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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: (Date of earliest event reported): December 1, 2008
ION Geophysical Corporation
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation)
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1-12691
(Commission file number)
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22-2286646
(I.R.S. Employer Identification No.) |
2105 CityWest Blvd, Suite 400
Houston, Texas 77042-2839
(Address of principal executive offices, including Zip Code)
(281) 933-3339
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
The disclosures in Item 5.02 below are incorporated by reference into this Item 1.01.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment and Resignation of Certain Officers; New Directors.
Officers. ION Geophysical Corporation (the “Company”) announced on December 4, 2008
that it has appointed James R. Hollis as its new President and Chief Operating Officer, effective
December 1, 2008. In connection with Mr. Hollis’s appointment as President of the Company, Robert
P. Peebler will continue as the Chief Executive Officer of the Company and a member of the
Company’s Board of Directors. Mr. Peebler has served as President and Chief Executive Officer of
the Company since March 2003, and has been a member of the Company’s Board of Directors since 1999.
Prior to his appointment, Mr. Hollis, age 47, had served as the Executive Vice President and
Chief Operating Officer of the Company’s ION Solutions division, a position that he had held since
January 2007. Prior to leading the ION Solutions division, Mr. Hollis served the Company in
various other capacities, including as Vice President, New Ventures — FireFly beginning in
November 2005 and Vice President — Land Imaging Systems beginning in November 2003. Mr. Hollis
joined the Company in July 2003 as Business Unit Manager — Land Surface Systems. Prior to his
joining the Company, Mr. Hollis served in various positions (most recently as General Manager —
Exploration and Development Solutions) at Landmark Graphics, a Halliburton Company-owned
workstation-based software provider for oil and gas exploration and production companies. Mr.
Hollis holds a Bachelor of Science degree in Geophysics from the University of California, Santa
Barbara and a Master of Science degree in Geophysics from the University of Utah.
A copy of the Company’s press release regarding the appointment of Mr. Hollis is filed as
Exhibit 99.1 to this Current Report on Form 8-K.
On December 1, 2008, Charles J. Ledet resigned as Executive Vice President and Chief Operating
Officer of ION Systems, a business unit of the Company. In connection with his resignation, Mr.
Ledet and the Company entered into a severance agreement dated December 1, 2008 (the “Severance
Agreement”), pursuant to which Mr. Ledet will be entitled to receive cash payments in an aggregate
amount equal to $468,000, payable in installments over an 18-month period. The Severance Agreement
also contains a release and a covenant by Mr. Ledet not to sue the Company or its officers or
directors. A copy of the Severance Agreement is filed as Exhibit 10.1 to this Current Report on
Form 8-K. This summary of the Severance Agreement is qualified in its entirety by reference to
such exhibit, which is incorporated herein by reference.
In addition, effective December 1, 2008, Mr. Ledet entered into a consulting agreement (the
“Consulting Agreement”) with the Company, which is more fully described below.
Directors. On December 5, 2008, the Company announced the appointment of G. Thomas
Marsh and Nick G. Vlahakis to its Board of Directors. The appointment of Mr. Vlahakis will fill
the vacancy on the Board of Directors created by the resignation of Sam K. Smith as a director in
August 2008. As Mr. Smith’s replacement on the Board, Mr. Vlahakis will serve the remainder of Mr.
Smith’s term on the Board, which term is scheduled to expire in 2011. Mr. Marsh will join the
class of directors having a term of service that expires in 2009. In connection with their
appointment to the Board of Directors, the Company increased the number of directors that will
comprise the entire Board from eight to nine.
Mr. Marsh, age 65, retired in 2006 as Executive Vice President, Lockheed Martin Space Systems
Company, a company engaged in developing advanced technologies for defense and space applications.
From 1969 until its merger in 1995 to form Lockheed Martin Corporation, Mr. Marsh was employed by
Martin Marietta Corporation, most recently in the position of President, Manned Space Systems.
After 1995, Mr. Marsh held positions of increasing responsibility within Lockheed Martin, including
serving as President and General Manager of the Missiles and Space Operations business unit from
2002 until his appointment as Executive Vice President in 2003.
Mr. Vlahakis, age 60, retired in 2005 as Executive Vice President and Chief Operating Officer
of Alliant Techsystems Inc. (ATK), a supplier of aerospace and defense technologies. Beginning in
1982, Mr. Vlahakis was employed by Hercules Aerospace Company, a supplier of aerospace products,
where he served in a number of positions, most recently in the position of Vice President and
General Manager, Tactical Propulsion Facility. Mr. Vlahakis joined Alliant Techsystems in 1995
when Alliant Techsystems acquired Hercules Aerospace. He served in a number of senior leadership
positions with Alliant Techsystems, including Group Vice President, Defense, until 2002, when he
was appointed its Chief Operating Officer.
A copy of the Company’s press release regarding these director appointments is filed as
Exhibit 99.2 to this Current Report on Form 8-K.
2
Compensatory Arrangements and Awards.
Consulting Agreement. On December 1, 2008, Mr. Ledet entered into the Consulting
Agreement with the Company, under which he has agreed to provide consulting services for a period
of two years to assist the Board of Directors and the Company’s executive management in achieving a
smooth transition following his departure and to provide management advisory services to the
Company. Under the Consulting Agreement, Mr. Ledet will not receive any monetary compensation for
his consulting services but he was awarded grants of 15,998 shares of restricted stock of the
Company under the Company’s 2004 Long-Term Incentive Plan and a total of 235,000 cash-settled stock
appreciation rights (“SARs”) under the Company’s recently-adopted Stock Appreciation Rights Plan.
In connection with the Consulting Agreement, Mr. Ledet also agreed to the termination on December
1, 2008, of a total of 141,250 vested stock options held by him. The SARs were granted to Mr.
Ledet on December 1, 2008, and have exercise prices as set forth below:
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| No. of SARs |
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Grant Exercise Price ($) |
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| 15,000
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5.8125 |
| 12,500
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11.10 |
| 10,000
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9.38 |
| 12,500
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3.35 |
| 25,000
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9.84 |
| 40,000
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6.20 |
| 25,000
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9.97 |
| 25,000
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15.43 |
| 70,000
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15.43 |
All of the exercise prices for the SARs granted to Mr. Ledet exceed the fair market value per
share of the Company’s common stock on the date of grant. On November 28, 2008, the last trading
day prior to December 1, 2008, the closing price per share of the Company’s common stock on the New
York Stock Exchange was $3.00 per share. Under the Consulting Agreement, Mr. Ledet will be subject
to certain covenants not to compete with the Company during its two-year term. All of the shares
of restricted stock and SARs granted to Mr. Ledet will vest on December 1, 2010, subject to the
condition that he shall have fully performed all of his obligations under the Consulting Agreement.
A copy of the Consulting Agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K.
This summary of the Consulting Agreement set forth herein is qualified in its entirety by reference
to such exhibit, which is incorporated herein by reference.
Annual Equity Compensation Grants. As stated in the Company’s proxy statement for its
Annual Meeting of Stockholders held on May 27, 2008, the Company has adopted a policy that all
awards of restricted stock and stock options to its employees and directors will be granted on one
of four designated dates during the year: March 1, June 1, September 1 or December 1. Except for
occurrences such as significant promotions, new hires, new directors joining the Board or unusual
circumstances, the Company’s current policy is to make most equity compensation awards on December
1 of each year. This date was selected because (i) it enables the Board of Directors and
Compensation Committee to consider individual performance eleven months into the year, (ii) it
simplifies the annual budgeting process by having the expense resulting from the equity award
incurred late in the fiscal year and (iii) the date is approximately three months before the date
that the Company normally pays annual incentive bonuses.
Consistent with this policy and past practice, on December 1, 2008, the Company granted
certain equity compensation awards to its key employees, including its officers. The table below
shows the grants on that date to the named executive officers of the Company (other than Mr. Ledet)
of (i) nonqualified stock options under the Company’s 2004 Long-Term Incentive Plan, (ii) shares of
the Company’s restricted stock under the 2004 Long-Term Incentive Plan and (iii) cash-settled SARs
under the Stock Appreciation Rights Plan:
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Shares of |
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Shares Subject to |
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Restricted Stock |
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| Executive Officer |
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Stock Options (#) |
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SARs (#) |
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Robert P. Peebler
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Chief Executive Officer
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180,000 |
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R. Brian Hanson
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Executive Vice
President and
Chief
Financial Officer
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70,000 |
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15,000 |
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140,000 |
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James R. Hollis
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President and Chief
Operating Officer
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100,000 |
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20,000 |
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200,000 |
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Teng Beng Koid
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Executive Vice
President and
Chief
Operating Officer —
Global Business
Development.
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40,000 |
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15,000 |
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The options granted vest 25% each year over a four-year period and are exercisable at a price
equal to $3.00 per share, which is the closing sales price per share of the Company’s common stock
on the NYSE on the last trading day immediately prior to the date of grant, in accordance with the
terms of the 2004 Long-Term Incentive Plan. The grants of shares of restricted stock will vest in
one-third increments each year, over a three-year period. During the period that the restricted
stock has not yet vested, holders of shares of restricted stock are entitled to the same voting
rights and rights to dividends as all other holders of common stock. The SARs will 100%
cliff-vest on December 1, 2011, and will have an exercise price equal to $3.00 per SAR, which is
the closing sales price per share of the Company’s common stock on the NYSE on the last trading day
prior to the date of grant, in accordance with the terms of the Stock Appreciation Rights Plan.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(d) Exhibits.
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10.1
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Severance Agreement dated as of December 1, 2008, between ION Geophysical Corporation and Charles J. Ledet. |
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10.2
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Consulting Agreement dated as of December 1, 2008, between ION Geophysical Corporation and Charles J.
Ledet. |
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99.1
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Press Release dated December 4, 2008. |
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99.2
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Press Release dated December 5, 2008. |
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Date: December 5, 2008 |
ION GEOPHYSICAL CORPORATION
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By: |
/s/ DAVID L. ROLAND
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David L. Roland |
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Senior Vice President, General Counsel and
Corporate Secretary |
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EXHIBIT INDEX
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| Exhibit Number |
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Description |
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10.1
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Severance Agreement dated as of December 1, 2008, between
ION Geophysical Corporation and Charles J. Ledet. |
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10.2
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Consulting Agreement dated as of December 1, 2008, between
ION Geophysical Corporation and Charles J. Ledet. |
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99.1
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Press Release dated December 4, 2008. |
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99.2
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Press Release dated December 5, 2008. |
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