<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Parker Drilling Company
- --------------------------------------------------------------------------------
(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)(l) 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:
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<PAGE> 2
[PARKER DRILLING LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
DECEMBER 17, 1997
10:00 A.M., CENTRAL STANDARD TIME
PARKER BUILDING
EIGHT EAST THIRD STREET
TULSA, OKLAHOMA 74103
<PAGE> 3
[PARKER DRILLING LOGO]
ROBERT L. PARKER
Chairman
Dear Stockholders:
On behalf of your board of directors and management, I cordially invite you
to attend the Annual Meeting of Stockholders of Parker Drilling Company to be
held on Wednesday, December 17, 1997, at 10:00 a.m., in the Parker Building,
Eight East Third Street, Tulsa, Oklahoma.
In the accompanying Notice of Annual Meeting and Proxy Statement you will
find detailed information about the Annual Meeting, including matters upon which
the shareholders will be asked to act. These items include the election of two
directors, a proposal to approve the grant of incentive stock options to
eligible employees under the Parker Drilling Company 1997 Stock Plan, and the
ratification of Coopers & Lybrand L.L.P. as independent accountants. You are
urged to read all of this information being provided. The board of directors
believes that the approval of each of these proposals is in the best interest of
the stockholders and the Company and unanimously recommends a vote for the
adoption of these proposals.
It is important that your shares be represented at the meeting whether or
not you plan to attend and regardless of the number of shares you own.
Therefore, please sign, date and mail promptly the enclosed proxy in the return
envelope.
Thank you for your continued support of Parker Drilling Company.
Sincerely,
LOGO
ROBERT L. PARKER
Chairman
EIGHT EAST THIRD STREET M TULSA, OKLAHOMA 74103 M 918-585-8221 M FAX
918-585-1058 M //www.parkerdrilling.com
<PAGE> 4
PARKER DRILLING COMPANY
PARKER BUILDING
EIGHT EAST THIRD STREET
TULSA, OKLAHOMA 74103
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO: STOCKHOLDERS OF PARKER DRILLING COMPANY
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Parker
Drilling Company, a Delaware corporation (the "Company"), will be held in the
Parker Building, Eight East Third Street, Tulsa, Oklahoma 74103, on Wednesday,
December 17, 1997, at 10:00 a.m. (CST) for the following purposes:
(1) To elect two directors (Class II) to serve a term of three years and
until their successors have been duly elected and qualified.
(2) To consider and act upon a proposal to approve the grant of incentive
stock options to eligible employees under the Parker Drilling Company
1997 Stock Plan.
(3) To ratify the selection of Coopers & Lybrand L.L.P., Two Warren Place,
6120 S. Yale, Tulsa, Oklahoma 74136, as independent accountants for the
Company for its fiscal year 1998.
(4) To transact such other business as may properly come before the meeting
or at any adjournment thereof.
Please consult the accompanying proxy statement for further information
concerning the meeting, election of directors and other matters.
The board of directors has fixed the close of business on November 4, 1997,
as the Record Date for the Annual Meeting, and only holders of the Company's
Common Stock of record at such time are entitled to notice of and to vote at the
meeting or any adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES. IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON.
By Order of the Board of Directors,
/s/ LESLIE D. ROSENCUTTER
LESLIE D. ROSENCUTTER
Corporate Secretary
Tulsa, Oklahoma
November 7, 1997
<PAGE> 5
PARKER DRILLING COMPANY
PARKER BUILDING
EIGHT EAST THIRD STREET
TULSA, OKLAHOMA 74103
(PRINCIPAL EXECUTIVE OFFICES)
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 17, 1997
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by
the board of directors of Parker Drilling Company (the "Company"), of proxies to
be voted at the Annual Meeting of Stockholders to be held on Wednesday, December
17, 1997 at 10:00 a.m. (CST), or at any adjournment thereof (the "Annual
Meeting") for the purposes set forth in the accompanying Notice of Annual
Meeting. The proxy statement and accompanying proxy card are being mailed to
stockholders on or about November 7, 1997, to stockholders of record as of
November 4, 1997, in order to give all stockholders the opportunity to be
present or represented at the meeting. Only if a stockholder is represented by a
proxy, or is present, can his or her shares be voted.
If the accompanying proxy is properly executed and returned, the shares
represented by the proxy will be voted at the Annual Meeting as directed
therein. If the proxy card is signed and returned to the board of directors
without direction, the proxy will be voted (a) FOR the election of the nominees
named thereon as directors, (b) FOR the approval of the grant of incentive stock
options to eligible employees under the Parker Drilling Company 1997 Stock Plan
and (c) FOR the ratification of Coopers & Lybrand L.L.P. as independent
accountants for the Company. A proxy executed in the form enclosed may be
revoked by the person signing the same at any time before the authority thereby
granted is exercised by giving written notice to the secretary of the Company at
Eight East Third Street, Tulsa, Oklahoma 74103, or by attending the Annual
Meeting and voting in person.
The Company will pay the cost of soliciting proxies for the meeting. Copies
of solicitation material will be furnished to brokerage houses, fiduciaries and
custodians to forward to beneficial owners of stock held in their names. Proxies
may be solicited by directors, officers or regular employees of the Company in
person or by mail, courier, telephone or facsimile. The Company has retained
Kissel-Blake Inc., 110 Wall Street, New York, New York 10005, to assist in the
solicitation of proxies from brokers and nominees for a fee of approximately
$7,000 plus expenses.
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record at the close of business on November 4, 1997 (the
"Record Date"), will be entitled to vote at the Annual Meeting. As of the Record
Date, there were issued and outstanding 76,685,892 shares of Common Stock, par
value $.16 2/3 per share, of the Company. Each share is entitled to one vote.
The Company has no other voting securities outstanding. In order to conduct
business at the Annual Meeting, a quorum consisting of a majority of the issued
and outstanding shares of common stock on the Record Date, represented either in
person or by proxy, will be necessary. Votes withheld from nominees for
directors, abstentions and broker non-votes will be counted for purposes of
determining whether a quorum has been reached. Votes will be tabulated by an
inspector of election appointed by the board of directors of the Company.
With regard to the election of directors, votes may be cast in favor of or
withheld from each nominee, with withheld votes having the effect of a negative
vote. Abstentions, which may be specified on all proposals except the election
of directors, will have the effect of a negative vote. Under applicable Delaware
law, a broker non-vote will have no effect on the outcome of the election of
directors or the ratification of the appointment of the independent auditor.
With regard to the approval of the grant of incentive stock options to eligible
employees under the Company's 1997 Stock Plan, a broker non-vote will have the
effect of a broker
<PAGE> 6
negative vote. A plurality of the votes cast is required for the election of the
directors and a majority of the votes cast is required for the ratification of
the selection of Coopers & Lybrand L.L.P. as independent accountants for the
Company. A majority of the outstanding stock entitled to vote thereon is
required for the approval of the grant of incentive stock options to eligible
employees under the Parker Drilling Company 1997 Stock Plan.
PROPOSAL ONE -- ELECTION OF DIRECTORS
The board is divided into three classes of directors. At each Annual
Meeting of Stockholders, members of one of the classes, on a rotating basis, are
elected for a term expiring at the third succeeding Annual Meeting of
Stockholders and the election and qualification of their successors. The Class
III and Class I Directors will serve until the Annual Meeting of Stockholders in
1998 and 1999, respectively, or until their successors are elected.
The two directors comprising Class II have been nominated for election at
the meeting for the term expiring at the 2000 Annual Meeting of Stockholders and
the election and qualification of their successors. The persons designated by
the board as nominees for election are Dr. Earnest F. Gloyna and Mr. Bernard J.
Duroc-Danner. Both persons are currently directors, Dr. Gloyna having previously
been elected by the stockholders and Mr. Duroc-Danner having been elected by the
incumbent board in November 1996. Both nominees have advised the Company of
their willingness to serve if elected.
In the event that any vacancy shall occur by reason of the death or other
unanticipated occurrence of the nominees for election as directors by the
stockholders, the persons named as proxies on the enclosed proxy card have
advised the board of directors that it is their intention to vote such proxy for
such substitute nominee as may be proposed by the board of directors or vote to
allow the vacancy created thereby to remain open until filled by the board. The
enclosed proxy card can only be voted for the persons who are nominees for
director, or for any substituted nominee that may be proposed by the board of
directors, and cannot be voted for any additional nominees who may be proposed
by a stockholder at the meeting.
The name, age and principal occupation of the nominees for election as
directors and each of the other directors whose term of office will continue
after the meeting are set forth below. Unless otherwise indicated, such persons
have held their respective principal occupations stated therein for more than
five years. Also included for each director is the year in which he first became
a director of the Company, his positions and offices with the Company, other
directorships and certain other biographical information.
NOMINEES FOR DIRECTOR -- FOR TERM OF OFFICE
EXPIRING AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
Earnest F. Gloyna Dr. Gloyna is presently a chaired professor in Environmental
Age 76 Engineering at The University of Texas at Austin. He served
as dean, College of Engineering, from April 1970 to August
1987. He is also a consultant in environmental engineering
through Earnest F. Gloyna Enterprises, and is president of
Gloyna Properties, Inc. Dr. Gloyna serves as a member of the
board of trustees of Southwest Research Institute, a
nonprofit research institute that does contract research
work for government and industry.
Director since 1978 -- Class II
Bernard J. Duroc-Danner Mr. Duroc-Danner has been a director since November 1996. He
Age 44 has been president, chief executive officer and a director
of EVI, Inc. ("EVI"), for more than five years. EVI is the
former parent company of Mallard Bay Drilling, LLC, a
subsidiary acquired by the Company from EVI in November
1996. EVI is an international manufacturer and supplier of
oilfield equipment. Mr. Duroc-Danner is also a director of
Dailey International, Inc., a provider of services and
equipment to the oil and gas industry.
Director since 1996 -- Class II
</TABLE>
2
<PAGE> 7
CONTINUING DIRECTORS -- WITH TERMS OF OFFICE
EXPIRING AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
Robert L. Parker Mr. Parker, chairman of the board, served as president of
Age 74 the Company from 1954 until October 1977 when he was elected
chief executive officer. Since December 1969 he has retained
the position of chairman. He also serves on the board of
directors of MAPCO Inc., a diversified energy company;
Clayton Williams Energy, Inc., a company engaged in
exploration and production of oil and natural gas; BOK
Financial Corporation, a bank holding company organized
under the laws of the State of Oklahoma; and Norwest Bank
Texas, Kerrville, N.A., a diversified financial services
organization. He is the father of Robert L. Parker Jr.
Director since 1954 -- Class III
Robert L. Parker Jr. Mr. Parker Jr., president and chief executive officer,
Age 48 joined the Company in 1973 and was elected president and
chief operating officer in 1977 and chief executive officer
in December 1991. He previously was elected a vice president
in 1973 and executive vice president in 1976. He currently
serves on the board of directors of Alaska Air Group, Inc.,
the holding company for Alaska Airlines and Horizon Air
Industries. He is the son of Robert L. Parker.
Director since 1973 -- Class III
</TABLE>
CONTINUING DIRECTORS -- WITH TERM OF OFFICE
EXPIRING AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
David L. Fist Mr. Fist is a member of the law firm of Rosenstein, Fist &
Age 66 Ringold, Tulsa, Oklahoma, having been associated with the
firm since 1955. He serves as a director of Peoples State
Bank and Alliance Business Investment Company, a federally
licensed small business investment company.
Director since 1986 -- Class I
James W. Linn Mr. Linn is executive vice president and chief operating
Age 51 officer of the Company and has general charge of the
Company's business affairs and its officers. He joined the
Company in 1973 in the Company's international department.
He then served in the Company's domestic operations, being
named northern U.S. district manager in 1976. He was elected
vice president of U.S. and Canada operations in 1979, was
promoted to senior vice president in September 1981 and was
elected to his present position in December 1991.
Director since 1986 -- Class I
R. Rudolph Reinfrank Mr. Reinfrank has been a director since 1993. Since January
Age 42 1, 1997, he has been managing general partner of Coldstream
Capital LLC, Los Angeles, California. From May 1993 through
December 1996, Mr. Reinfrank was a managing director of the
Davis Companies, the holding company for the Marvin Davis
family. From January 1, 1988 through June 30, 1993, Mr.
Reinfrank was executive vice president of Shamrock Holdings,
Inc., the holding company for the Roy E. Disney family. From
January 1990 through December 1992, Mr. Reinfrank also
served as managing director of Trefoil Investors, Inc. and
Shamrock Capital Advisors, Inc., the general partner and
management services company respectively, for Trefoil
Capital Investors, L.P.
Director since 1993 -- Class I
</TABLE>
3
<PAGE> 8
PROPOSAL TWO -- APPROVE THE GRANT OF INCENTIVE STOCK OPTIONS PURSUANT TO THE
PARKER DRILLING COMPANY 1997 STOCK PLAN
On May 13, 1997, the board of directors adopted the Parker Drilling Company
1997 Stock Plan (the "1997 Stock Plan"), a broad-based stock plan allowing
awards to be made to substantially all Company employees and consultants. The
1997 Stock Plan became effective immediately upon adoption by the board, but
options granted thereunder will only be exercisable upon listing of the
underlying shares on the New York Stock Exchange ("NYSE"), which is expected to
occur in the near future. The board of directors approved the 1997 Stock Plan
pursuant to the recommendations of management and the compensation committee of
the board of directors, based in part on the reports of an internationally
recognized employee benefits consultant, which prepared a detailed analysis of
the total compensation package of the executive officers of the Company compared
to the executive officers of several peer companies. The reports concluded that
the total compensation package of the top five executive officers was
significantly less than the total compensation packages of the most highly
compensated officers of several of the peer companies included in the
independent analysis prepared for the Company, primarily in the area of
stock-based incentive compensation. In addition, the committee determined that
it is in the interest of the Company to substantially broaden the class of
employees to whom stock-based compensation awards may be made. The board of
directors believes that the adoption of this 1997 Stock Plan will not only
increase the stock-based incentive compensation to competitive levels, but will
also assist in better aligning the interests of the executive officers and other
employees with its stockholders, and will enhance the ability of the Company to
obtain and retain employees necessary for the efficient performance of the
Company's operations. In the opinion of the board, the implementation of the
1997 Stock Plan will lead to increased shareholder value.
The 1997 Stock Plan is a flexible plan which will provide the board with
discretion to grant stock-based incentives to eligible employees and consultants
as the board deems appropriate. It will permit the issuance of awards in a
variety of forms, including: (i) non-qualified and incentive stock options for
the purchase of common stock and (ii) restricted stock ("Restricted Stock"). The
Company has no current intention to award Restricted Stock under the 1997 Stock
Plan, but has included this option to allow flexibility in the event that the
board of directors determines that changes in tax laws or accounting principles
make granting Restricted Stock appropriate for the Company. Because the 1997
Stock Plan is broad-based, approval of the stockholders is not a requirement for
public companies listed on the NYSE. Stockholder approval of the 1997 Stock Plan
is sought only for the limited purpose of qualifying the 1997 Stock Plan under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") to
afford the Company and optionees certain Federal income tax benefits in
connection with incentive stock option awards. See "Discussion of Federal Income
Tax Consequences" below. The board of directors recommends that stockholders
vote to approve the 1997 Stock Plan to qualify under Section 422 of the Code,
which will allow the granting of incentive stock options.
The following summary of certain features of the 1997 Stock Plan is
qualified in its entirety by reference to the full text of the 1997 Stock Plan,
which is set forth in the attached Exhibit "A".
GENERAL
The purpose of the 1997 Stock Plan is to promote the overall financial
objectives of the Company and its stockholders by (i) providing employees of,
and consultants to, the Company who are in a position to contribute to the
growth, management and success of the Company, with additional incentive to
promote the success of the businesses of the Company and (ii) enabling the
Company to attract and retain the services of employees and consultants upon
whose judgment and effort the successful conduct of its operations is largely
dependent. All decisions regarding awards under the 1997 Stock Plan will be made
by the entire board of directors, which is composed of three employee and four
non-employee directors.
The 1997 Stock Plan provides for the grant of up to 4,000,000 shares of
common stock (approximately 5% of the outstanding common stock). In the
discretion of the board of directors, shares of common stock subject to an award
under the 1997 Stock Plan that are forfeited, otherwise remain unissued upon
termination of an award or are received by the Company in connection with
exercise of an award shall become available for additional awards under the 1997
Stock Plan. In the event of a stock dividend, stock split, recapitalization,
sale of substantially all of the assets of the Company, reorganization or other
similar event, the board of
4
<PAGE> 9
directors will adjust the aggregate number of shares of common stock subject to
the 1997 Stock Plan and the number, class and price of such shares subject to
outstanding awards to reflect equitably the effects of such change. The Company
is obligated to and intends to register shares of common stock issuable under
the 1997 Stock Plan pursuant to the Securities Act of 1933 on a Form S-8.
The board of directors may amend, modify or discontinue the 1997 Stock Plan
at any time unless such amendment impairs the rights of a participant without
the participant's consent. The board of directors may amend the terms of any
award granted under the 1997 Stock Plan, subject to the consent of a participant
if such amendment impairs the rights of such participant.
AWARDS UNDER THE 1997 STOCK PLAN
Stock Options. The board of directors shall determine the number of shares
of common stock subject to the options to be granted to each participant. The
1997 Stock Plan permits the board of directors to grant non-qualified stock
options, incentive stock options or a combination thereof to the participants.
None of the options granted under the 1997 Stock Plan will be treated as
incentive stock options, however, unless the stockholders approve the 1997 Stock
Plan to qualify under Section 422 of the Code. Only persons who on the date of
the grant are employees of the Company or any subsidiary of the Company may be
granted options which qualify (under Code section 422) as incentive stock
options. The aggregate fair market value of the Common Stock (as determined on
the grant date) with respect to which incentive stock options are exercisable
for the first time in any calendar year may not exceed $100,000. Options granted
under the 1997 Stock Plan will provide for the purchase of common stock at
prices determined by the board of directors, but in no event less than the par
value of a share of Common Stock on the date of grant and 100% of the fair
market value on the date of grant if in the form of incentive stock options. No
incentive stock option shall be exercisable later than the tenth anniversary
date after its grant. No incentive stock option shall be granted later than the
tenth anniversary date of the adoption of the 1997 Stock Plan.
Options granted under the 1997 Stock Plan shall be exercisable at such
times and subject to such terms and conditions as set forth in the 1997 Stock
Plan and as the board of directors shall determine or provide in an option
agreement. Except as otherwise provided in any option agreement, options may
only be transferred pursuant to a domestic relations order or under the laws of
descent and distribution, and all options shall be exercisable during the
participant's lifetime only by the participant. The option exercise price is
payable by the participant (i) in cash, (ii) in shares of common stock held by
the participant, his executor, administrator, or assignee, and having an
aggregate fair market value, as determined as of the close of business on the
day prior to the day on which such option is exercised, equal to the option
price, (iii) if permitted by the board of directors, a promissory note in the
amount of the option price, which note shall provide for full personal liability
of the maker and shall contain such other terms and provisions as the board of
directors may determine, including without limitation the right to repay the
note partially or wholly with common stock, (iv) if authorized by the board of
directors, by delivery of irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds necessary to pay for
all common stock acquired through such exercise and any tax withholding
obligations resulting from such exercise, (v) if authorized by the board of
directors, by the withholding by the Company, pursuant to a written election
delivered by the participant, his executor, administrator, or assignee, on or
prior to the date of exercise, from the shares of common stock issuable upon any
exercise of the option that number of shares having a fair market value as of
the close of business on the day prior to the day on which such option is
exercised equal to such option price, (vi) by constructive delivery
("attestation") of shares of common stock held by the participant, his executor,
administrator, or assignee, and having an aggregate fair market value, as
determined as of the close of business on the day of exercise, equal to the
option price effected through providing the Company with a notarized statement
on or before the day of exercise attesting to the number of shares owned by the
participant, his executor, administrator, or assignee, that will serve as the
option price payment shares, or (vii) as authorized by the board of directors,
by a combination of such methods. If a participant voluntarily ceases to be an
employee of the Company (other than due to cause), all of his outstanding
options shall terminate, except that to the extent such options are then
exercisable by their own terms or the board accelerates the vesting thereof,
5
<PAGE> 10
such options may be exercised for the shorter of their remaining terms or five
years after the termination of employment.
Restricted Stock. The board of directors in its discretion shall determine
the persons, if any, to whom Restricted Stock shall be granted, the number of
shares of Restricted Stock to be granted to each participant, the periods for
which Restricted Stock is restricted, and any other restrictions to which
Restricted Stock is subject. The board of directors may condition the award of
Restricted Stock on such performance goals and other criteria as it may
determine. The terms and conditions of the Restricted Stock shall be confirmed
in and subject to an agreement between the Company and the participant. During
the restriction period, the certificates evidencing the Restricted Stock will be
held by the Company. During the restriction period, with limited exceptions, the
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered. Other than the foregoing restrictions, the participant shall have
all the rights of a holder of common stock. If a participant's employment
terminates during the restriction period due to death or disability, the
restrictions on the Restricted Stock shall lapse.
1997 STOCK PLAN BENEFITS
The following table provides a description of the options that have been
granted under the 1997 Stock Plan. All of the options listed below were granted
on May 13, 1997, at an exercise price of $8.875 per share, which was the closing
price of the Company's stock on said date.
PARKER DRILLING COMPANY 1997 STOCK PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE* NUMBER OF SHARES**
----------------- ------------- ------------------
<S> <C> <C>
Robert L. Parker Jr, CEO.............................. $1,035,120 240,000
Robert L. Parker, Chairman............................ $ 690,080 160,000
James W. Linn, EVP & COO.............................. $ 517,560 120,000
James J. Davis, SVP & CFO............................. $ 517,560 120,000
Thomas L. Wingerter, VP............................... $ 172,520 40,000
All Executive Officers................................ $3,967,960 920,000
Non-Executive Officers................................ $ 776,340 180,000
Employee Group........................................ $3,019,100 700,000
</TABLE>
- ---------------
* Computed by multiplying the number of shares times the difference between the
August 31, 1997 closing market price of $13.188 and exercise price of $8.875.
** Certain of such options were designated as incentive stock options at the
time of grant. However, if stockholders do not approve the 1997 Stock Plan to
qualify under Section 422 of the Code, all of such options will be treated as
non-qualified options for Federal income tax purposes.
CHANGES IN CONTROL
Upon the occurrence of a Change in Control (as defined in the 1997 Stock
Plan), the following shall occur: (i) all unexercised stock options shall become
immediately exercisable, and (ii) all restrictions on the Restricted Stock shall
lapse. In addition, after the Change in Control the Company may require such a
participant to surrender all or part of the participant's outstanding vested
options and receive in cash from the Company the following amount for each
option: (i) the excess of the Change in Control Price over the exercise price of
the option, multiplied by (ii) the number of shares of common stock subject to
the option.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following summary of tax consequences with respect to the awards under
the 1997 Stock Plan is not comprehensive and is based upon laws and regulations
in effect on October 31, 1997. Such laws and regulations are subject to change.
6
<PAGE> 11
Stock Options. There are generally no Federal income tax consequences
either to the optionee or to the Company upon the grant of a stock option. On
exercise of an incentive stock option the optionee will not recognize any income
and the Company will not be entitled to a deduction for tax purposes, although
such exercise may give rise to liability for the optionee under the alternative
minimum tax provisions of the Code. Generally, if the optionee disposes of
shares acquired upon exercise of an incentive stock option within two years of
the date of grant or one year of the date of exercise, the optionee will
recognize compensation income and the Company will be entitled to a deduction
for tax purposes in the amount of the excess of the fair market value of the
shares on the date of exercise over the option exercise price (or the gain on
sale, if less). Otherwise, the Company will not be entitled to any deduction for
tax purposes upon disposition of such shares, and the entire gain for the
optionee will be treated as a capital gain. On exercise of a non-qualified stock
option, the amount by which the fair market value of the shares on the date of
exercise exceeds the option exercise price will generally be taxable to the
optionee as compensation income and will generally be deductible for tax
purposes by the Company. The disposition of shares acquired upon exercise of a
non-qualified stock option will generally result in a capital gain or loss for
the optionee, but will have no tax consequences for the Company.
Restricted Stock. A participant who is granted Restricted Stock may make an
election under Section 83(b) of the Code (a "Section 83(b) Election") to have
the grant taxed as compensation income at the date of receipt, with the result
that any future appreciation (or depreciation) in the value of the shares
granted shall be taxed as capital gains (or loss) upon a subsequent sale of the
shares. However, if the participant does not make a Section 83(b) Election, then
the grant shall be taxed as compensation income at the full fair market value on
the date that the restrictions imposed on the shares expire, except in the case
of persons subject to Section 16(b) of the Securities Exchange Act of 1934, in
which case the fair market value will be determined at the later of (i) six
months after the date on which the Restricted Stock was granted or (ii) the date
of the expiration of the restrictions. Unless a participant makes a Section
83(b) Election, any dividends paid on stock subject to the restrictions are
compensation income to the participant and compensation expense to the Company.
The Company is entitled to an income deduction for any compensation income taxed
to the participant, subject to the Section 162(m) limitation on the
deductibility of non-performance based compensation in excess of $1,000,000 to
the Named Executive Officers.
In the event any payments or rights accruing to a participant upon a Change
in Control, or any other payments awarded under the 1997 Stock Plan, constitute
"parachute payments" under Section 280G of the Code, depending upon the amount
of such payments accruing and the other income of the participant from the
Company, the participant may be subject to an excise tax (in addition to
ordinary income tax) and the Company may be disallowed a deduction for the
amount of the actual payment.
PROPOSAL THREE -- SELECTION OF INDEPENDENT ACCOUNTANTS
The board of directors has unanimously selected Coopers & Lybrand L.L.P. as
the independent accountants for the Company for its 1998 fiscal year subject to
ratification or rejection by the stockholders at the Annual Meeting. Recently,
Coopers & Lybrand L.L.P. and Price Waterhouse LLP have announced plans to merge
their practices, subject to regulatory approval and the approval of their
respective partners. If the stockholders ratify the board of directors'
selection of Coopers & Lybrand L.L.P., then such ratification will be deemed to
extend to the merged firm. A representative of Coopers & Lybrand L.L.P. will
attend the forthcoming Annual Meeting, will have the opportunity to make a
statement if he or she desires to do so and will be available to answer
appropriate questions.
7
<PAGE> 12
PRINCIPAL STOCKHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning beneficial ownership
of the Company's common stock as of November 4, 1997, by (a) all persons known
by the Company to be beneficial owners of more than five percent (5%) of such
stock, (b) each director and nominee for director of the Company, (c) each of
the executive officers of the Company named in the Executive Compensation table,
and (d) all directors and executive officers as a group. Unless otherwise noted,
the persons named below have sole voting and investment power with respect to
such shares.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
--------------------------
NAME OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS
---------------- ---------- ----------
<S> <C> <C>
The Equitable Companies Incorporated........................ 14,731,169(2) 19.1%
Robert L. Parker............................................ 4,297,175(3) 5.6%
Robert L. Parker Jr......................................... 994,816(4) *
James W. Linn............................................... 669,716(5) *
James J. Davis.............................................. 463,869(6) *
Thomas L. Wingerter......................................... 217,895(7) *
Earnest F. Gloyna........................................... 54,800(8) *
R. Rudolph Reinfrank........................................ 49,000(9) *
David L. Fist............................................... 45,600(10) *
Bernard J. Duroc-Danner..................................... 35,000(11) *
All directors and all executive officers as a Group (16
persons).................................................. 7,497,284(12) 9.7%
</TABLE>
- ---------------
* Less than one percent
(1) Unless otherwise indicated, all shares are directly held with sole voting
and investment power. Additionally, there are no voting or investment
powers over shares which are represented by presently exercisable stock
options.
(2) Based on information obtained from The Equitable Companies Incorporated as
of September 30, 1997, 14,731,169 shares were beneficially owned by
subsidiaries of The Equitable Companies Incorporated, 787 Seventh Avenue,
New York, NY 10019. The Equitable Life Assurance Society of the United
States, Alliance Capital Management L.P. and Donaldson, Lufkin & Jenrette
Securities Corporation beneficially owned 5,550,000, 9,122,300 and 58,869
shares respectively, each having sole voting and dispositive power.
(3) Includes 67,200 shares owned by Mr. Parker's spouse, as to which shares Mr.
Parker disclaims any beneficial ownership and has no voting control,
3,796,045 shares held by the Robert L. Parker Trust, over which Mr. Parker
has sole voting control and shared dispositive power, options to purchase
240,000 shares under the 1994 Executive Stock Option Plan and options to
purchase 160,000 shares under the 1997 Stock Plan.
(4) Includes 5,760 shares held as trustee for Mr. Parker Jr.'s nieces, as to
which he disclaims any beneficial ownership, 38,080 unvested shares granted
pursuant to the Company's 1991 Stock Grant Plan over which Mr. Parker Jr.
has voting control only, options to purchase 526,000 shares under the 1994
Executive Stock Option Plan and options to purchase 240,000 shares under
the 1997 Stock Plan.
(5) Includes 28,560 unvested shares granted pursuant to the Company's 1991
Stock Grant Plan over which Mr. Linn has voting control only, options to
purchase 304,000 shares under the 1994 Executive Stock Option Plan and
options to purchase 120,000 shares under the 1997 Stock Plan.
(6) Includes 15,300 unvested shares granted pursuant to the Company's 1991
Stock Grant Plan for which Mr. Davis has voting control, 22,000 shares held
by Mr. Davis' spouse in a trust over which she is trustee only, options to
purchase 247,000 shares under the 1994 Executive Stock Option Plan and
options to purchase 120,000 shares under the 1997 Stock Plan.
(7) Includes 15,300 unvested shares granted pursuant to the Company's 1991
Stock Grant Plan over which Mr. Wingerter has voting control only, options
to purchase 127,000 shares under the 1994 Executive Stock Option Plan and
options to purchase 40,000 shares under the 1997 Stock Plan.
(8) Includes 2,000 shares held in trust by Dr. Gloyna's spouse, as to which Dr.
Gloyna disclaims beneficial ownership and options to purchase 45,000
shares.
(9) Includes options to purchase 45,000 shares.
(10) Includes options to purchase 45,000 shares.
(11) Includes options to purchase 35,000 shares.
(12) This number of shares includes the total number of shares which may be
acquired pursuant to the exercise of options by the directors and executive
officers.
8
<PAGE> 13
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
services rendered in all capacities to the Company by the chief executive
officer and the four next most highly compensated executive officers of the
Company (collectively, the "Named Executive Officers") for each of the three
fiscal years ended August 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------------- ---------------------------
SECURITIES
OTHER RESTRICTED UNDERLYING
NAME AND ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($)(2) AWARD(S)($)(3) SARS(#) COMPENSATION($)
------------------ ---- ------------ -------- ------------------ -------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Parker Jr. 1997 $511,500 $100,000 -- -- 600,000 $ 10,396(4)(9)
President and Chief 1996 $476,583 $80,000 -- -- -- $ 12,283
Executive Officer 1995 $476,500 $80,000 -- $166,600 166,000 $ 8,582
Robert L. Parker 1997 $461,500 -- $96,975 -- 400,000 $361,710(5)(9)
Chairman 1996 $447,417 -- $81,660 -- -- $382,249
1995 $476,500 -- $94,111 -- -- $440,761
James W. Linn 1997 $316,167 $75,000 -- -- 300,000 $ 8,607(6)(9)
Executive Vice 1996 $269,417 $50,000 -- -- -- $ 9,974
President and 1995 $263,500 $45,000 -- $124,950 124,000 $ 8,845
Chief Operating
Officer
James J. Davis 1997 $200,667 $65,000 -- -- 300,000 $ 8,167(7)(9)
Sr. Vice
President -- 1996 $189,833 $40,000 -- -- -- $ 9,544
Finance and 1995 $184,000 $40,000 -- $ 66,938 67,000 $ 8,305
Chief Financial
Officer
Thomas L. Wingerter 1997 $126,133 $25,000 -- -- 100,000 $ 6,819(8)(9)
Vice President -- 1996 $120,717 $25,000 -- -- -- $ 8,110
US Operations 1995 $114,467 $25,000 -- $ 66,938 67,000 $ 5,361
</TABLE>
- ---------------
(1) For each of the employed directors, includes director's fees of $24,500,
$12,500 and $14,500 for fiscal years 1997, 1996 and 1995, respectively.
(2) No compensation was received by the Named Executive Officers which requires
disclosure in this column except for Mr. Parker whose Other Annual
Compensation in 1997 includes $42,805 for tax preparation and $47,470 for
salaries to employees who work jointly for the Company and the Robert L.
Parker Trust.
(3) These shares were granted January 11, 1995 under the Company's 1991 Stock
Grant Plan with a vesting schedule of 33% on January 5, 1996; 33% on January
3, 1997; and 34% on January 5, 1998. The Company is required to use the
closing price of its common stock on the date of grant (i.e. $4.375 on
January 11, 1995) in calculating the value of the stock reported in this
column. As of August 31, 1997, Messrs. Parker Jr., Linn, Davis and Wingerter
held 38,080, 28,560, 15,300 and 15,300 unvested shares respectively, with
the market value thereof on August 31, 1997, being $152,180, $376,635,
$201,769 and $201,769, respectively. Dividends are paid on these shares if
and to the extent dividends are paid on the Company's outstanding common
stock.
(4) Mr. Parker Jr.'s All Other Compensation for 1997 is comprised of Company
matching contributions to its 401(k) plan of $4,650, $349 representing the
full dollar value of the term portion of a Company paid premium for a split
dollar life insurance policy and $5,397 representing the present value of
the benefit of the non-term portion of that premium.
(5) Mr. Parker's All Other Compensation for 1997 is comprised of Company
matching contributions to its 401(k) plan of $4,650, $40,588 representing
the full dollar value of the term portion of a Company-paid
9
<PAGE> 14
premium for a split dollar life insurance policy and $316,472 representing
the present value of the non-term portion of that premium. See "Certain
Relationships and Related Transactions" on page 17.
(6) Mr. Linn's All Other Compensation for 1997 is comprised of Company matching
contributions to its 401(k) plan of $4,650, $258 representing the full
dollar value of the term portion of a Company paid premium for a split
dollar life insurance policy and $3,699 representing the present value of
the benefit of the non-term portion of that premium.
(7) Mr. Davis' All Other Compensation for 1997 is comprised of Company matching
contributions to its 401(k) plan of $4,650, $208 representing the full
dollar value of the term portion of a Company paid premium for a split
dollar life insurance policy and $3,309 representing the present value of
the benefit of the non-term portion of that premium.
(8) Mr. Wingerter's All Other Compensation for 1997 is comprised of Company
matching contributions to its 401(k) plan of $4,300, $155 representing the
full dollar value of the term portion of a Company paid premium for a split
dollar life insurance policy and $2,364 representing the present value of
the benefit of the non-term portion of that premium.
(9) The present value of the benefit of the non-term portion of the split dollar
life insurance policies was determined by calculating the present value of
interest at risk on future premiums to be paid by the Company, assuming an
interest crediting rate of 8% plus the present value of past premiums paid
by the Company, assuming an interest credit rating of 8%. The present value
of the benefit of the non-term portion of an additional split dollar life
insurance policy for Robert L. Parker was determined by multiplying the
following factors: the non-term portion of the premium, an assumed interest
crediting rate of 8 percent, 10 years (which is the number of years at which
point the cash surrender value exceeds the total of premiums paid by the
Company) and 8 percent (net present value).
OPTION/SAR GRANTS IN FISCAL YEAR 1997
The following table provides information on the options granted to the
Named Executive Officers in 1997 under the 1994 Executive Stock Option Plan and
under the new 1997 Stock Plan and the potential realizable value of those grants
(on a pre-tax basis) determined in accordance with SEC rules. The information in
this table shows how much the named executive officers may eventually realize in
future dollars under two hypothetical situations: if the stock gains 5% or 10%
in value per year compounded over the ten-year life of the options. These are
assumed rates of appreciation and are not intended to forecast future
appreciation of the Company's Common Stock. See Table under Proposal Two above
for separate current dollar values of the 1997 grants under the new 1997 Stock
Plan.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(B)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ----------------------- GRANT DATE
NAME GRANTED FISCAL YEAR(A) PER SHARE DATE 5% 10% VALUE(C)
---- ---------- -------------- -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Parker Jr........ 600,000 18% $8.875 5/13/07 $3,348,600 $8,486,400 $2,607,096
Robert L. Parker........... 400,000 12% $8.875 5/13/07 $2,232,400 $5,657,600 $1,738,064
James W. Linn.............. 300,000 9% $8.875 5/13/07 $1,674,300 $4,243,200 $1,303,548
James J. Davis............. 300,000 9% $8.875 5/13/07 $1,674,300 $4,243,200 $1,303,548
Thomas L. Wingerter........ 100,000 3% $8.875 5/13/07 $ 558,100 $1,414,400 $ 434,516
</TABLE>
- ---------------
(a) Based on the total number of options granted to employees under the 1994
Executive Stock Option Plan and the 1997 Stock Plan during 1997.
(b) Calculated over a ten-year period, which is equal to the maximum term of the
options.
(c) Calculated using the Black-Scholes option pricing model, based on the
Company's current dividend policy, volatility based on stock price data over
the five years preceding the option grants (39.1%) and a risk-free interest
rate (6.51%), which equaled, at the time of the option grants, the yield on
U.S. Treasury Strips with a time to maturity that approximates the six-year
estimated average life of the options. The result is a Black-Scholes option
value of $4.35 per share. The Company does not believe the values estimated
by this model, or any other model, necessarily will be indicative of the
values to be realized by an executive.
10
<PAGE> 15
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END 1997 OPTION/SAR VALUES
The following table provides information on the Named Executive Officers'
unexercised options at August 31, 1997. All options granted in prior fiscal
years are fully exercisable and all options granted in fiscal 1997 under the
1994 Executive Stock Option Plan and under the 1997 Stock Plan are exercisable
as described below in the "Compensation Committee Report on Executive
Compensation". None of the Named Executive Officers exercised any options during
fiscal year 1997 and no stock appreciation rights have been granted since the
inception of the 1994 Executive Stock Option Plan, nor are any allowable under
the 1997 Stock Plan.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SAR'S AT AUGUST 31, SAR'S AT AUGUST 31,
1997(#) 1997($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert L. Parker Jr.............. 286,000 480,000 $1,959,768 $2,070,240
Robert L. Parker................. 80,000 320,000 $ 345,040 $1,380,160
James W. Linn.................... 184,000 240,000 $1,336,092 $1,035,120
James J. Davis................... 127,000 240,000 $ 840,876 $1,035,120
Thomas L. Wingerter.............. 87,000 80,000 $ 374,970 $ 344,800
</TABLE>
- ---------------
(1) The value per option is calculated by subtracting the exercise price of each
option ($4.50 for previous awards under the 1994 Plan and $8.875 for all
awards in 1997 under the 1994 and the 1997 Plans) from the $13.188 closing
price of the Company's common stock on the New York Stock Exchange on August
31, 1997.
MEETINGS, COMMITTEES AND COMPENSATION OF THE BOARD
The full board of directors met twelve times during fiscal year 1997. The
committees of the board consist of an audit committee and a compensation
committee. The board does not have a nominating committee. All directors
attended each meeting of the board and committees on which they served, with the
exception of five directors who were each unable to attend one of the twelve
board meetings at different times and one director who was unable to attend two
of the twelve board meetings.
The audit committee was comprised of Dr. Gloyna and Mr. Fist. In fiscal
year 1997, the audit committee met two times for the purpose of reviewing the
internal and external audit policies and procedures, reviewing and discussing
with the independent auditors the scope and results of their audit, reviewing
past audits, meeting with a new internal audit manager to discuss future audit
policy and inquiring into financial, legal and other relevant matters.
The compensation committee was comprised of Messrs. Fist and Reinfrank.
During fiscal year 1997, the compensation committee convened two times for the
purpose of reviewing executive and overall employee compensation and management
recommendations for employee participation in the Company's equity compensation
plans and discussing future compensation policies.
The Company compensated all directors at a rate of $2,000 per board meeting
during fiscal year 1997 and awarded each of the directors $500 as a holiday
bonus. In addition, committee members received $1,000 for each meeting.
Directors who are not full-time employees of the Company also receive an annual
retainer of $7,000 per year. Compensation for employee directors is included in
the salary column of the Summary Compensation Table herein. On January 2, 1997,
each non-employee director was issued an option to purchase 5,000 shares of
common stock at a purchase price equal to the fair market value per share of the
common stock on such date, $9.3125. On May 13, 1997, each of the non-employee
directors was awarded options to purchase 30,000 shares of common stock, 20% of
said options vesting immediately and the remaining options vesting on the four
succeeding anniversary dates at the rate of 20% per year, at a purchase price of
$8.875 per share, which was the closing price of the Common Stock on such date.
11
<PAGE> 16
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During fiscal year 1997 the compensation committee of the board of
directors was comprised of two outside directors, Mr. David Fist and Mr. R.
Rudolph Reinfrank. The committee convened two times during the year to review
executive and overall employee compensation and management recommendations for
employee participation in the Company's equity compensation plans and to discuss
future compensation policies.
COMPENSATION GUIDELINES
The committee has established guidelines to attract, motivate and retain a
talented executive team, whose performance is essential to the long-term
maximization of the value of the stockholders' investments. In pursuit of this
objective, the committee has set forth the following guidelines:
(1) Attract and retain talented executive officers and key employees
who have the ability to manage the Company in a manner that
results in maximization of shareholder value and long-term growth.
In this regard, the committee recommends base compensation that is
comparable to those of peer companies with similar business
operations.
(2) Provide cash compensation commensurate to the executive officer's
or key employee's individual contributions and level of
responsibility which results in improving stockholder value.
(3) Compensate executive officers and employees for exceptional
performance with regard to the business performance of the
Company.
(4) Utilize stock options to motivate executive officers and other
employees toward effective management of the Company's operations
that produces long-term profitability.
Due to the recent diversification of the Company into barge and offshore
drilling and rental tools, the committee retained the services of an
internationally recognized employee benefits consultant organization to provide
a comprehensive analysis of the compensation of the top five executive officers
of the Company in comparison with a peer group consisting of: Nabors Industries,
Rowan Companies, Inc., Noble Drilling Corp., Helmerich & Payne, Pool Energy
Services, Pride International, Inc. and Falcon Drilling. These companies were
chosen because they have drilling operations most similar to the Company with
respect to equipment, areas of operation and customer base. The report of the
outside consultant firm analyzed the "fixed annual pay", the variable pay such
as bonuses and stock options and the total direct compensation of the Company's
top five executive officers individually and as a group, and compared this
information to the total cash and stock based compensation of the top five
executive officers of the peer companies. The outside consultant also prepared
and submitted reports on compensation (including cash, stock and non-cash
benefits) for middle managers and certain operating positions in comparison with
peer companies.
The committee also compared the Company's financial performance and
cumulative stockholder returns to those of the peer companies, as well as to the
indices on the Company's performance graph. In addition, each executive
officer's and key employee's performance was reviewed by his or her immediate
supervisor which was the basis of management's recommendations as to
compensation adjustments considered by the Committee. No specific formulas based
on performance were used in determining executive officers' and key employees'
compensation and some subjectivity was involved in the evaluation.
The committee next addressed the issue of cash compensation for 1997. Based
on the contribution of the executive officers and certain key employees to the
successful completion of the acquisitions of Mallard Bay Drilling and Quail
Tools as well as their contributions in connection with the pending acquisition
of Hercules Offshore Corporation, and the performance of said persons in
assimilating the operations of the acquired companies into the Company, the
committee agreed with management's recommendation to increase the cash
compensation of the executive officers and certain key employees an average of
10% for 1997 and to establish a guideline of 5% for salary increases for all
other employees.
12
<PAGE> 17
In evaluating the equity participation of the executive officers and the
key employees to their counterparts at the peer companies, the committee
utilized the data presented in the outside consultant's report and reviewed the
individual contributions of said executive officers and key employees to the
business under the above guidelines. After completing this evaluation process
and taking into account the current stock ownership and options of said persons
including the most recent grants and awards made in 1994, the committee
concurred with management that the existing 1994 Executive Stock Option Plan was
insufficient to provide competitive equity incentives to the executive officers
and is not sufficiently broad-based to allow for grants to all employees who are
in a position to contribute to the growth, management and success of the
Company. As a result, the committee concurred with management regarding the
adoption of a new broad-based stock plan to allow for option grants not only to
the executive officers, but also to all employees who are in a position to
contribute to the growth, management and success of the Company. Pursuant to the
existing 1994 Executive Stock Option Plan and the new 1997 Stock Plan, the
committee adopted management's recommendations to grant the following stock
options to officers and employees during fiscal year 1997:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS NUMBER OF OPTIONS
GRANTED IN 1997 GRANTED IN 1997
UNDER 1994 EXECUTIVE UNDER 1997
STOCK PLAN STOCK PLAN
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Named Executive Officers (from Summary
Compensation Table)............................ 340,000(1) 640,000(1) 0 680,000(2)
Executive Officer Group.......................... 416,666(1) 833,334(1) 20,000(2) 900,000(2)
Non-Executive Officers........................... 90,000(1) 180,000(1) 0 180,000(2)
Employee Group................................... 0 0 140,000 560,000(3)
</TABLE>
- ---------------
(1) 33% of the grants to officers under the 1994 Executive Stock Option Plan
vested on May 13, 1997, 33% will vest on May 13, 1998 and 34% will vest on
May 13, 1999. See table under "Option/SAR Grants in fiscal year 1997" in
previous section for grants to each Named Executive Officer in the Executive
Compensation Table.
(2) For those executive officers receiving grants in 1997 under the 1994
Executive Stock Option Plan, 50% of the grants to these officers under the
1997 Stock Plan will vest on May 13, 2000 and 50% will vest on May 13, 2001.
For those executive officers who did not receive any option grants in 1997
under the 1994 Executive Stock Option Plan, 20% of the grants to these
officers under the 1997 Stock Plan vested on May 13, 1997, with the
remaining 80% vesting in equal portions over the next four anniversary
dates.
(3) 20% of these grants vested on May 13, 1997, with the remaining 80% vesting
in equal portions over the next four anniversary dates.
The committee also directed management to provide guidelines for awarding stock
grants and incentive bonuses to other employees based on a combination of
objective criteria and subjective considerations, with the intent of
implementing further option grants and incentive bonuses during the ensuing
year.
The committee also relied upon the employee benefit consultant's report
which provided information on how outside directors were being compensated in
peer companies. Based on this information, the committee agreed that the options
granted to the outside directors should be increased to bring them more in line
with those of the Company's peer companies. Based on this analysis, the
following options were granted to the outside directors during fiscal year 1997:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS GRANTED
IN 1997 UNDER 1994 NON-
EMPLOYEE DIRECTOR STOCK
OPTION PLAN
-----------------------------
NAME EXERCISABLE NON-EXERCISABLE
---- ----------- ---------------
<S> <C> <C>
Earnest F. Gloyna........................................... 11,000 24,000
David L. Fist............................................... 11,000 24,000
R. Rudolph Reinfrank........................................ 11,000 24,000
Bernard J. Duroc-Danner..................................... 11,000 24,000
</TABLE>
13
<PAGE> 18
All options granted in fiscal 1997 were granted with exercise prices equal
to 100% of fair market value of the Common Stock at the date of grant.
CHIEF EXECUTIVE OFFICER
Robert L. Parker Jr. serves as the chief executive officer of the Company.
The committee reviewed Mr. Parker's base salary, bonus and participation in the
1991 Stock Grant Plan and the 1994 Executive Stock Option Plan for fiscal years
1994, 1995 and 1996 and compared those to the corresponding remuneration figures
for the chief executive officers of the peer companies in the report of the
outside benefits' consultant. It was determined that while Mr. Parker's cash
compensation was more than four of the chief executive officers in the peer
group and less than three other chief executive officers in the peer group, his
stock-based incentive compensation was significantly lower than the median
stock-based compensation for the chief executive officers of the peer group. In
addition, the committee reviewed the financial performance and cumulative total
return to stockholders of the peer companies and compared those results to the
financial performance and cumulative total return to stockholders of the
Company. The committee noted Mr. Parker's personal performance over the past 12
months, including the dramatic increase in the size of the Company through
recent acquisitions, new business developments and strategic planning, increased
revenue and earnings, as well as his continued excellent reputation and contacts
in the drilling industry. No specific formula based on performance was used and
some subjectivity was involved. Based on its evaluation of these factors, the
committee recommended that Mr. Parker's equity participation should be increased
by the grant of additional stock options under the 1994 Executive Stock Option
Plan and the 1997 Stock Plan. (See tables in previous sections for amount of
grants under each plan.)
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Code imposes a limitation on the deductibility of
certain executive officer compensation in excess of $1,000,000 subject to
certain performance-related exceptions (which must be conditioned on stockholder
approval). The compensation committee has not yet adopted a formal policy with
respect to qualifying compensation paid to its executive officers for an
exemption from the limitation on deductibility imposed by Section 162(m). The
compensation committee anticipates that all compensation paid to its executive
officers during 1997, including any compensation relating to exercises of
options granted under the 1994 Executive Stock Option Plan will qualify for
deductibility because no executive's compensation is expected to exceed the
dollar limitations of Section 162(m). The compensation committee noted that the
1994 Executive Stock Option Plan was previously approved by stockholders and
certain other conditions were satisfied and all compensation relating to stock
options awarded under said Plan is deductible.
With respect to options granted under the 1997 Stock Plan, the approval of
which for purposes of Section 422 of the Code is being sought at the Annual
Meeting, the compensation committee considered the impact of delaying awards to
certain employees under the 1997 Stock Plan until stockholder approval could be
obtained to ensure that all amounts earned with respect to such awards would be
deductible under Section 162(m); however, the compensation committee concluded
that competitive factors relative to the executives' equity-based compensation
overrode any potential tax benefits which the Company might lose under Section
162(m) and determined to make awards made in 1997 effective as of their grant
date.
THE COMPENSATION COMMITTEE
Mr. David L. Fist, Chairman -- Mr. R. Rudolph Reinfrank
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. David L. Fist, a director of the Company and chairman of the
compensation committee, is a lawyer with Rosenstein, Fist & Ringold, Tulsa,
Oklahoma, a professional legal services corporation, which provides legal
services for the Company. The fees paid by the Company to this firm constituted
less than five percent of the firm's gross revenues during the latest fiscal
year.
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<PAGE> 19
PERFORMANCE GRAPH
The following performance graph compares cumulative total stockholder
returns on the Company's common stock compared to the Standard and Poor's
Mid-Cap 400 Index and a Peer Group Index consisting of Nabors Industries, Rowan
Companies, Inc., Noble Drilling Corp., Helmerich & Payne, Pool Energy Services,
Pride International, Inc. and Falcon Drilling, calculated at the end of each
fiscal year, August 31, 1993 through August 31, 1997. The composition of
companies that comprise the Peer Group Index was increased based on the
diversification of the Company during the last year to enable comparisons with
peer companies whose operations and business most closely resemble that of the
Company. The graph assumes $100 was invested on August 31, 1992 in the Company's
common stock and in each of the referenced indices and assumes reinvestment of
dividends.
[GRAPH]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Parker Drilling S&P Midcap 400 Peer Group
<S> <C> <C> <C>
1992 100 100 100
1993 118 122 151
1994 90 125 110
1995 92 148 132
1996 114 163 202
1997 215 371 417
</TABLE>
SEVERANCE COMPENSATION AND CONSULTING AGREEMENTS
Each officer named in the Summary Compensation Table and 13 additional
officers of the Company have entered into Severance Compensation and Consulting
Agreements (the "Agreements") with the Company. Each Agreement has a six year
term but is automatically extended on a year to year basis thereafter unless
terminated or unless a change in control occurs, in which case the Agreements
will remain in effect until no more benefits are payable thereunder.
A change in control (as defined in the Agreements) shall be deemed to have
occurred if (a) any Person, as such term is defined in Section 13(d)(3) or
14(d)(7) of the Securities Exchange Act of 1934 (the " '34 Act") becomes the
beneficial owner (as defined in Rule 13d-3 of the '34 Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding securities of the Company entitled to vote generally in the
election of directors (the "Company Voting Securities"), in either case, unless
the board in office immediately prior to such acquisition determines in writing
within five business days of the receipt of actual notice of such acquisition
that the circumstances do not warrant the implementation of the provisions of
the Agreements, or (b) individuals who, as of the beginning of any 24 month
period, constitute the board (the
15
<PAGE> 20
"Incumbent Board") cease for any reason to constitute at least a majority of the
board, provided that any individual becoming a director subsequent to the
beginning of such period whose election or nomination for election by the
Company's stockholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding for this purpose
any such individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the directors
of the Company (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the '34 Act) or (c) consummation by the Company of a
reorganization, merger or consolidation (a "Business Combination"), in each
case, with respect to which all, or substantially all, of the individuals and
entities who were the respective beneficial owners of the Outstanding Company
Common Stock and Company Voting Securities immediately prior to such Business
Combination, beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the corporation resulting
from such Business Combination in substantially the same proportion as their
ownership immediately prior to such Business Combination of the Outstanding
Company Common Stock and Company Voting Securities, as the case may be or (d)
consummation of (i) a complete liquidation or dissolution of the Company or (ii)
sale or other disposition of all or substantially all of the assets of the
Company other than to a corporation with respect to which, following such sale
or disposition, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be, immediately prior to such sale or disposition. Notwithstanding any other
provision of the Agreements, no change in control shall be deemed to have
occurred for purposes of the Agreements after the date of the initial change in
control pursuant to these provisions.
After a change in control, if an officer is terminated other than for cause
or resigns for good reason, the Agreements provide for a lump sum payment of
three times the annual cash compensation, a one year consulting agreement at the
officer's annual cash compensation and extended life and health benefits for
four years.
"Cause" is defined in each of the Agreements to include the officer's
willful and continued failure substantially to perform his duties with the
Company after a written demand for substantial performance is delivered to the
officer by the Company's board of directors which specifically identifies the
manner in which the board of directors believes that the officer has not
substantially performed his duties or the officer's willful engagement in
conduct materially and demonstrably injurious to the Company.
"Good reason", as defined in each of the Agreements, includes: the
assignment of duties inconsistent with, or any diminution of, the officer's
position, duties, titles, offices, responsibilities or status with the Company
immediately prior to a change in control of the Company; a reduction by the
Company in the officer's base salary; any failure by the Company to continue in
effect or the taking of any action which would adversely affect the officer's
participation in any benefit plan, incentive or bonus plan or stock plans in
which the officer is participating at the time of a change in control; a
relocation of the executive offices or the officer's required relocation in
excess of 35 miles from the present location; a substantial increase in business
travel requirements; any material breach by the Company of any provision of the
Agreements; any failure by the Company to obtain the assumption of the
Agreements by any successor or assign of the Company; or any purported
termination of the officer's employment which is not effected pursuant to the
Agreements.
Subsequent to the execution of the Agreements, there have been no events of
change in control that would trigger the payment of any benefits under the
Agreements in the event of the termination of employment of the signatories
thereto.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors and persons who beneficially own
greater than 10 percent of a registered class of the
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<PAGE> 21
Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Based solely on a review of the forms it has received, the Company
believes that during 1997 all Section 16 filing requirements applicable to its
officers, directors and greater than 10 percent beneficial owners were complied
with by such persons with the exception that the Form 3 filing for Mr. Bernard
Duroc-Danner that was due within ten days of his being elected a director of the
Company was 19 days late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
An insurance premium totaling $200,225 was paid by the Company during the
last fiscal year to maintain a life insurance policy on Robert L. Parker,
chairman of the Company. The Company is the beneficiary of this policy which was
issued pursuant to a Stock Purchase Agreement ("Agreement") approved by vote of
the stockholders at the 1975 Annual Meeting on December 10, 1975. This Agreement
was entered into between the Company and the Robert L. Parker Trust and
originally provided that upon the death of Robert L. Parker, the Company would
be required, at the option of the trust, to purchase from the trust at a
discounted price the amount of Company common stock which could be purchased
with the proceeds of the policy of $7,000,000. The Company and the trust have
modified this Agreement as of August 3, 1994, so that the Company will have the
option, but not the obligation, to purchase the stock at a discounted price with
the proceeds. The Company may now, at its option, retain the entire proceeds of
the policy upon the death of Robert L. Parker. Recently, the Company decided to
cash-out this policy, which will result in the Company receiving the cash
surrender value of this policy of $2,009,000, which will be used for general
corporate purposes.
As a part of the agreement to terminate the option held by the trust and to
grant the Company a limited option to purchase stock at a discounted price, the
Company has also agreed to pay a premium of $655,019 annually for a split dollar
last-to-die life insurance policy on Robert L. Parker Sr. and Mrs. Robert L.
Parker. Upon the deaths of Mr. Parker and Mrs. Parker, the Company will be
reimbursed by the Robert L. Parker Sr. and Catherine M. Parker Family Trust from
the proceeds of the policy for the full amount of the premiums paid by the
Company, with interest to be paid after fiscal year 1999 at a one-year treasury
bill rate. Robert L. Parker Sr. and the Company agreed on or about October 15,
1996, that the Company would cash surrender a $500,000 Executive Life policy on
his life, and, in exchange, the interest on the above-described policy would not
begin accruing until March 2003. Robert L. Parker Jr., chief executive officer
of the Company and son of Robert L. Parker Sr., will receive as a beneficiary of
the trust, one-third of the net proceeds of this policy. The face value of the
policy is $13,200,000.
* * *
As part of building business relationships and fostering closer ties to
clients, companies traditionally host customers in a variety of activities. Over
the years, the Company has determined that the most successful business
development opportunities are providing customers with industry-related
conferences and seminars, coupled with sporting and other outdoor activities.
Robert L. Parker, chairman of the Company, through The Robert L. Parker,
Sr. Family Limited Partnership (the "Limited Partnership") owns a 2,987 acre
ranch near Kerrville, Texas, ("Cypress Springs Ranch") which the Limited
Partnership makes available to the Company for customer retreats and forums and
meetings for world-wide company management. The Cypress Springs Ranch provides
lodging, conference facilities, sporting and other outdoor activities in
conjunction with marketing and business purposes. The location of the ranch and
its facilities help to attract a select group of oil and gas industry
executives, including the chairmen and principal officers of major oil
companies, and prominent national leaders who are provided the unique
opportunity to meet annually and to actively participate in an exchange of ideas
and discussion of current industry and world issues. Additionally, domestic and
international drilling managers and other operations personnel representing
major, independent and national oil company customers meet annually with company
operations personnel for in-depth discussions on all phases of the industry and
are afforded the opportunity to know one another on a personal basis. Robert L.
Parker has a 50 percent general partnership interest and a 46.5 percent limited
partnership interest in the Limited Partnership. The Limited Partnership also
owns a 4,982 acre cattle ranch near Mazie, Oklahoma ("Mazie Ranch"), 40 miles
from the corporate
17
<PAGE> 22
headquarters in Tulsa, Oklahoma. The Mazie Ranch is also used by the Company for
outdoor activities by customers and is available to employees for outdoor
activities and other family recreation.
There is an understanding between the Company and the Limited Partnership
that the Cypress Springs Ranch and the Mazie Ranch shall be available for
Company use without limitation. In consideration for the availability and use of
these facilities, the Company pays only the portion of the ranch operating
expenses based on the Company's actual use of said facilities. The total amount
of these operating expenses paid by the Company in fiscal year 1997 was
approximately $295,000.
Additionally, the Company uses a 1,380 acre ranch ("Camp Verde Ranch")
owned by Robert L. Parker Jr., president and chief executive officer of the
Company, which is near the Cypress Springs Ranch. The Camp Verde Ranch is used
to provide additional facilities and lodging for business functions at Cypress
Springs Ranch, for which the Company pays only that portion of the ranch
operating expenses based on the actual use of these facilities. The total amount
of these operating expenses paid by the Company in fiscal 1997 was approximately
$31,000.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") acted as
co-lead underwriter in connection with the Company's underwritten public
offering of $175,000,000 of convertible subordinated notes in July, 1997. DLJ
received $2,100,000 in fees in connection with said underwriting. DLJ is owned
by The Equitable Companies Incorporated, which owns in excess of 5% of the
outstanding common stock of the Company as noted under the Principal
Stockholders table in this Proxy Statement.
On November 12, 1996, the Company acquired Mallard Bay Drilling,
Inc.("Mallard"), which at the time was a wholly owned subsidiary of EVI, Inc. In
November 1996, Mr. Bernard Duroc-Danner, the Chairman of EVI, Inc., was elected
a director of the Company by the existing board. Mr. Duroc-Danner is currently
standing for election by the stockholders under Proposal One herein. During
fiscal year 1997, the Company and its subsidiaries purchased approximately
$20,000,000 worth of drillpipe from Grant Prideco, Inc., a wholly-owned
subsidiary of EVI, Inc.
OTHER MATTERS
MATTERS WHICH MAY COME BEFORE THE MEETING
The board of directors does not intend to bring any other matters before
the meeting, nor does the board of directors know of any matters which other
persons intend to bring before the meeting. If, however, other matters not
mentioned in this proxy statement properly come before the meeting, the persons
named in the accompanying proxy card will vote thereon in accordance with the
recommendation of the board of directors.
PROPOSALS OF STOCKHOLDERS
To permit the Company and its stockholders to deal with stockholder
proposals in an informed and orderly manner, the By-Laws establish an advance
notice procedure with regard to the nomination (other than by or at the
direction of the board of directors) of candidates for election to the board of
directors and with regard to certain matters to be brought before the Annual
Meeting of Shareholders. In general, written notice must be received by the
Secretary of the Company not less than 60 days prior to the meeting at which the
shareholder vote will be taken of any nominations for directors made by
shareholders. A copy of the applicable By-Law provision may be obtained, without
charge, upon written request to the secretary of the Company at the address set
forth on page 1 of this Proxy Statement.
18
<PAGE> 23
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received at the Company's principal executive
offices, 8 East Third Street, Tulsa, Oklahoma, 74103, on or before July 9, 1998.
By Order of the Board of Directors,
/s/ LESLIE D. ROSENCUTTER
LESLIE D. ROSENCUTTER
Corporate Secretary
Tulsa, Oklahoma
November 7, 1997
ANNUAL REPORT
The Company has provided to each person whose proxy is being solicited a
copy of its 1997 Annual Report to Stockholders. THE COMPANY WILL PROVIDE WITHOUT
CHARGE TO EACH PERSON WHO REQUESTS, A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL SCHEDULES THERETO)
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR
ENDED AUGUST 31, 1997. Such requests should be directed to Mr. Tim Colwell,
Public Relations Department, Parker Drilling Company, 8 East Third Street,
Tulsa, Oklahoma 74103.
Stockholders are invited to keep current on the Company's latest contracts,
news releases and other developments throughout the year by way of the Internet.
The Parker Drilling Company World Wide Web site can be accessed by setting your
browser to http://www.parkerdrilling.com for regularly updated information.
19
<PAGE> 24
EXHIBIT "A"
PARKER DRILLING COMPANY
1997 STOCK PLAN
1. PREAMBLE.
Parker Drilling Company, a Delaware corporation (the "Company"), hereby
establishes the Parker Drilling Company 1997 Stock Plan (the "Plan") as a means
whereby the Company may, through awards of stock options and restricted stock:
(a) provide employees or consultants who are in a position to
contribute to the growth, management and success of the business of the
Company and its Subsidiaries with additional incentive to promote the
success of the Company and its Subsidiaries; and
(b) enable the Company to attract and retain the services of employees
and consultants upon whose judgment and effort the successful conduct of
its operations is largely dependent.
Except as specifically provided herein, the provisions of the Plan do not
apply to or affect any option, stock appreciation right, or stock heretofore or
hereafter granted under any other stock or stock option plan of the Company or
any Subsidiary, and all such options, stock appreciation rights or stock
continue to be governed by and subject to the applicable provisions of the plan
or agreement under which they were granted.
2. DEFINITIONS.
2.01 "Administrator" shall mean that person designated by the Board from
time to time to administer the Awards made under the Plan, which designation
shall be communicated to the Participants in writing.
2.02 "Award" shall mean a grant of an Option or the award of Restricted
Stock under the Plan.
2.03 "Award Agreement" shall mean an agreement between the Company and a
Participant which evidences the grant of an Option and/or the award of
Restricted Stock to a Participant and sets forth the terms and conditions of
such Option and/or Restricted Stock.
2.04 "Board" or "Board of Directors" means the board of directors of the
Company.
2.05 "Change in Control" means the occurrence of any one of the following
events:
(a) Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(7) of the Exchange Act, except the Participant, his
affiliates and associates, the Company, or any corporation, partnership,
trust or other entity controlled by the Company (a "Subsidiary"), or any
employee benefit plan of the Company or of any Subsidiary (each such
individual, entity or group shall hereinafter be referred to as a
"Person")) becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election
of directors (the "Company Voting Securities"), in either case; or
(b) Individuals who, as of the beginning of any twenty-four month
period, constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the beginning of such period
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding for this purpose any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
<PAGE> 25
(c) Consummation by the Company of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to
which all or substantially all of the individuals and entities who were the
respective beneficial owners of the outstanding Company Common Stock and
Company voting securities immediately prior to such Business Combination do
not, immediately following such Business Combination, beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case
may be; or
(d) (i) Consummation of a complete liquidation or dissolution of the
Company or (ii) sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with respect to
which, following such sale or disposition, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors of such corporation is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Company Voting Securities, as the case may be,
immediately prior to such sale or disposition.
2.06 "Code" means the Internal Revenue Code of 1986, as it exists now and
as it may be amended from time to time.
2.07 "Common Stock" means the common stock of the Company, 16 2/3 cents
par value per share.
2.08 "Company" means Parker Drilling Company, a Delaware corporation, and
any successor thereto.
2.09 "Director(s)" means a member or members of the Board.
2.10 "Disability" means being unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months.
2.11 "Exchange Act" means the Securities Exchange Act of 1934, as it
exists now or from time to time may hereafter be amended.
2.12 "Fair Market Value" means for the relevant day:
(a) If shares of Common Stock are listed or admitted to unlisted
trading privileges on any national or regional securities exchange, the
last reported sale price, regular way, on the composite tape of that
exchange on the day Fair Market Value is to be determined;
(b) If the Common Stock is not listed or admitted to unlisted trading
privileges as provided in paragraph (a), and if sales prices for shares of
Common Stock are reported by the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ
System"), then the last sale price for Common Stock reported as of the
close of business on the day Fair Market Value is to be determined, or if
no such sale takes place on that day, the average of the high bid and low
asked prices so reported; if Common Stock is not traded on that day, the
next preceding day on which such stock was traded; or
(c) If trading of the Common Stock is not reported by the NASDAQ
System or on a stock exchange, Fair Market Value will be determined by the
Board in its discretion based upon the best available data.
2.13 "Incentive Stock Option" or "ISO" means an Option that complies with
the terms and conditions set forth in Section 422 of the Code and is designated
as an ISO at the time of its grant.
2.14 "Officer" means a corporate officer of the Company or any Subsidiary
or Affiliate of the Company.
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<PAGE> 26
2.15 "Option" means the right of a Participant to purchase a specified
number of shares of Common Stock, subject to the terms and conditions of the
Plan.
2.16 "Option Date" means the date upon which an Option is granted, or
Restricted Stock is awarded, to a Participant under the Plan.
2.17 "Option Price" means the price per share at which an Option may be
exercised.
2.18 "Participant" means an individual, or to the extent permitted as
contemplated at Section 5 hereof, the account of an individual, to whom an
Option or Restricted Stock has been granted under the Plan.
2.19 "Plan" means the Parker Drilling Company 1997 Stock Plan herein and as
from time to time amended.
2.20 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to the Plan and subject to the restrictions contained or authorized in
Section 7 hereof.
2.21 "Securities Act" means the Securities Act of 1933, as it exists now or
from time to time may hereinafter be amended.
2.22 "Subsidiary" means any corporation or other entity of which the
majority voting power or equity interest is owned directly or indirectly by the
Company.
2.23 "Termination of Employment" means:
(a) with respect to an employee, when the employee's employment
relationship with the Company and all of its Subsidiaries is terminated,
regardless of any severance arrangements. A transfer from the Company to a
Subsidiary or affiliate of the Company or a Subsidiary, or vice versa is
not a termination of employment for purposes of the Plan; or
(b) with respect to a consultant, when the consultant's consulting
relationship with the Company is terminated either due to the termination
of any consulting agreement, or otherwise, regardless of the fact that no
employment relationship exists.
2.24 Rules of Construction.
(a) Governing Law. The construction and operation of the Plan are
governed by the laws of the State of Oklahoma.
(b) Undefined Terms. Unless the context requires another meaning, any
term not specifically defined in the Plan has the meaning given to it by
the Code.
(c) Headings. All headings in the Plan are for reference only and are
not to be utilized in construing the Plan.
(d) Gender. Unless clearly appropriate, all nouns of either gender
refer indifferently to persons of either gender.
(e) Singular and Plural. Unless clearly inappropriate, singular terms
refer also to the plural and vice versa.
(f) Severability. If any provision of the Plan is determined to be
illegal or invalid for any reason, the remaining provisions shall continue
in full force and effect and shall be construed and enforced as if the
illegal or invalid provision did not exist, unless the continuance of the
Plan in such circumstances is not consistent with its purposes.
3. STOCK SUBJECT TO THE PLAN.
Except as otherwise provided in Section 11, the total number of shares of
Common Stock reserved and available for distribution pursuant to Awards under
the Plan shall be 4,000,000 shares. Such number of shares shall be increased as
contemplated in the last sentence of this Section 3. Such shares may consist, in
whole or
3
<PAGE> 27
in part, of authorized and unissued shares or treasury shares. Awards under the
Plan may be of shares of Restricted Stock and/or Options. Options granted
hereunder may be: (a) Incentive Stock Options or (b) non-qualified options. Only
employees of the Company or any Subsidiary thereof shall be eligible to receive
Incentive Stock Options under the Plan. Reserved shares may be either authorized
but unissued shares or treasury shares, in the Board's discretion. If any Awards
hereunder shall terminate or expire, as to any number of shares, or Options are
exercised (and any related withholding tax paid) by the delivery (actual,
constructive or by attestation) of shares of Common Stock, new Options and
Restricted Stock may thereafter be awarded hereunder with respect to such
delivered shares or expired or terminated Awards.
4. ADMINISTRATION.
The Plan shall be administered by the Board, or by such Person(s) as
authorized by the Board. In addition to any other powers set forth in the Plan,
the Board has the exclusive authority:
(a) to construe and interpret the Plan, and to remedy any ambiguities
or inconsistencies therein;
(b) to establish, amend and rescind appropriate rules and regulations
relating to the Plan;
(c) subject to the express provisions of the Plan, to determine the
individuals who will receive Awards of Options and/or Restricted Stock, the
times when they will receive them, the number of shares to be subject to
each Award and the Option Price, payment terms, payment method, and
expiration date applicable to each Award;
(d) to contest on behalf of the Company or Participants, at the
expense of the Company, any ruling or decision on any matter relating to
the Plan or to any Awards of Options and/or Restricted Stock;
(e) generally, to administer the Plan, and to take all such steps and
make all such determinations in connection with the Plan and the Awards of
Options and/or Restricted Stock as it may deem necessary or advisable;
(f) to determine the form in which tax withholding under Section 14 of
the Plan will be made; and
(g) to amend the Plan or any Option or Restricted Stock granted or
awarded hereunder as may be necessary in order for any business combination
involving the Company to qualify for pooling-of-interest treatment under
APB No. 16.
5. ELIGIBLE PARTICIPANTS.
Subject to the provisions of the Plan, the persons who shall be eligible to
participate in the Plan and be granted Awards shall be those persons who are
employees of the Company or any Subsidiary or consultants under contract to the
Company, who shall be in a position, in the opinion of the Board, to make
contributions to the growth, management, and success of the Company or its
Subsidiaries. Of those persons described in the preceding sentence, the Board
may, from time to time, select persons to be granted Awards and shall determine
the terms and conditions with respect thereto. In making any such selection and
in determining the form of the Award, the Board may give consideration to the
functions and responsibilities of the person, to the person's contributions to
the Company or its Subsidiaries, the value of the individual's service to the
Company or its Subsidiaries and such other factors deemed relevant by the Board.
In the event and to the extent authorized by the United States Departments of
Treasury and Labor, the Parker Drilling Company Stock Bonus Plan account of an
employee of the Company or a Subsidiary may also be a Participant, the Board may
grant Options to such account and, to the extent such account is a Participant,
the Options in such an account shall be subject to all of the terms and
provisions of the Plan as if the Options had been granted to the individual for
whom the account is maintained.
6. TERMS AND CONDITIONS OF OPTIONS.
The Board may, in its discretion, grant Options to any Participant under
the Plan. Each Option shall be evidenced by an agreement between the Company and
the Participant. Unless the Board at the time of grant specifically designates
Options granted under the Plan as Incentive Stock Options, all Options granted
under
4
<PAGE> 28
the Plan shall be non-statutory options. Each Option agreement, in such form as
is approved by the Board, shall be subject to the following express terms and
conditions and to such other terms and condition, not inconsistent with the Plan
as the Board may deem appropriate:
(a) Option Period. Each Option granted under the Plan shall be for
such period as is established by the Board, except that each ISO shall
expire no later than ten years after the Option Date. Where Options are
exercisable in installments, the right to purchase any shares shall be
cumulative, so that when the right to purchase any shares has matured, such
shares may be purchased thereafter until the expiration of the Option. The
Board shall have the power to accelerate the exercisability of installments
for any Option granted under the Plan.
(b) Option Price. At the time when the Option is granted, the Board
will fix the Option Price. In the case of ISO's, the Option Price shall be
no less than the Fair Market Value on the Option Date and in the case of
all other Options granted under the Plan, the Option Price shall be as
determined in the sole discretion of the Board, but in no event may the
Option Price be less than the par value for a share of Common Stock.
(c) Other Option Provisions. The form of Option authorized by the Plan
may contain such other provisions as the Board may from time to time
determine, including:
(i) "Discounted Options" which may be granted to any Participant. A
"Discounted Option" is an Option having an Option Price per share less
than the Fair Market Value at the Option Date provided such Option Price
shall not be less than 50% of the Fair Market Value at the Option Date.
(ii) "Reload Options" which may be granted only to employees of the
Company or a Subsidiary. A "Reload Option" is an Option automatically
granted to a Participant pursuant to the terms of an Award Agreement
upon the delivery of shares of Common Stock to pay any required
withholding tax in respect of the exercise of an Option (the "delivered
shares"). Such Reload Option entitles the Participant to purchase (at an
option price equal to the Fair Market Value at the time of such
delivery) a number of shares of Common Stock equal to the number of
delivered shares. Reload Options shall be subject to all of the terms of
the Plan and the Award Agreement in respect to which they are granted,
including the Option Period for the Option exercised by delivery of the
delivered shares, and shall not be exercisable before the earlier of one
year after their grant or the day before the expiration of such Option
Period. In the discretion of the Board, Reload Options granted on the
exercise of ISO's may be ISO's or non-qualified options.
(d) Incentive Stock Options. ISO's may only be granted to employees of
the Company or of a Subsidiary. The aggregate Fair Market Value (determined
as of the Option Date of the ISO) of the Common Stock with respect to which
ISO's are first exercisable by a Company or Subsidiary employee during any
calendar year under all Option plans of the Company shall not exceed
$100,000. An ISO granted to an employee who, at the time the ISO is
granted, owns Common Stock possessing more than ten percent (10%) of the
total combined voting power of all classes of capital stock of the Company
or a Subsidiary thereof shall have an exercise price equal to not less than
110 percent (110%) of the Fair Market Value on the Option Date. In
addition, no more than 4,000,000 shares of Common Stock may be issued as
ISO's granted under the Plan and no ISO may be granted under the Plan after
the tenth anniversary of the date the Plan is approved by the stockholders
of the Company. Any Participant who disposes of shares acquired upon the
exercise of an ISO either (i) within two years after the Option Date of the
Option under which the shares were acquired or (ii) within one year after
the acquisition of such shares shall notify the Company of such disposition
and of the amount realized. Failure by a Participant to so notify the
Company of such a disposition of shares shall entitle the Company to treat
the shares of Common Stock issued to such Participant as void ab initio or
to recover from the Participant the greater of the value of the shares
disposed of as of the date of disposition or the value of the shares
disposed of as of the date the Company learns of such disposition from
either (i) any amounts due to such Participant from the Company or a
Subsidiary, or (ii) otherwise. The Company may, at its discretion, place a
legend noting the possible consequences of a Participant's failure to
provide such disposition notice on shares of Common Stock delivered upon
the exercise of an ISO.
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<PAGE> 29
(e) No person shall have any rights of a stockholder with respect to
any shares to be delivered upon the exercise of an Option until such time
as such Option is validly exercised.
7. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
The Board, in its discretion, may grant Restricted Stock to any Participant
under the Plan, the purchase price of which shall be established by the Board.
Each grant of Restricted Stock shall be evidenced by an Award Agreement between
the Company and the Participant. All shares of Common Stock awarded to
Participants under the Plan as Restricted Stock shall be subject to the
following express terms and conditions and to such other terms and conditions,
not inconsistent with the Plan, as the Board shall deem appropriate:
(a) Restrictions on Transfer. Shares of Restricted Stock awarded to
Participants shall contain such restrictions on transfer as the Board may
determine in its sole discretion.
Except as permitted under Section 12 of the Plan, shares of Restricted
Stock awarded to Participants may not be sold or transferred before such
restrictions on transfer lapse, and may only be pledged to the Company or
any Subsidiary to satisfy any obligations that the Participant may have to
the Company or the Subsidiary with respect to the acquisition of such
shares of Restricted Stock. Subject to the provisions of subparagraphs (b)
and (c) below and any other restrictions imposed by law, the certificates
for any shares of Restricted Stock the restrictions on which have lapsed
will be transferred to the Participant or, in the event of his death, to
the beneficiary or beneficiaries designated by writing filed by the
Participant with the Board for such purpose or, if none, to his estate.
Delivery of shares in accordance with the preceding sentence shall be made
within the 30-day period after such restrictions shall lapse.
(b) Certificates Deposited With Company. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Participant and deposited with the Company.
Each such certificate shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) relating to Restricted Stock contained in the Parker Drilling
Company 1997 Stock Plan and an agreement entered into between the
registered owner and Parker Drilling Company. Copies of such Plan and
agreement are on file at the principal office of Parker Drilling Company."
(c) Stockholder Rights. Subject to the foregoing restrictions, each
Participant shall have all the rights of a stockholder with respect to his
shares of Restricted Stock including, but not limited to, the right to vote
such shares.
(d) Dividends. On each Common Stock dividend payment date, each
Participant shall receive an amount equal to the dividend paid on that date
on a share of Common Stock, multiplied by his number of shares of
Restricted Stock.
8. MANNER OF EXERCISE OF OPTIONS.
To exercise an Option in whole or in part, a Participant (or, after his
death, his executor or administrator) or his assignee (as contemplated at
Section 12 hereof) must give written notice to the Administrator, stating the
number of shares with respect to which he intends to exercise the Option. The
Company will issue the shares with respect to which the Option is exercised upon
payment in full of the Option Price. The Option Price may be paid (i) in cash,
(ii) in shares of Common Stock held by the Participant, his executor,
administrator, or assignee, and having an aggregate Fair Market Value, as
determined as of the close of business on the day prior to the day on which such
Option is exercised, equal to the Option Price, (iii) if permitted by the Board,
a promissory note in the amount of the Option Price, which note shall provide
for full personal liability of the maker and shall contain such other terms and
provisions as the Board may determine, including without limitation the right to
repay the note partially or wholly with Common Stock, (iv) if authorized by the
Board in the Award Agreement for the Option being exercised, by delivery of
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds necessary to pay for all Common Stock acquired
through such exercise and any tax withholding obligations resulting from
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<PAGE> 30
such exercise, (v) if authorized by the Board in the Award Agreement for the
Option being exercised, by the withholding by the Company, pursuant to a written
election delivered by the Participant, his executor, administrator, or assignee,
to the Administrator on or prior to the date of exercise, from the shares of
Common Stock issuable upon any exercise of the Option that number of shares
having a Fair Market Value as of the close of business on the day prior to the
day on which such Option is exercised equal to such Option Price, (vi) by
constructive delivery ("attestation") of shares of Common Stock held by the
Participant, his executor, administrator, or assignee, and having an aggregate
Fair Market Value, as determined as of the close of business on the day of
exercise, equal to the Option Price effected through providing the Company with
a notarized statement on or before the day of exercise attesting to the number
of shares owned by the Participant, his executor, administrator, or assignee,
that will serve as the Option Price payment shares, or (vii) as authorized by
the Board in the Award Agreement for the Option being exercised, by a
combination of such methods. The Option Price may also be paid in shares of
Common Stock which were received by the Participant, his executor,
administrator, or assignee, upon the exercise of one or more Options or as an
award of Restricted Stock under the Plan and upon which all restrictions have
lapsed.
9. VESTING.
A Participant may not exercise an Option until it has become vested. The
portion of an Option Award that is vested depends upon the vesting restrictions,
if any, established by the Board for such Option at the time of its grant and
the period that has elapsed since the Option Date.
10. CHANGE OF CONTROL.
Notwithstanding the provisions of Sections 6 and 7 or anything contained in
a Participant's agreement to the contrary, upon a Change in Control, all Options
and/or Restricted Stock shall be subject to the following:
(a) The restrictions and limitations applicable to any Options shall
lapse, and such Options shall become free of all restrictions and become
fully vested to the full extent of the original grant.
(b) The Company shall have the right to acquire from Participants
their vested Options for which the value, as established in the Change of
Control, of the Common Stock issuable upon exercise thereof is greater than
the Option Price, by payment of the amount by which the price per share of
Common Stock, as established in the Change of Control, exceeds the Option
Price; and
(c) All Restricted Stock shall become free of all restrictions and be
fully vested and transferable.
11. ADJUSTMENTS TO REFLECT CHANGES IN CAPITAL STRUCTURE.
If there is any change in the corporate structure or shares of the Company,
the Board of Directors may, in its discretion, make any adjustments necessary to
prevent accretion, or to protect against dilution, in the number and kind of
shares authorized by the Plan and, with respect to outstanding Options and/or
Restricted Stock, in the number and kind of shares covered thereby and in the
applicable Option Price. For the purpose of this Section 11, a change in the
corporate structure or shares of the Company includes, without limitation, any
change resulting from a recapitalization, stock split, stock dividend,
consolidation, rights offering, spin-off, reorganization, or liquidation and any
transaction in which shares of Common Stock are changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or another corporation.
12. NON-TRANSFERABILITY OF OPTIONS AND RESTRICTED STOCK; LIMITED EXCEPTION TO
TRANSFER RESTRICTIONS.
(a) Unless otherwise expressly provided in this Section 12, by applicable
law or by any Award Agreement, as the same may be amended, evidencing the grant
or award of Restricted Stock or Options: Awards are non-transferable and shall
not be subject in any manner to sale, transfer, anticipation, alienation,
assignment, pledge, encumbrance or charge; Awards shall be exercised only by the
person to whom such Awards were granted or awarded (a "Recipient"); and amounts
payable or shares issuable pursuant to Awards shall be delivered only to or for
the account of a Recipient.
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<PAGE> 31
(b) Except as precluded by any applicable law, the Board may permit Awards
to be transferred to and exercised by and paid to certain persons or entities
related to the Recipient, including, but not limited to members of the
Recipient's immediate family (parents, grandparents, children, grandchildren,
spouse, siblings), charitable institutions, or trusts or other entities whose
beneficiaries or beneficial owners are members of the Recipient's immediate
family and/or charitable institutions, or to such other persons or entities as
may be approved by the Board, pursuant to such conditions and procedures as the
Board may establish. Any permitted transfer shall be subject to the condition
that the Board receive evidence satisfactory to it that the transfer is being
made for estate and/or tax planning purposes on a gratuitous or donative basis
and without consideration other than nominal consideration.
(c) The exercise and transfer restrictions in this Section 12 shall not
apply to:
(i) transfers to the Company;
(ii) the designation of a beneficiary to receive benefits in the event
of the Recipient's death or, if the Recipient has died, transfers to or
exercise by the Recipient's beneficiary, or, in the absence of a validly
designated beneficiary, transfers by will or the laws of descent and
distribution;
(iii) transfers pursuant to a domestic relations order;
(iv) if the Recipient has suffered a disability, permitted transfers
or exercises on behalf of the Recipient by his or her legal representative;
or
(v) the authorization by the Board of "cashless exercise" procedures
with third parties who provide financing for the purpose of (or who
otherwise facilitate) the exercise of Awards consistent with applicable
laws and the express authorization of the Board.
(d) In the event of a transfer of an Award pursuant to Subsection (b) or
(c) of this Section 12, the Recipient will remain liable for any taxes
(including withholding and social security taxes) due upon or as a consequence
of the exercise of or lapse of any restrictions in respect of an Award and
neither the Company nor the Board shall have any obligation to provide notice to
a transferee of any event or information that has, will or could in any way
affect an Award or its exercise.
13. RIGHTS AS STOCKHOLDER.
No person shall have any rights of a stockholder as to shares of Common
Stock subject to an Award under the Plan until, after proper exercise of the
Award or other action required, such shares shall have been recorded on the
Company's official stockholder records as having been issued or transferred.
Upon exercise of the Award or any portion thereof, the Company will have thirty
(30) days in which to issue the shares, and the Participant will not be treated
as a stockholder for any purpose whatsoever prior to such issuance. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date such shares are recorded as issued or transferred in
the Company's official stockholder records, except as provided herein or in an
Agreement.
14. WITHHOLDING TAX.
Upon the exercise of an Option, or the lapse of restrictions on Restricted
Stock, requiring tax withholding, the Participant will be required to pay to the
Company for remittance to the appropriate taxing authorities an amount necessary
to satisfy the employee's portion of federal, state and local taxes, if any,
incurred by reason of the exercise of an Option or the lapse of such
restrictions. A Participant may elect to have any tax withholding obligation
incurred upon the exercise of or lapse of restrictions in respect of an Award
satisfied by payment of cash by the Participant, by the withholding of cash
otherwise due the Participant, or, except in the case of ISO's, by the
withholding of shares of Common Stock issuable upon such occurrence and having
an aggregate Fair Market Value on the day prior to the day of exercise or lapse
sufficient to satisfy the applicable tax withholding requirement; provided,
however, that if the Participant elects to have shares of Common Stock withheld
from the shares deliverable upon such exercise or lapse, a Participant's
election must be
8
<PAGE> 32
delivered to the Administrator in writing on or prior to the date of exercise of
the Options or lapse of restrictions with respect to Restricted Stock.
15. TERMINATION OF EMPLOYMENT.
(a) In the event of a Participant's Termination of Employment for any
reason other than death or disability any Option or Restricted Stock shall
expire forthwith; provided, however, that with the approval of the Board
evidenced by a writing signed by an executive officer of the Company other than
the Participant, unvested Options may be (i) allowed to remain in effect and to
vest and be exercisable in accordance with the terms of the Award Agreement
evidencing such option or (ii) accelerated to vest immediately. Any Options
exercisable at the time of such termination or which became exercisable in
accordance with this paragraph may be exercised up to a date after such
termination that is determined by the Board, but not exceeding five years from
the date of such termination and not beyond the date the Option otherwise would
have expired in accordance with the Award Agreement evidencing such Option. The
restrictions on Restricted Stock may be eliminated so that such Restricted Stock
is free of such restrictions at the time of Termination of Employment and not
forfeited upon such Termination of Employment.
(b) Upon the death of a Participant, all unvested Options shall vest
immediately and all restrictions on Restricted Stock shall lapse. A
Participant's estate or beneficiaries shall have a period up to the later of one
year after the Participant's death or the expiration date specified in the Award
Agreement within which to exercise the Option; provided, however, in the case of
ISO's, the Participant's estate or beneficiaries may exercise an Option only
until the expiration date specified in the Award Agreement. Any Option may be
immediately exercised in full by the Participant's estate or beneficiaries. In
the event the Participant's estate is closed with exercisable Options then
unexercised, the rights under this paragraph shall pass by will or the laws of
descent and distribution. In the case of Restricted Stock, the restrictions on
such Restricted Stock shall be deemed to have lapsed immediately before such
Participant's death.
(c) Upon the disability of a Participant, all unvested Options shall vest
immediately and all restrictions on Restricted Stock shall lapse. In the event
of a Participant's disability during employment, the Participant, or his or her
guardian or legal representative shall have a period up to the expiration date
specified in the Award Agreement within which to exercise the Option. In the
case of Restricted Stock, the restrictions on such Restricted Stock shall be
deemed to have lapsed immediately before the disability of such Participant.
16. CANCELLATION OF OPTION GRANTS AND RESTRICTED STOCK.
(a) After Termination of Employment. If there is a Termination of
Employment with respect to a Participant for any reason other than death, and,
pursuant to paragraph (a), or (c) of Section 15, one or more Options have not
yet expired or the restrictions pertaining to Restricted Stock have not lapsed,
the Board, in its sole discretion, which may be delegated to the Chief Executive
Officer of the Company or to the Chairman of the Board, may cancel any such
Options at any time prior to the exercise thereof or declare forfeited any such
Restricted Stock before the related restrictions lapse unless the following
conditions are met:
(i) The Participant shall not render services for any organization or
engage directly or indirectly in any business which, in the judgment of the
Chief Executive Officer of the Company, is or becomes competitive with the
Company, or which is or becomes otherwise prejudicial to or in conflict
with the interests of the Company. The judgment of the Chief Executive
Officer shall be based on the Participant's positions and responsibilities
while employed by the Company, the Participant's post-employment
responsibilities and position with the other organization or business, the
extent of past, current and potential competition or conflict between the
Company and the other organization or business, the effect on the Company's
customers, suppliers and competitors of the Participant's assuming the
post-employment position, and such other considerations as are deemed
relevant given the applicable facts and circumstances. The Participant
shall be free, however, to purchase as an investment or otherwise, stock or
other securities of such organization or business so long as such stock or
securities are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not
9
<PAGE> 33
represent a substantial investment to the Participant or a greater than
five percent (5%) equity interest in the organization or business.
(ii) The Participant shall not, without prior written authorization
from the Company, disclose to anyone outside the Company, or use in other
than the Company's business, any confidential information or material
relating to the business of the Company, acquired by the Participant either
prior to or after such Participant's Termination of Employment.
(b) Before Termination of Employment. The Board, in its sole discretion,
which may be delegated to the Chief Executive Officer of the Company or to the
Chairman of the Board, may cancel any Options held by a person or reduce the
number thereof at any time prior to the exercise thereof or declare forfeited a
part or all of any shares of Restricted Stock awarded to a Participant under the
following circumstances:
(i) The Participant's conduct either in connection with his or her
employment by the Company or otherwise is deemed inimical to the interests
of the Company.
(ii) The Participant's employment responsibilities with the Company
are reduced or altered and the Board determines that the Participant would
not have been granted the Options or awarded the shares of Restricted
Stock, or such number of Options or shares of Restricted Stock, had the
Participant's employment responsibilities been at the reduced or altered
level at the time of the grant or award of such Options or shares of
Restricted Stock.
17. NO RIGHT TO EMPLOYMENT.
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company or any Subsidiary, or any right or claim
to any benefit under the Plan, unless the right or claim has specifically
accrued under the Plan.
18. AMENDMENT OF THE PLAN.
The Board may from time to time amend or revise the terms of the Plan in
whole or in part and may without limitation, adopt any amendment deemed
necessary.
19. NOTICE.
Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Administrator, if so required under the Plan, and
otherwise to the Chairman of the Board or to the Chief Executive Officer of the
Company, and shall become effective when it is received by the office of such
Administrator, Chairman or the Chief Executive Officer.
20. COMPANY BENEFIT AND COMPENSATION PLANS.
Nothing contained in the Plan shall prevent any Participant prior to death,
or the Participant's dependents or beneficiaries after the Participant's death,
from receiving, in addition to any Options or Restricted Stock provided for
under the Plan, any salary, incentive or performance plan Awards, payments under
a Company retirement plan or other benefits that may be otherwise payable or
distributable to such Participant, or to the Participant's dependents or
beneficiaries under any other plan or policy of the Company or otherwise. To the
extent permitted by law, grants of Options or awards of Restricted Stock under
the Plan may be made in combination with, or as alternatives to, grants, awards
or payments under other Company plans.
21. REPRESENTATIONS AND WARRANTIES.
No person shall at any time have a right to be selected as a Participant in
the Plan, nor having been selected as a Participant for one Award to be selected
as a Participant for any other Award, and no person shall have any authority to
enter into any agreement assuring such selection or making any warranty or
10
<PAGE> 34
representation with respect thereto. A Participant shall have no rights to or
interest in any Option or Restricted Stock except as set forth herein.
22. UNFUNDED PLAN.
Insofar as it provides for grants of Options and awards of Restricted
Stock, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Participants who are or may become entitled to
Common Stock under the Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by Common Stock, nor shall the Plan
be construed as providing for such segregation, nor shall the Company nor the
Board be deemed to be a trustee of any Common Stock issuable or deliverable
under the Plan. Any liability of the Company to an Participant with respect to a
grant of Options or award of Restricted Stock under the Plan shall be based
solely upon any contractual obligations that may be created by the Plan or an
Award Agreement; no such obligation of the Company shall be deemed to be secured
by any pledge or other encumbrance on any property of the Company. Neither the
Company nor the Board shall be required to give any security or bond for the
performance of any obligation that may be created by the Plan.
23. CONDITIONS UPON ISSUANCE OF SHARES.
An Option shall not be exercisable, a share of Common Stock shall not be
issued pursuant to the exercise of an Option, and restrictions on Restricted
Stock awarded shall not lapse until such time as the issuance and delivery of
such share pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares of Common Stock may then be listed (including the
listing requirements for such Common Stock on the Exchange), and shall be
further subject to the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Common Stock is being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
24. EFFECTIVE DATE AND TERMINATION OF PLAN.
24.1 Effective Date. The Plan is effective as of the of the date of its
adoption by the Board of Directors.
24.2 Termination of the Plan. The Board may terminate the Plan at any time
with respect to any shares that are not then subject to Options or Restricted
Stock. Termination of the Plan will not affect the rights and obligations of any
Participant with respect to Options or Restricted Stock awarded before
termination.
* * * * *
The undersigned, being the duly elected Secretary of Parker Drilling
Company, does hereby certify that the foregoing Parker Drilling Company 1997
Stock Plan was approved by the Board of Directors effective as of May 13, 1997.
/s/ LESLIE D. ROSENCUTTER
Leslie D. Rosencutter
Corporate Secretary
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<PAGE> 35
PARKER DRILLING COMPANY
(BOLD FACE) PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- DECEMBER 17, 1997
(BOLD FACE) This Proxy is Solicited on Behalf of The Board of Directors
The undersigned hereby appoints ROBERT L. PARKER and LESLIE D. ROSENCUTTER,
or either of them, as proxies and attorneys with several powers of substitution,
hereby revoking any prior Proxy, for and in the name of the undersigned, to
represent the undersigned at the Annual Meeting of Stockholders of Parker
Drilling Company, December 17, 1997, or at any adjournment(s) thereof, and
thereat to vote all of the shares of Common Stock standing in the name of the
undersigned upon the following matters:
(See reverse side)
- --------------------------------------------------------------------------------
<PAGE> 36
(BOLD FACE) IF THE PROXY CARD IS SIGNED AND RETURNED TO THE COMPANY WITHOUT
DIRECTION ON ANY MATTER, THE PROXY WILL BE VOTED IN FAVOR OF
THE PROPOSALS IN EACH SUCH CASE.
PLEASE MARK YOUR
CHOICE LIKE THIS [ ] WILL ATTEND
IN BLUE OR BLACK INK. [ ]
[ ]
-------------- -------------
ACCOUNT NUMBER COMMON
(BOLD FACE) The Board of Directors recommends a Vote "FOR" Items 1, 2 and 3.
<TABLE>
<S> <C> <C>
(1) Election of two directors FOR both nominees listed below WITHHOLD AUTHORITY
(Class II), to serve a (except as marked to the to vote for both
term of three years. contrary below) nominees listed
[ ] [ ]
</TABLE>
(Instructions: To withhold authority to vote for any individual nominee strike
a line through the nominee's name in the list below.) (BOLD FACE)
EARNEST F. GLOYNA
BERNARD J. DUROC-DANNER
(2) Proposal to approve the grant of incentive stock options to eligible
employees under the Parker Drilling Company 1997 Stock Plan.
For Against Abstain
[ ] [ ] [ ]
(3) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as
independent accountants for the Company's 1998 fiscal year.
For Against Abstain
[ ] [ ] [ ]
(4) In their discretion, the Proxies are authorized to vote upon such
other and further business as may be brought before the meeting or any
adjournments thereof.
The undersigned has received the Notice of Meeting and the Proxy Statement
dated November 7, 1997, and the Annual Report to Stockholders for 1997.
Dated:
----------------------
----------------------------
----------------------------
Signature(s) exactly as your name
appears hereon
(Note: In the case of joint ownership,
each such owner should sign. Executors,
guardians, trustees, etc. should add
their title as such and where more than
one executor, etc., is named, a majority
must sign. If the signer is a
corporation, please sign full corporate
name by a duly authorized officer.)
