<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
Rowan Companies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
- --------------------------------------------------------------------------------
<PAGE> 2
ROWAN COMPANIES, INC.
5450 TRANSCO TOWER, 2800 POST OAK BOULEVARD
HOUSTON, TEXAS 77056-6196
C. R. PALMER
CHAIRMAN OF THE BOARD
March 14, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Rowan Companies, Inc., which will be held in the Transco Auditorium located on
Level 2 of the Transco Tower, 2800 Post Oak Boulevard, Houston, Texas, on
Friday, April 25, 1997 at 9:00 A.M., Houston time. Your Board of Directors and
management look forward to greeting personally those stockholders able to
attend.
At the meeting, stockholders will be asked to elect directors and to vote
on a stockholder proposal. These proposals are more fully described in the
accompanying proxy statement, which you are urged to read carefully. Your Board
of Directors recommends a vote FOR the election of directors and AGAINST the
stockholder proposal.
Regardless of the number of shares you own or whether you plan to attend,
it is important that your shares be represented and voted at the meeting. Your
are requested to sign, date and mail the enclosed proxy promptly.
Your interest and participation in the affairs of the Company are most
appreciated.
Sincerely,
/s/ C. R. PALMER
C. R. Palmer
Chairman, President and
Chief Executive Officer
<PAGE> 3
ROWAN COMPANIES, INC.
5450 TRANSCO TOWER
2800 POST OAK BOULEVARD
HOUSTON, TEXAS 77056-6196
(713) 621-7800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, APRIL 25, 1997
To the Stockholders:
The Annual Meeting of the Stockholders of Rowan Companies, Inc., a Delaware
corporation (the "Company"), will be held in the Transco Auditorium located on
Level 2 of the Transco Tower, 2800 Post Oak Boulevard, Houston, Texas, on
Friday, April 25, 1997 at 9:00 A.M., Houston time, for the following purposes:
1. To elect two Class III Directors to serve until the third succeeding
annual meeting and until their respective successors are duly elected
and qualified.
2. To consider and vote upon Stockholder Proposal No. 1 pertinent to
declassifying the Company's Board of Directors, such proposal being
opposed by the Board of Directors.
3. To transact such other business as may properly come before such
meeting or any adjournment thereof.
February 27, 1997 has been fixed as the date of record for determining
stockholders entitled to receive notice of and to vote at the Annual Meeting of
Stockholders. A list of all stockholders entitled to vote is on file at the
principal executive offices of the Company, 5450 Transco Tower, 2800 Post Oak
Boulevard, Houston, Texas, 77056-6196.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARK H. HAY
Secretary
March 14, 1997
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND MAIL BACK THE
ACCOMPANYING PROXY IN THE ENCLOSED RETURN ENVELOPE AT YOUR EARLIEST CONVENIENCE.
<PAGE> 4
ROWAN COMPANIES, INC.
5450 TRANSCO TOWER
2800 POST OAK BOULEVARD
HOUSTON, TEXAS 77056-6196
---------------------------------------
PROXY STATEMENT
---------------------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Rowan Companies, Inc. for use at the Annual Meeting of Stockholders to be
held on April 25, 1997 in the Transco Auditorium located on Level 2 of the
Transco Tower, 2800 Post Oak Boulevard, Houston, Texas, or any adjournment
thereof. The cost of solicitation will be paid by the Company. The Company has
retained D. F. King & Co., Inc. to solicit proxies at an estimated cost of
$7,500, plus reasonable expenses. In addition to solicitation by mail,
solicitation of proxies may be made personally or by telephone or telecopy by
the Company's employees, and arrangements may be made with brokerage houses or
other custodians, nominees and fiduciaries to send proxies and proxy material to
their principals.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy by either (i) attending the meeting
and voting in person or (ii) giving written notice of such revocation to Mr.
Mark H. Hay, Secretary of the Company, at Rowan Companies, Inc., 5450 Transco
Tower, 2800 Post Oak Boulevard, Houston, Texas 77056-6196. The enclosed proxy
may also be revoked by a subsequently dated proxy received by the Company prior
to the voting of the previously dated proxy.
The Proxy Statement and the related form of proxy are being first mailed or
delivered to stockholders on or about March 14, 1997.
VOTING SECURITIES OUTSTANDING
At the close of business on February 27, 1997, the record date for
determining those stockholders entitled to notice of and to vote at the Annual
Meeting of Stockholders, there were outstanding 85,609,984 shares of $.125 par
value Common Stock of the Company ("Common Stock"), each share of which is
entitled to one vote on the matters to be presented at the meeting.
1
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
MANAGEMENT
The table below sets forth the number of shares of Common Stock of the
Company owned as of February 27, 1997 by directors (including Mr. Palmer who is
Chief Executive Officer), the four other most highly compensated executive
officers of the Company and all directors and executive officers as a group:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME BENEFICIALLY OWNED(1)(2)
---- ------------------------
<S> <C>
Directors:
Ralph E. Bailey 50,000
Henry O. Boswell 40,000(3)
H. E. Lentz 25,200(4)
Hon. Colin B. Moynihan -0-
C. R. Palmer 1,063,336
Wilfred P. Schmoe 7,000
Charles P. Siess, Jr. 6,000
Peter Simonis 5,000
C. W. Yeargain 233,202
Executive Officers (not Directors):
R. G. Croyle 152,574(5)
D. F. McNease 107,954
E. E. Thiele 166,699
J. Earl Beckman(6) -0-
All Directors and Executive Officers as a group (24 in
number) 2,242,338
</TABLE>
- ---------------
(1) Except as noted otherwise, the persons and the group listed have sole voting
and sole dispositive power with respect to the shares shown herein.
(2) All directors and executive officers as a group beneficially owned 2.62% of
the outstanding shares of Common Stock; no continuing director, nominee or
executive officer owned more than 1.24% of the Common Stock. Included herein
are shares of Common Stock that may be acquired prior to April 28, 1997
through the conversion of the Series II Floating Rate Convertible
Subordinated Debenture (the "Series II Debenture"), the Series III Floating
Rate Convertible Subordinated Debentures (the "Series III Debentures") and
the exercise of Nonqualified Stock Options (the "Options") as follows:
C. R. Palmer -- Series II Debenture, Series III Debentures and
Options -- 400,000 shares, 340,741 shares and 316,250 shares, respectively;
R. G. Croyle -- Series III Debentures and Options -- 74,074 shares and
75,500 shares, respectively; D. F. McNease -- Series III Debentures and
Options -- 74,074 shares and 32,875 shares, respectively; E. E.
Thiele -- Series III Debentures and Options -- 74,074 shares and 46,875
shares, respectively; and all directors and executive officers as a
group -- the Series II Debenture, the Series III Debentures and
Options -- 400,000 shares, 637,037 shares and 619,875 shares, respectively.
(3) Includes 15,000 shares owned by Mr. Boswell's wife. Mr. Boswell disclaims
beneficial ownership of such shares.
(4) Mr. Lentz's shares are owned jointly with his wife. The total includes 200
shares held in the names of Mr. Lentz's two minor children with respect to
which Mr. Lentz's wife serves as custodian. Mr. Lentz disclaims beneficial
ownership of such shares.
(5) Includes 1,000 shares owned by Mr. Croyle's children. Mr. Croyle disclaims
beneficial ownership of such shares.
(6) Mr. Beckman, President and Chief Executive Officer of LeTourneau, Inc.
("LeTourneau") and Vice President of the Company, retired from such
positions on January 1, 1997.
2
<PAGE> 6
PRINCIPAL STOCKHOLDERS
The table below sets forth, as of February 27, 1997, certain information as
to those persons who, to the knowledge of the Company, beneficially owned more
than five percent of the Company's outstanding Common Stock:
<TABLE>
<CAPTION>
TITLE NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF CLASS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED OF CLASS
-------- ---------------------- ------------------ --------
<S> <C> <C> <C>
Common Stock The Equitable Companies 11,179,700(2) 13.0%(2)
Incorporated
787 Seventh Avenue
New York, New York 10019;
AXA
23, Avenue Matignon
75008 Paris, France;
The Mutuelles AXA Group
detailed in (2) below
Common Stock Soros Fund Management LLC 7,796,000(3) 9.11%(3)
888 Seventh Avenue, 33rd Floor
New York, New York 10106;
George Soros
888 Seventh Avenue, 33rd Floor
New York, New York 10106;
Stanley F. Druckenmiller
888 Seventh Avenue, 33rd Floor
New York, New York 10106;
Duquesne Capital Management LLC
2579 Washington Road, Suite 322
Pittsburgh, Pennsylvania 15241
Common Stock Loomis, Sayles & Company, L.P. 4,693,287(4) 5.50%(4)
One Financial Center
Boston, Massachusetts 02111
</TABLE>
- ---------------
(1) To the knowledge of the Company, no other person owns more than 5% of the
outstanding shares of Common Stock.
(2) Based on information contained in the named stockholders' Amendment No. 6
dated February 12, 1997 to its Schedule 13G, filed pursuant to the
Securities Exchange Act of 1934 (the "1934 Act"). Such amended Schedule 13G
also stated that The Equitable Companies Incorporated ("Equitable") and the
AXA Companies described below as a group had sole voting power with respect
to 11,129,200 shares and sole dispositive power with respect to 11,179,700
shares. Furthermore, based on information also contained in that amended
Schedule 13G, 4,452,000 and 6,727,700 of the shares shown above were
beneficially owned by Equitable's subsidiaries, The Equitable Life Assurance
Society of the United States ("Equitable U.S.") and Alliance Capital
Management L.P. ("Alliance Capital"), respectively, and that Equitable U.S.
had sole voting power and sole dispositive power with respect to 4,452,000
shares, while Alliance Capital had sole voting power and sole dispositive
power with respect to 6,677,200 shares and 6,727,700 shares, respectively.
AXA and the five mutual insurance companies comprising The Mutuelles Group,
namely Alpha Assurances I.A.R.D. Mutuelle and Alpha Assurances Vie Mutuelle,
both located at 101-100 Terrasse Boieldieu, 92042 Paris La Defense France,
and AXA Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle, both
located at 21, rue de Chateaudun, 75009 Paris France and AXA Courtage
Assurance Mutuelle located at 26, rue Louis le Grand, 75002 Paris France,
disclaim any beneficial interest in and disclaim any deemed voting power or
dispositive power with respect to any of the shares shown above.
3
<PAGE> 7
(3) Based on information contained in the named stockholders' Amendment No. 3
dated January 1, 1997 to its Schedule 13D, filed pursuant to the 1934 Act.
Such amended Schedule 13D also stated that Soros Fund Management LLC ("SFM
LLC") beneficially owned and had sole voting and sole dispositive power with
respect to 6,094,000 shares. The principal business of SFM LLC is to serve
as the principal investment manager to several foreign investment companies
including Quantum Fund and Quantum Partners located at Kaya Flamboyan 9,
Willemstad, Curaco Netherlands Antilles ("Quantum"). Such amended Schedule
13D also stated that George Soros beneficially owned 6,784,000 shares, had
sole voting and sole dispositive power with respect to 690,000 shares, and
had shared voting and shared dispositive power with respect to 6,094,000
shares. The principal occupation of Mr. Soros, a United States citizen, is
to direct the activities of SFM LLC in his capacity as its Chairman.
Additionally, he exercises, in his capacity as one of two general partners,
voting and dispositive power over the investment accounts of Lupa Family
Partners, a New York limited partnership located at 888 Seventh Avenue, 32nd
Floor, New York, New York ("Lupa"). Such amended Schedule 13D also stated
that Stanley F. Druckenmiller beneficially owned 7,106,000 shares, had sole
voting and sole dispositive power with respect to 1,012,000 shares and had
shared voting and shared dispositive power with respect to 6,094,000 shares.
The principal occupation of Mr. Druckenmiller, a United States citizen, is
to direct the investment decisions of SFM LLC in his capacity as its Lead
Portfolio Manager. Such amended Schedule 13D also stated that Duquesne
Capital Management LLC ("Duquesne") beneficially owned and had sole voting
and sole dispositive power with respect to 1,012,000 shares. The principal
business of Duquesne is to serve as discretionary investment advisor to a
limited number of institutional clients. Mr. Druckenmiller owns a 75%
interest in, and is the sole managing member of, Duquesne. SFM LLC expressly
disclaims beneficial ownership of any shares other than the 6,094,000 shares
held for the account of Quantum. Mr. Soros expressly disclaims beneficial
ownership of any shares other than the 6,784,000 shares held directly for
his account or for the account of Quantum or Lupa. Mr. Druckenmiller
expressly disclaims beneficial ownership of any shares other than the
6,094,000 shares held for the account of Quantum and the 1,012,000 shares
held for the accounts of clients of Duquesne. Duquesne expressly disclaims
beneficial ownership of any shares other than the 1,012,000 shares held for
the accounts of its clients.
(4) Based on information contained in the named stockholder's Schedule 13G dated
February 13, 1997, filed pursuant to the 1934 Act, which Schedule 13G also
stated that the named stockholder had sole voting power with respect to
2,221,700 shares and shared dispositive power with respect to 4,693,287
shares. Loomis, Sayles & Company, L.P. is an investment advisor for various
clients.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
All of the Company's directors, executive officers and any greater than ten
percent stockholders are required by Section 16(a) of the 1934 Act to file with
the Securities and Exchange Commission and the New York Stock Exchange initial
reports of ownership and reports of changes in ownership of the Company's Common
Stock and to furnish the Company with copies of such reports. Based on a review
of those reports and written representations that no other reports were
required, the Company believes that all applicable Section 16(a) filing
requirements were complied with during the year ended December 31, 1996, except
for the inadvertent failure of the following executive officers to file on a
timely basis: John L. Buvens, a Vice President, two reports covering three
transactions; Mark A. Keller, a Vice President, one report covering one
transaction; and James E. Vande Voorde, a Senior Vice President of the Company's
wholly-owned subsidiary, Era Aviation, Inc., one report covering one
transaction.
4
<PAGE> 8
QUORUM AND OTHER MATTERS
The presence at the Annual Meeting of Stockholders, in person or by proxy,
of the holders of at least a majority of the outstanding shares of Common Stock
at the close of business on February 27, 1997 is necessary to constitute a
quorum. In accordance with Delaware law and pursuant to the provisions of the
Company's Bylaws, holders of shares shall be treated as being present at the
Annual Meeting of Stockholders if the holders of such shares are present in
person or are represented by valid proxies, whether the proxy cards granting
such proxies are marked as casting a vote or abstaining or are left blank.
If a quorum is present at the Annual Meeting of Stockholders, the election
of each nominee for Class III Director will be approved if the votes cast in
favor of the election of such nominee exceed the votes cast opposing the
election of such nominee. Unless otherwise directed thereon, a validly executed
proxy will be treated as a vote cast in favor of the election of the Class III
Director nominees identified on page 6.
The stockholder proposal or actions on any other matters to come before the
Annual Meeting of Stockholders will be approved if a quorum is present and the
votes cast in favor of the proposal or matters exceed the votes cast opposing
same. Unless otherwise directed thereon, a validly executed proxy will be
treated as a vote cast against the stockholder proposal.
In determining the number of votes cast, shares abstaining from voting on
such matters and shares held in street name that are indicated as not being
voted on by brokers due to lack of discretionary authority will not be treated
as votes cast.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, each
of which currently consists of three directors. Each director holds office for a
term ending on the date of the third annual meeting following the annual meeting
at which such director was elected. Class III Directors are to be elected at the
1997 Annual Meeting of Stockholders.
One of the current Class III Directors, Peter Simonis, who has served as a
Director for twelve years, will not stand for re-election. On behalf of the
Company, the Board of Directors takes this opportunity to record its
appreciation to Mr. Simonis for his many years of valuable and devoted service
to the Company. Henry O. Boswell and C. R. Palmer, both current Class III
Directors, have been selected by the Nominating Committee to be Class III
Director nominees. Accordingly, a Board-approved amendment to the Company's
bylaws reducing the number of Board members from nine to eight (with the Board
to be comprised of two members in Class III and three members in each of Classes
I and II) will become effective on April 25, 1997, the date of the 1997 Annual
Meeting of Stockholders.
The persons named in the enclosed proxy have been selected as a proxy
committee by the directors of the Company and valid proxies will be voted in the
manner directed thereon. If no direction is made, the proxies will be voted for
the election of the Class III Director nominees listed below. Although the Board
of Directors of the Company does not contemplate that any of the nominees will
be unable to serve, if such a situation arises prior to the meeting, the proxy
committee will select a replacement nominee in accordance with its best
judgment.
5
<PAGE> 9
The table below sets forth certain information regarding the nominees for
director and continuing directors as of February 27, 1997.
NOMINEES AND CONTINUING DIRECTORS
--------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION YEAR FIRST
FOR THE PAST BECAME
NAME(1)(2) FIVE YEARS AGE DIRECTOR
---------- -------------------- --- ----------
<S> <C> <C> <C>
NOMINEES CLASS III (TERM EXPIRES IN 2000)
- ------------------------------- ----------------------------------------------------
Henry O. Boswell Retired; formerly President (1983-1987) of Amoco 67 1988
(a)(b)(c)(e) Production Company (oil and gas production).
C. R. Palmer Chairman of the Board, President and Chief Executive 62 1969
(c) Officer of the Company.(3)
<CAPTION>
CONTINUING DIRECTORS CLASS I (TERM EXPIRES IN 1998)
- ------------------------------- ----------------------------------------------------
H. E. Lentz Managing Director, Lehman Brothers Inc. (investment 52 1990
(d) bankers) since March 1993; Investment Banker,
Wasserstein Perella & Co., Inc. (March 1988 through
February 1993).
Wilfred P. Schmoe Retired; formerly Executive Vice President, Director 69 1992
(a)(b)(d)(e) and member of the Executive Committee (May 1984 to
November 1988) of E.I. DuPont de Nemours & Co.
(diversified chemical/energy conglomerate).
Charles P. Siess, Jr. Chairman of the Board and Chief Executive Officer, 70 1991
(a)(b)(c)(d)(e) Cabot Oil & Gas Corporation since May 1995 and from
December 1989 to December 1992; Consultant and
Acting General Manager of Bridas S.A.P.I.C. Oil
Exploration (January 1993 to January 1994); Vice
Chairman of the Board, Marathon Manufacturing
Company (August 1986 until retiring in February
1987).
<CAPTION>
CONTINUING DIRECTORS CLASS II (TERM EXPIRES IN 1999)
- ------------------------------- ----------------------------------------------------
Ralph E. Bailey Chairman of the Board and, until February 1996, 72 1993
(b)(d)(e) Chairman of the Board and Chief Executive Officer of
American Bailey Corporation (manufacturing and
energy investments); Chairman of the Board of Clean
Diesel Technologies, Inc. (diesel fuel additives)
since June 1996 and, until May 1995, Chairman of the
Board and, until February 1992, Chairman of the
Board and Chief Executive Officer of United Meridian
Corporation (oil and gas exploration and
production).
Hon. Colin B. Moynihan Senior Partner of London-based Colin Moynihan 41 1996
(d) Associates (CMA) (energy advisors) since 1993;
Member of Parliament in the United Kingdom
(1983-1992); additionally, Minister for Energy as
Parliamentary Undersecretary of State at the UK
Department of Energy (1990-1992).
C. W. Yeargain Chairman of the Board, LeTourneau, Inc.; Executive 71 1975
(c)(d) Vice President of the Company until retiring in
March 1991.(3)
</TABLE>
(Table continued on the following page)
6
<PAGE> 10
- ---------------
(1) Directorships other than those listed in the table are as follows: Ralph E.
Bailey is a director of General Signal Corporation; Henry O. Boswell is a
director of Service Master Management Corporation, the general partner of
Service Master Limited Partnership, and Cabot Oil & Gas Corporation; H. E.
Lentz is a director of Imperial Holly Corporation; Hon. Colin B. Moynihan is
a director of Ranger Oil Limited and Charles P. Siess, Jr. is a director of
Cabot Corporation and Camco, Inc.
(2) Committee memberships are indicated by (a) for Audit Committee, (b) for
Compensation Committee, (c) for Executive Committee, (d) for Nominating
Committee and (e) for 1986 Debenture Plan Committee. See "Committees of the
Board of Directors" below for information on functions performed by the
Committees. The Board of Directors held five meetings during 1996. All
directors attended at least 75% of the 1996 meetings of the Board of
Directors and Committees on which they served.
(3) In addition to his Board membership, Mr. Yeargain continues to serve the
Company in a consulting capacity. See "Compensation Committee Interlocks and
Insider Participation; Certain Transactions" on page 18. Information
regarding Mr. Palmer's compensation is disclosed in the Summary Compensation
Table under "Executive Compensation" on page 8.
COMMITTEES OF THE
BOARD OF DIRECTORS
The functions performed by the committees of the Board of Directors are as
follows:
The Audit Committee has as its principal functions to recommend to the
Board of Directors each year the firm of independent auditors to be selected by
the Company and its subsidiaries, to review the reports to be rendered and the
fees to be charged by the independent auditors and to review with the
independent auditors the principal accounting policies of the Company and its
subsidiaries and other pertinent matters either at the initiative of the
Committee or at the request of the independent auditors. The Audit Committee
held one meeting in 1996.
The Compensation Committee recommends to the Board of Directors from time
to time the compensation to be paid to the executive and other officers of the
Company and its subsidiaries and any plan for additional compensation that it
deems appropriate. The Compensation Committee held two meetings in 1996.
The Nominating Committee generally designates, on behalf of the Board of
Directors, candidates for the directors of the class to be elected at the next
meeting of stockholders. The Nominating Committee will consider for election to
the Board qualified nominees recommended by stockholders. To make such a
recommendation, stockholders should submit to the Company's Secretary a
biographical sketch of the prospective candidate, which should include age,
principal occupation and business experience and other directorships, including
positions previously held or now held. In August 1996, the Board of Directors
amended the Company's Bylaws, effective September 1, 1996, to provide that any
such stockholder recommendations be submitted not less than 60 days prior to the
date of the anniversary of the annual meeting held in the prior year and, in the
case of a special meeting, not more than ten days following the earlier of the
date of the meeting notice or the public announcement notice. The Nominating
Committee held one meeting in 1996.
The Executive Committee has the authority to exercise all of the powers of
the Board in the management of the business and affairs of the Company, except
for certain qualifications noted in the Company's Bylaws. The Executive
Committee did not hold any meetings in 1996.
The 1986 Debenture Plan Committee administers the Company's 1986
Convertible Debenture Incentive Plan. The 1986 Debenture Plan Committee has
broad authority to interpret, amend, suspend or terminate such Plan and to make
all determinations necessary or advisable for the administration of the Plan.
The 1986 Debenture Plan Committee did not hold any meetings in 1996.
7
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended December 31,
1996, 1995 and 1994 annual compensation of the Chief Executive Officer and the
other four most highly compensated executive officers of the Company (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-----------------
ANNUAL COMPENSATION SHARES UNDERLYING
--------------------- DEBENTURES AND ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(1) COMPENSATION($)(3)
--------------------------- ---- --------- -------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
C. R. Palmer 1996 $853,333 $250,000 75,000 $4,500
Chairman of the Board, President 1995 800,000 -0- 150,000 3,375
and Chief Executive Officer 1994 766,667 -0- 791,111 -0-
R. G. Croyle 1996 241,667 50,000 15,000 4,203
Executive Vice President 1995 216,667 -0- 30,000 3,375
1994 200,000 -0- 187,963 -0-
D. F. McNease 1996 216,667 40,000 12,500 2,937
Senior Vice President -- Drilling 1995 191,667 -0- 25,000 1,687
1994 175,000 -0- 187,963 -0-
E. E. Thiele 1996 195,000 30,000 12,500 4,182
Senior Vice President -- Finance, 1995 181,667 -0- 25,000 3,375
Administration and Treasurer 1994 166,667 -0- 187,963 -0-
J. Earl Beckman(2) 1996 213,333 40,000 12,500 4,083
Vice President -- Manufacturing; 1995 218,333 -0- 25,000 3,987
President and Chief Executive 1994 215,000(2) -0- 187,963 4,873
Officer of LeTourneau, Inc.
</TABLE>
- ---------------
(1) The 1995 and 1996 amounts are shares of Common Stock that may be acquired
through the exercise of Options granted on April 28, 1995 and April 25,
1996, respectively. The 1994 amounts are comprised of shares of Common Stock
that may be acquired through the conversion of Series III Floating Rate
Convertible Subordinated Debentures (the "Series III Debentures"), which
were offered and issued on November 30, 1994, and the exercise of Options
which were granted on April 22, 1994, as follows: C.R. Palmer -- Series III
Debentures and Options -- 711,111 shares and 80,000 shares, respectively;
R.G. Croyle, D.F. McNease, E.E. Thiele and J. Earl Beckman -- Series III
Debentures and Options -- in each case, 162,963 shares and 25,000 shares,
respectively.
(2) Represents the base salary paid to Mr. Beckman in the calendar year that he
became an employee by way of the Company's purchase of the net assets of his
former employer, Marathon LeTourneau Company. Mr. Beckman was elected
President and Chief Executive Officer of LeTourneau and Vice President of
the Company on February 18, 1994 and April 22, 1994, respectively. Mr.
Beckman retired as an officer of the Company and LeTourneau effective
January 1, 1997.
(3) Represents the amount of the Company's contribution on behalf of the Named
Executive Officer to either of two 401(k) plans, specifically, the Rowan
Companies, Inc. Savings and Investment Plan in the case of Messrs. Palmer,
Croyle, McNease and Thiele, and the LeTourneau, Inc. Savings and Investment
Plan in the case of Mr. Beckman. The Rowan Plan was approved in late 1994
and became operational in April 1995.
No executive officer received any non-cash compensation during fiscal years
1996, 1995 and 1994, having an aggregate incremental cost to the Company in
excess of the lesser of $50,000 or 10% of his or her total annual salary and
bonus as reported in this table.
8
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information pertinent to stock options granted
under the Company's 1988 Nonqualified Stock Option Plan (the "1988 Plan") to the
Named Executive Officers during 1996:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
----------------------------------------------------- REALIZABLE VALUE
PERCENT AT ASSUMED ANNUAL
NUMBER OF OF TOTAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL 1996 ($/SHARE)(1) DATE(2) 0% 5% 10%
---- ---------- ------------ ------------ ---------- --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
C. R. Palmer 75,000 10.3% $15.25 4-25-06 -0- $719,250 $1,822,500
R. G. Croyle 15,000 2.1% 15.25 4-25-06 -0- 143,850 364,500
D. F. McNease 12,500 1.7% 15.25 4-25-06 -0- 119,875 303,750
E. E. Thiele 12,500 1.7% 15.25 4-25-06 -0- 119,875 303,750
J. Earl Beckman 12,500 1.7% 15.25 4-25-06 -0- 119,875 303,750
</TABLE>
- ---------------
(1) Last reported sales price of the Common Stock on the New York Stock Exchange
on April 25, 1996, the date of grant.
(2) Options become exercisable in 25% increments over a four-year period with
the options being 100% exercisable four years after the date of grant.
Exercisability may accelerate upon the occurrence of certain events such as
corporate reorganizations, death or disability (as set forth in the option
agreement or the plan).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
For each of the Named Executive Officers, the information set forth below
reflects, for the fiscal year ended December 31, 1996, options under the
Company's 1988 Plan which were exercised and the value realized thereon as well
as exercisable and unexercisable options which were unexercised at year-end 1996
and the realizable value thereon at such date:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE DECEMBER 31, 1996(#) DECEMBER 31, 1996($)(1)
EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. R. Palmer -0- -0- 240,000 227,500 $5,190,000 $3,850,937
R. G. Croyle -0- -0- 53,750 56,250 1,162,344 1,002,656
D. F. McNease 23,500 $269,687 14,000 50,000 302,750 903,125
E. E. Thiele -0- -0- 25,000 50,000 540,625 903,125
J. Earl Beckman 12,500 174,219 -0- -0- -0- -0-
</TABLE>
- ---------------
(1) Represents the difference between $22.63, which was the last reported per
share sales price of the Company's Common Stock on the New York Stock
Exchange on December 31, 1996, and the per share exercise price (either
$1.00 or $15.25 per share, depending upon the grant) times the number of
underlying shares.
OPTION PLANS
As amended by the stockholders at the Annual Meeting of Stockholders in
April 1992, the 1988 Plan permits the grant to key employees of the Company and
its subsidiaries prior to January 21, 2003 of options to purchase 7,000,000
shares. As of February 27, 1997, options to purchase shares (net of forfeitures)
of the Company's Common Stock had been granted at the following option exercise
prices: 4,299,804 shares at $1.00 per share; 164,500 shares at $15.25 per share;
515,000 shares at $7.625 per share and 25,000 shares at $8.00
9
<PAGE> 13
per share. Outstanding options under the 1988 Plan expire between April 1999 and
April 2006. Options granted under the 1988 Plan are nonqualified options and
expire ten years after the date of grant.
The authority of the Board of Directors to grant additional options under
the 1980 Plan expired on January 25, 1990. The 1980 Plan provided for the grant
of options to key employees of the Company and its subsidiaries, and the
exercise prices and terms of options granted under the 1980 Plan were determined
by the Compensation Committee. As of February 27, 1997, options to purchase a
total of 971,500 shares (net of forfeitures) of the Company's Common Stock had
been granted under the 1980 Plan at an option exercise price of $1.00 per share.
Outstanding options under the 1980 Plan are nonqualified options and expire
between April 1998 and April 1999.
Options granted under the 1980 and 1988 Plans become exercisable in 25%
increments over a four-year period with the options being 100% exercisable four
years after the date of grant.
CONVERTIBLE DEBENTURE INCENTIVE PLAN
The Rowan Companies, Inc. 1986 Convertible Debenture Incentive Plan (the
"Plan") was approved at the Company's 1986 Annual Meeting of Stockholders. The
Plan provides for the issuance to key employees of the Company and its
subsidiaries of up to $20,000,000 in aggregate principal amount of the Company's
floating rate convertible subordinated debentures (the "Debentures"). The
Debentures are convertible into fully paid and nonassessable shares of preferred
stock, which are immediately convertible into fully paid and nonassessable
shares of Common Stock of the Company. The ultimate conversion price for each
issue is the closing price of the Company's Common Stock on the day prior to the
issuance of the Debentures.
The Plan is administered by the 1986 Debenture Plan Committee of the Board
of Directors (the "Debenture Committee"). The Debenture Committee has the
authority to select key employees of the Company or any subsidiary who may
purchase Debentures. The Debenture Committee also determines, with respect to
each series of Debentures, the interest rate, conversion price and other terms
and conditions of the Debentures, all consistent with the provisions of the
Plan. The deadline for making offers under the Plan was November 30, 1994.
The $5,125,000 aggregate principal amount of Series I Debentures issued in
June 1986 was converted into 891,304 shares of Common Stock at $5.75 per share
prior to the June 1996 expiration date.
The $4,500,000 aggregate principal amount of the Series II Debenture issued
in September 1987 is ultimately convertible into 500,000 shares of Common Stock
at $9.00 per share until September 1997. The one employee participating in the
Series II Debenture offering borrowed the Debenture purchase price from an
unaffiliated third party. A promissory note evidencing any outstanding borrowing
bears interest at the same rate as the Debenture and is secured by a pledge of
the Debenture purchased. The Company has guaranteed such outstanding
indebtedness. No conversions occurred in 1996. The aggregate principal amount of
the Debenture outstanding at February 27, 1997 was $3,600,000, which is
convertible into 400,000 shares of Common Stock.
The $10,300,000 aggregate principal amount of Series III Debentures issued
in November 1994 is ultimately convertible into 1,525,926 shares of Common Stock
at $6.75 per share in specified amounts and intervals until November 30, 2004 as
follows: beginning November 30, 1995 -- $2,350,000 convertible into 348,148
shares; beginning November 30, 1996 -- $2,450,000 convertible into 362,963
shares; beginning November 30, 1997 -- $2,700,000 convertible into 399,998
shares; and beginning November 30, 1998 -- $2,800,000 convertible into 414,817
shares. All employees participating in the Series III Debenture offering have
borrowed the Debenture purchase price from the Company. Promissory notes
evidencing the borrowings bear interest at the same rate as the Debentures and
are secured by a pledge of the Debentures purchased. In 1996, Debentures in the
amount of $500,000 were converted into 74,074 shares of Common Stock. The
aggregate principal amount of Series III Debentures outstanding at February 27,
1997 (net of debentures cancelled) was $9,200,000, which is convertible into
1,362,963 shares of Common Stock.
10
<PAGE> 14
PENSION PLANS
The Company offers to eligible drilling and aviation employees
participation in a non-contributory, defined benefit pension plan. All salaried
and hourly employees (including executive officers but excluding non-US.
citizens) of the Company who have completed one year of employment (as defined
in the Plan) are eligible to participate in the pension plan. Pursuant to the
terms of the pension plan, the cost of which is borne by the Company, an
eligible employee generally will receive a pension at age 60 pursuant to a
formula which is based upon the employee's number of years of credited service
and his average annual compensation during the highest five consecutive years of
his final ten years of service. Compensation for this purpose is based on
salary, excluding discretionary bonuses. Because applicable provisions of the
Internal Revenue Code, as amended, currently limit the annual benefits payable
to any individual from the pension plan to $120,000, the pension plan provides
that benefits of a plan retiree which are limited by the provisions of the
Internal Revenue Code shall be increased each year that adjustments to such
provisions permit a benefit increase. As of January 31, 1997, the Company had
approximately 1,900 employees eligible to participate in such pension plan.
The Company offers to eligible manufacturing employees participation in a
separate non-contributory, defined benefit pension plan. This plan is
substantially similar to the Company's drilling and aviation pension plan except
that: an eligible employee generally will receive a pension at age 65 rather
than at age 60; the benefits are subject to reduction for Social Security
benefits; and no provision has been made for increasing the annual benefits
payable to any individual under this plan for the purpose of tracking an upward
adjustment in the limitation imposed by the Internal Revenue Code. As of January
31, 1997, the Company's manufacturing subsidiaries had approximately 1,200
employees eligible to participate in this pension plan.
The Company also sponsors pension restoration plans which provide for the
restoration of any retirement income that is lost under its pension plans
because of the previously mentioned Internal Revenue Code limitations on
benefits payable or the compensation level on which they are based. Both pension
restoration plans are unfunded and benefits thereunder are paid directly by the
Company. To date, three employees, C. R. Palmer, C. W. Yeargain and J. Earl
Beckman, have been selected to be participants under the pension restoration
plans. Mr. Yeargain retired in March 1991 and Mr. Beckman took early retirement
effective January 1, 1997.
11
<PAGE> 15
The following table illustrates, for representative average earnings and
years of credited service levels, the annual retirement benefit payable to
eligible drilling and aviation employees under the Company's pension and pension
restoration plans computed on the basis of a life annuity with 60 payments
guaranteed.
PENSION PLAN TABLE(1)
<TABLE>
<CAPTION>
YEARS OF SERVICE(2)
---------------------------------------------------------------
COMPENSATION(3) 15 20 25 30 35 40
- --------------- -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C>
$ 125,000 $ 32,812 $ 43,750 $ 54,687 $ 65,625 $ 76,562 $ 87,500
150,000 39,375 52,500 65,625 78,750 91,875 105,000
175,000 45,937 61,250 76,562 91,875 107,187 122,500
200,000 52,500 70,000 87,500 105,000 122,500 140,000
225,000 59,062 78,750 98,437 118,125 137,812 157,500
250,000 65,625 87,500 109,375 131,250 153,125 175,000
300,000 78,750 105,000 131,250 157,500 183,750 210,000
400,000 105,000 140,000 175,000 210,000 245,000 280,000
500,000 131,250 175,000 218,750 262,500 306,250 350,000
600,000 157,500 210,000 262,500 315,000 367,500 420,000
700,000 183,750 245,000 306,250 367,500 428,750 490,000
800,000 210,000 280,000 350,000 420,000 490,000 560,000
900,000 236,250 315,000 393,750 472,500 551,250 630,000
1,000,000 262,500 350,000 437,500 525,000 612,500 700,000
</TABLE>
- ---------------
(1) The benefits listed in the table are not subject to reduction for Social
Security benefits or other offset amounts.
(2) As of December 31, 1996, the Named Executive Officers (excluding J. Earl
Beckman) were credited under either or both the pension and pension
restoration plans for the drilling and aviation employees of the Company
with years of service as follows: C. R. Palmer -- 36; R. G. Croyle -- 23; D.
F. McNease -- 23; and E. E. Thiele -- 27.
(3) The annual benefit amounts payable to Messrs. Yeargain and Beckman are
$164,831 and $19,462, respectively. Mr. Yeargain's benefit is based upon his
44 years of credited service under the pension and pension restoration plans
covering the Company's drilling and aviation employees. Mr. Beckman's
benefit is based upon his 10 years of credited service under pension and
pension restoration plans covering the Company's manufacturing employees,
including six years under a plan of a predecessor company. The estimated
annual benefit amount payable upon retirement to Mr. Palmer is $482,390. The
other executive officers named in "Executive Compensation" above (but
excluding J. Earl Beckman) will basically be entitled to receive the annual
benefit amounts based upon their 1996 salary amount set forth under "Salary"
in the table on page 8 and their years of credited service under the pension
plan (see Footnote (2) above).
DIRECTOR COMPENSATION
Each director who is not a salaried officer of the Company or a subsidiary
receives $20,000 annually for serving as a director, $500 for attending a
regular or special Board meeting and $250 or $500 for attending a meeting of
each committee on which he serves, depending on the length of the meeting. In
addition, directors are reimbursed for reasonable travel expenses.
12
<PAGE> 16
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
COMPENSATION POLICY FOR EXECUTIVE OFFICERS
Under the supervision of the Compensation Committee of the Board of
Directors (the "Committee"), the Company has developed and implemented
compensation policies and programs that seek to retain and motivate employees of
the Company and its subsidiaries whose performance contributes to the Company's
goal of maximizing stockholder value in an unstable industry that has only
recently begun to recover from a prolonged downturn. In addition, these
compensation policies attempt to align the executive officers' interests with
those of the stockholders by providing incentive compensation related to the
value of the Company's Common Stock. Compensation decisions are made by the
Committee after reviewing recommendations prepared by the Company's Chief
Executive Officer, with the assistance of other Company personnel. The Company
has combined salaries with stock option grants, convertible debenture offerings
and selected cash bonuses to provide a compensation balance. The balance
established by the Committee is designed to reward past performance, retain key
employees and encourage future performance.
In approving and establishing compensation for an executive officer,
several factors are considered by the Committee. Performance criteria include
individual performance, overall Company performance versus that of its
competitors and performance of the price of the Company's Common Stock in
comparison to prior levels and to the relative stock prices of its competitors.
Since the contract drilling industry has suffered a prolonged downturn, overall
corporate performance has in the past included factors such as maintaining
equipment and personnel and protecting the strength of the Company's balance
sheet. When evaluating individual performance, particular emphasis has been
placed on the executive officers' success in enabling the Company to increase
its market share, their ability to develop innovative ways to obtain better
returns on the Company's assets and their maintenance of the Company's ability
to respond to upturns in the drilling industry. Emphasis is placed upon an
individual's integrity, loyalty and competence in his or her areas of
responsibility. When evaluating the foregoing performance criteria in setting
executive compensation, the Committee gives greatest weight to those factors it
believes have or will contribute the most towards maximizing stockholder value
and increasing the Company's financial viability. The factors that contribute
the most towards these goals vary depending on the state of the industry in
which the Company operates.
Based upon the Committee's determination, all of the executives named
above, including Mr. Palmer (see "Chief Executive Officer Compensation" on page
14), received a salary increase and a bonus in 1996 as the Company's performance
(reflected in its stock price) improved significantly during 1996. As discussed
above, factors considered by the Committee in setting compensation included each
individual's past contributions and performance, as well as the Company's
operating results and the performance of the Company's stock in comparison to
its competitors, management of its assets and debts and implementing and
maintaining effective cost controls. Additionally, setting salaries which are
both externally competitive relative to the industry and internally equitable
when considering performance and responsibility levels were pursued objectives.
Competitor comparisons for purposes of determining executive officer
compensation consisted of a comparison to the competitors in the Company's peer
group described under "Stockholder Return Performance Presentation" on pages 15
and 16 along with comparison to certain additional public companies in the
energy service industry. Although no specific target has been established, the
Committee generally seeks to set salaries at the median to high end of the range
in comparison to peer group companies. Measurement of each individual's
performance is to some extent subjective, and the Company does not make
compensation awards based on the degree to which an individual achieves
predetermined objective criteria.
In addition to regular salary payments to executive officers in 1996, the
Committee determined to make stock option grants to all of the Company's
executive officers, including Mr. Palmer, at an exercise price equal to the
market price on the date of grant of $15.25 per share. The primary basis for
these stock option grants was management's performance in keeping the Company's
organization intact and maintaining a strong balance sheet under what were,
until recently, unstable market conditions in its drilling segment in order to
position the Company to take advantage of increased oil and gas exploration and
development activities worldwide. The Committee also took into account the
positive earnings contributions by all three of the
13
<PAGE> 17
Company's business segments and the Committee's evaluation of the individual
performance of each officer. The criteria used in evaluating individual
performance for purposes of these grants were the same as the criteria discussed
above that are considered when setting regular compensation. Previous option
grants and debenture offerings to and held by executive officers were taken into
account when determining the amount of new option awards.
Although the Committee chose to revise the compensation of the Named
Executive Officers for the fiscal year just ended, it attempts to avoid treating
salaries, bonuses, stock option grants and debenture offerings as entitlements
and recommends compensation revisions only when it believes such changes are
warranted.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee's determination for establishing Mr. Palmer's remuneration
for 1996 was based on the facts that (i) the Company had survived a severe
industry downturn when many of its competitors had failed, merged or ceased to
exist, (ii) the Company had been able to maintain a relatively strong balance
sheet throughout the past five year period, which was a period of unprecedented
difficulty and instability, enabling it to maintain its employees and equipment
at competitive levels, and (iii) the Company had increased its market share,
leaving it well positioned to capitalize on the recent significant increase in
offshore drilling activity. No specific quantitative measure of the Company's
performance was used for this purpose. Emphasis was also placed on evaluating
the Company's performance versus the performance of the competitors in the
Company's peer group described under "Stockholder Return Performance
Presentation" on pages 15 and 16, as well as certain additional public companies
in the energy service industry. The Committee believed, and believes, that the
Company's relatively strong position in the contract drilling industry has been
in large part attributable to Mr. Palmer's abilities and contributions.
In 1996, the Committee's deliberations with respect to Mr. Palmer's
remuneration centered on the ongoing strong position that the Company has
maintained in the contract drilling industry during a period of increased
activity and profitability. During 1996, the Company's stock price increased
135%, as the market for the Company's drilling operations improved
significantly, leaving the Company well positioned to take advantage of the
stronger demand. Given this fact, and the Committee's continuing belief that
tying a significant portion of the chief executive officer's remuneration to the
interests of the Company's stockholders is a prudent remuneration policy, it
determined to grant to Mr. Palmer stock options for 75,000 shares of Common
Stock with an exercise price equal to the market value on the date of grant of
$15.25 per share. The Committee therefore increased Mr. Palmer's annual salary
by $80,000 and granted a $250,000 bonus.
The Committee has also continued to discuss and consider a provision of the
tax code that will generally limit the Company's ability to deduct compensation
in excess of $1 million to a particular executive. The Committee intends to
consider the deductibility of the compensation paid to its executive officers in
the future. However, given the current level of the Company's net operating
losses and investment tax credit carryforwards, deductibility of compensation is
not an immediate concern.
This report has been provided by the following members of the Committee:
Charles P. Siess, Jr., Chairman
Ralph E. Bailey
Henry O. Boswell
Wilfred P. Schmoe
The foregoing report of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or under
the 1934 Act, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such acts.
14
<PAGE> 18
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparison of the yearly percentage change
in the cumulative total stockholder return on the Company's Common Stock, the
cumulative total return of the Standard & Poor's Composite 500 Stock Index and
the cumulative total return of a company-selected peer group for the period of
five calendar years commencing January 1, 1992 and ending December 31, 1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
ROWAN COMMON STOCK, S&P 500 INDEX &
COMPANY-SELECTED PEER GROUP**
(ASSUMES $100 INVESTED
ON DECEMBER 31, 1991)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ROWAN S&P 500 PEER GROUP**
(FISCAL YEAR COVERED)
<S> <C> <C> <C>
1991 100 100 100
1992 137 108 80
1993 157 118 163
1994 109 120 138
1995 167 165 283
1996 393 203 604
</TABLE>
Fiscal Year Ended December 31
* Total return assumes reinvestment of dividends
** ENSCO International Incorporated, Global Marine, Inc., Noble Drilling Corp.
and Reading & Bates Corp.
The previous line graph is presented pursuant to, and has been prepared in
accordance with, specific SEC rules which prescribe, among other
characteristics, a five-year measurement period. Such rules also require the
inclusion of a graph line reflecting a broad stock market benchmark, as
reflected in the Standard & Poor's Composite 500 Index. The Company believes the
contract drilling industry moves in very long cycles, significantly greater than
five years, and that such cycles encompass extended periods of growth as well as
extended periods of contraction. During much of the past fourteen-year period,
the Company and the industry as a whole have generally experienced conditions
more closely associated with the latter; though the Company believes present and
anticipated conditions foretell of industry growth in the years ahead. For that
reason, the Company does not believe a five-year presentation of stockholder
return is especially meaningful, but rather
15
<PAGE> 19
believes a comparison covering the period since the industry last peaked is more
informative. Furthermore, the Company believes the breadth of the S&P 500 Index
yields an unsuitable barometer for measuring stockholder return in an industry
as volatile as that in which the Company operates. A line graph comparison is
set forth below which reflects the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock and the cumulative total
return of the same Company-selected peer group for the period of fourteen
calendar years commencing January 1, 1983 and ending December 31, 1996.
COMPARISON OF FOURTEEN-YEAR CUMULATIVE TOTAL RETURN*
ROWAN COMMON STOCK & COMPANY-SELECTED PEER GROUP**
(ASSUMES $100 INVESTED
ON DECEMBER 31, 1982)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ROWAN PEER GROUP**
(FISCAL YEAR COVERED)
<S> <C> <C>
1982 100 100
1983 113 92
1984 88 61
1985 78 32
1986 40 21
1987 53 37
1988 58 25
1989 113 45
1990 113 36
1991 58 20
1992 79 16
1993 91 33
1994 63 28
1995 97 57
1996 228 122
</TABLE>
Fiscal Year Ended December 31
* Total return assumes reinvestment of dividends.
** ENSCO International Incorporated, Global Marine, Inc., Noble Drilling Corp.
and Reading & Bates Corp.
16
<PAGE> 20
STOCKHOLDER PROPOSAL
STOCKHOLDER PROPOSAL PERTINENT
TO DECLASSIFYING THE COMPANY'S BOARD OF DIRECTORS
The New York City Employees' Retirement System ("NYCERS") states through
Alan G. Hevesi, Comptroller of the City of New York, 1 Centre Street, New York,
New York 10007-2341, that NYCERS is the owner of 228,700 shares of common stock
(0.26% of shares outstanding) and that it intends to submit the following
proposal which, along with its supporting statement, are reprinted herein
exactly as submitted:
"BE IT RESOLVED, that the stockholders of Rowan Companies request that the
Board of Directors take the necessary steps to declassify the Board of Directors
and establish annual elections of directors, whereby directors would be elected
annually and not by classes. This policy would take effect immediately, and be
applicable to the re-election of any incumbent director whose term, under the
current classified system, subsequently expires."
SUPPORTING STATEMENT
"We believe that the ability to elect directors is the single most
important use of the shareholder franchise. Accordingly, directors should be
accountable to shareholders on an annual basis. The election of directors by
classes, for three-year terms, in our opinion, minimizes accountability and
precludes the full exercise of the rights of shareholders to approve or
disapprove annually the performance of a director or directors."
"In addition, since only one-third of the Board of Directors is elected
annually, we believe that classified boards could frustrate, to the detriment of
long-term shareholder interest, the efforts of a bidder to acquire control or a
challenger to engage successfully in a proxy contest."
"We urge your support for the proposal which requests the Board of
Directors to take the necessary steps to repeal the classified board and
establish that all directors be elected annually."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL NO. 1.
The classification of the Board of Directors was approved by the Company's
stockholders in 1984. Then, as now, the Board of Directors believes that a
classified Board with one-third of the Board being elected annually for a
three-year term offers a number of advantages, such as enhancing the stability
in the composition of the Board of Directors and stability in the policies
formulated by the Board.
The proponent of this proposal implies that the staggered election of
directors adversely affects the ability of the Company's stockholders to
influence corporate policies and frustrates efforts of potential bidders to the
detriment of long-term stockholders. Your Board believes that the facts and the
Company's track record demonstrate otherwise.
Due in large part to the efforts of your Board and management's
implementation of the Board's long-term planning policies, the market value of
the Company's common stock has increased by over 151% in the past three years.
This was not an accident. Planning by the Board for the long-term interests of
all stockholders enabled the Company to weather the financial storms of the
1980s and early 1990s in the offshore drilling industry (unlike most of our
competitors), and position the Company to take full advantage of the recent
resurgence of that industry. Effective long-term planning for the benefit of all
stockholders can only be undertaken when the Board has confidence that it need
not manage only for short-term results.
Board stability is important to permit more effective long-term planning. A
classified Board helps to assure stability, since a majority of the directors at
any one time will have prior experience as directors of the Company. Board
stability also helps the Company attract and retain highly qualified individuals
willing to commit the time and dedication necessary to understand the Company,
its operations and its competitive environment. Continuity and quality of
leadership resulting from the classified Board have contributed directly to the
creation of long-term value for the Company's stockholders.
17
<PAGE> 21
Your Board also believes that a classified Board enables it more
effectively to represent the interests of all stockholders, including responding
to circumstances created by demands or actions by a minority stockholder or
group. In particular, this structure can give the Board needed time to evaluate
any proposal (hostile or other) to acquire the Company, review alternative
proposals and help ensure that the best price will be obtained in any
transaction involving the Company. A classified Board also encourages persons
seeking to acquire control of the Company to pursue such an acquisition through
arm's-length negotiations with the Board, which would then be in a position to
maximize stockholder value and negotiate a transaction that is fair to all
stockholders.
Your Board believes that it does hold itself accountable to you and that a
classified Board is in the best interests of the Company's stockholders, and
believes that the facts and track record of the Company support its beliefs.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST APPROVAL OF
STOCKHOLDER PROPOSAL NO. 1 ON REPEAL OF THE CLASSIFIED BOARD.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION; CERTAIN TRANSACTIONS
Mr. C. W. Yeargain, an Executive Vice President of the Company until his
retirement in March 1991 and a Class II Director, earned and was paid by the
Company $122,500 in consulting fees in 1996.
In 1996, the Company paid $100,000 in fees to Lehman Brothers, Inc., an
investment banking firm, for services rendered in that capacity. H. E. Lentz, a
Class I Director of the Company, is a Managing Director of Lehman Brothers, Inc.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche L.L.P. has been selected as principal
auditors for the Company for the year ending December 31, 1997. A representative
of Deloitte & Touche is expected to be present at the Annual Meeting of
Stockholders on April 25, 1997 and will be offered the opportunity to make a
statement if he desires to do so. He will also be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for presentation at the
1998 Annual Meeting of Stockholders must forward such proposal to the Secretary
of the Company, at the address indicated on the cover page of this proxy
statement, so that the Secretary receives it no later than November 12, 1997.
FORM 10-K
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS
AND ANY FINANCIAL STATEMENT SCHEDULES THERETO. THE COMPANY WILL FURNISH TO ANY
SUCH PERSON ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-K, UPON
THE PAYMENT, IN ADVANCE, OF REASONABLE FEES RELATED TO THE COMPANY'S FURNISHING
SUCH EXHIBIT(S). REQUESTS FOR COPIES OF SUCH REPORT AND/OR EXHIBIT(S) SHOULD BE
DIRECTED TO MR. MARK H. HAY, SECRETARY OF THE COMPANY, AT THE COMPANY'S
PRINCIPAL ADDRESS AS SHOWN ON THE COVER PAGE HEREOF.
18
<PAGE> 22
OTHER BUSINESS
Management of the Company does not know of any other matters which are to
be presented for action at the meeting. However, if any other matters properly
come before the meeting, it is intended that the enclosed proxy will be voted in
accordance with the discretion of the persons voting the proxy unless otherwise
designated thereon.
BY THE ORDER OF THE BOARD OF DIRECTORS
/S/ C. R. PALMER
Chairman
March 14, 1997
19
<PAGE> 23
PROXY
ROWAN COMPANIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints C.R. Palmer and Mark H. Hay proxies, each with
power to act without the other and with full power of substitution, and hereby
authorizes each of them to represent and vote, as designated on the reverse
side hereof, all the shares of stock of Rowan Companies, Inc. ("Company")
standing in the name of the undersigned with all powers which the undersigned
would possess if present at the Annual Meeting of Stockholders of the Company
to be held April 25, 1997 or any adjournment thereof.
IF CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED AS INDICATED. IF NO CHOICE IS
SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES AND AGAINST THE
STOCKHOLDER PROPOSAL AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSONS
VOTING THE PROXY WITH RESPECT TO ANY OTHER MATTER WHICH MAY PROPERLY COME
BEFORE THE MEETING. ALL PRIOR PROXIES ARE HEREBY REVOKED.
(Continued, and to be dated and signed, on the reverse side)
<PAGE> 24
ROWAN COMPANIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
<TABLE>
<S> <C> <C> <C>
1. The Board of Directors unanimously FOR WITHHOLD FOR ALL
recommends a vote FOR the election of: ALL ALL EXCEPT
[ ] [ ] [ ]
Henry O. Boswell and C.R. Palmer
as Class III Directors ------------------------------------
Nominee Exceptions
2. The Board of Directors unanimously FOR AGAINST ABSTAIN
recommends a vote AGAINST: [ ] [ ] [ ]
Stockholder Proposal No. 1 to
declassify the Board of Directors
3. With discretionary authority on any
other matter which may properly come
before the meeting.
</TABLE>
____________________________________
Signature
____________________________________
Signature if held jointly
Dated_________________________, 1997
Please complete, date, sign and
return this proxy promptly in the
enclosed envelope. Sign exactly as
name appears hereon. Executors,
administrators, trustees, etc. should
so indicate when signing. If the
signature is for a corporation,
please sign full corporate name by
authorized officer. If shares are
registered in more than one name, all
holders must sign.
