UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box:
[DAWSON GEOPHYSICAL COMPANY LETTERHEAD] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JANUARY 22, 2002 TO THE STOCKHOLDERS: Notice is hereby given that the Annual Meeting of the Stockholders of Dawson Geophysical Company will be held at the Petroleum Club of Midland, 501 West Wall, Midland, Texas 79701 at 10:00 a.m. on January 22, 2002 for the following purposes: 1. Electing Directors of the Company; 2. Considering and voting upon a proposal to appoint KPMG LLP as independent public accountants of the Company for the fiscal year ending September 30, 2002; and 3. Considering all other matters as may properly come before the meeting. The Board of Directors has fixed the close of business on November 26, 2001, as the record date for the determination of stockholders entitled to notice of and to vote at the meeting and at any adjournment or adjournments thereof. DATED this 26th day of November, 2001. BY ORDER OF THE BOARD OF DIRECTORS Paula G. Waldrop, Secretary IMPORTANT WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO EXECUTE THE ACCOMPANYING PROXY CARD, WHICH REQUIRES NO POSTAGE, AND RETURN IT PROMPTLY. ANY STOCKHOLDER GRANTING A PROXY MAY REVOKE SAME AT ANY TIME PRIOR TO ITS EXERCISE. ALSO, WHETHER OR NOT YOU GRANT A PROXY, YOU MAY VOTE IN PERSON IF YOU ATTEND THE MEETING.
[DAWSON GEOPHYSICAL COMPANY LETTERHEAD] PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS TO BE HELD TUESDAY, JANUARY 22, 2002 SOLICITATION OF PROXY The accompanying proxy is solicited on behalf of the Board of Directors of Dawson Geophysical Company (the "Company") for use at the Annual Meeting of Stockholders of the Company to be held on Tuesday, January 22, 2002, and at any adjournment or adjournments thereof. In addition to the use of the mails, proxies may be solicited by personal interview, telephone and telegraph by officers, directors and other employees of the Company, who will not receive additional compensation for such services. The Company may also request brokerage houses, nominees, custodians and fiduciaries to forward the soliciting material to the beneficial owners of stock held of record and will reimburse such persons for forwarding such material. The Company will bear the cost of this solicitation of proxies. Such costs are expected to be nominal. Proxy solicitation will commence with the mailing of this Proxy Statement on or about December 4, 2001. Any stockholder giving a proxy has the power to revoke the same at any time prior to its exercise by executing a subsequent proxy or by written notice to the Secretary of the Company or by attending the meeting and withdrawing the proxy. PURPOSE OF MEETING As stated in the Notice of Annual Meeting of Stockholders accompanying this Proxy Statement, the business to be conducted and the matters to be considered and acted upon at the annual meeting are as follows: 1. Electing Directors of the Company; 2. Considering and voting upon a proposal to appoint KPMG LLP as independent public accountants of the Company for the fiscal year ending September 30, 2002; and 3. Considering all other matters as may properly come before the meeting. VOTING RIGHTS The voting securities of the Company consist solely of common stock, par value $0.33 1/3 per share ("Common Stock"). The record date for stockholders entitled to notice of and to vote at the meeting is the close of business on November 26, 2001, at which time the Company had outstanding and entitled to vote at the meeting 5,445,794 shares of Common Stock. Stockholders are entitled to one vote, in person or by proxy, for each share of Common Stock held in their name on the record date. Stockholders representing a majority of the Common Stock outstanding and entitled to vote must be present or represented by proxy to constitute a quorum. The election of directors will require the affirmative vote of a majority of the Common Stock present or represented by proxy at the meeting and entitled to vote thereon. Cumulative voting for directors is not authorized. If the enclosed Proxy is properly executed and returned prior to the Annual Meeting, the shares represented thereby will be voted as specified therein. IF A SHAREHOLDER DOES NOT SPECIFY OTHERWISE ON THE RETURNED PROXY, THE SHARES REPRESENTED BY THE SHAREHOLDER'S PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED BELOW UNDER "ELECTION OF DIRECTORS", FOR APPROVAL OF THE MINUTES OF THE 2002 ANNUAL MEETING OF SHAREHOLDERS AND ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF. 1
ELECTION OF DIRECTORS At the Annual Meeting to be held on January 22, 2002, eight persons are to be elected to serve on the Board of Directors for a term of one year and until their successors are duly elected and qualified. All of the current Directors have announced that they are available for election to the Board of Directors. The Company's nominees for the eight directorships are: Paul H. Brown Matthew P. Murphy Calvin J. Clements Howell W. Pardue L. Decker Dawson Tim C. Thompson Stephen C. Jumper C. Ray Tobias For information about each nominee, see "Directors and Executive Officers." DIRECTORS AND EXECUTIVE OFFICERS The Board of Directors currently consists of four persons who are employees of the Company and four persons who are not employees of the Company (i.e., outside directors). Set forth below are the names, ages and positions of the Company's Directors and executive officers as of November 26, 2001.
Edward L. Huff. Mr. Huff joined the Company in 1956, and was elected Vice President in September 1997. Prior thereto, Mr. Huff served as instrument operator, crew manager and field supervisor. He has managed the Company's field operations since 1987. Frank D. Brown. Mr. Brown, a geophysicist, joined the Company in 1988 and was elected Vice President in January, 2001. Mr. Brown is responsible for maintaining client relationships and submitting survey cost quotations as well as providing survey design services to client companies. He is a past President of the Permian Basin Geophysical Society and a member of the Society of Exploration Geophysicists Continuing Education Committee. Prior to joining the Company, Mr. Brown was employed by Permian Exploration Corporation as a geophysicist responsible for acquisition and interpretation projects. K.S. Forsdick. Mr. Forsdick joined the Company in 1993 and was elected Vice President in January, 2001. Mr. Forsdick is responsible for soliciting, designing and bidding seismic surveys for prospective client companies. Prior to joining the Company, Mr. Forsdick was employed by Grant Geophysical Company and Western Geophysical Company and was responsible for marketing and managing land and marine seismic surveys for domestic and international operations. He presently serves on the Governmental Affairs Committee of the International Association of Geophysical Contractors. Paula G. Waldrop. Ms. Waldrop joined the Company in 1981 and has served in her present position since 1989. Ms. Waldrop supervises administrative operations of the Company. Paul H. Brown. Mr. Brown has served the Company as a director since September 1999. Mr. Brown, a management consultant since May 1998, was President and Chief Executive Officer at WEDGE Energy Group, Inc. from January 1985 to May 1998. Calvin J. Clements. Mr. Clements has served the Company as a director since 1972. Prior thereto and until his retirement in 1987, Mr. Clements was employed by the Company as vice president of the data acquisition operations. Matthew P. Murphy. Mr. Murphy has served the Company as a director since 1993. Until his retirement in 1991, Mr. Murphy served as an executive of NCNB Texas, now known as Bank of America (and predecessor banks), and from 1986 to 1991, Mr. Murphy served the bank as District Director-West Texas. Tim C. Thompson. Mr. Thompson has served the Company as director since 1995. Mr. Thompson, a management consultant since May 1993, was President and Chief Executive Officer of Production Technologies International, Inc. from November 1989 to May 1993. MEETINGS AND COMMITTEES OF DIRECTORS During fiscal year ended September 30, 2001, six meetings of the Board of Directors were held which all of the respective members attended except that one Director was absent from two meetings. The Audit Committee is a standing committee of the Board of Directors and currently consists of Messrs. Brown, Clements, Murphy and Thompson, all of whom are independent, non-employee directors. The functions of the Committee are to determine whether management has established internal controls which are sound, adequate and working effectively; to ascertain whether Company assets are verified and safeguarded; to review and approve external audits; to review audit fees and the appointment of independent public accountants; and to review non-audit services provided by the independent public accountants. For additional information, see "Report of the Audit Committee". The Compensation Committee currently consists of Messrs. Clements, Murphy and Thompson, all of whom are non-employee directors. The function of the Committee is to determine compensation for the officers of the Company that is competitive to enable the Company to motivate and retain the talent needed to lead and grow the Company's business. The Committee held three meetings during fiscal year ended September 30, 2001. All members attended these meetings. MANAGEMENT COMPENSATION The compensation levels of the Company are believed to be competitive and in line with those of comparable companies and to align the interests of the Company's employees with those of its stockholders through potential stock ownership. 3
SUMMARY COMPENSATION TABLE The following table sets forth certain information concerning the annual and long-term compensation paid to or for (i) the Company's Chief Executive Officer during the fiscal year ended September 30, 2001, and (ii) those of the Company's four other most highly compensated executive officers whose total annual salary and bonus exceeded $100,000 in 2001 (collectively, the "Named Officers"), for services rendered to the Company during fiscal years 1999, 2000 and 2001.
COMPENSATION PLANS Stock Option Plans. The Dawson Geophysical Company 1991 Incentive Stock Option Plan (the "1991 Plan") provided that 150,000 shares of the Company's authorized but unissued Common Stock are reserved for issuance pursuant to the 1991 Plan and are subject to options granted to key employees during the ten-year period through January 8, 2001. The Dawson Geophysical Company 2000 Incentive Stock Plan provides an additional 500,000 shares reserved for issuance. The 2000 Plan contains substantially the same terms as the predecessor plan except up to 50,000 of such shares may be awarded and issued as additional compensation to key employees, officers and non-employee members of the Board of Directors of the Company with or without payment therefor. The 2000 Plan covers a ten-year period through January 12, 2009. All outstanding options under the original plan will not be affected by the 2000 Plan. Options under the 2000 Plan are granted at an exercise price equal to the market price of the stock on the date of grant. Each option that is granted is exercisable after the period or periods specified in the option agreement, but prior to the expiration of five years after the date of grant. Commencing one year after date of grant, optionees may purchase up to one-fourth of the shares covered by a particular grant, and each option becomes exercisable with respect to an additional one-fourth of the shares covered in each of the next three years. During fiscal 2001, no shares of the Common Stock were issued pursuant to the exercise of options granted under the 1991 Plan. During fiscal 2001, options to purchase 70,000 shares of common stock were granted to employees of the Company under the 2000 Plan. As of November 26, 2001, the total number of shares covered by outstanding options was 251,000. Stock Purchase Plan. On November 1, 1982, as amended September 28, 1999, the Board of Directors of the Company adopted an Employee Stock Purchase Plan (the "Purchase Plan") effective January 1, 1983, in which eligible employees may elect to purchase, through payroll deductions, shares of the Company's Common Stock and thereby increase their proprietary interest in the Company. Pursuant to the Purchase Plan, the Company contributes one dollar (before Social Security and withholding taxes) for each dollar contributed by an eligible employee to purchase Common Stock for the employee's account up to 5% of the employee's annual salary. As of September 30, 2001, no named executive officers participated in the Purchase Plan. On a bi-weekly basis, the Company matches the participants' percentage of contributions and directs the purchase of shares of the Company's Common Stock. There are no vesting requirements for the participants. The Company contributed $214,347, $240,328 and $223,360 to the Purchase Plan during the fiscal years 1999, 2000 and 2001, respectively. BOARD REPORT ON EXECUTIVE COMPENSATION Compensation for executive officers is based on the principle that compensation must be competitive to enable the Company to motivate and retain the talent needed to lead and grow the Company's business, and to provide rewards which are closely linked to the Company and individual performance. Executive compensation is based on performance against a combination of financial and non-financial measures. In addition to business results, employees are expected to uphold a commitment to integrity, maximizing the development of each individual, and continually improving the environmental quality of its services and operations. In upholding these financial and non-financial objectives, executives not only contribute to their own success, but also help ensure that the business, employees, stockholders and communities in which we live and work will prosper. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Company's Compensation Committee makes recommendations regarding compensation subject to approval of the entire Board of Directors. REPORT OF THE AUDIT COMMITTEE To the Stockholders of Dawson Geophysical Company: It is the responsibility of the members of the Audit Committee to contribute to the reliability of the Company's Financial Statements. In keeping with this goal, the Board of Directors adopted a written charter in May 2000 (attached to this proxy statement as Exhibit A) to govern the Audit Committee. Upon evaluation of the charter's adequacy in 2001, the Audit Committee is satisfied. In addition to written consent, the Audit Committee met three times during fiscal 2001. The members of the Audit Committee are independent directors. The Audit Committee has reviewed and discussed the Company's audited financial statements with management. It has also discussed with the independent auditors the matters required to be discussed by Statement on Accounting Standards No. 61, Communication with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants. Additionally, the Audit Committee has received the written disclosures and the letter from the independent accountants at KPMG LLP, as required by Independent Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with the independent accountants that firm's independence from the Company and its management. The Audit Committee has concluded that non-audit services provided by KPMG LLP do not result in conflict in maintaining that firm's independence. 5
Audit fees billed to the Company by KPMG LLP during the Company's 2001 fiscal year for the audit of the Company's annual financial statements and the review of those financial statements included in the Company's quarterly reports of Form 10-Q totaled approximately $30,000. The Company was billed approximately $14,000 by KPMG LLP for tax related services. The Company has obtained no other services from KPMG LLP. Based on reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the financial statements for fiscal 2001 be included in the Company's Annual Report on Form 10-K. November 26, 2001 Audit Committee Matthew P. Murphy Paul H. Brown Calvin C. Clements Tim C. Thompson PERFORMANCE GRAPH The following graph compares the five-year cumulative total return of the Company's Common Stock as compared with the S&P 500 Stock Index and a peer group made up of companies in the Value-Line Oilfield Services Industry Index. The Oilfield Services Index consists of far larger companies that perform a variety of services as compared to land-based acquisition and processing of seismic data performed by the Company. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* AMONG DAWSON GEOPHYSICAL COMPANY, THE S & P 500 INDEX AND A PEER GROUP PEER GROUP TOTAL RETURN WORKSHEET RESEARCH DATA GROUP DAWSON GEOPHYSICAL CO
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock, as of November 26, 2001, by each of the Company's Directors, by each of the Named Officers, by all executive officers and Directors of the Company as a group, and by each person known to the Company to be the beneficial owner of more than 5% of any class of the Company's outstanding Common Stock.
NEXT ANNUAL MEETING The next Annual Meeting of the Company's stockholders is scheduled to be held on January 21, 2003. Appropriate proposals of stockholders intended to be presented at the 2003 Annual Meeting must be received by Ms. Paula G. Waldrop, Secretary, no later than August 15, 2002, in order to be included in the Company's Proxy Statement and form of Proxy relating to such meeting. OTHER MATTERS Management knows of no other business which will be presented at the Annual Meeting other than as explained herein. STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001, BY WRITING TO THE SECRETARY, DAWSON GEOPHYSICAL COMPANY, 508 WEST WALL, SUITE 800, MIDLAND, TEXAS 79701. A COPY OF THE REPORT ALSO MAY BE OBTAINED FROM THE INTERNET AT www.sec.gov. BY ORDER OF THE BOARD OF DIRECTORS Paula G. Waldrop, Secretary 8
EXHIBIT A DAWSON GEOPHYSICAL COMPANY AUDIT COMMITTEE CHARTER COMPOSITION The Audit Committee shall be composed of at least three directors who are independent of the management of Dawson Geophysical Company (the "Company") and are free of any relationship that, in the opinion of the Board of Directors, would interfere with their exercise of independent judgment as a committee member and are, or will shortly become, financially literate. In addition, the members of the Audit Committee shall understand financial statements. OBJECTIVE OF THE AUDIT COMMITTEE The Audit Committee shall assist the Board of Directors in fulfilling its responsibility to the shareholders, potential shareholders, and the investment community relating to corporate accounting, reporting practices of the Company, and the quality and integrity of the financial reports of the Company. SPECIFIC RESPONSIBILITIES OF THE AUDIT COMMITTEE In fulfilling its objective, the Audit Committee shall have the responsibility with respect to: The Company's Risks and Control Environment: To review management's overview of the risks, policies, procedures, and controls surrounding the integrity of financial reporting and, particularly, the adequacy of the Company's controls in areas representing significant financial and business risks; To establish, review and update periodically a code of ethical conduct, ensure that management has established a system to enforce the code, and receive updates and briefings from management and others on how compliance with ethical policies and other relevant Company procedures is being achieved; To review, with the Company's counsel, legal matters, including litigation, compliance with securities trading policies, the Foreign Corrupt Practices Act and other laws having a significant impact on the Company's business or its financial statements; and To investigate any matter brought to its attention within the scope of its duties, and retain outside counsel for this purpose if, in its judgment, that is appropriate; The Hiring and Firing of and Relationship with the Independent Accountants: To participate, on behalf of the Board of Directors, in the process by which the Company selects the independent accountants to audit the Company's financial statements, evaluate annually the effectiveness and objectivity of such accountants, and recommend the engagement or replacement of independent accountants to the Board of Directors; To have an open line of communication with the independent accountants, who shall have ultimate accountability to the Board of Directors and the Audit Committee, as representatives of the shareholders; To approve the fees and other compensation paid to the independent accountants; and
To review the independence of the independent accountants prior to engagement, annually discuss with the independent accountants their independence annually based upon the written disclosures and the letter from the independent accountants required by Independent Standards Board Standard No. 1, as modified or supplemented, and discuss with the Board of Directors any relationships that may adversely affect the independence of the independent accountants. The Financial Reporting Process: To meet with the independent accountants and the financial management of the Company with respect to major changes to the Company's auditing and accounting principles; To meet with the independent accountants and the financial management of the Company together and separately with the independent accountants (a) prior to the performance by the independent accountants of the audit to discuss the scope of the proposed audit for the current year and the audit procedures to be utilized; and (b) at the conclusion of the audit to discuss (i) the independent accountants' judgments about the quality, not just the acceptability, of the Company's accounting principles as applied in its financial reporting, the consistency of application of the Company's accounting policies and the clarity, consistency, and completeness of the entity's accounting information contained in the financial statements and related disclosures, (ii) the adequacy and effectiveness of the accounting and financial controls of the Company, including the internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper, and any recommendations for improvement of such internal control procedures or for new or more detailed controls or procedures of the Company, (iii) any other results of the audit, including any comments or recommendations, and (iv) the view of the independent accountants with respect to the financial, accounting and auditing personnel and the cooperation that the independent accountants received during the course of the audit; To review and discuss with the independent accountants and the financial management of the Company the Company's financial results before they are made public. In general, the Chairman of the Audit Committee may represent the entire committee with respect to the review and discussions about interim financial results; and To review other reports submitted by the Company to any governmental body of the public, including any certification, report, opinion or review rendered by the independent accountants; Other Responsibilities of the Audit Committee To review and update periodically the charter for the Audit Committee; To review, assess and approve or disapprove conflicts of interest and related-party transactions; To review accounting and financial human resources and succession planning within the Company; To meet at least four times annually, or more frequently, as circumstances dictate; To report to the Board of Directors the matters discussed at each committee meeting; To assess the performance of the Audit Committee members through a self-assessment process, led by the Chairman of the committee; and To keep an open line of communication with the financial and senior management, the internal audit department, the independent accountants, and the Board of Directors.
DAWSON GEOPHYSICAL COMPANY PROXY The undersigned stockholder of Dawson PLEASE SIGN Geophysical Company hereby appoints L. Decker Dawson, Tim C. Thompson, and Matthew P. AND RETURN Murphy or any one or more of them, attorneys, agents and proxies of the undersigned, with PROMPTLY. full power of substitution to each of them, to vote all the shares of Common Stock which ANNUAL MEETING the undersigned would be entitled to vote at JANUARY 22, 2002 the Annual Meeting of Stockholders to be held 10:00 A.M. January 22, 2002, and at any adjournment or PETROLEUM CLUB OF MIDLAND adjournments thereof, with all the powers the 501 WEST WALL, MIDLAND, TX 79701 undersigned would possess if personally present and voting thereat, (A) as instructed THIS PROXY IS SOLICITED BY below with respect to the following matters THE BOARD OF DIRECTORS and (B) in their discretion upon other OF THE COMPANY matters which properly come before the meeting. UNLESS A CONTRARY INSTRUCTION IS Please return this proxy card SPECIFIED BELOW, THIS PROXY WILL BE VOTED FOR which requires no postage if ALL ITEMS. mailed in the U.S.A. 1. Election of Directors: [ ] FOR all nominees listed below (except as marked to the contrary below) [ ] WITHHOLD AUTHORITY to vote for all nominees listed below Paul H. Brown, Calvin J. Clements, L. Decker Dawson, Stephen C. Jumper, Matthew P. Murphy, Howell W. Pardue, Tim C. Thompson and C. Ray Tobias. (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided): 2. Proposal to ratify the selection of KPMG LLP as independent public accountants of the Company for the fiscal year ended September 30, 2002. [ ] For [ ] Against The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement of the Company dated November 26, 2001. Please date and sign exactly as name appears on this proxy. Joint owners should each sign. If the signer is a corporation, please sign full corporate name by duly authorized officer. Executors, administrators, trustees, etc., should give full title as such. Dated ----------------------- -------------------------- -------------------------- (Signature of Stockholder)
FROM --------------- | NO POSTAGE | - ----------------- | NECESSARY | - ----------------- | IF MAILED | - ----------------- | IN THE | |UNITED STATES| --------------- -------------------------------------------------------- | BUSINESS REPLY MAIL | | | | FIRST CLASS MAIL PERMIT NO. 80 MIDLAND, TEXAS | -------------------------------------------------------- POSTAGE WILL BE PAID BY ADDRESSEE DAWSON GEOPHYSICAL CO. 508 WEST WALL, SUITE 800 MIDLAND TX 79701-9976