<PAGE>
RPC, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
2170 PIEDMONT ROAD, NE, ATLANTA, GEORGIA 30324
TO THE HOLDERS OF THE COMMON STOCK:
PLEASE TAKE NOTICE that the 1997 Annual Meeting of Stockholders of RPC,
Inc., a Delaware corporation (the "Company"), will be held at the Company's
offices located at 2170 Piedmont Road, NE, Atlanta, Georgia, on Tuesday, April
22, 1997, at 9:00 A.M., or any adjournment thereof, for the following purposes:
(1) To elect three Class II directors to the Board of Directors; and
(2) To approve an increase in the number of shares reserved for issuance
under the Company's 1994 Employee Stock Incentive Plan (the "1994 Plan");
and
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Proxy Statement dated March 27, 1997 is attached.
The Board of Directors has fixed the close of business on February 28, 1997
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the meeting.
Stockholders who do not expect to be present at the meeting are urged to
complete, date, sign and return the enclosed proxy. No postage is required if
the enclosed envelope is used and mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
Linda H. Graham, Secretary
Atlanta, Georgia
March 27, 1997
<PAGE>
PROXY STATEMENT
This Proxy Statement and a form of proxy were first mailed to stockholders
on or about March 27, 1997.
The following information concerning the enclosed proxy and the matters to
be acted upon at the Annual Meeting of Stockholders to be held on April 22,
1997, is submitted to the stockholders for their information.
SOLICITATION OF AND POWER TO REVOKE PROXY
A form of proxy is enclosed. Each proxy submitted will be voted as directed,
but if not otherwise specified, proxies solicited by the Board of Directors of
the Company will be voted in favor of the candidates for election to the Board
of Directors and in favor of the proposal to increase the number of shares
reserved for issuance under the 1994 Plan.
A stockholder executing and delivering a proxy has power to revoke the same
and the authority thereby given at any time prior to the exercise of such
authority if he so elects, by contacting either proxyholder.
CAPITAL STOCK
The outstanding capital stock of the Company on February 28, 1997 consisted
of 14,689,738 shares of Common Stock, par value $0.10 per share (excluding
78,253 treasury shares). Holders of Common Stock are entitled to one vote
(non-cumulative) for each share of such stock registered in their respective
names at the close of business on February 28, 1997, the record date for
determining stockholders entitled to notice of and to vote at the meeting or any
adjournment thereof.
The name and address of each stockholder who owned beneficially five percent
(5%) or more of the shares of Common Stock of the Company on February 28, 1997,
together with the number of shares so owned and the percentage of outstanding
shares that ownership represents, and information as to Common Stock ownership
of the Company's Chief Executive Officer and the other four most highly
compensated executive officers of the Company (the "Named Executives"), and the
executive officers and directors of the Company as a group (according to
information received by the Company), is set out below:
<TABLE>
<CAPTION>
AMOUNT PERCENT OF
NAME AND ADDRESS BENEFICIALLY OUTSTANDING
OF BENEFICIAL OWNER OWNED(1) SHARES
- ---------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
R. Randall Rollins ......................................................... 7,863,254(2) 53.5
2170 Piedmont Road, NE
Atlanta, Georgia
Gary W. Rollins ............................................................ 7,816,903(3) 53.2
2170 Piedmont Road, NE
Atlanta, Georgia
Mario Gabelli .............................................................. 875,200(4) 6.0
One Corporate Center
Rye, New York
Richard A. Hubbell ......................................................... 99,465(5) 0.7
2170 Piedmont Road, NE
Atlanta, Georgia
Bobby Joe Cudd ............................................................. 0 0.0
2170 Piedmont Road, NE
Atlanta, Georgia
James A. Lane, Jr .......................................................... 69,159(6) 0.5
2170 Piedmont Road, NE
Atlanta, Georgia
William S. Pegg ............................................................ 73,159(6) 0.5
2170 Piedmont Road, NE
Atlanta, Georgia
All Directors and Executive Officers as a group (12 persons)................ 8,977,676(7) 60.8
</TABLE>
(1) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
2
<PAGE>
(2) Includes 236,072 shares of the Company held as Trustee, Guardian, or
Custodian for his children or as Custodian for the children of his brother,
Gary W. Rollins. Also includes 433,580 shares of the Company in four trusts
of which he is a Co-Trustee and as to which he shares voting and investment
power. Also includes 6,246,914 shares owned by LOR, Inc. Mr. Rollins is an
officer, director and stockholder of LOR, Inc. Also includes 432,000 shares
owned by The May Partnership. Mr. Rollins is an officer, director and
stockholder of Rollins Holding Company, Inc., the corporation which is the
sole general partner of The May Partnership. Also includes 133,484 shares
held by Rollins Investment Fund, a Georgia general partnership, of which Mr.
Rollins is a general partner. Also includes 36,715 shares held by RWR
Investment partnership, a Georgia limited partnership, of which Mr. Rollins
is a general partner. Also includes 82,752 shares indirectly owned by Mr. O.
Wayne Rollins' Estate. Mr. Rollins is the Co-Executor and Co-Trustee of this
estate. Does not include 10,890* shares of the Company held by his wife.
(3) Includes 163,972 shares of the Company held as Trustee or Custodian for his
children or as Custodian for the grandchildren of his brother, R. Randall
Rollins. Also includes 420,140 shares of the Company in four trusts of which
he is Co-Trustee and as to which he shares voting and investment power. Also
includes 6,246,914 shares owned by LOR, Inc. Mr. Rollins is an officer,
director and stockholder of LOR, Inc. Also includes 432,000 shares owned by
The May Partnership. Mr. Rollins is an officer, director and stockholder of
Rollins Holding Company, Inc., the corporation which is the sole general
partner of The May Partnership. Also includes 133,484 shares held by Rollins
Investment Fund, a Georgia general partnership, of which Mr. Rollins is a
general partner. Also includes 82,752 shares indirectly owned by Mr. O.
Wayne Rollins' Estate. Mr. Rollins is the Co-Executor and Co-Trustee of this
estate. Does not include 50,002* shares of the Company held by his wife.
(4) Based upon information received by the Company, an aggregate of 875,200
shares of Company Common Stock are beneficially owned by entities controlled
directly or indirectly by Mario Gabelli, as follows: 614,200 shares by GAMCO
Investors, Inc., 220,000 shares by Gabelli Funds, Inc. and 41,000 shares by
Gabelli Performance Fund. GAMCO Investors, Inc. does not have authority to
vote 77,000 shares of the total 614,200 held. Gabelli Funds, Inc. and
Gabelli Performance Fund have sole voting and disposition powers with
respect to all the shares held therein.
(5) Includes 26,900 shares subject to exercisable options, and 41,800 shares of
restricted stock grants.
(6) Includes 16,300 shares each subject to exercisable options, and 20,000
shares each of restricted stock grants.
(7) Shares held in trusts as to which more than one officer and/or director are
Co-Trustees have been included only once. Includes an aggregate of 157,600
shares which may be purchased by 5 executive officers upon exercise of
currently exercisable options or restricted stock grants awarded to or
earned by them pursuant to the Company's 1984 Incentive Stock Option Plan
and 1994 Employee Stock Incentive Plan.
*Messrs. R. Randall Rollins and Gary W. Rollins disclaim any beneficial
interest in these holdings.
ELECTION OF DIRECTORS
Three individuals are to be elected at the Annual Meeting to serve as Class
II directors for a term of three years, and until the election and qualification
of their successors. Six other individuals serve as directors but are not
standing for re-election because their terms as directors extend past this
Annual Meeting pursuant to provisions of the Company's Bylaws which provide for
the election of directors for staggered terms, with each director serving a
three-year term. Unless authority is withheld, the proxy holders will vote for
the election of the first three persons named below to three year terms as
directors. Although Management does not contemplate the possibility, in the
event any nominee is not a candidate or is unable to serve as a director at the
time of the election, unless authority is withheld, the proxies will be voted
for any nominee who shall be designated by the present Board of Directors to
fill such vacancy.
The name and age of each of the three nominees, his principal occupation,
together with the number of shares of Common Stock beneficially owned, directly
or indirectly, by him and the percentage of outstanding shares that ownership
represents, all as of the close of business on February 28, 1997, (according to
information received by the Company) are set out below. Similar information is
also provided for those directors whose terms expire in future years. Each
director was originally
3
<PAGE>
elected as a director shortly after incorporation of the Company in January
1984, with the exception of James A. Lane, Jr. and Richard A. Hubbell, who were
elected as directors on January 27, 1987.
<TABLE>
<CAPTION>
PERCENTAGE OF
COMMON OUTSTANDING
NAMES OF NOMINEES PRINCIPAL OCCUPATION(1) AGE STOCK(2) SHARES
------------------------- --------------------------------------------- --- ------------ -------------
CLASS II (NEW TERM EXPIRES 2000)
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John W. Rollins(3)....... Chairman of the Board and Chief Executive
Officer of Rollins Truck Leasing Corp.
(vehicle leasing and transportation);
Chairman of the Board and Chief Executive
Officer of Rollins Environmental Services,
Inc. (hazardous waste treatment and
disposal); and Chairman of the Board of Dover
Downs Entertainment, Inc., (operator of a
multi-purpose gaming and entertainment less than
complex since October 1996). 80 6,204(4) 0.1
Bobby Joe Cudd........... Executive Vice President of the Company;
President of Cudd Pressure Control, Inc.
(subsidiary of the Company). 67 0 0.0
Richard A. Hubbell....... President and Chief Operating Officer of the
Company. 52 99,465(5) 0.7
</TABLE>
<TABLE>
<CAPTION>
NAMES OF DIRECTORS
WHOSE TERMS HAVE
NOT EXPIRED
-------------------------
CLASS I (TERM EXPIRES 1999)
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
R. Randall Rollins(3).... Chairman of the Board and Chief Executive
Officer of the Company; Chairman of the Board
and Chief Executive Officer of Rollins, Inc.
(consumer services) (since October 1991);
Vice Chairman of the Board of Rollins, Inc.
(prior to October 1991). 65 7,863,254(6) 53.5
Henry B. Tippie.......... Chairman of the Board and Chief Executive
Officer of Tippie Services, Inc. (management
services). 70 578,139(7) 3.9
James B. Williams........ Chairman and Chief Executive Officer of
SunTrust Banks, Inc. (bank holding company). 63 20,000 0.1
</TABLE>
<TABLE>
<CAPTION>
CLASS III (TERM EXPIRES 1998)(8)
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wilton Looney............ Honorary Chairman of the Board of Genuine less than
Parts Company (automotive parts distributor). 77 600 0.1
Gary W. Rollins(3)....... President and Chief Operating Officer of
Rollins, Inc. (consumer services). 52 7,816,903(9) 53.2
James A. Lane, Jr........ Executive Vice President of the Company;
President of Chaparral Boats, Inc.
(subsidiary of the Company). 54 69,159(10) 0.5
</TABLE>
(1) Unless otherwise noted, each of the directors has held the positions of
responsibility set out in this column (but not necessarily his present
title) for more than five years. In addition to the directorships listed in
this column, the following individuals also serve on the boards of
directors of the following companies: Henry B. Tippie: Rollins
Environmental Services, Inc., Rollins Truck Leasing Corp., Matlack Systems,
Inc. and Dover Downs Entertainment, Inc.; John W. Rollins: Matlack Systems,
Inc. and Dover Downs Entertainment, Inc.; James B. Williams: The Coca-Cola
Company, Genuine Parts Company, Sonat Inc., and Georgia-Pacific
Corporation; Gary W. Rollins: Rollins Truck Leasing Corp.; R. Randall
Rollins: SunTrust Banks, Inc., SunTrust Banks of Georgia and Dover Downs
Entertainment, Inc. All of the directors shown in the above table, with the
exception of Messrs. Hubbell, Lane and Cudd, are also directors of Rollins,
Inc.
(2) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
(3) R. Randall Rollins and Gary W. Rollins are brothers. John W. Rollins is
their uncle.
(4) Does not include 7,804 shares held by his wife as custodian for his
children. Mr. Rollins disclaims any beneficial interest in these holdings.
(5) See information contained in footnote (5) to the table appearing in Capital
Stock section.
4
<PAGE>
(6) See information contained in footnote (2) to the table appearing in Capital
Stock section.
(7) Includes 453,139 shares of Common Stock of the Company in trusts of which
he is a Trustee or Co-Trustee and as to which he shares voting and
investment power.
(8) Charles R. Patterson who served as a director during 1996 died in December
1996. The Company has no current intentions to add an additional director.
As a result, the Company has redesignated Mr. Lane as a Class III director.
(9) See information contained in footnote (3) to the table appearing in Capital
Stock section.
(10) See information contained in footnote (6) to the table appearing in Capital
Stock section.
BOARD OF DIRECTORS COMPENSATION, COMMITTEES AND MEETINGS
During 1996 non-employee Directors received from the Company $750 for each
meeting of the Board of Directors or committee they attended, plus $10,000 per
year.
The Audit Committee of the Board of Directors of the Company consists of
Henry B. Tippie, Chairman, Wilton Looney and James B. Williams. The Audit
Committee held two meetings during the fiscal year ended December 31, 1996. Its
functions are to select a firm of independent public accountants whose duty it
is to audit the books and accounts of the Company and its subsidiaries for the
fiscal year for which they are appointed and to monitor the effectiveness of the
audit effort and the Company's financial and accounting organization and
financial reporting. The Compensation Committee of the Board of Directors of the
Company consists of Henry B. Tippie, Chairman, Wilton Looney and James B.
Williams. It held one meeting during the fiscal year ended December 31, 1996.
The functions of the Compensation Committee are to review the Company's
executive compensation structure and to report to the Board any changes to
insure continued effectiveness. The Board of Directors met four times during the
fiscal year ended December 31, 1996. The Company does not have a nominating
committee of the Board of Directors. No director attended fewer than 75 percent
of Board Meetings and meetings of committees on which he served during the
fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the directors named above who serve on the Company's Compensation
Committee are or have ever been employees of the Company. No executive officer
of the Company serves on a Compensation Committee of another company. R. Randall
Rollins, an executive of the Company, serves on the Board of Directors of both
SunTrust Banks, Inc. and SunTrust Banks of Georgia, a subsidiary of SunTrust
Banks, Inc. Mr. Williams is the Chairman and Chief Executive Officer of SunTrust
Banks, Inc. Mr. Rollins is not on the Compensation Committee of SunTrust Banks,
Inc. or SunTrust Banks of Georgia.
5
<PAGE>
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long-term compensation
for services in all capacities to the Company for the calendar years ended
December 31, 1996, 1995 and 1994 of those persons who were at December 31, 1996
(i) the chief executive officer and (ii) the other Named Executives of the
Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
----------------------
ANNUAL RESTRICTED SECURITIES
COMPENSATION STOCK UNDERLYING
----------------- AWARDS OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ($) (1) (#) COMPENSATION(2)
- ---------------------------------------- ---- -------- ------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins 1996 $340,000 $ 0 0 0 $ 0
Chairman of the Board & 1995 340,000 0 0 0 0
Chief Executive Officer 1994 320,000 0 0 0 0
Richard A. Hubbell 1996 280,000 140,000 181,400 20,000 1,800
President & Chief Operating Officer 1995 256,042 126,000 0 0 1,800
1994 243,333 127,500 176,000 11,000 1,800
Bobby Joe Cudd 1996 118,254 0 0 0 1,419
Executive Vice President, and 1995 118,229 1,720 0 0 1,423
President, Cudd Pressure Control 1994 110,090 7,360 0 0 1,409
James A. Lane, Jr. 1996 69,146 1,274,925 0 0 1,800
Executive Vice President, and 1995 67,580 1,012,633 0 0 1,800
President, Chaparral Boats, Inc. 1994 67,841 926,885 160,000 0 1,800
William S. Pegg 1996 69,146 1,274,925 0 0 1,800
Executive Vice President, and 1995 67,580 1,012,633 0 0 1,800
Executive Vice President, Chaparral 1994 67,841 926,885 160,000 0 1,800
Boats, Inc.
</TABLE>
(1) The number of shares held and their values on December 31, 1996 were as
follows: Mr. Hubbell, 36,800 shares valued at $552,000; Mr. Lane, 20,000
shares valued at $300,000; and Mr. Pegg, 20,000 shares valued at $300,000.
The December 31, 1996 values are based on the December 31, 1996 closing
market stock price of $15.00 and do not take into account any diminution of
value attributable to vesting provisions on these shares. Time-Lapse
Restricted Stock vests ten years from the date of grant. This stock is
forfeited if the employment of the Named Executive terminates prior to
vesting for reasons other than death, retirement or permanent disability.
During these ten years, grantees receive all dividends declared and retain
voting rights for the granted shares. Performance Restricted Stock is
granted, but not earned and issued, until certain five year tiered
performance criteria are met. The performance criteria are predetermined
market prices of the Company's stock. On the date the stock appreciates to
each level (determination date), 20 percent of performance shares are
earned. Once earned, the stock vests five years from the determination date.
After the determination date, the grantee will receive all dividends
declared and also voting rights to the shares.
(2) Effective July 1, 1984, the Company adopted the RPC, Inc. 401(k) Plan
("401(k) Plan"), a qualified retirement plan designed to meet the
requirements of Section 401(k) of the Internal Revenue Code. The 401(k) Plan
provides for a matching contribution of forty cents ($.40) for each one
dollar ($1.00) of a participant's contribution to the 401(k) Plan, not to
exceed 3 percent of his or her annual compensation (which includes
commissions, overtime and bonuses). A participant's voluntary pretax salary
deferrals made under the 401(k) Plan are in lieu of payment of compensation
to the participant. The amounts shown in this column represent the Company
match for the Named Executives.
6
<PAGE>
OPTION/SAR GRANTS IN FISCAL YEAR 1996
The following table sets forth stock options granted in the fiscal year
ending December 31, 1996 to each of the Company's named Executives. Employees of
the Company and its subsidiaries are eligible for stock option grants based on
individual performance. The table also sets forth the hypothetical gains that
would exist for the options at the end of their ten-year term, assuming compound
rates of stock appreciation of five percent and ten percent. The actual future
value of the options will depend on the market value of the Company's Common
Stock. All option exercise prices are based on the market price on the grant
date.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ANNUAL
SECURITIES PERCENT OF RATES OF STOCK PRICE
UNDERLYING TOTAL OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OF OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------------------------------- ------------ --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins..................... 0 -- -- -- -- --
Richard A. Hubbell..................... 20,000(3) 50% 8.875 01/23/06 111,629 282,889
Bobby Joe Cudd......................... 0 -- -- -- -- --
James A. Lane, Jr...................... 0 -- -- -- -- --
William S. Pegg........................ 0 -- -- -- -- --
</TABLE>
(1) Options were granted on January 23, 1996 at a price of $8.875 per share. No
Stock Appreciation Rights were granted to the Named Executives during 1996.
(2) These amounts, based on assumed appreciation rates of five percent and ten
percent as prescribed by the Securities and Exchange Commission rules, are
not intended to forecast possible future appreciation, if any, of the
Company's stock price. These numbers do not take into account certain
provisions of options providing for termination of the option following
termination of employment, nontransferability or phased-in vesting. The
Company did not use an alternative formula for a grant date valuation as it
is not aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors, future
compensation resulting from option grants is based solely on the
performances of the Company's stock price.
(3) These Incentive Stock Options vest and become exercisable 20 percent each
year and expire after ten years.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1996
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S AT OPTIONS/SAR'S AT FY-
FY-END(#) END($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------ --------------- ----------- ---------------- --------------------
<S> <C> <C> <C> <C>
R. Randall Rollins........................ 0 0 0/0 0/0
Richard A. Hubbell........................ 0 0 57,665/20,400 576,852/128,800
Bobby Joe Cudd............................ 0 0 0/0 0/0
James A. Lane, Jr......................... 30,765 369,180 16,300/0 144,663/0
William S. Pegg........................... 30,765 369,180 16,300/0 144,663/0
</TABLE>
(1) Based on the closing price of Company Common Stock on the New York Stock
Exchange on December 31, 1996 of $15.00 per share.
7
<PAGE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE EXCHANGE ACT THAT
MIGHT INCORPORATE OTHER COMPANY FILINGS, INCLUDING THIS PROXY STATEMENT, IN
WHOLE OR IN PART, THE FOLLOWING REPORT AND THE PERFORMANCE GRAPH INCLUDED HEREIN
SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee (the "Committee") is comprised of outside
directors who are not eligible to participate in the compensation plans and over
whose names this report is presented. The Committee reviews and approves the
compensation of the Company's executive officers annually. The actions of
executive officers have a profound impact on the short-term and long-term
profitability of the Company. Therefore, the design of the executive officer
compensation package is very important.
The Company has an executive compensation package that is driven by an
increase in shareholder value, the overall performance of the Company, and the
individual performance of the executive. The measures of the Company's
performance include revenue and net income. The three main components of the
executive compensation package are base salary, cash incentive plans, and stock-
based incentive plans.
BASE SALARY
The first component is base salary. The Company believes that it is
important for the Named Executives to receive acceptable salaries so the Company
can keep the senior executive talent it needs to meet the challenges in today's
environment. The factors subjectively used in determining base salary include
the recent profit performance of the Company, the magnitude of responsibilities,
the scope of the position, individual performance and the pay received by others
in similar positions. Approximately one-half of the merit percentage increases
are based on attainment of the net income objectives for each appropriate
functional area of responsibility. The remaining portion of the merit salary
increase is subjectively based on the other aforementioned criteria. The
decisions of the Committee are subjective and these factors are not used in any
specific formula or weighting. The salaries of the Named Executives are reviewed
annually, but increases are awarded only when justified by the increase in the
Company's shareholder value and the overall performance of the Company. As a
result of the improvement in net income in 1996, increases to base salaries
ranged up to 10 percent for the Named Executives.
CASH BASED INCENTIVE PLANS
The second component of the executive compensation package consists of cash
based incentive plans. The Company has individualized cash based incentive plans
developed to reward individual performance. The Company includes several
subsidiaries conducting business in unrelated industries, so each compensation
plan was designed to be motivational and appropriate, based on the norms in that
industry.
The annual incentive compensation package for executive officers is
developed by the Chief Executive Officer of the Company prior to the end of each
fiscal year. It is based upon a performance formula for the ensuing fiscal year.
That performance formula and incentive package is then reviewed by the Committee
and is either accepted, amended or modified.
Two of the Named Executives, James A. Lane, Jr. and William S. Pegg, have
employment agreements with the Company that were first entered into as part of
the Company's acquisition of Chaparral Boats, Inc. on November 4, 1986. Under
these agreements, each individual receives an annual cash incentive bonus of 10
percent of pretax profit of Chaparral Boats, Inc. These incentive
8
<PAGE>
payments were approximately 95 percent of the total cash compensation paid to
these executives in 1996. During 1996, each of these two executives received in
excess of $1 million in aggregate compensation (the maximum amount for which an
employer may claim a compensation deduction, pursuant to Section 162(m) of the
Internal Revenue Code of 1986, as amended, unless certain performance related
compensation exemptions are met during one fiscal year). The Company obtained
stockholder approval of these agreements at the April 25, 1995 Stockholders'
Meeting in order to qualify for the performance related compensation exemption.
The other Named Executives participate in a variety of individualized
performance bonus plans designed to encourage achievement of short-term
objectives. These plans all have payouts subjectively based on net income,
budget objectives, and other individual specific performance objectives.
Subjective compensation decisions are based upon these specific performance
objectives, which relate to each executive improving the contribution of his
functional areas of responsibility to further enhance the earnings of the
Company. The Company's philosophy is that the executive should receive a bonus
only if certain performance targets are met. This means that a significant
portion of the compensation package is at risk. The performance bonus as a
percent of total compensation will vary in accordance with the type of executive
position, ranging up to 100 percent.
Richard A. Hubbell, the President of the Company earned a $140,000 bonus in
1996 under one of these plans.
STOCK BASED INCENTIVE PLANS
The 1994 Employee Stock Incentive Plan was approved by stockholders at the
April 26, 1994 meeting. As detailed in the Option/SAR Grant Table on page 7 and
the Summary Compensation Table on page 6, during 1996 Mr. Hubbell was granted
20,000 stock options and was awarded 6,000 shares of Time-Lapse Restricted
Stock. These awards were intended to help insure that the long-term goals of the
executive were aligned with those of the Company. Mr. Hubbell's awards were
based on his performance and took into consideration the value of all
unexercised options he currently holds under this plan and previous plans.
CEO PAY
The 1996 cash compensation of R. Randall Rollins, Chairman and Chief
Executive Officer, was $340,000. This represents the total compensation for Mr.
Rollins. The Committee feels that due to the significant level of ownership in
the Company, the Chief Executive Officer will not participate in an incentive
plan at this time. The Committee considers several factors when determining the
CEO's salary. These factors include long-term growth in net income, stockholder
value improvements as well as his individual performance. The decision of the
Committee is subjective and these factors are not used in any specific formula
or weighting. The CEO does not participate in the deliberations of the Committee
when his salary or incentive is determined.
9
<PAGE>
CONCLUSION
The Committee believes that this mix of conservative market-based salaries,
cash incentives for short-term performance, and stock based incentives for
long-term performance in the Company represent a balance that will motivate the
executive team to continue to produce the best results possible, given the
economic conditions and the cyclical nature of the industries of the
subsidiaries. The Committee further believes this program strikes an appropriate
balance between the interest of the Company in operating its businesses and
appropriate rewards based on shareholder value.
COMPENSATION COMMITTEE
Henry B. Tippie, Chairman
Wilton Looney
James B. Williams
COMMON STOCK PERFORMANCE
As part of the executive compensation information presented in this Proxy
Statement, the Securities and Exchange Commission requires a 5-year comparison
of the cumulative total stockholder return based on the performance of the stock
of the Company, assuming dividend reinvestment, as compared with both a broad
equity market index and an industry or peer group index. The indices included in
the following graph are the S & P 500 Index and a peer group which includes
companies that are considered peers of the subsidiaries of the Company. The
companies included in the peer group have been weighted according to the
respective issuer's stock market capitalization at the beginning of each year.
The companies are Brunswick Corporation and Outboard Marine Corporation, which
compete with the Company's boat manufacturing subsidiary; and Weatherford
Enterra, Inc., which competes with each of the two largest oil and gas services
subsidiaries of the Company. NOWSCO Well Service was included in prior year
calculations but is not included this year due to it's acquisition during 1996.
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RPC COMMON STOCK S&P 500 PEER GROUP
<S> <C> <C> <C>
12/31/91 100.00 100.00 100.00
12/31/92 77.94 107.62 122.69
12/31/93 100.00 118.46 146.40
12/31/94 89.71 120.03 147.94
12/31/95 107.35 165.13 192.91
12/31/96 176.47 203.05 194.39
</TABLE>
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to June 30, 1984, the Company was a wholly-owned subsidiary of
Rollins, Inc. ("Rollins"). On June 30, 1984, Rollins effected a spin-off
distribution to its stockholders of all of the outstanding shares of the Company
(the "Spin-off"). Messrs. Gary W. Rollins and R. Randall Rollins, named in the
table under "Capital Stock" on page 2, have substantially similar interests in
Rollins.
The Company receives certain administrative services from Rollins, and also
rents office space from Rollins. The service agreements between Rollins and the
Company provide for the provision of services on a cost reimbursement basis and
are terminable on six months notice. The services covered by these agreements
include office space, data processing, administration of certain employee
benefit programs, and other administrative services. Charges to the Company (or
to corporations which are subsidiaries of the Company) for such services and
rent aggregated $502,000 in 1996.
BENEFIT PLANS
The Company's Retirement Income Plan, effective July 1, 1984, is a trusteed
defined benefit pension plan. The amounts shown on the following table are those
annual benefits payable for life on retirement at age 65. The amounts computed
in the following table assume: (a) that the participant remains in the service
of the Company until his normal retirement date at age 65; (b) that the
participant's earnings continue at the same rate as paid in the fiscal year
ended December 31, 1996 during the remainder of his service until age 65; (c)
that the normal form of benefit is a single-life annuity, and (d) that the Plan
continues without substantial modification. The column entitled remuneration
represents all compensation in the Summary Compensation Table included herein.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
REMUNERATION 15 20 25 30 35
- ------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 45,000
200,000 45,000 60,000 75,000 90,000 90,000
300,000 67,500 90,000 112,500 135,000 135,000
400,000 90,000 120,000 150,000 180,000 180,000
500,000 112,500 150,000 187,500 225,000 225,000
600,000 135,000 180,000 225,000 270,000 270,000
700,000 157,500 210,000 262,500 315,000 315,000
800,000 180,000 240,000 300,000 360,000 360,000
900,000 202,500 270,000 337,500 405,000 405,000
1,000,000 225,000 300,000 375,000 450,000 450,000
</TABLE>
The above table does not reflect the Plan offset for Social Security average
earnings, the maximum benefit limitations under Section 415 of the Internal
Revenue Code, of 1986, as amended (the "Code") maximum pay limitation under
Section 401(a)(17) of the Code.
Retirement income benefits are based on the average of the employee's
compensation from the Company for the five consecutive complete calendar years
of highest compensation during the last ten consecutive complete calendar years
("final average compensation") immediately preceding the employee's retirement
date or, if earlier, the date of his termination of employment. All full-time
corporate employees of the Company and its subsidiaries (other than employees
subject to collective bargaining agreements) are eligible to participate in the
Retirement Income Plan after completing 1 year of service as an employee. The
benefit formula is 1 1/2 percent of final average compensation less 3/4 percent
of final average FICA earnings multiplied by years of service (maximum 30
years). The Plan also provides reduced early retirement benefits under certain
conditions. In accordance with the Code, the maximum annual benefit that could
be payable to a Retirement Income Plan beneficiary in 1996 is
11
<PAGE>
$120,000. However, this limitation does not affect previously accrued benefits
of those individuals who became entitled to benefits in excess of $120,000 prior
to the effective date of the applicable provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Tax Reform Act of 1986. In accordance with
the Code (as amended by the Omnibus Budget Reconciliation Act of 1993), the
maximum compensation recognized by the Retirement Income Plan was $150,000 in
1996. Retirement benefits at the end of any calendar year will not be reduced by
any subsequent changes in the maximum compensation limit. Participants in the
Rollins, Inc. Retirement Income Plan who transferred their employment to the
Company as a result of the Spin-off participated immediately in the Plan. The
current credited years of service for the five individuals named in the
executive compensation table are: R. Randall Rollins -- 30, Bobby Joe Cudd --
19, Richard A. Hubbell -- 10, James A. Lane, Jr. -- 9, William S. Pegg -- 9.
Effective July 1, 1984, the Company adopted a qualified retirement plan
designed to meet the requirements of Section 401(k) of the Code ("401(k) Plan").
The only form of benefit payment under the 401(k) Plan is a single lump-sum
payment equal to the balance in the participant's account on the date the
distribution is processed. Under the 401(k) Plan, the full amount of a
participant's accrued benefit is payable upon his termination of employment,
attainment of age 59 1/2 (with respect to pre-tax deferrals only), retirement,
total and permanent disability, or death. Amounts contributed to the accounts of
Named Executives for 1996 under this plan are reported in the "All Other
Compensation" column of the Summary Compensation Table included herein.
PROPOSAL TO APPROVE AN INCREASE IN THE NUMBER OF SHARES RESERVED FOR
ISSUANCE UNDER THE COMPANY'S 1994 EMPLOYEE STOCK INCENTIVE PLAN
The Board of Directors recommends that the shareholders vote FOR the
approval of an increase in the aggregate number of shares of Common Stock from
500,000 to 1,300,000 to be reserved for issuance under the 1994 Plan. The 1994
Plan was adopted by the Board of Directors on January 25, 1994 effective as of
the date of such approval. The 1994 Plan provides for the granting to directors
and key employees of the Company ("Participants") stock options, stock
appreciation rights ("SAR's"), and/or other awards valued in whole or in part by
reference to, or based upon, the Company's $.10 par value Common Stock,
including without limitation, restricted stock. The 1994 Plan is administered by
the Board of Directors or a duly appointed committee thereof (the "Committee").
The 1994 Plan affords the Company latitude in tailoring incentive compensation
to support corporate and business objectives, and to anticipate and respond to a
changing business environment and competitive compensation practices. The
following is a description of the principal features of the 1994 Plan, a copy of
which is attached as Exhibit A to this Proxy Statement. The description which
follows is qualified in its entirety by Exhibit A.
As of February 28, 1997, there were 147,000 shares remaining for the
granting of options or other awards under the 1994 Plan. The Board has
determined it will exhaust the number of shares available for issuance,
accordingly, the directors have submitted this proposal to the shareholders for
their approval.
The Committee consists of at least two directors who are "non-employees" for
purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
("Rule 16b-3"). Members of the Committee will not be eligible to receive options
or other grants under the 1994 Plan. It is anticipated that the 1994 Plan will
continue to be administered by the Compensation Committee and will satisfy the
requirements of Rule 16b-3. The Committee has exclusive discretion to select the
Participants and to determine the type, size and terms of each award, to
determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the 1994 Plan. The 1994 Plan will terminate ten years from
January 25, 1994, the date that it was initially approved and adopted by the
Board of Directors of the Company. With limited exceptions, including
termination of employment as a result of death, disability or retirement,
12
<PAGE>
options and other awards under the 1994 Plan are forfeited if a recipient's
employment or performance of service terminates following the grant of the award
but prior to its exercise and/or vesting. Generally, a participant's rights and
interest under the 1994 Plan are not transferable except by will or by the laws
of descent and distribution.
There is no maximum number of persons eligible to receive options, SARs,
restricted stock and other awards under the 1994 Plan. It is currently estimated
that the eligible group will be comprised of approximately 25 persons.
Options, which include nonqualified stock options, are rights to purchase a
specified number of shares of Common stock at a price fixed by the Committee. In
the case of incentive stock options, the option price may not be less than the
fair market value of the underlying shares of Common Stock at the time of grant.
In the case of nonqualified stock options, the option price may not be less than
90% of such fair market value. Options generally will expire not later than ten
years after the date on which they are granted. Options will become exercisable
at such times and in such installments as the Committee shall determine. Payment
of the option price must be made in full at the time of exercise in such form
(including, but not limited to, cash, unrestricted Common Stock held for at
least six months, or any combination thereof) as the Committee may determine. In
order to comply with certain federal tax restrictions, no employee may be
granted an incentive stock option if taking into account such option the
aggregate fair market value of the stock with respect to which incentive stock
options are exercisable for the first time by such employee during any given
calendar year, under this and all other incentive stock option plans of the
Company, would exceed $100,000. In addition, special restrictions concerning the
option price and the period during which the option may be exercised will be
applicable in the case of any individual who, at the time the option is granted,
owns more than 10% of the total combined voting power of all classes of stock of
the Company.
An SAR may be granted alone, or a holder of an option or other award may be
granted a related SAR either at the time of grant or by amendment of the option
or award thereafter. Upon exercise of an SAR, the holder must surrender the SAR
and surrender, unexercised, any related option or other award, and the holder
will receive in exchange, at the election of the Committee, cash or Common
Stock, or any combination thereof, equal in value to the difference between the
exercise price or option price per share and the fair market value per share on
the last business day preceding the date of exercise, times the number of shares
subject to the SAR, or portion thereof, which is exercised.
A restricted stock award is an award of a given number of shares of Common
Stock which are subject to a restriction against transfer and to a risk of a
forfeiture during a period set by the Committee. During the restriction period,
the Participant generally has the right to vote and receive any dividends on the
shares.
The 1994 Plan is subject to amendment or termination by the Board of
Directors without shareholder approval as deemed in the best interests of the
Company. However, no such amendment may (i) materially increase the benefits
accruing to participants under the 1994 Plan, (ii) materially increase the
number of shares which may be issued under the 1994 Plan, (iii) materially
modify the requirements as to eligibility for participation in the 1994 Plan, or
(iv) reduce the amount of any previously granted award or adversely change the
terms and conditions thereof, without the consent of the holder of such award.
In general, subject to the discretion of the Board of Directors, if the
Company is merged into or consolidated with another corporation under
circumstances in which the company is not the surviving corporation, or if the
Company is liquidated, or sells or otherwise disposes of substantially all of
its assets to another corporation (any such merger, consolidation, etc., being
hereinafter referred to as a "Non-Acquiring Transaction") while unexercised
options or SARs are outstanding under the 1994 Plan, after the effective date of
a Non-Acquiring Transaction each holder of an outstanding option or SAR shall be
entitled, upon exercise of such option or SAR, to receive such stock or other
securities as
13
<PAGE>
the holders of the same class of stock as those shares subject to the option or
SAR shall be entitled to receive in such Non-Acquiring Transaction based upon
the agreed upon conversion ratio or per share distribution, or, in the case of
an SAR, an equivalent cash payment or combination of cash and securities. Other
awards under the 1994 plan will receive such treatment in connection with Non-
Acquiring Transactions as the Committee shall determine at or after the date of
grant.
The following table sets forth all awards granted under the 1994 Plan prior
to the date hereof to each of the individuals and groups named therein. All such
grants were in the form of incentive stock options, restricted stock or some
combination of the two. No awards have been granted under the 1994 Plan to any
nominees for director not named below. The only individuals other than those
named below who received 5% or more of the awards granted pursuant to the 1994
Plan were J. W. Moss, Vice President of Patterson Services, Inc. and Patterson
Truck Line, Inc. and Ray Saliba, Vice President of Cudd Pressure Control, Inc.
These are the three oil and gas services subsidiaries of the Company. Mr. Moss
has received grants for an aggregate of 20,000 units and Mr. Saliba has received
grants for an aggregate of 24,000 units. It is not expected that any additional
awards will be granted under the 1994 Plan during 1997. Although it is
anticipated that additional grants under the 1994 Plan will be made subsequent
to the date hereof, the nature and amounts of such grants are not determinable
at this time.
NEW PLAN BENEFITS
RPC, INC. 1994 EMPLOYEE STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF UNITS
-------------------------------
NAME AND POSITION 1994 1996 1997
- ---------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
R. Randall Rollins................................................................ 0 0 0
Richard A. Hubbell................................................................ 55,000 26,000 20,000
Bobby Joe Cudd.................................................................... 0 0 0
James A. Lane, Jr................................................................. 20,000 0 0
William S. Pegg................................................................... 20,000 0 0
Executive Group................................................................... 105,000 36,000 35,000
Non-Executive Director Group...................................................... 0 0 0
Non-Executive Officer Employee Group.............................................. 88,900 29,000 70,000
</TABLE>
CERTAIN FEDERAL TAX CONSEQUENCES UNDER THE 1994 PLAN
The following discussion addresses certain anticipated federal income tax
consequences to recipients of awards made under the 1994 Plan. It is based on
the Internal Revenue Code of 1986, as amended and interpretations thereof as in
effect on the date of this proxy statement.
An optionee to whom a nonqualified stock option is granted will not
recognize income as a result of the grant of the option. However, upon exercise
of the non-qualified stock option, the optionee will generally recognize
ordinary compensation income equal to the excess, if any, of the fair market
value of the stock received pursuant to exercise of the option (the "Shares")
over the exercise price. However, taxation will be deferred (i) if the shares
are subject to restrictions imposed by the Committee which could result in a
substantial risk of their forfeiture or (ii) if the optionee is subject to the
"short-swing profit" forfeiture provisions of Section 16(b) of the Securities
Exchange Act ("Section 16(b) Liability"), unless in either event, the optionee
makes an election pursuant to Section 83(b) of the Code (an "83(b) Election"),
within 30 days of receipt of the Shares, to be taxed on the date of receipt of
the Shares. If no 83(b) Election is made, the optionee will recognize ordinary
compensation income at the time the shares are no longer subject to such
restrictions or the optionee is no longer subject to Section 16(b) Liability as
a result of the transfer of the Shares, in an amount equal to the excess of the
value of the Shares at such time over the amount paid for them. The
14
<PAGE>
optionee's tax basis for the Shares will be equal to the exercise price paid by
the optionee plus the amount includeable in the optionee's gross income as
compensation, and the optionee's holding period for the shares will commence on
the date on which the Shares are acquired.
An optionee to whom an incentive stock option which qualifies under Section
422 of the Code is granted generally will not recognize income at the time of
grant of the incentive stock option or at the time of its exercise. However, the
excess of the fair market value of the Shares of stock subject to the option
(the "Incentive Shares") over the exercise price of the option at the time of
its exercise is an adjustment to taxable income in determining an optionee's
alternative minimum taxable income and ultimately his alternative minimum tax
(AMT). As a result, this adjustment could cause the optionee to be subject to
AMT or increase his AMT liability.
If an optionee who has exercised an incentive stock option does not sell the
Incentive Shares until more than one year after exercise and more than two years
after the date of the grant, such optionee will normally recognize long-term
capital gain or loss equal to the difference, if any, between the selling price
of the Incentive Shares and the exercise price. If the optionee sells the
Incentive Shares before the time periods expire (a "disqualifying disposition")
he or she will recognize ordinary compensation income equal to the lesser of (i)
the difference, if any, between the fair market value of the Incentive Shares on
the date of exercise and the exercise price of the option, and (ii) the
difference, if any between the selling price for the Incentive Shares and the
exercise price of the option. Any other gain or loss on such sale will normally
be capital gain or loss. The tax basis of the Incentive Shares to the optionee,
for purposes of computing such other gain or loss, should be equal to the
exercise price paid (plus, in the case of an early disposition, the amount
includable in the optionee's gross income as compensation, if any).
With respect to either non-qualified or incentive stock options, if an
optionee delivers shares of the Company's Common Stock in part or full payment
of the option price, the optionee generally will be treated as having exchanged
such shares for an equivalent number of the shares received upon exercise of the
option (the "Exchange Shares"), and no gain or loss will be recognized with
respect to the shares surrendered to the Company in payment of the option price.
In such a case, the optionee will have a tax basis in the Exchange Shares which
is the same as the optionee's tax basis in the shares of stock delivered in
payment of the option price. The remaining shares received upon exercise of the
option (other than the Exchange Shares) will, in the case of non-qualified
options, have a tax basis equal to the income recognized on the exercise of the
option plus any additional consideration paid pursuant to the exercise of the
option, and in the case of incentive stock options, will have a tax basis equal
to any additional consideration paid pursuant to the exercise of the option.
The grant of SARs in connection with issuance of a non-qualified stock
option or an incentive stock option will not result in taxable income to the
grantee. At the time an SAR is exercised a grantee will recognize ordinary
compensation income in an amount equal to the cash or the fair market value of
any other property the grantee receives to satisfy the SAR.
An officer, employee or other individual who receives stock pursuant to a
restricted stock award (the "Restricted Shares") should not recognize any
taxable income upon the receipt of such award (unless such recipient makes an
83(b) Election). Such recipient will recognize taxable compensation income at
the later of (i) the time his or her interest in the Restricted Shares is no
longer subject to a substantial risk of forfeiture under the terms of the grant,
or (ii) the time he or she is no longer subject to Section 16(b) Liability upon
transfer of the Restricted Shares, in an amount equal to the fair market value
of the Restricted Shares at such time. The tax basis of the Restricted Shares to
the recipient should be equal to the amount includable in the recipient's gross
income as compensation, and the recipient's holding period for the Restricted
Shares should normally commence on the day following the date on which the value
of such Shares is includable in income. Dividends paid on Restricted
15
<PAGE>
Shares prior to the lapse of the restrictions (if an 83(b) Election is not made)
should be included in the income of the recipient as taxable compensation income
when received.
Different tax rules will apply to a recipient of a restricted stock award if
the recipient makes a timely 83(b) Election. In such event, the recipient will
recognize the fair market value of the Restricted Shares as taxable compensation
income at the time of their receipt. Any gain recognized on a subsequent sale of
the Restricted Shares, after a holding period of one year has elapsed, will be
treated as long term capital gain.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the auditors for the Company for the fiscal
year ended December 31, 1996. As is its policy, upon the recommendation of the
Audit Committee, the Board of Directors shall select a firm of independent
public accountants for fiscal 1997. It is anticipated that a representative of
Arthur Andersen LLP will be present at the Annual Meeting to answer questions
and make a statement should such representative so desire.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company has completed a review of Forms 3, 4, and 5 and amendments
thereto furnished to the Company by all Directors, Officers and greater than 10
percent stockholders subject to the provisions of Section 16 of the Securities
Exchange Act of 1934. In addition, the Company has a written representation from
all Directors, Officers and greater than 10 percent stockholders from whom no
Form 5 was received, indicating that no Form 5 filing was required. Based solely
on this review, the Company believes that filing requirements of such persons
under Section 16 for the fiscal year ended December 31, 1996 have been satisfied
except as to Mr. Cudd, (one late filing related to a stock disposition), Mr.
Lane, (one late filing related to the exercise of stock options using owned
shares), and Mr. Pegg, (one late filing related to the exercise of stock options
using owned shares).
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company by
November 27, 1997 for inclusion in its proxy statement and form of proxy
relating to that meeting. If the date of the next annual meeting is advanced by
more than 30 calendar days or delayed by more than 90 calendar days from the
date of the annual meeting to which this proxy statement relates, the Company
shall, in a timely manner, inform its stockholders of the change and the date by
which proposals of stockholders must be received.
VOTING PROCEDURES AND VOTE REQUIRED
The Chairman of the Board of Directors of the Company will select a
representative of the Company's transfer agent as Inspector of the Election, to
determine the eligibility of persons present at the Meeting to vote and to
determine whether the name signed on each proxy card corresponds to the name of
a stockholder of the Company. The Inspector shall also determine whether or not
a quorum of the shares of the Company (consisting of a majority of the votes
entitled to be cast at the Meeting) exists at the Meeting. A majority of the
outstanding shares will constitute a quorum at the meeting. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. If a quorum exists and a vote is
taken at the Meeting, the Inspector shall tabulate (i) the votes cast for or
against each proposal and (ii) the abstentions in respect of each proposal.
In accordance with the Delaware General Corporation Law, the election of the
nominees named herein as directors will require the affirmative vote of a
plurality of the votes cast by the shares of Company Common Stock entitled to
vote in the election provided that a quorum is present at the
16
<PAGE>
Meeting. In the case of a plurality vote requirement (as in the election of
directors), where no particular percentage vote is required, the outcome is
solely a matter of comparing the number of votes cast in favor of a proposal to
the number of votes cast against the proposal, and hence only votes for or
against the proposal (and not abstentions or broker non-votes) are relevant to
the outcome. The proposal for approval of the increase in the number of shares
reserved for issuance under the 1994 Plan will require the affirmative vote of a
majority of the shares of Common Stock present in person or by proxy and
entitled to vote on the proposal. Abstentions will have the effect of "negative"
votes with respect to this proposal, while broker non-votes will have no effect
on the outcome of the proposal.
MISCELLANEOUS
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, is being mailed to stockholders with this proxy statement.
Management knows of no business other than the matters set forth herein
which will be presented at the meeting. Inasmuch as matters not known at this
time may come before the meeting, the enclosed proxy confers discretionary
authority with respect to such matters as may properly come before the meeting;
and it is the intention of the persons named in the proxy to vote in accordance
with their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
Linda H. Graham, Secretary
Atlanta, Georgia
March 27, 1997
17
<PAGE>
EXHIBIT A
1994 EMPLOYEE STOCK INCENTIVE PLAN
JANUARY 25, 1994
18
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
SECTION 1. Purpose; Definitions.......................................................................... A-2
SECTION 2. Administration................................................................................ A-4
SECTION 3. Stock Subject to Plan......................................................................... A-5
SECTION 4. Eligibility................................................................................... A-5
SECTION 5. Stock Options................................................................................. A-6
(a) Option Price..................................................................................... A-6
(b) Option Term...................................................................................... A-6
(c) Exercisability.................................................................................. A-6
(d) Method of Exercise............................................................................... A-6
(e) Non-Transferability of Options................................................................... A-7
(f) Termination by Death............................................................................ A-7
(g) Termination by Reason of Disability.............................................................. A-7
(h) Termination by Reason of Retirement.............................................................. A-7
(i) Other Termination............................................................................... A-7
(j) Buyout Provisions............................................................................... A-8
(k) Certain Recapitalizations........................................................................ A-8
(l) Subdivision or Consolidation.................................................................... A-8
(m) Fractional Shares................................................................................ A-8
(n) Compliance with Section 422...................................................................... A-8
SECTION 6. Stock Appreciation Rights..................................................................... A-8
(a) Grant and Exercise............................................................................... A-8
(b) Terms and Conditions............................................................................. A-9
SECTION 7. Other Stock-Based Awards...................................................................... A-10
(a) Administration................................................................................... A-10
(b) Terms and Conditions............................................................................. A-10
SECTION 8. Amendments and Termination.................................................................... A-12
SECTION 9. Unfunded Status of Plan....................................................................... A-12
SECTION 10. General Provisions............................................................................ A-12
SECTION 11. Effective Date of Plan........................................................................ A-13
SECTION 12. Term of Plan.................................................................................. A-13
</TABLE>
A-1
<PAGE>
RPC ENERGY SERVICES, INC.
1994 EMPLOYEE STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the RPC Energy Services, Inc. 1994 Employee Stock Incentive
Plan (the "Plan") is to enable RPC Energy Services, Inc. (the "Company") to
attract, retain and reward directors and key employees of the Company and its
Subsidiaries and Affiliates, and strengthen the mutuality of interests between
such persons and the Company's shareholders, but offering such persons
performance-based stock incentives and/or other equity interests or equity-based
incentives in the Company, as well as performance-based incentives payable in
cash.
For purposes of this Plan, the following terms shall be defined as set forth
below:
1. "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer
under this Plan, provided that the Company directly or indirectly owns at
least 20% of the combined voting power of all classes of stock of such
entity or at least 50% of the ownership interests in such entity.
2. "Board" means the Board of Directors of the Company.
3. "Book Value" means, at any given date, (i) the consolidated
stockholders' equity in the Company and its Subsidiaries, as shown on the
Company's consolidated balance sheet as of the end of the immediately
preceding fiscal year, subject to such adjustments as the committee shall in
good faith specify at or after grant, divided by (ii) the number of shares
of Outstanding Stock as of such year-end date (as adjusted by the Committee
for subsequent events).
4. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
5. "Committee" means the committee referred to in Section 2 of this
Plan. If at any time no Committee shall be in office, then the functions of
the Committee specified in this Plan may be exercised by the Board or the
Compensation Committee of the Board, as set forth in Section 2 hereof.
6. "Company" means RPC Energy Services, Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.
7. "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan and shall in all
events be consistent with the definition of "disabled" provided in Sections
422(c)(6) and 22(e)(3) of the Code.
8. "Disinterested Person" shall have the meaning set forth in Rule
16b-3 as promulgated by the Securities and Exchange Commission
("Commission") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor definition adopted by the Commission.
9. "Early Retirement" means retirement with the express written consent
of the Committee (given for purposes of this Plan only at or before the time
of such retirement) from active employment with the company and/or any
subsidiary or Affiliate or pursuant to the early retirement provisions of
the applicable pension plan of such entity.
10. "Fair Market Value" means, as of any give date, unless otherwise
determined by the Committee in good faith:
(i) if the Stock is listed on an established stock exchange or
exchanges, or traded on the NASDAQ National Market System ("NASDAQ/NMS")
the highest closing price of the Stock or as listed thereon on the
applicable day, or if no sale of Stock has been made on any
A-2
<PAGE>
exchange or on NASDAQ/NMS on that date, on the next preceding day on
which there was a sale of Stock;
(ii) if the Stock is not listed on an established stock exchange or
NASDAQ/NMS but is instead traded over-the-counter, the mean of the dealer
"bid" and "ask" prices of the Stock in over-the-counter market on the
applicable day, as reported by the National Association of Securities
Dealers, Inc.;
(iii) if the Stock is not listed on any exchange or traded
over-the-counter, the value determined in good faith by the Committee.
11. "Incentive Stock Option" means any Stock Option designated as an
"Incentive Stock Option" within the meaning of Section 422 of the Code.
12. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
13. "Normal Retirement" means retirement from active employment with the
Company and/or any Subsidiary or Affiliate on or after age 65.
14. "Other Stock-Based Award" means an award under Section 7 below what
is valued in whole or in part by reference to, or is otherwise based on,
Stock.
15. "Outstanding Stock" shall include all outstanding shares of Common
Stock, $.10 par value, of the Company as well as the number of shares of
Common Stock into which then outstanding shares of capital stock of the
Company, of whatever class, are convertible as of the year-end immediately
preceding the date of calculation thereof (as adjusted by the Committee for
certain events).
16. "Performance-Accelerated Restricted Stock" means Restricted Stock
which is subject to restrictions for a stated period of time based on
continued employment, with the opportunity for the restriction period to be
shortened based on the achievement of predetermined performance goals.
17. "Performance Stock" means stock awarded under Section 7 below at the
end of a specified performance period, the amount of which is determined by
multiplying a performance factor times either (i) the Fair Market Value of
the Stock on the last day of the performance period, or (ii) the difference
between the Fair Market Value of the Stock on the first and last days of the
performance period; provided, however, that at the discretion of the
Committee, participants may receive the value of Performance Stock in cash,
as determined by reference to the Fair Market Value on the date the amount
of the award is determined.
18. "Performance Unit" means an award pursuant to Section 7 with a
starting value and an associated performance period, such that at the end of
the performance period participants receive an amount, payable in either
cash or stock, at the discretion of the Committee, equal to (i) the number
of units earned based on a predetermined performance schedule times the
starting unit value, or (ii) the number of units granted times the ending
unit value based on a predetermined performance schedule.
19. "Plan" means this RPC Energy Services, Inc. 1994 Employee Stock
Incentive Plan, as hereafter amended from time to time.
20. "Premium Stock Option" means any Stock Option with an exercise price
in excess of the Fair Market Value, as computed on the date of grant of the
Stock Option.
21. "Retirement" means Normal or Early Retirement.
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22. "Restricted Stock" means Stock awarded under Section 7 below which
is (i) subject to restriction for a stated period of time based on continued
employment, (ii) subject to restriction which will only lapse upon the
achievement of predetermined performance goals, or (iii) subject to a
combination of the restrictions described in (i) and (ii) above.
23. "Stock" means the Common Stock, $.10 par value per share, of the
Company.
24. "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 below to receive an amount in either cash or stock,
equal to the difference between the Fair Market Value of the Stock on the
date of exercise and the Fair Market Value of the Stock on the date of grant
of the right.
25. "Stock Option" or "Option" means any option to purchase shares of
Stock granted pursuant to Section 5 below.
26. "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the company if each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 100% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
SECTION 2. ADMINISTRATION
This Plan shall be administered by a Committee of not less than two
Disinterested Persons, who shall be members of the Board and who shall serve at
the pleasure of the Board, such Committee to be designated by the Board. The
functions of the Committee specified in this Plan may be exercised by the Board
or by the Compensation Committee of the Board, however, if and to the extent
that no Committee meeting the requirements of this Section 2 has been designated
by the Board as having the authority to so administer this Plan and if a
resolution to such effect is adopted by the Board after due consideration of the
impact of such resolution upon the status of this Plan under Rule 16b-3
promulgated pursuant to the Exchange Act ("Rule 16b-3").
The Committee shall have full authority to grant, pursuant to the terms of
this Plan, to directors, officers and other key employees eligible under Section
4: (i) Stock Options, including, without limitation, Incentive Stock Options,
Non-Qualified Stock Options and Premium Stock Options, (ii) Stock Appreciation
Rights and/or (iii) Other Stock-Based Awards, including, without limitation,
Restricted Stock, Performance-Accelerated Restricted Stock, Performance Stock
and Performance Units.
In particular, the Committee shall have the authority:
(i) subject to Section 4 hereof, to select the directors, officers and
other key employees of the Company or its Subsidiaries and Affiliates to
whom Stock Options, Stock Appreciation Rights and/or Other Stock-Based
Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Stock Options, Stock
Appreciation Rights and/ or Other Stock-Based Awards, or any combination
thereof, are to be granted hereunder to one or more eligible employees;
(iii) to determine the number of shares of Stock to be covered by each
such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any
vesting, acceleration or waiver of forfeiture restrictions regarding any
Stock Option or other award and/or the shares of Stock relating thereto,
based in each case on such factors as the Committee shall determine, in its
sole discretion);
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(v) to determine whether and under what circumstances Stock Options,
Stock Appreciation Rights, Performance Stock and Performance Units may be
settled in cash;
(vi) to determine whether, to what extent and under what circumstances
Stock Option grants and/or other awards under this Plan and/or other cash
awards made by the company are to be made, and operate, on a tandem basis
vis-a-vis other awards under this Plan and/or cash awards made outside of
this Plan, or on an additive basis; and
(vii) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this Plan
shall be deferred either automatically or at the election of the participant
(including providing for and determining the amount (if any) of any deemed
earnings or any deferred amount during any deferral period).
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing this Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of this Plan and any
award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan.
Except as otherwise specifically provided herein, all decisions made by the
Committee pursuant to the provisions of this Plan shall be made in the
Committee's sole discretion and shall be final and binding on all persons,
including the Company and all Plan participants.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
under this Plan shall be 500,000 shares. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares.
Subject to section 6(b)(iv) below, if any shares of Stock that have been
optioned hereunder cease to be subject to a Stock Option, or if any such shares
of Stock that are subject to any Other Stock-Based Award granted hereunder are
forfeited or any such award otherwise terminates without a payment being made to
the participant in the form of Stock, such shares shall again be available for
distribution in connection with future awards under this Plan.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividends, stock split or other changes in corporate structure affecting
the Stock, and subject to Sections 5(k) and 5(m), such substitution or
adjustment shall be made in the aggregate number of shares reserved for issuance
under this Plan, in the number and option price of shares subject to outstanding
Options granted under this Plan and in the number of shares subject to other
outstanding awards granted under this Plan as may be determined to be
appropriate by the Committee, in its sole discretion, provided that the number
of shares subject to any award shall always be a whole number. Such adjusted
option price shall be used to determine the amount payable by the Company upon
the exercise of any Stock Appreciation Right associated with any Stock Option.
SECTION 4. ELIGIBILITY.
Directors, officers and other key employees of the Company or its
Subsidiaries and Affiliates (but excluding members of the Committee if a
Committee meeting the requirements of Section 2 is designated by the Board) who
are responsible for or contribute to the management, growth and/or profitability
of the business of the Company and/or its Subsidiaries and Affiliates are
eligible to be granted awards under this Plan. Notwithstanding the foregoing,
incentive stock Options may only be granted to employees of the Company and any
of its Subsidiaries or Affiliates that are a "subsidiary corporation" (within
the meaning of Section 424(f) of the Code). Furthermore, no director who is not
also an employee of the Company shall be eligible to receive Incentive Stock
Options.
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SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to or in tandem with other
awards granted under this Plan and/or cash awards made outside of this Plan. Any
Stock Option granted under this Plan shall be in such form as the Committee may
from time to time approve.
Stock Options granted under this Plan may be of two types: (i) Incentive
Stock Options, and (ii) Non-Qualified Stock Options. Incentive Stock Options and
Non-Qualified Stock Options may be issued as Premium Stock Options at the
discretion of the Board.
Subject to the restrictions contained in Section 4 hereof concerning the
grant of Incentive Stock Options, the Committee shall have the authority to
grant to any optionee Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options (in each case with or without Stock Appreciation
Rights). To the extent that the Fair Market Value of the shares with respect to
which Incentive Stock Options first become exercisable by an optionee during any
calendar year (under the Plan and any other plans granting Incentive Stock
Options which are established by the Company or its Subsidiaries) exceeds
$100,000, such Options shall be treated as Non-Qualified Stock Options.
Options granted under this Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of
grant but shall be (i) not less than 100% (or, in the case of an employee
who owns stock possessing more than 10 percent of the total combined voting
power of all classes of capital stock of the Company or of any of its
subsidiary or parent corporations, not less than 110%) of the Fair Market
Value of the Stock at grant, in the case of Incentive Stock Options, and
(iii) not less than 90% of the Fair Market Value of the Stock at grant, in
the case of Non-Qualified Stock Options.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercised more than ten years (or,
in the case of an employee who owns stock possessing more than 10 percent of
the total combined voting power of all classes of Stock of the Company or
any of its subsidiary or parent corporations, more than five years) after
the date the Option is granted.
(c) EXERCISABILITY. Stock Options shall be exercised at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at or after grant; provided, however, that, except as provided in
Section 5(f), 5(g), or 5(k), unless otherwise determined by the Committee at
or after grant, no Stock Option shall be exercisable until at least one year
after the granting of the Option. If the Committee provides, in its sole
discretion, that any Stock Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time at or
after grant in whole or in part, based on such factors as the Committee
shall determine, in its sole discretion.
(d) METHOD OF EXERCISE. Subject to whatever installment exercise
provisions or other restrictions apply under Section 5(c), Stock Options may
be exercised in whole or in part at any time during the option period, by
giving written notice of exercise to the Company specifying the number of
shares to be purchased; provided, however, that if exercised in part, a
Stock Option may not be exercised for fewer than 100 shares, unless the
remaining balance of the Stock Option is less than 100 shares, in which case
the Stock Option may be exercised for the remaining balance.
Such notice shall be accompanied by payment in full of the purchase price,
either by cash or such instrument as the Committee may accept. Payment in full
or in part may also be made in the form of Unrestricted Stock already owned by
the optionee for a period of at least six months, based, in each
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case, on the Fair Market Value of the Stock on the date the Option is exercised,
unless it shall be determined by the committee, at or after grant, in its sole
discretion, that Unrestricted Stock is not a permissible form of payment with
respect to any Stock Option or Options.
No shares of Stock shall be issued until full payment therefor has been
made. An optionee shall generally have the rights to dividends or other rights
of a shareholder with respect to shares subject to the Stock Option when the
optionee has given written notice of exercise, has paid in full for such shares,
and, if requested, has given the representation described in Section 10(a).
(e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable, during
the optionee's lifetime, only by the optionee.
(f) TERMINATION BY DEATH. Subject to Section 5(k), if an optionee's
employment by the Company and/or any subsidiary or Affiliate terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised to the extent such Option was exercisable at the time of death or
on such accelerated basis as the Committee may determine at or after grant
(or as may be determined in accordance with procedures established by the
Committee), by the legal representative of the estate or by the legatee of
the optionee under the will of the optionee, for a period of six months (or
such other period as the Committee may specify at grant) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
(g) TERMINATION BY REASON OF DISABILITY. Subject to section 5(k), if
an optionee's employment by the Company and/or Subsidiary or Affiliate
terminates by reason of Disability, any Stock Option held by such optionee
may thereafter be exercised by the optionee or his/her guardian, to the
extent it was exercisable at the time of termination or on such accelerated
basis as the Committee may determine at or after grant (or as may be
determined in accordance with procedures established by the Committee), for
a period of one year (or such other period as the Committee may specify at
grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter; provided, however, that, if the optionee dies within such one-year
period (or such other period as the Committee may specify at grant), any
unexercised Stock Option held by such optionee shall thereafter be
exercisable only pursuant to Section 5(f). In the event of termination of
employment by Disability, if a Stock Option theretofore designated as an
incentive Stock Option is exercised more than one year after such
termination of employment, such Stock Option shall be treated as a
Non-Qualified Stock Option.
(h) TERMINATION BY REASON OF RETIREMENT. Subject to Section 5(k), if
an optionee's employment by the Company and/or any Subsidiary or Affiliate
terminates by reason of Normal or Early Retirement, any Stock Option held by
such optionee may be exercised by the optionee, to the extent it was
exercisable at the time of such Retirement, for a period of three months,
less one day, (or such other period as the Committee may specify at grant),
any unexercised Stock Option held by such optionee shall thereafter be
exercisable only pursuant to Section 5(f). In the event of termination of
employment by Retirement, if a Stock Option theretofore designated as an
incentive Stock Option is exercised more than three (3) months after such
termination of employment, such Stock Option shall be treated as a
Non-Qualified Stock Option.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee
(or pursuant to procedures established by the Committee) at or after grant,
if an optionee's employment by the company and/or any Subsidiary or
Affiliate terminates for any reason other than death, Disability or Normal
or Early Retirement, as in the case of voluntary resignation of employment
by the optionee, the Stock Option shall thereupon terminate and shall be
immediately forfeited, regardless of its vesting status.
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(j) BUYOUT PROVISIONS. The Committee may at any time offer to buy out
for a payment in cash or Stock a Stock Option previously granted, based on
such terms and conditions as the Committee shall establish and communicate
to the optionee at the time that such an offer is made.
(k) CERTAIN RECAPITALIZATIONS. In general, if the Company is merged
into or consolidated with another corporation under circumstances in which
the Company is not the surviving corporation, or if the Company is
liquidated, or sells or otherwise disposes of substantially all of its
assets to another corporation (any such merger, consolidation, etc. being
hereinafter referred to as a "Non-Acquiring Transaction") while unexercised
Options are outstanding under this Plan, after the effective date of a
Non-Acquiring Transaction each holder of an outstanding Option shall be
entitled, upon exercise of such Option, to receive such stock or other
securities as the holders of the same class of stock as those shares subject
to the Option shall be entitled to receive in such Non-Acquiring Transaction
based upon the agreed upon conversion ratio or per share distribution.
However, in the discretion of the Board of Directors, after giving due
consideration to the impact on the optionee, if any, pursuant to Rule 16b-3,
any limitations on exercisability of options may be waived so that all
Options, from and after a date prior to the effective date of such
Non-Acquiring Transaction shall be exercisable in full. Furthermore, in the
discretion of the Board of Directors, the right to exercise may be given to
each holder of an Option during a 30-day period preceding the effective date
of such Non-Acquiring Transaction. Any outstanding Options not exercised
within such 30-day period may be canceled by the Board of Directors as of
the effective date of any such Non-Acquiring Transaction. To the extent that
the foregoing adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Board of Directors, who determination in
that respect shall be final, binding and conclusive. The Committee need not
treat all optionees and/or Options in the same manner.
(l) SUBDIVISION OR CONSOLIDATION. Except as set forth in this Plan,
optionees shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or
by reason of any dissolution, liquidation, merger, or consolidation or
spinoff of stock of another corporation, and no issue by the Company of
shares of stock of any class shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares subject
to the Stock Option. The grant of any Stock Option pursuant to this Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassification, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate
or sell, or to transfer all or any part of its business or assets.
(m) FRACTIONAL SHARES. If any adjustment referred to herein shall
result in a fractional share for any optionee under any Stock Option
hereunder, such fraction shall be completely disregarded and the optionee
shall only be entitled to the whole number of shares resulting from such
adjustment.
(n) COMPLIANCE WITH SECTION 422. Unless otherwise determined by the
Committee with the consent of the optionee, any Option granted hereunder and
designated as an Incentive Stock Option shall comply with all relevant
provisions of Section 422 of the Code; provided, however, that to the extent
that any such Option which is designated as an Incentive Stock Option
hereunder fails for any reason to comply with the provisions of Section 422
it shall be treated as a Non-Qualified Stock Option.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted alone, in
addition to or in tandem with all or part of any other award granted under this
Plan. In the case of a Non-Qualified Stock Option, such tandem rights may be
granted either at or after the time of the grant of such Stock
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Option. In the case of an Incentive Stock Option, such tandem rights may be
granted only at the time of the grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, subject to such provisions
as the Committee may specify at grant where a Stock Appreciation Right is
granted with respect to less than the full number of shares covered by a related
Stock Option.
A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the Committee for
such exercise, the optionee shall be entitled to receive an amount determined in
the manner prescribed in Section 6(b). Stock Options which were issued in tandem
with exercised Stock Appreciation Rights shall no longer be exercisable to the
extent that the related Stock Appreciation Rights have been exercised.
(b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Except as set forth below, the term of each Stock Appreciation Right
shall be fixed by the Committee, but no such Stock Appreciation Right shall
be exercised more than ten years after the date is granted. Stock
Appreciation Rights granted in tandem with Stock Options shall be
exercisable only at such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in accordance with the
provisions of Section 5 and this Section 6 whenever the Fair Market Value of
the Stock exceeds the option price per share specified in the related Stock
Option. The foregoing notwithstanding, no Stock Appreciation Right granted
hereunder to a Plan participant who is subject to Section 16(b) of the
Exchange Act shall be exercisable during the first six months of its term,
except that, with the exception of Stock Appreciation Rights granted in
tandem with Incentive Stock Options, in the discretion of the Committee,
after giving due consideration to the impact on the participant, if any,
pursuant to Rule 16b-3, this special limitation may be waived in the event
of death or Disability of the optionee prior to the expiration of the
six-month period. The exercise of Stock Appreciation Rights held by
participants who are subject to Section 16(b) of the Exchange Act shall
comply with Rule 16b-3(e)(3) thereunder, or any successor provision, to the
extent applicable.
(ii) Stock Appreciation Rights shall be exercised at such time or times
and subject to such terms and conditions as shall be determined by the
Committee at or after grant; provided, however, that, except as provided in
Section 5(f), 5(g), or 5(k), as incorporated herein by Section 6(b)(vi)
below, unless otherwise determined by the Committee at or after grant, no
Stock Appreciation Right shall be exercisable until at least one year after
its date of grant. If the Committee provides, in its sole discretion, that
any Stock Appreciation Right is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time at or
after grant in whole or in part, based on such factors as the Committee
shall determine, in its sole discretion. Upon the exercise of a Stock
Appreciation Right, a participant shall be entitled to receive an amount in
cash and/or shares of Stock equal in value to the excess of Fair Market
Value of the Stock on the date of exercise over the Fair Market Value of the
Stock on the date of grant multiplied by the number of Stock Appreciation
Rights exercised, with the Committee having the right to determine the form
of payment. subject to whatever installment exercise provisions or other
restrictions apply hereunder, Stock Appreciation Rights may be exercised in
whole or in part at any time during the term thereof by giving written
notice of exercise to the Company specifying the number of rights to be
exercised.
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(iii) No Stock Appreciation Right shall be transferable by a participant
otherwise than by will or by the laws of descent and distribution, and all
Stock Appreciation Rights shall be exercisable, during the participant's
lifetime, only by the participant.
(iv) Upon the exercise of a tandem Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation set
forth in Section 3 of this Plan on the number of shares of Stock to be
issued under this Plan, but only to the extent of the number of shares
issued under the Stock Appreciation Right at the time of exercise based on
the value of the Stock Appreciation Right at such time.
(v) Stock Appreciation Rights issued in tandem with Incentive Stock
Options shall contain such terms and conditions as the Committee may
determine to be necessary for the qualification of the Incentive Stock
Options.
(vi) Sections 5(f)-(m) hereof shall apply equally to all Stock
Appreciation Rights granted pursuant to this Plan, as if each reference
therein to a "Stock Option" was instead a reference to a "Stock Appreciation
Right."
SECTION 7. OTHER STOCK-BASED AWARDS.
(a) ADMINISTRATION. Other awards of Stock and other awards that are valued
in whole or in part by reference to, or are otherwise based on Stock ("Other
Stock-Based Awards"), including, without limitation, Restriction Stock,
Performance-Accelerated Restricted Stock, Performance Stock, Performance Units
and Stock awards or options valued by reference to Book Value or Subsidiary
performance, may be granted either alone or in addition to or in tandem with
Stock Options or Stock Appreciation Rights granted under this Plan and/or cash
awards made outside of this Plan.
Subject to the provision of this Plan, the Committee shall have authority to
determine the persons to whom and the time or times at which such awards shall
be made, the number of shares of Stock to be awarded pursuant to such awards,
and all other conditions of the awards. The committee may also provide for the
grant of Stock upon the completion of a specified performance period or event.
The provisions of Other Stock-Based Awards need not be the same with respect
to each recipient.
(b) TERMS AND CONDITIONS. Other Stock-Based Awards made pursuant to this
Section 7 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award agreement
referred to in Section 7(b)(v) below, Other Stock-Based Awards and shares
subject to such awards are made under this Section 7 may not be sold,
assigned, transferred, pledged or otherwise encumbered, in the case of
shares of Stock, prior to the date on which the shares are issued, or, if
later, the date on which any applicable restriction, performance or deferral
period lapses, and in all other cases, not at all.
(ii) Subject to the provisions of this Plan and the award agreement and
unless otherwise determined by the Committee at grant, the recipient of an
award under this Section 7 shall be entitled to receive, currently or on a
deferred basis, as determined by the Committee, interest or dividends or
interest or dividend equivalents with respect to the number of shares
covered by the award, as determined at the time of the award by the
Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional Stock
or otherwise reinvested.
(iii) any award under this section 7 and any Stock covered by any such
award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or death,
and in other instances, the Committee may, in its sole discretion, waive in
whole or in part any or all of the remaining
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limitations, performance requirements or restrictions imposed (if any) with
respect to any or all of an award under this Section 7 and/or accelerate the
payment of cash or Stock pursuant to any such award.
(v) Each award under this Section 7 shall be confirmed by, and subject
to the terms of, an agreement or other instrument executed by the Company
and by the participant.
(vi) Stock (including securities convertible into Stock) issued on a
bonus basis under this Section 7 may be issued for no cash consideration.
(vii) Other Stock-Based Awards, to the extent they constitute derivative
securities for purposes of Section 16 of the Exchange Act, and are owned by
persons who are subject to Section 16(b) of the Exchange Act, shall be
transferable only when and to the extent a Stock Option would be
transferable under Section 5(e) of this Plan. The Committee may also take
into account other provisions contained in the Exchange Act or which are
promulgated pursuant thereto.
(viii) Unless otherwise determined by the Committee at or after grant, if
a participant's employment by the Company and/or any Subsidiary or Affiliate
terminates by reason of death or Disability, a pro rata portion of the
restrictions pertaining to continued employment on any Restricted Stock will
lapse, based on the number of full months the participant was employed
during the restriction period divided by the total number of months in the
restriction period. All such pro rata awards will be determined and
distributed at such time as awards are paid to other Plan participants.
(ix) Unless otherwise determined by the Committee at or after grant, if a
participant's employment by the Company and/or any subsidiary of Affiliate
terminates by reason of Normal Retirement, all of the restrictions
pertaining to continued employment on any Restricted Stock will lapse. Any
such award will be determined and distributed at such time as awards are
paid to other Plan participants.
(x) Unless otherwise determined by the Committee at or after grant, if a
participant's employment by the Company and/or any Subsidiary or Affiliate
terminates by reason of death or Disability, the estate of the participant
or the participant, as applicable, will receive a pro rata portion of the
payment or Stock the participant would have received for Performance Stock
or Performance Units, based on the number of full months in the performance
period prior to the participant's death or Disability, divided by the total
number of months in the performance period. All such pro rata payments will
be determined and distributed at such time as awards are paid to other Plan
participants.
(xi) Unless otherwise determined by the Committee at or after grant, if a
participant's employment by the company and/or any Subsidiary or Affiliate
terminates by reason of Early Retirement and if such Early Retirement occurs
before age 65 and before completion of 10 years of service with the Company
and/or a Subsidiary or Affiliate subsequent to the date of grant of
Restricted Stock or Performance-Accelerated Restricted Stock, all such
Restricted Stock and Performance-Accelerated Restricted Stock will be
forfeited by the participant. In addition, in the event of Normal or Early
Retirement before the end of the performance period for Performance Stock or
Performance Units, no awards will be paid unless specifically approved by
the Committee on a case-by-case basis.
(xii) Unless otherwise determined by the Committee (or pursuant to
procedures established by the Committee) at or after grant, if a
participant's employment by the company and/or any Subsidiary or Affiliate
terminates for any reason other than death, Disability or Normal or Early
Retirement, as in the case of voluntary resignation of employment by the
participant, all Other Stock-Based Awards shall be immediately forfeited.
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<PAGE>
(xiii) The Committee may at any time offer to buy out for a payment in
case or Stock an Other Stock-Based Award previously granted, based on such
terms and conditions as the Committee shall establish and communicate to the
participant at the time that such offer is made.
(xiv) Except as set forth in this Plan, participants shall have no rights
by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease
in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger, or consolidation or spinoff of stock of
another corporation, and no issue by the Company of shares of stock of any
class shall affect, and no adjustment by reason thereof shall be with
respect, to the number or price of shares subject to any Other Stock Based
Award. The grant of any Other Stock-Based Award pursuant to this Plan shall
no affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell,
or to transfer all or any part of its business or assets.
SECTION 8. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue this Plan, but, except as
otherwise provided herein, no amendment, alteration, or discontinuation shall be
made which would impair the rights of an optionee or participant under a Stock
Option, Stock Appreciation Right or Other Stock-Based Award theretofore granted,
without the optionee's or participant's consent, or which, without the approval
of the Company's stockholders, would.
(a) materially increase the benefits accruing to participants under this
Plan;
(b) materially increase the number of securities which may be issued
under this Plan; or
(c) materially modify the requirements as to eligibility for
participation in this Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority to
amend this Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 9. UNFUNDED STATUS OF PLAN.
This Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payment not yet made to a participant
or optionee by the Company, nothing contained herein shall give any such
participant or optionee any rights that are granted than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
this Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that, unless the Committee otherwise determines
with the consent of the affected participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of this Plan.
SECTION 10. GENERAL PROVISIONS.
(a) The Company shall not be obligated to sell or issue any shares pursuant
to any Option unless the shares with respect to which the Option is being
exercised are at the time effectively registered or exempt from registration
under the Securities Act of 1933, as amended (the "1933 Act"). The Company shall
have no obligation to register pursuant to the 1933 Act any shares of Stock
issued pursuant to this Plan. The Committee may require each person purchasing
shares pursuant to the Stock Option or other award under this Plan to represent
to an agree with the Company in writing
A-12
<PAGE>
that the optionee or participant is acquiring the shares for investment and
without a view to distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
this Plan shall be subject to such conditions, stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to made appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required, and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) The adoption of this Plan shall not confer upon any employee of the
Company or of any Subsidiary or Affiliate any right to continued employment with
the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a subsidiary or Affiliate
to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includable in
the gross income of the participant for federal income tax purposes with respect
to the exercise of any Option or Stock Appreciation Right or any award under
this Plan, the participant shall pay to the Company, or make arrangement
satisfactory to the committee regarding the payment of, any federal, state, or
local taxes of any kind required by law to be withheld with respect to such
amount. The obligations of the Company under this Plan shall be conditional on
such payment or arrangements, and the Company and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend equivalents
in additional types of Plan awards at the time of any dividend payment shall
only be permissible if sufficient shares of Stock are available under Section 3
for such reinvestment, taking into account other Plan awards then outstanding.
(f) This Plan and all awards made and actions taken hereunder shall be
governed by and construed in accordance with the Delaware General Corporation
Law, to the extent applicable, and in accordance with the laws of the State of
Georgia in all other respects.
(g) The value of awards made pursuant to this Plan shall not be included as
part of the definition of "cash compensation" in connection with any other
benefit offered by the Company.
SECTION 11. EFFECTIVE DATE OF PLAN.
This Plan shall be effective as of January 25, 1994.
SECTION 12. TERM OF PLAN.
No Stock Option, Stock Appreciation Right or Other Stock-Based Award shall
be granted pursuant to this Plan on or after the tenth anniversary of the
effective date of this Plan, but awards granted prior to such tenth anniversary
may extend beyond that date.
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<PAGE>
RPC, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF RPC, INC.
FOR ANNUAL MEETING OF STOCKHOLDERS TUESDAY, APRIL 22, 1997, 9:00 A.M.
The undersigned hereby constitutes and appoints GARY W. ROLLINS, R. RANDALL
ROLLINS, and each of them, jointly and severally, proxies, with full power of
substitution, to vote all shares of Common Stock which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on April 22,
1997 at 9:00 A.M. at 2170 Piedmont Road, NE, Atlanta, Georgia, or any
adjournment thereof.
The undersigned acknowledges receipt of Notice of the aforesaid Annual
Meeting and Proxy Statement, each dated March 27, 1997, grants authority to said
proxies, or either of them, or their substitutes, to act in the absence of
others, with all the powers which the undersigned would possess if personally
present at such meeting and hereby ratifies and confirms all that said proxies
or their substitutes may lawfully do in the undersigned's name, place and stead.
The undersigned instructs said proxies, or either of them, to vote as follows:
<TABLE>
<S> <C> <C> <C>
1. / / FOR all Class II / / FOR all Class II nominees, / / ABSTAIN from voting for the election of
nominees; EXCEPT AS INDICATED BELOW; OR John W. Rollins, Bobby Joe Cudd and Richard
A. Hubbell as Class II Directors.
</TABLE>
INSTRUCTIONS: TO REFRAIN FROM VOTING FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:
________________________________________
<TABLE>
<S> <C> <C> <C>
2. TO APPROVE AN INCREASE IN THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE COMPANY'S 1994 EMPLOYEE STOCK
INCENTIVE PLAN. / / FOR / / AGAINST / / ABSTAIN
</TABLE>
<TABLE>
<S> <C> <C> <C>
3. ON ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
(OVER)
<PAGE>
RPC, INC.
ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE
WITH YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE WILL BE VOTED "FOR" THE
ABOVE-NAMED NOMINEES FOR DIRECTOR AND "FOR" THE ABOVE PROPOSAL. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
PROXY
Please sign below, date and return
promptly.
__________________________________
__________________________________
Signature
Dated: _____________________, 1997
(Signature should conform to name
and title stenciled hereon.
Executors, administrators,
trustees, guardians and attorneys
should add their title upon
signing.)
NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.
