<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
RPC, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<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 1998 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
28, 1998, at 9:00 A.M., or any adjournment thereof, for the following purposes:
(1) To elect three Class III directors to the Board of Directors; and
(2) To amend the Certificate of Incorporation for the Company to increase
the number of authorized shares of Company Stock from 36,000,000 to
80,000,000 shares.
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Proxy Statement dated April 1, 1998, is attached.
The Board of Directors has fixed the close of business on March 2, 1998, 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
April 1, 1998
<PAGE>
PROXY STATEMENT
This Proxy Statement and a form of proxy were first mailed to stockholders
on or about April 1, 1998.
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 28,
1998, 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 authorized
shares.
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 March 2, 1998, consisted of
29,644,990 shares of Common Stock, par value $0.10 per share (excluding 169,392
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 March 2, 1998, 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 March 2, 1998,
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)(7) SHARES
- -------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
R. Randall Rollins ................................................................... 15,727,247(2) 53.1
2170 Piedmont Road, NE
Atlanta, Georgia
Gary W. Rollins ...................................................................... 15,635,851(3) 52.7
2170 Piedmont Road, NE
Atlanta, Georgia
Richard A. Hubbell ................................................................... 249,730(4) 0.8
2170 Piedmont Road, NE
Atlanta, Georgia
Bobby Joe Cudd ....................................................................... 0 0.0
2170 Piedmont Road, NE
Atlanta, Georgia
James A. Lane, Jr .................................................................... 134,130(5) 0.5
2170 Piedmont Road, NE
Atlanta, Georgia
William S. Pegg ...................................................................... 138,924(5) 0.5
2170 Piedmont Road, NE
Atlanta, Georgia
All Directors and Executive Officers as a group (12 persons).......................... 19,317,694(6) 65.2
</TABLE>
2
<PAGE>
(1) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
(2) Includes 465,614 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 1,385,560 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 12,493,828 shares owned by LOR, Inc. Mr.
Rollins is an officer, director and stockholder of LOR, Inc. Also includes
345,600 shares owned Rollins Holding Company, Inc. Mr. Rollins is an
officer, director and stockholder of Rollins Holding Company, Inc. Also
includes 271,453 shares held by Rollins Investment Fund, a Georgia general
partnership, of which Mr. Rollins is a general partner. Also includes 73,430
shares held by RWR Investment partnership, a Georgia limited partnership, of
which Mr. Rollins is a general partner. Also includes 168,288 shares
indirectly owned by Mr. O. Wayne Rollins' Estate. Mr. Rollins is the Co-
Executor and Co-Trustee of this estate. Does not include 21,780* shares of
the Company held by his wife.
(3) Includes 322,720 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 1,358,680 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 12,493,828 shares owned by LOR, Inc. Mr. Rollins is an
officer, director and stockholder of LOR, Inc. Also includes 345,600 shares
owned by Rollins Holding Company, Inc. Mr. Rollins is an officer, director
and stockholder of Rollins Holding Company, Inc. Also includes 271,453
shares held by Rollins Investment Fund, a Georgia general partnership, of
which Mr. Rollins is a general partner. Also includes 168,288 shares
indirectly owned by Mr. O. Wayne Rollins' Estate. Mr. Rollins is the
Co-Executor and Co-Trustee of this estate. Does not include 100,004* shares
of the Company held by his wife.
(4) Includes 70,200 shares subject to exercisable options, and 118,000 shares of
restricted stock awards.
(5) Includes 40,000 shares each of restricted stock awards.
(6) 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 319,200
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.
(7) All share amounts reflect the December 1997 two-for-one stock split.
* 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
III 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 March 2, 1998, (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 elected as
3
<PAGE>
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>
PERCENT OF
COMMON OUTSTANDING
NAMES OF NOMINEES PRINCIPAL OCCUPATION(1) AGE STOCK(2)* SHARES
- ------------------------ ------------------------------------------------------ --- ---------- ------------
CLASS III (NEW TERM EXPIRES 2001)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wilton Looney........... Honorary Chairman of the Board of Genuine Parts less than
Company (automotive parts distributor). 78 1,200 0.1
Gary W. Rollins(3)...... President and Chief Operating Officer of Rollins, Inc.
(consumer services). 53 15,635,851(4) 52.7
James A. Lane, Jr....... Executive Vice President of the Company; President of
Chaparral Boats, Inc. (subsidiary of the Company). 55 134,130(5) 0.5
</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 Execu-
tive Officer of Rollins, Inc. (consumer services)
(since October 1991); Vice Chairman of the Board of
Rollins, Inc. (prior to October 1991). 66 15,727,247(6) 53.1
Henry B. Tippie......... Chairman of the Board and Chief Executive Officer of
Tippie Services, Inc. (management services). 71 1,156,278(7) 3.9
James B. Williams....... Chairman and Chief Executive Officer of SunTrust
Banks, Inc. (bank holding company). 64 40,000 0.1
</TABLE>
<TABLE>
<CAPTION>
CLASS II (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); and Chairman of the Board of Dover
Downs Entertainment, Inc., (operator of a
multi-purpose gaming and entertainment complex since less than
October 1996). 81 12,408(8) 0.1
Bobby Joe Cudd.......... Executive Vice President of the Company; President of
Cudd Pressure Control, Inc. (subsidiary of the Com-
pany). 68 0 0.0
Richard A. Hubbell...... President and Chief Operating Officer of the Company. 53 249,730(9) 0.8
</TABLE>
* All share amounts reflect the December 1997 two-for-one stock split.
(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 Truck Leasing Corp.,
Matlack Systems, Inc. and Dover Downs Entertainment, Inc.; John W. Rollins:
Matlack Systems, 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) See information contained in footnote (3) to the table appearing in Capital
Stock section.
4
<PAGE>
(5) See information contained in footnote (5) to the table appearing in Capital
Stock section.
(6) See information contained in footnote (2) to the table appearing in Capital
Stock section.
(7) Includes 906,278 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) Does not include 15,608 shares held by his wife as custodian for his
children. Mr. Rollins disclaims any beneficial interest in these holdings.
(9) See information contained in footnote (4) to the table appearing in Capital
Stock section.
BOARD OF DIRECTORS COMPENSATION, COMMITTEES AND MEETINGS
During 1997 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, 1997. 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, 1997.
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, 1997. 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, 1997, 1996 and 1995 of those persons who were at December 31, 1997
(i) the chief executive officer and (ii) the other Named Executives of the
Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS (3)
------------------------
ANNUAL RESTRICTED
COMPENSATION STOCK SECURITIES
--------------------- AWARDS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ($) (1) OPTIONS (#) COMPENSATION(2)
- --------------------------------------- --------- --------- ---------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins 1997 1996 $ 400,000 $ 0 0 0 $ 0
Chairman of the Board 1995 340,000 0 0 0 0
and Chief Executive Officer 320,000 0 0 0 0
Richard A. Hubbell 1997 350,000 175,000 416,714 20,000 1,800
President and Chief Operating Officer 1996 280,000 140,000 181,400 40,000 1,800
1995 256,042 126,000 0 0 1,800
Bobby Joe Cudd 1997 110,090 36,680 0 0 1,419
Executive Vice President, and 1996 118,254 0 0 0 1,419
President, Cudd Pressure Control 1995 118,229 1,720 0 0 1,423
James A. Lane, Jr. 1997 67,841 1,532,744 0 0 1,800
Executive Vice President, and 1996 69,146 1,274,925 0 0 1,800
President, Chaparral Boats, Inc. 1995 67,580 1,012,633 0 0 1,800
William S. Pegg 1997 67,841 1,532,744 0 0 1,800
Executive Vice President, and 1996 69,146 1,274,925 0 0 1,800
Executive Vice President, 1995 67,580 1,012,633 0 0 1,800
Chaparral Boats, Inc.
</TABLE>
(1) The number of shares held and their values on December 31, 1997 were as
follows: Mr. Hubbell, 118,000 shares valued at $1,393,934; Mr. Lane, 40,000
shares valued at $472,520; and Mr. Pegg, 40,000 shares valued at $472,520.
The December 31, 1997, values are based on the December 31, 1997, closing
market stock price of $11.813 and do not take into account any diminution of
value attributable to vesting provisions on these shares. Time-Lapse
Restricted Stock vests ten years from the date of grant. This stock is
forfeited if the employment of the Named Executive terminates prior to
vesting for reasons other than death, retirement or permanent disability.
During these ten years, grantees receive all dividends declared and retain
voting rights for the granted shares. Performance Restricted Stock is
granted, but not earned and issued, until certain five year tiered
performance criteria are met. The performance criteria are predetermined
market prices of the Company's stock. On the date the stock appreciates to
each level (determination date), 20 percent of performance shares are
earned. Once earned, the stock vests five years from the determination date.
After the determination date, the grantee will receive all dividends
declared and retain voting rights to the shares.
(2) Effective July 1, 1984, the Company adopted the RPC, Inc. 401(k) Plan
("401(k) Plan"), a qualified retirement plan designed to meet the
requirements of Section 401(k) of the Internal Revenue Code. The 401(k) Plan
provides for a matching contribution of forty cents ($.40) for each dollar
($1.00) of a participant's contribution to the 401(k) Plan, not to exceed 3
percent of his or her annual compensation (which includes commissions,
overtime and bonuses). A participant's voluntary pretax salary deferrals
made under the 401(k) Plan are in lieu of payment of compensation to the
participant. The amounts shown in this column represent the Company match
for the Named Executives.
(3) All share amounts reflect the December 1997 two-for-one stock split.
6
<PAGE>
OPTION/SAR GRANTS IN FISCAL YEAR 1997
The following table sets forth stock options granted in the fiscal year
ending December 31, 1997, to each of the Company's Named Executives. Employees
of the Company and its subsidiaries are eligible for stock option grants based
on individual performance. The table also sets forth the hypothetical gains that
would exist for the options at the end of their ten-year term, assuming compound
rates of stock appreciation of five percent and ten percent. The actual future
value of the options will depend on the market value of the Company's Common
Stock. All option exercise prices are based on the market price on the grant
date.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
-------------------------------------------------------
PERCENT POTENTIAL REALIZABLE
NUMBER OF OF TOTAL VALUE AT ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OR OPTION TERM (2)
GRANTED IN FISCAL BASE PRICE EXPIRATION --------------------
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------------------------- ----------- --------------- ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins....................... 0 -- -- -- -- --
Richard A. Hubbell....................... 20,000(3) 13% 7.50 01/28/07 94,334 239,061
Bobby Joe Cudd........................... 0 -- -- -- -- --
James A. Lane, Jr........................ 0 -- -- -- -- --
William S. Pegg.......................... 0 -- -- -- -- --
</TABLE>
(1) Options were granted on January 28, 1997, at a price of $7.50 per share. No
Stock Appreciation Rights were granted to the Named Executives during 1997.
(2) These amounts, based on assumed appreciation rates of five percent and ten
percent as prescribed by the Securities and Exchange Commission rules, are
not intended to forecast possible future appreciation, if any, of the
Company's stock price. These numbers do not take into account certain
provisions of options providing for termination of the option following
termination of employment, nontransferability or phased-in vesting. The
Company did not use an alternative formula for a grant date valuation as it
is not aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors. Future
compensation resulting from option grants is based solely on the performance
of the Company's stock price.
(3) These Incentive Stock Options vest and become exercisable 20 percent each
year and expire after ten years.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1997
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S OPTIONS/SAR'S
VALUE AT FY-END (#) AT FY-END ($)(1)
SHARES ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------- --------------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C>
R. Randall Rollins......................... 0 0 0/0 0/0
Richard A. Hubbell......................... 61,530 365,334 70,200/44,400 558,035/280,397
Bobby Joe Cudd............................. 0 0 0/0 0/0
James A. Lane, Jr.......................... 32,600 259,781 0/0 0/0
William S. Pegg............................ 32,600 340,263 0/0 0/0
</TABLE>
(1) Based on the closing price of Company Common Stock on the New York Stock
Exchange on December 31, 1997, of $11.813 per share. All share amounts
reflect the December 1997 two-for-one stock split.
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 1997, increases to base salaries
ranged up to 25 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 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 payments were
approximately 96 percent of the total cash compensation paid to these executives
in
8
<PAGE>
1997. During 1997, 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 $175,000 bonus in
1997 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 and amended by the stockholders at the April 22, 1997,
meeting. As detailed in the Option/ SAR Grants Table on page 7 and the Summary
Compensation Table on page 6, during 1997 Mr. Hubbell was granted 20,000 stock
options and was awarded 10,000 shares of Time-Lapse Restricted Stock and 10,000
shares of Performance 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 1997 cash compensation of R. Randall Rollins, Chairman and Chief
Executive Officer, was $400,000. This represents the total compensation for Mr.
Rollins. The Committee feels that due to his 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.
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
9
<PAGE>
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 which competes with the Company's boat
manufacturing subsidiary; and Weatherford Enterra, Inc., which competes with one
of the largest oil and gas services subsidiary of the Company. Outboard Marine
Corporation was included in prior year calculations but is not included this
year due to it's acquisition during 1997.
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>
12/31/92 100.00 100.00 100.00
12/31/93 128.32 110.08 122.76
12/31/94 115.10 111.53 126.90
12/31/95 137.74 153.45 170.72
12/31/96 226.45 188.68 175.30
12/31/97 358.04 251.63 237.23
</TABLE>
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. 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 aggregated $539,673 in 1997.
10
<PAGE>
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, 1997 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"), or the 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 1997 is $125,000. However,
this limitation does not affect previously accrued benefits of those individuals
who became entitled to benefits in excess of $125,000 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 $160,000 in 1997.
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--20,
Richard A. Hubbell--11, James A. Lane, Jr.--10, William S. Pegg--10.
11
<PAGE>
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 1997 under this plan are reported in the "All Other
Compensation" column of the Summary Compensation Table included herein.
PROPOSAL TO APPROVE AN AMENDMENT OF THE CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
The stockholders will be asked to vote on the approval of an amendment
("Amendment") to the Company's Certificate of Incorporation whereby the
authorized stock of the Company would be increased from 36,000,000 to 80,000,000
shares. The Amendment pertains only to the first paragraph of Article Fourth of
the Certificate of Incorporation of the Company. As amended, such paragraph
would be as follows:
"FOURTH: The total number of shares of stock which this corporation shall
have authority to issue is 80,000,000, divided into two classes, namely,
Preferred Stock, of which this corporation is authorized to issue One
Million (1,000,000) shares of the par value of Ten Cents ($0.10) per share,
and Common Stock, of which this corporation is authorized to issue Seventy
Nine Million (79,000,000) shares of the par value of Ten Cents ($0.10) per
share."
The Company has never before requested an increase in the number of
authorized shares. In 1992, the Company requested a reduction in authorized
shares from 51,000,000 to 36,000,000. Currently there are 29,644,990 shares
outstanding. The Company has 2,600,000 shares reserved for issuance under stock
incentive plans. The Board of Directors believes this amendment is necessary in
order to meet the Company's business needs and to take advantage of corporate
opportunities. At present, there are no plans to issue any authorized shares.
When the Company does issue authorized shares, unless required by New York Stock
Exchange Rules and Regulations or Delaware law, the Company will not need
stockholder approval.
Management recommends a vote "FOR" approval of the Amendment.
The members of the Board of Directors, who own of record approximately 64.4
percent of the voting securities of the Company, have informed the Company that
they intend to vote "FOR" approval of the Amendment. Since the affirmative vote
of a majority of shares outstanding and entitled to vote is required in order to
approve the Amendment, the vote "FOR" approval of the Amendment by the
stockholders who are members of the Board of Directors will assure such
approval.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the auditors for the Company for the fiscal
year ended December 31, 1997. 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 1998. 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
12
<PAGE>
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, 1997, have been satisfied.
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company by
December 1, 1998, 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 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 authorized shares of Company
common stock will require the affirmative vote of a majority of the outstanding
shares of Common Stock entitled to vote on the proposal. Abstentions and broker
non-votes will have the effect of "negative" votes with respect to this
proposal.
13
<PAGE>
MISCELLANEOUS
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997, 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
April 1, 1998
14
<PAGE>
RPC, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF RPC, INC.
FOR ANNUAL MEETING OF STOCKHOLDERS TUESDAY, APRIL 28, 1998, 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 28,
1998, 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 April 1, 1998, 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 III / / FOR all Class III nominees, / / ABSTAIN from voting for the election of
nominees; EXCEPT AS INDICATED BELOW; OR Wilton Looney, Gary W. Rollins, and James
A. Lane, Jr. as Class III 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 AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES. / / 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. THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY.
PROXY
Please sign below, date and return
promptly.
__________________________________
__________________________________
Signature
Dated: _____________________, 1998
(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.
