(GRAPH)
6/7/01 12/31/01 12/31/02
------- -------- --------
Torch Offshore, Inc..................................... $100.00 $ 37.50 $ 34.06
NASDAQ.................................................. $100.00 $ 86.16 $ 58.99
OSX..................................................... $100.00 $ 72.92 $ 72.55
Peer Group Index........................................ $100.00 $ 59.07 $ 21.77
PROPOSAL TWO: APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed and recommends the
approval of the appointment of Ernst & Young LLP as independent public
accountants to conduct an audit of the Company's financial statements for the
year 2003. This firm has acted as independent public accountants for the Company
since June 2002.
The Company is advised that no member of Ernst & Young LLP has any direct or
material indirect financial interest in the Company or has had any connection
with the Company in the capacity of promoter, underwriter, voting trustee,
director, officer or employee since June 2002.
During 2002, the Company incurred the following aggregate fees for the services
rendered:
Audit Fees.............................................. $ 95,000
Tax compliance and consulting........................... 40,800
Financial information system design and
implementation fees .................................... --
All other fees.......................................... 15,000
---------
TOTAL................................................... $ 150,800
=========
Audit fees include $10,000 paid to Arthur Andersen LLP for their review of our
quarterly financial statements for the three-month period ended March 31, 2002,
prior to being
13
replaced. Tax compliance and consulting fees include $16,900 paid to Arthur
Andersen LLP prior to being replaced. Other fees relate to the audit of our
401(k) defined contribution plan by Ernst and Young LLP for the year ended
December 31, 2001.
The Audit Committee reviewed the non-audit services provided to the Company and
determined that they did not impair the independence of Ernst & Young LLP.
Representatives of Ernst & Young LLP will attend the Annual Meeting and will be
available to respond to questions that may be asked by stockholders. Such
representatives will also have an opportunity to make a statement at the meeting
if they desire to do so.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS. In accordance with the Company's Bylaws, approval of the
appointment of independent public accountants will require the affirmative vote
of a majority of the shares of Common Stock voted on the proposal. Accordingly,
abstentions and broker nonvotes applicable to shares present at the meeting will
not be included in the tabulation of votes cast on this matter.
OTHER BUSINESS
Management does not intend to bring any business before the meeting other than
the matters referred to in the accompanying notice. If, however, any other
matters properly come before the meeting, it is intended that the persons named
in the accompanying proxy will vote pursuant to discretionary authority granted
in the proxy in accordance with their best judgment on such matters. This
discretionary authority includes matters that the Board of Directors does not
know are to be presented at the meeting by others.
ADDITIONAL INFORMATION
SUBMISSION DEADLINE FOR STOCKHOLDER PROPOSALS TO BE INCLUDED IN PROXY MATERIALS
FOR 2004 MEETING
In order to be included in the Company's proxy material for its Annual Meeting
of Stockholders in 2004, eligible proposals of stockholders intended to be
presented at the annual meeting must be received by the Company on or before
December 15, 2003 (directed to the Secretary of the Company at the address
indicated on the first page of this Proxy Statement).
ADVANCE NOTICE REQUIRED FOR STOCKHOLDER NOMINATIONS AND PROPOSALS
The Bylaws of the Company require timely advance written notice of stockholder
nominations of director candidates and of any other proposals to be presented at
an Annual Meeting of Stockholders. Notice will be considered timely for the
Annual Meeting to be held in 2004 if it is received by February 15, 2004. In the
case of director nominations by stockholders, the Bylaws require that written
notice be delivered to the Company's Secretary at the Company's executive
offices not later than the 90th day prior to the first anniversary of the
preceding year's annual meeting and set forth for each person whom the
stockholder proposes to nominate for election or re-election as a director, (a)
the name, age, business address and residence address of such person, (b) the
principal occupation or employment of such person, (c) the number of shares of
each class of common stock of the Company beneficially owned by such person, (d)
the written consent of such person to having such person's name placed in
nomination at the meeting and to serve as of a director if elected and (e) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors of the Company, or that is
otherwise
14
required pursuant to Regulation 14A under the Securities Exchange Act of 1934.
The stockholder giving the notice must also include the name and address, as
they appear on the Company's books, of such stockholder and the number of shares
of each class of voting stock of the Company that are then beneficially owned by
such stockholder. The Company is not required to include any stockholder
proposed nominee in the proxy statement.
In the case of other proposals by stockholders at an annual meeting, the Bylaws
require that written notice be delivered to the Company's Secretary at the
Company's executive offices not later than the 90th day prior to the first
anniversary of the preceding year's annual meeting and set forth (a) a
description of each proposal desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business and any other stockholders known by such stockholder to be
supporting such proposal, (c) the class and number of shares of the Company's
stock that are beneficially owned by the stockholder on the date of such notice,
(d) any financial interest of the stockholder in such proposal and (e) a
representation that the stockholder intends to appear in person or by proxy at
the meeting to bring the proposed business before the annual meeting. A copy of
the Bylaws of the Company setting forth the requirements for the nomination of
director candidates by stockholders and the requirements for proposals by
stockholders may be obtained from the Company's Corporate Secretary at the
address indicated on the first page of this Proxy Statement.
In order for director nominations and stockholders proposals to have been
properly submitted for presentation at this annual meeting, notice must have
been received by the Company's Secretary on or before February 15, 2003. The
Company received no such notice and no stockholder director nominations or
proposals will be presented at the Annual Meeting.
ANNUAL REPORT
The Annual Report to Stockholders, which includes financials statements of the
Company for the year ended December 31, 2002, has been mailed to all
stockholders. The Annual Report is not part of the proxy solicitation material.
By Order of the Board of Directors
/s/ LYLE G. STOCKSTILL
Lyle G. Stockstill
Chairman of the Board and
Chief Executive Officer
Gretna, Louisiana
April 14, 2003
15
APPENDIX A
TORCH OFFSHORE, INC.
AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee of the Board of Directors (the "Committee") is appointed by
the Board of Directors (the "Board") to assist the Board in fulfilling its
oversight responsibilities. The Committee's primary duties and responsibilities
are to: (i) be responsible for the appointment, oversight, and compensation of
the firm hired to audit the Company's financial statements and internal controls
("external auditors") and preapprove and review all audit and non-audit
services, including tax services, provided by the external auditor to the
Company, consistent with all applicable laws; (ii) to monitor the quality and
integrity of the accounting, auditing and financial reporting practices of the
Company; (iii) provide an avenue of communication between management and the
external auditors; (iv) to monitor the independence and performance of the
external auditors; and (v) to establish procedures for the treatment of
complaints received by the Company regarding accounting, internal accounting
controls, or audit matters and the confidential anonymous submission by
employees of the Company of concerns regarding questionable accounting or
auditing matters.
MEMBERSHIP AND MEETINGS
The Committee shall consist of not less than three directors, each of whom shall
serve at the discretion of the Board. Each member of the Committee shall be
independent, non-executive directors free from any relationship that would
interfere with the exercise of his or her independence. The Committee members
shall meet the independence and experience requirements of the Securities and
Exchange Commission (the "SEC") and the Nasdaq National Market (as may be
modified or supplemented) or the principal exchange on which the Company's
common stock is then quoted or listed (the "Principal Exchange"). Each member is
prohibited from accepting any fees from the Company other than for services as a
member of the Board or a committee of the Board. In addition, (i) each member
shall be (or shall become within a reasonable time after appointment) able to
read and understand fundamental financial statements, and (ii) at least one
member shall have accounting or related financial management expertise and
qualify as a "financial expert" in accordance with the requirements of the SEC
and the Nasdaq National Market (as may be modified or supplemented).
The Committee shall meet at least four times annually, with special meetings
called as circumstances dictate, and shall meet periodically with management and
the external auditors in order to maintain direct lines of communication and to
ensure there is an open avenue of communication between the external auditor,
the Committee and management. The Committee may hold executive sessions with
these individuals to discuss any matters that they or the Committee believe
should be discussed privately. The Committee has the authority to conduct or
authorize investigations into any matters within the Committee's scope of
responsibilities, and is empowered to retain, at the Company's expense,
independent counsel and other professionals to assist in the conduct of any such
investigation.
A-1
ACCOUNTABILITY OF EXTERNAL AUDITORS
The external auditors are ultimately accountable to the Committee. The Committee
has the ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the external auditors.
DUTIES AND RESPONSIBILITIES
The Committee shall:
1. Annually select the external auditors, with such selection to be
submitted to the stockholders for ratification.
2. Preapprove all audit and non-audit services to be provided, consistent
with all applicable laws, to the Company by the external auditors, and
establish the fees and other compensation to be paid to the external
auditors.
3. Review and approve the plan and scope of the annual audit of the
Company's financial statements and any other services provided by the
external auditors, as well as the fees related to the audit and such
other services.
4. Discuss with management and the external auditors the design, quality
and adequacy of the Company's internal controls.
5. Review and discuss with management and the external auditors the
Company's audited annual financial statements prior to filing with the
SEC, and determine whether to recommend to the Board that the audited
financial statements be included in the Company's Annual Report on Form
10-K.
6. Review and discuss with management and the external auditors the
Company's quarterly financial statements prior to filing with the SEC
and any other SEC filing deemed by the Committee to be appropriate
7. Obtain from the independent auditors assurance that Section 10A of the
Securities and Exchange Act has not been implicated.
8. Whenever requested, or as considered useful or appropriate meet with
the external auditors and management in separate executive sessions to
discuss any matters that the Committee or these groups believe should
be discussed privately with the Audit Committee.
9. Discuss with the external auditors the matters required to be discussed
by the Statement of Auditing Standards No. 61 (Communication with Audit
Committees) and any matters brought to the Committee's attention as a
result of the application of the Statement of Auditing Standards No. 71
(Interim Financial Information).
10. Ensure that the external auditors submit to the Committee on a periodic
basis a formal written statement delineating all relationships between
the external auditors and the Company, actively engage in a dialogue
with the external auditors with respect to any such disclosed
relationships or services that may impact the objectivity and
independence
A-2
of the external auditors, and take appropriate action in response to
the written statement to satisfy itself of the independence of the
external auditors.
11. Prepare a report to stockholders as required by the SEC to be included
in the Company's annual proxy statement.
12. Review and approve all related party transactions.
13. Provide reports of Committee activities to the Board, and perform such
other functions, as requested by the Board or required by law or the
rules of the Principal Exchange.
ANNUAL REVIEW OF CHARTER
At least annually, the Committee shall review and reassess the adequacy of this
Charter. The Committee shall report the results of the review to the Board and,
if necessary, recommend that the Board amend this Charter.
OVERSIGHT/RELIANCE
While the Committee has the responsibilities and powers set forth in this
Charter, the Committee recognizes that the Company's management is responsible
for preparing the Company's financial statements and the external auditors are
responsible for auditing those financial statements. Therefore, the Committee's
responsibility is in the nature of oversight. It is not the responsibility of
the Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate or are in accordance with
generally acceptable accounting principles. In carrying out its oversight
responsibilities, the Committee is not providing any expert or special
assurances as to the Company's financial statements or the work of the external
auditors. Absent actual knowledge to the contrary (which shall be promptly
reported to the Board), each member of the Committee shall be entitled to assume
and rely upon (i) the integrity of those persons and organizations within and
outside the Company from which it receives information, and (ii) the accuracy of
the financial and other information provided to the Committee by such persons
and organizations.
A-3
TORCH OFFSHORE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2003 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MAY 15, 2003
The undersigned hereby appoints Willie Bergeron and Bradley T. Lowe, jointly
and severally, proxies, with full power of substitution and with discretionary
authority, to vote all shares of Common Stock which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of Torch Offshore, Inc. (the
"Company") to be held on Thursday, May 15, 2003, at the International House
Hotel, 221 Camp Street, New Orleans, Louisiana, at 10:00 a.m., or at any
adjournment thereof, hereby revoking any proxy heretofore given.
THIS BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE. [X]
1. ELECTION OF DIRECTORS, NOMINEES: LYLE G. STOCKSTILL, LANA J. HINGLE
STOCKSTILL, CURTIS LEMONS, ANDREW L. MICHEL, JOHN REYNOLDS AND KEN WALLACE
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM [ ] FOR ALL EXCEPT
ALL NOMINEES (See instructions below)
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), mark "FOR ALL EXCEPT" and write the nominee name(s)
below:
-----------------------------------------------------------------
2. APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2003
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. With discretionary authority as to such other matters as may properly come
before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IN THE ABSENCE OF SPECIFIC DIRECTIONS TO THE CONTRARY, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTORS NAMED AND FOR THE APPROVAL OF ERNST & YOUNG
LLP AS THE COMPANY'S ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003.
The undersigned hereby acknowledges receipt of the Notice of, and Proxy
Statement for, the aforesaid Annual Meeting.
Please sign, date and return the Proxy Card promptly, using the enclosed
envelope.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this
method. [ ]
Signature of Stockholder: Date:
------------------------------- --------------
Signature of Stockholder: Date:
------------------------------- --------------
Note: This proxy must be signed exactly as the name appears hereon. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.