<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM_____TO_____
ROWAN COMPANIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-5491 75-0759420
- ------------------------------------------- -------------------------- --------------------------
(State or other jurisdiction of Commission File (I.R.S. Employer
incorporation or organization) Number Identification No.)
</TABLE>
5450 Transco Tower, 2800 Post Oak Boulevard, Houston, Texas 77056-6196
- ----------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(713) 621-7800
--------------------------------------------------------------------
Registrant's telephone number, including area code
Inapplicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
The number of shares of common stock, $.125 par value, outstanding at April 30,
1997 was 85,753,234.
<PAGE> 2
ROWAN COMPANIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. Financial Information:
Consolidated Balance Sheet --
March 31, 1997 and December 31, 1996 . . . . . . . . . . 2
Consolidated Statement of Operations --
Three Months Ended March 31, 1997
and 1996 . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows --
Three Months Ended March 31, 1997
and 1996 . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . 6
Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . 8
PART II. Other Information:
Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . . . 12
Exhibits and Reports on Form 8-K . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................... $ 116,924 $ 97,225
Receivables - trade and other ........................... 107,326 112,836
Inventories - at cost:
Raw materials and supplies ............................ 64,265 65,734
Work-in-progress ...................................... 26,287 21,181
Finished goods ........................................ 1,867 1,758
Prepaid expenses ........................................ 10,885 8,750
Cost of turnkey drilling contracts in progress .......... 9,835
---------- ----------
Total current assets ....................... 327,554 317,319
---------- ----------
INVESTMENT IN AND ADVANCES TO 49% OWNED COMPANIES ......... 26,580 28,049
---------- ----------
PROPERTY, PLANT AND EQUIPMENT - at cost:
Drilling equipment ...................................... 958,531 954,249
Aircraft and related equipment .......................... 190,098 188,681
Manufacturing plant and equipment ....................... 45,586 37,377
Construction in progress ................................ 98,567 77,318
Other property and equipment ............................ 95,249 94,517
---------- ----------
Total ...................................... 1,388,031 1,352,142
Less accumulated depreciation and amortization .......... 815,263 805,942
---------- ----------
Property, plant and equipment - net ...... 572,768 546,200
---------- ----------
OTHER ASSETS AND DEFERRED CHARGES ......................... 7,007 7,740
---------- ----------
TOTAL ...................................... $ 933,909 $ 899,308
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-2-
<PAGE> 4
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable and current maturities of long-term debt ............... $ 56,008 $ 3,932
Accounts payable - trade ............................................. 34,887 28,106
Other current liabilities ............................................ 49,689 53,236
-------- --------
Total current liabilities ................................... 140,584 85,274
-------- --------
LONG-TERM DEBT - less current maturities ................................. 235,874 267,321
-------- --------
OTHER LIABILITIES ........................................................ 45,715 39,573
-------- --------
DEFERRED CREDITS:
Income taxes ......................................................... 1,674 1,774
Gain on sale/leaseback transactions .................................. 8,358 9,147
-------- --------
Total deferred credits ...................................... 10,032 10,921
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value:
Authorized 5,000,000 shares issuable in series:
Series I Preferred Stock, authorized 6,500 shares, none issued
Series II Preferred Stock, authorized 6,000 shares, none issued
Series III Preferred Stock, authorized 10,300 shares, none issued
Series A Junior Preferred Stock, authorized
1,500,000 shares, none issued
Common stock, $.125 par value:
Authorized 150,000,000 shares; issued 87,151,753
shares at March 31, 1997 and 87,054,028 shares
at December 31, 1996 .............................................. 10,894 10,882
Additional paid-in capital ............................................... 403,050 401,730
Retained earnings ........................................................ 90,245 86,092
Less cost of 1,457,919 treasury shares ................................... 2,485 2,485
-------- --------
Total stockholders' equity .................................. 501,704 496,219
-------- --------
TOTAL ....................................................... $933,909 $899,308
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE> 5
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
----------------------
1997 1996
--------- ---------
(Unaudited)
<S> <C> <C>
REVENUES:
Drilling services ..................................... $ 89,603 $ 71,051
Manufacturing sales and services ...................... 36,644 35,948
Aviation services ..................................... 18,518 19,809
--------- ---------
Total ........................................ 144,765 126,808
--------- ---------
COSTS AND EXPENSES:
Drilling services ..................................... 65,971 52,764
Manufacturing sales and services ...................... 32,085 32,472
Aviation services ..................................... 20,064 19,210
Depreciation and amortization ......................... 11,367 12,047
General and administrative ............................ 4,292 4,021
--------- ---------
Total ........................................ 133,779 120,514
--------- ---------
INCOME FROM OPERATIONS .................................... 10,986 6,294
--------- ---------
OTHER INCOME (EXPENSE):
Interest expense ...................................... (7,344) (6,907)
Less: interest capitalized ............................ 1,941 207
Gain on disposals of property, plant and equipment .... 894 1,595
Interest income ....................................... 1,316 1,209
Other - net ........................................... 72 84
--------- ---------
Other income (expense) - net ................. (3,121) (3,812)
--------- ---------
INCOME BEFORE INCOME TAXES ................................ 7,865 2,482
Provision for income taxes ............................ 234 125
--------- ---------
INCOME BEFORE EXTRAORDINARY CHARGE ........................ 7,631 2,357
Extraordinary charge from early redemption of debt .... (3,478)
========= =========
NET INCOME ................................................ $ 4,153 $ 2,357
========= =========
PER COMMON SHARE (Note 4):
Income before extraordinary charge .................... $ .09 $ .03
Extraordinary charge from early redemption of debt .... (.04)
--------- ---------
Net income:
Primary ............................................ $ .05 $ .03
========= =========
Fully diluted ...................................... $ .05 $ .03
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE> 6
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
-----------------------
1997 1996
--------- ----------
(Unaudited)
<S> <C> <C>
CASH PROVIDED BY (USED IN):
Operations:
Net income ...................................................... $ 4,153 $ 2,357
Noncash charges (credits) to net income:
Depreciation and amortization ................................ 11,367 12,047
Gain on disposals of property, plant and equipment ........... (894) (1,595)
Compensation expense ......................................... 1,236 1,103
Change in sale/leaseback payable ............................. (4,536) (4,101)
Amortization of sale/leaseback gain .......................... (789) (788)
Provision for pension and postretirement benefits ............ 2,076 2,110
Other - net .................................................. 1,768 1,182
Changes in current assets and liabilities:
Receivables- trade and other ................................. 5,510 (3,960)
Inventories .................................................. (3,746) (4,713)
Other current assets ......................................... 7,700 (3,364)
Current liabilities .......................................... 12,003 7,521
Net changes in other noncurrent assets and liabilities .......... (127) 1,073
--------- ---------
Net cash provided by operations ..................................... 35,721 8,872
--------- ---------
Investing activities:
Property, plant and equipment additions ......................... (38,774) (16,605)
Repayments from affiliates ...................................... 225
Proceeds from disposals of property, plant and equipment ....... 1,802 2,471
--------- ---------
Net cash used in investing activities ............................... (36,747) (14,134)
--------- ---------
Financing activities:
Proceeds from borrowings ....................................... 20,709
Repayments of borrowings ........................................ (80) (74)
Other - net ..................................................... 96 99
--------- ---------
Net cash provided by financing activities ........................... 20,725 25
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ....................... 19,699 (5,237)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ......................... 97,225 90,338
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ............................... $ 116,924 $ 85,101
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE> 7
ROWAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements of the Company included herein
have been prepared without audit pursuant to generally accepted
accounting principles and the rules and regulations of the Securities
and Exchange Commission. Certain information and notes have been
condensed or omitted pursuant to such rules and regulations and the
Company believes that the disclosures included herein are adequate. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and related notes included
in the Company's 1996 Annual Report to Stockholders incorporated by
reference in the Form 10-K for the year ended December 31, 1996.
2. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments and reclassifications,
which are of a normal recurring nature, necessary to present fairly
its financial position as of March 31, 1997 and December 31, 1996, and
the results of its operations and its cash flows for the three months
ended March 31, 1997 and 1996.
3. The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results to be expected for the full
year.
-6-
<PAGE> 8
4. Computation of primary and fully diluted earnings per share is as follows
(in thousands except per share amounts):
<TABLE>
<CAPTION>
For The
Three Months Ended
March 31,
--------------------
1997 1996
------- -------
<S> <C> <C>
Weighted average shares of common
stock outstanding ................................. 85,625 84,984
Stock options and related (treasury stock method) ... 2,692 1,936
------- -------
Weighted average shares for primary
earnings per share calculation .................... 88,317 86,920
Stock options and related (treasury stock method) ... 306
Shares issuable from assumed conversion
of the Series II Convertible Subordinated
Debenture ......................................... 400 400
------- -------
Weighted average shares for fully diluted
earnings per share calculation .................... 88,717 87,626
======= =======
Net income for primary calculation .................. $ 4,153 $ 2,357
Subordinated debenture interest, net of
income tax effect ................................. 79 82
------- -------
Net income for fully diluted
calculation ....................................... $ 4,232 $ 2,439
======= =======
Earnings per share:
Primary ........................................... $ .05(A) $ .03(A)
======= =======
Fully diluted ..................................... $ .05(A) $ .03(A)
======= =======
</TABLE>
(A) Amounts would not be materially different under Statement of Financial
Accounting Standards No. 128, "Earnings per Share", which is effective
for interim and annual periods ending after December 15, 1997.
-7-
<PAGE> 9
ROWAN COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 Compared to
Three Months Ended March 31, 1996
The Company achieved net income of $4.2 million in the first quarter
of 1997 compared to $2.4 million in the same period of 1996. The current period
results were after charges of $20 million from concluding the Company's turnkey
business and $3.5 million from partially redeeming 11 7/8% Senior Notes. The
improved performance primarily resulted from the continued strengthening of
offshore drilling day rates.
A comparison of the revenues and operating profit (loss) from
drilling, manufacturing, aviation and consolidated operations for the first
quarters of 1997 and 1996, respectively, is reflected below (dollars in
thousands):
<TABLE>
<CAPTION>
Drilling Manufacturing Aviation Consolidated
-------------------- -------------------- --------------------- --------------------
1997 1996 1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 89,603 $ 71,051 $ 36,644 $ 35,948 $ 18,518 $ 19,809 $144,765 $126,808
Percent of Consolidated
Revenues 62% 56% 25% 28% 13% 16% 100% 100%
Operating Profit (Loss) (1) $ 16,017 $ 9,552 $ 3,696 $ 2,990 $ (4,435) $ (2,227) $ 15,278 $ 10,315
</TABLE>
- --------------------------------------------------------------------------------
(1) Income (loss) from operations before deducting general and administrative
expenses.
As reflected above, the Company's consolidated operating results
improved by $5.0 million when comparing the first quarters of 1997 and 1996.
Day rate drilling revenues increased by $26.8 million or 43% as the Company's
offshore fleet achieved 98% utilization during the first quarter of 1997,
compared to 95% in the first quarter of 1996, and a 42% increase in average day
rates between periods. Related expenses increased by only $2.5 million, or 6%,
between periods.
First quarter 1997 results include an approximately $20.5 million loss
from the Company's turnkey division, primarily reflecting the costs incurred on
one well where the Company was unable to reach the contract depth due to a
series of misfortunes, including underground blow-outs, stuck pipe, lost holes
and, finally, an unstable, heaving shale section. In the year-earlier period,
the turnkey division generated revenues of $8.2 million and an incremental
operating loss of $1.6 million. The Company currently has no turnkey wells in
progress nor any plans for additional turnkey work at this time.
The improvement in the Company's manufacturing profitability between
periods shown above primarily reflects higher-margin heavy equipment sales in
1997, particularly for the mining and timber industries. In April, the
manufacturing division was awarded two significant marine construction
-8-
<PAGE> 10
contracts. Over the next twelve months, the Company will provide vessel design
and components (a "LeTourneau kit") for the construction of a new Super 116
Class rig. In addition, the Company will furnish vessel design and components
needed to upgrade an existing LeTourneau 116-C kit to an enhanced 116-C rig.
The aviation operating results in both quarters reflect the normal
seasonal slowdown in flying activity in Alaska, although the 1997 results were
hampered primarily due to higher maintenance costs in the Company's fixed-wing
division.
Perceptible trends in the offshore drilling markets in which the
Company is currently operating and the number of Company-operated rigs in each
of those markets are as follows:
<TABLE>
<CAPTION>
AREA RIGS PERCEPTIBLE INDUSTRY TRENDS
- --------------------------- ------------- ------------------------------------------------------------
<S> <C> <C>
Continuing high levels of exploration and development
Gulf of Mexico 15 activity
Continuing high levels of drilling activity for jack-up
North Sea 5 rigs
Eastern Canada 1 Improving demand
</TABLE>
The preceding table reflects the relocation in January 1997 of Rowan
Gorilla IV to the North Sea from the Gulf of Mexico.
Perceptible trends in the aviation markets in which the Company is
currently operating and the number of Company aircraft based in each of those
markets are as follows:
<TABLE>
<CAPTION>
COMPANY-OWNED
AREA AIRCRAFT (1) PERCEPTIBLE INDUSTRY TRENDS
- ------------------------ ------------------- ----------------------------------------------------
<S> <C> <C>
Alaska 63 Normal seasonal improvement
Gulf of Mexico 43 Moderately improving market conditions
China 2 Generally stable flight support activity
North Sea (Dutch) 11 Generally stable flight support activity
North Sea (U. K.) 4 Generally stable flight support activity
</TABLE>
- ----------------------------
(1) Includes 15 units which are 49% owned.
The drilling and aviation markets in which the Company competes
frequently experience significant changes in supply and demand. Drilling
utilization and day rates achievable in offshore markets are a function of the
demand for drilling services, as measured by the level of exploration and
development expenditures, and the supply of capable drilling equipment. These
expenditures, in turn, are affected by many factors such as existing and newly
discovered oil and natural gas reserves, political and regulatory policies,
seasonal weather patterns, contractual requirements under leases or
concessions, trends in finding and extraction costs and, probably most
influential, oil and natural gas prices. The Company's aviation operations are
also affected by such factors, as flying in support of offshore energy
operations remains a major source of business and Alaska operations are
hampered each winter. The
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<PAGE> 11
volatile nature of such factors prevents the Company from being able to
accurately predict whether existing market conditions or the perceptible market
trends reflected in the preceding tables will continue. In response to
fluctuating market conditions, the Company can, as it has done in the past,
relocate its drilling rigs and aircraft from one geographic area to another,
but only when such moves are economically justified. Assuming such conditions
and trends prevail, the Company should experience increased profitability in
1997.
The Company's manufacturing operations are considerably less volatile
than its drilling and aviation operations and, given current backlog levels and
barring unforeseen circumstances, should continue to contribute positive
operating results throughout the remainder of 1997.
LIQUIDITY AND CAPITAL RESOURCES
A comparison of key balance sheet figures and ratios as of March 31,
1997 and December 31, 1996 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ------------
<S> <C> <C>
Cash and cash equivalents $116,924 $ 97,225
Current assets $327,554 $317,319
Current liabilities $140,584 $ 85,274
Current ratio 2.33 3.72
Notes payable and current maturities of long-term debt $ 56,008 $ 3,932
Long-term debt $235,874 $267,321
Stockholders' equity $501,704 $496,219
Long-term debt/total capitalization .32 .35
</TABLE>
Reflected in the comparison above are the effects in the first quarter
of 1997 of net cash provided by operations of $35.7 million, capital
expenditures of $38.8 million, proceeds from borrowings of $20.7 million and
the call in February of $50 million of 11 7/8% Senior Notes for redemption in
April.
Capital expenditures during the first quarter were primarily related
to construction of Rowan Gorilla V, an enhanced version of the Company's
Gorilla Class jack-ups featuring a combination drilling and production
capability and the world's largest bottom supported mobile offshore drilling
unit. The rig is being constructed at the Company's Vicksburg, Mississippi
shipyard and should be completed by the third quarter of 1998. The Company is
financing up to 87.5% of the estimated $175 million cost of Gorilla V through a
12-year bank loan guaranteed by the Maritime Administration of the U. S.
Department of Transportation under its Title XI Program. Following Gorilla V
will be Rowan Gorilla VI and Rowan Gorilla VII in 1999 and 2000, respectively,
at a combined construction cost of approximately $380 million. The Company
intends to pursue outside financing for Gorilla VI and Gorilla VII if
necessary, but believes that internally generated working capital may be
sufficient to finance construction of both rigs if operating conditions
continue to improve as expected. The Company currently has no other available
credit facilities.
The Company estimates remaining 1997 capital expenditures will be
between $120 million and $130 million, including approximately $60-65 million
and $35-40 million, respectively, for Gorilla V and Gorilla VI and $6 million
for the purchase of five helicopters. The Company may also spend amounts to
acquire additional aircraft as market conditions justify and to upgrade
existing offshore rigs.
-10-
<PAGE> 12
On April 1, 1997, the Company redeemed $50 million of its 11 7/8%
Senior Notes due 2001 which had been called on February 6, 1997. The Company
recorded a $3.5 million extraordinary charge in the first quarter, consisting
primarily of the 6% redemption premium. The Company intends to refinance the
remaining $150 million of outstanding Senior Notes in late 1997 and expects to
realize an estimated $7 million extraordinary loss upon such redemption.
Based upon current operating levels and the previously discussed
market trends, management believes that 1997 operations, together with existing
working capital and available financial resources, will generate sufficient
cash flow to sustain planned capital expenditures and debt service requirements
at least through the remainder of 1997.
At March 31, 1997, approximately $49 million of the Company's retained
earnings was available for the payment of dividends under the most restrictive
provisions of the Company's debt agreements.
This report contains forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including, without
limitation, statements as to the expectations, beliefs and future expected
financial performance of the Company that are based on current expectations and
are subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected by the Company. Among the
factors that could cause actual results to differ materially are the following:
o oil and natural gas prices
o the level of offshore expenditures by energy companies
o the general economy, including inflation
o weather conditions in the Company's principal operating areas
o environmental and other laws and regulations
Other relevant factors have been disclosed in the Company's filings with the
U. S. Securities and Exchange Commission.
-11-
<PAGE> 13
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders on April 25, 1997, stockholders
elected the two nominees for Class III Director as set forth in the
Company's Proxy Statement relating to the meeting. With respect to
such election, proxies were solicited pursuant to Regulation 14 under
the Securities Exchange Act of 1934 and there was no solicitation in
opposition to such nominees. Of the Company's 85,609,984 shares of
record, 78,823,307 were voted at the meeting in person or by proxy.
The following numbers of votes were cast as to the Class III Director
nominees: Henry O. Boswell, 78,252,824 votes for and 570,483 votes
withheld; and C. R. Palmer, 78,252,133 votes for and 571,174 votes
withheld.
Also at the meeting, stockholders declined a proposal to declassify
the Company's Board of Directors, as set forth in the Company's Proxy
Statement relating to the meeting. The proposal received 24,751,130
votes in the affirmative, or 39% of the votes cast, while 38,741,351
shares, or 61%, were voted against the proposal. Shares that abstained
from voting totaled 15,330,826.
The Company's Proxy Statement relating to the 1997 Annual Meeting of
Stockholders dated March 14, 1997 is filed as an exhibit to this Form
10-Q.
Item 6. Exhibits and Reports on Form 8-K
(a) The following is a list of Exhibits filed with this Form 10-Q:
3a - Amendment dated April 25, 1997 to the Bylaws, as Amended
3b - Bylaws, as Amended, as of April 25, 1997
10a - Amendment No. 2 dated April 25, 1997 to the 1988
Nonqualified Stock Option Plan, as Amended, together
with amendments to the form of Stock Option Agreement
related thereto
10b - 1988 Nonqualified Stock Option Plan, as Amended,
together with the form of Stock Option Agreement
related thereto
10c - Amendment No. 5 dated April 25, 1997 to the 1986
Convertible Debenture Incentive Plan, as Amended
10d - 1986 Convertible Debenture Incentive Plan, as Amended
27 - Financial Data Schedule
99 - Proxy Statement dated March 14, 1997
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
first quarter of fiscal year 1997.
-12-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROWAN COMPANIES, INC.
(Registrant)
Date: May 13, 1997 /s/ E. E. THIELE
------------------------------------
E. E. Thiele
Senior Vice President- Finance,
Administration and Treasurer
(Chief Financial Officer)
Date: May 13, 1997 /s/ W. H. WELLS
------------------------------------
W. H. Wells
Controller
(Chief Accounting Officer)
-13-
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<S> <C>
3a - Amendment dated April 25, 1997 to the Bylaws, as Amended
3b - Bylaws, as Amended, as of April 25, 1997
10a - Amendment No. 2 dated April 25, 1997 to the 1988 Nonqualified Stock
Option Plan, as Amended, together with amendments to the form of
Stock Option Agreement related thereto
10b - 1988 Nonqualified Stock Option Plan, as Amended, together with the
form of Stock Option Agreement related thereto
10c - Amendment No. 5 dated April 25, 1997 to the 1986 Convertible
Debenture Incentive Plan, as Amended
10d - 1986 Convertible Debenture Incentive Plan, as Amended
27 - Financial Data Schedule
99 - Proxy Statement dated March 14, 1997
</TABLE>
<PAGE> 1
Exhibit 3a
ROWAN COMPANIES, INC.
Amendment Dated
April 25, 1997 to the
Bylaws of the Company,
as Amended
Section 2. Classes of Directors and Term of Office. As provided in
the Certificate of Incorporation, the Board of Directors shall be and is
divided into three classes, Class I, Class II and Class III, which shall be as
nearly equal in number as possible. Each director shall serve for a term
ending on the date of the third annual meeting following the annual meeting at
which such class of directors of which he is a member was elected. Effective
as of April 25, 1997, Class I and Class II shall have three directors and Class
III shall have two directors. Each director shall serve until his successor is
elected and qualified or until death, retirement, resignation or removal for
cause.
<PAGE> 1
Exhibit 3b
BYLAWS
AS AMENDED
ROWAN COMPANIES, INC.
A DELAWARE CORPORATION
APRIL 25, 1997
<PAGE> 2
B Y L A W S
I N D E X
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE I. OFFICES
Section 1. Principal Offices 4
Section 2. Registered Office 4
Section 3. Other Offices 4
ARTICLE II MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings 4
Section 2. Notice of Meetings 4
Section 3. Quorum 5
Section 4. Annual Meetings; Election of Directors 5
Section 5. Special Meetings 5
Section 6. Voting; Elections; Inspectors; Votes by Ballot 5
Section 7. Conduct of Stockholders' Meetings 6
Section 8. Validity of Proxies; Ballots, etc. 6
Section 9. Stock List 6
ARTICLE III BOARD OF DIRECTORS
Section 1. Number, Qualification and Nominations 7
Section 2. Classes of Directors and Term of Office 8
Section 3. Newly Created Directorships 8
Section 4. Vacancies 8
Section 5. Compensation 8
ARTICLE IV MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of Directors 8
Section 2. First Meeting 8
Section 3. Election of Officers 8
Section 4. Regular Meetings 9
Section 5. Special Meetings 9
Section 6. Notice 9
Section 7. Quorum 9
Section 8. Order of Business 9
Section 9. Presumption of Assent 9
Section 10. Action Without a Meeting or Telephone
Conference Meeting 9
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ARTICLE V. COMMITTEES
Section 1. Executive Committee and Other Committees 10
Section 2. Procedure; Meetings; Quorum 10
ARTICLE VI. OFFICERS
Section 1. Number, Titles, and Term of Office 11
Section 2. Salaries 11
Section 3. Removal of Officers 11
Section 4. The Chairman of the Board 11
Section 5. Powers and Duties of the President 11
Section 6. Vice Presidents 11
Section 7. Treasurer 12
Section 8. Assistant Treasurer 12
Section 9. Secretary 12
Section 10. Assistant Secretaries 12
ARTICLE VII INDEMNIFICATION OF DIRECTORS, OFFICERS
EMPLOYEES AND AGENTS
Section 1. Right to Indemnification 12
Section 2. Indemnification of Employees and Agents 13
Section 3. Right of Claimant to Bring Suite 13
Section 4. Nonexclusivity of Rights 14
Section 5. Insurance 14
Section 6. Savings Clause 14
Section 7. Definitions 14
ARTICLE VIII CAPITAL STOCK
Section 1. Certificates of Stock 14
Section 2. Transfer of Shares 15
Section 3. Ownership of Shares 15
Section 4. Record Date 15
Section 5. Regulations Regarding Certificates 15
Section 6. Dividends 15
Section 7. Lost or Destroyed Certificates 15
ARTICLE IX MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year 16
Section 2. Seal 16
Section 3. Notice and Waiver of Notice 16
Section 4. Resignations 16
ARTICLE X AMENDMENTS 16
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BYLAWS
OF
ROWAN COMPANIES, INC.
AS AMENDED
Article I
Offices
Section 1. Principal Office. The principal office of the
Corporation shall be in the City of Houston, County of Harris, State of Texas.
Section 2. Registered Office. Until the Board of Directors
otherwise determines, the registered office of the Corporation required by law
(meaning, here and hereinafter, as required from time to time by the General
Corporation Law of the State of Delaware) to be maintained in the State of
Delaware, shall be in the City of Wilmington, County of New Castle, State of
Delaware, and the name of the resident agent in charge thereof is The
Corporation Trust Company, or such other office and agent as may be designated
from time to time by the Board of Directors in the manner provided by law. Such
registered office need not be identical to the principal place of business of
the Corporation.
Section 3. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
Article II
Meetings of Stockholders
Section 1. Place of Meetings. All meetings of the stockholders
shall be held in the City of Houston at the principal offices of the
Corporation or at such other places as may be designated by the Board of
Directors or Executive Committee and shall be specified or fixed in the notices
or waivers of notices thereof.
Section 2. Notice of Meetings. Written or printed notice stating
the place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten (10) nor more than sixty (60) days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman
of the Board, the President, the Secretary, or the officer or person calling
the meeting, to each stockholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the stockholder at his address as it appears on
the records of the Corporation, with postage thereon prepaid.
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date, and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for the original meeting, or if after the
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adjournment a new record date is fixed for the adjourned meeting, written
notice of the place, date, and time of the adjourned meeting shall be given in
conformity herewith. At any adjourned meeting, any business may be transacted
which might have been transacted at the original meeting.
Section 3. Quorum. The holders of at least a majority of the
outstanding shares entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of stockholders for the
transaction of business, except as otherwise provided by law, by the
Certificate of Incorporation or by these Bylaws. If, however, such quorum
shall not be present or represented at any meeting of stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting of the time and place to which
the meeting is being adjourned, to a time when a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally called. A holder of a share shall be treated as
being present at a meeting if the holder of such share is (i) present in person
at the meeting or (ii) represented at the meeting by a valid proxy, whether the
proxy card granting such proxy is marked as casting a vote or abstaining or is
left blank.
Section 4. Annual Meetings; Election of Directors. An annual
meeting of the stockholders, for the election of directors to succeed those
whose terms expire and for the transaction of such other business as may
properly come before the meeting, shall be held on the fourth Friday in April
of each year, at 9:00 a.m., local time, if not a legal holiday, at the
principal offices of the Corporation in Houston, Texas or at such other place,
date, and time as the Board of Directors or Executive Committee shall designate
each year. Any business may be transacted at the annual meeting, except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws.
Section 5. Special Meetings. In addition to any condition that may
be provided for in the Certificate of Incorporation, special meetings of the
stockholders for any purpose or purposes may be called at any time in the
interval between annual meetings by the Chairman of the Board, the President,
the Board of Directors, or the Executive Committee. Special meetings of the
Stockholders may not be called by any other person or persons.
Section 6. Voting; Elections; Inspectors; Votes by Ballot. Unless
otherwise provided in the Certificate of Incorporation, at all meetings of
stockholders, every stockholder of record of any class entitled to vote thereat
shall have one vote for each share of stock standing in his name on the books
of the Corporation on the date for the determination of stockholders entitled
to vote at such meeting, either in person or by proxy appointed by instrument
in writing subscribed by such stockholder or his duly authorized attorney, and
bearing a date not more than three years prior to said meeting unless said
instrument provides for a longer period.
If a quorum exists, action on a matter (including the election of
directors) shall be approved if the votes cast in favor of the matter or
election of the director exceed the votes cast opposing the matter or election
of such director. In determining the number of votes cast, shares abstaining
from voting on a matter (including elections) will not be treated as votes
cast. The provisions of this paragraph will govern with respect to all votes
of stockholders except as otherwise provided for in these Bylaws or in the
Certificate of Incorporation or by some specific
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statutory provision superseding the provisions contained in these Bylaws or the
Certificate of Incorporation.
At any meeting of stockholders, the chairman of the meeting may, and
upon the request of the holders of 10% of the stock present in person or
represented by proxy and entitled to vote at such meeting, shall appoint two
inspectors of election who shall subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict impartiality
and according to the best of their ability shall canvass the votes and make and
sign a certificate of the results thereof. No candidate for the office of
director shall be appointed as such inspector.
As provided in the Certificate of Incorporation of the Corporation,
all elections of directors shall be viva voce unless one or more stockholders
present at the meeting at which directors are elected shall request in writing
that such election be by ballot. The chairman of the meeting may cause a vote
by ballot to be taken upon any other matter, and such vote by ballot shall be
taken upon the request of the holders of 10% of the stock present and entitled
to vote on such other matter.
Section 7. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board, or if he is
not present, by the President, or if he is not present, by a Vice President, or
if neither the Chairman of the Board, President nor a Vice President is
present, by a chairman elected at the meeting. The Secretary of the
Corporation, if present, shall act as secretary of such meetings, or if he is
not present, an Assistant Secretary shall so act; if neither the Secretary nor
an Assistant Secretary is present, then a secretary shall be appointed by the
chairman of the meeting.
The chairman of any meeting of stockholders shall determine the order
of business and the procedures at the meeting, including such regulation of the
manner of voting which is not otherwise prescribed by law, the Certificate of
Incorporation or these Bylaws.
Section 8. Validity of Proxies; Ballots, etc. At every meeting of
the stockholders, all proxies shall be received and taken charge of, and all
ballots shall be received and canvassed by, the secretary of the meeting who
shall decide all questions touching the qualification of voters, the validity
of the proxies, and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed by the chairman of the meeting, in which
event such inspectors of election shall decide all such questions.
Section 9. Stock List. At least ten (10) days before every meeting
of stockholders, the Secretary shall prepare (or cause to be prepared) a
complete list of stockholders entitled to vote at any meeting of stockholders,
arranged in alphabetical order for each class of stock and showing the address
of each such stockholder and the number of shares registered in his name. Such
list shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of
shares held by each of them.
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Article III
Board of Directors
Section 1. Number, Qualification and Nominations. The business and
property of the Corporation shall be managed by the Board of Directors, and
subject to the restrictions imposed by law, the Certificate of Incorporation or
these Bylaws, they may exercise all the powers of the Corporation. Directors
need not be stockholders or residents of Delaware.
The Board of Directors shall consist of not less than one nor more
than thirty directors, as so determined from time to time by resolution of the
Board of Directors. If the Board of Directors makes no such determination, the
number of directors shall be the number set forth in the Certificate of
Incorporation. Within the above limits, the number of directors may be
increased or decreased (provided such decrease does not shorten the term of any
incumbent director) from time to time by resolution of the Board of Directors.
Nominations of candidates for election as directors of the Corporation
at any meeting of stockholders of the Corporation may be made by the Chairman
of the Board of Directors, the President or by any stockholder entitled to vote
at such meeting who complies with the provisions of this paragraph. Not less
than 60 days prior to the date of the anniversary of the annual meeting held in
the prior year, in the case of an annual meeting, or, in the case of a special
meeting called by the Chairman of the Board, the President, the Board of
Directors or the Executive Committee for the purpose of electing directors, not
more than 10 days following the earlier of the date of notice of such special
meeting or the date on which a public announcement of such meeting is made, any
stockholder who intends to make a nomination at the meeting shall deliver
written notice to the Secretary of the Corporation setting forth (i) the name
and address of the stockholder who intends to make the nomination and of the
person or persons to be nominated; (ii) a representation that the stockholder
(A) is a holder of record of stock of the Corporation specified in such notice,
(B) is or will be entitled to vote at such meeting, and (C) intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice; and (iii) such other information concerning each such
nominee as would be required under the rules of the Securities and Exchange
Commission in a proxy statement soliciting proxies for the election of such
nominee and in a Schedule 14B (or other comparable required filing then in
effect) under the Securities Exchange Act of 1934. In the event that a person
is validly designated as a proposed nominee in accordance with this paragraph
(including a bona fide statement that the nominee is willing to be nominated)
and shall thereafter become unable or unwilling to stand for election to the
Board of Directors, the stockholder who made such designation may designate
promptly in the manner set forth above a substitute proposed nominee,
notwithstanding the minimum time period set forth in this paragraph. No person
may be elected as a director at a meeting of stockholders unless nominated in
accordance with this paragraph, and any purported nomination or purported
election not made in accordance with the procedures as set forth in this
paragraph shall be void. In addition to any other requirements relating to
amendments to these Bylaws, no proposal by any stockholder to repeal or amend
this paragraph shall be brought before any meeting of the stockholders of the
Corporation unless written notice is given of (i) such proposed repeal or the
substance of such proposed amendment; (ii) the name and address of the
stockholder who intends to propose such repeal or amendment, and (iii) a
representation that the stockholder is a holder of record of stock of the
Corporation specified in such notice, is or will be entitled to vote at such
meeting and intends to appear in person or by proxy at such meeting to make the
proposal. Such notice shall be given in the manner and at the time specified
above in this paragraph. Any proposal to repeal or amend or any such purported
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repeal or purported amendment of this paragraph not made or adopted in
accordance with the procedures set forth in this paragraph shall be void.
Section 2. Classes of Directors and Term of Office. As provided in
the Certificate of Incorporation, the Board of Directors shall be and is
divided into three classes, Class I, Class II and Class III, which shall be as
nearly equal in number as possible. Each director shall serve for a term
ending on the date of the third annual meeting following the annual meeting at
which such class of directors of which he is a member was elected. Effective
as of April 25, 1997, Class I and Class II shall have three directors and Class
III shall have two directors. Each director shall serve until his successor is
elected and qualified or until death, retirement, resignation or removal for
cause.
Section 3. Newly Created Directorships. In the event of any
increase or decrease in the authorized number of directors, (i) each director
then serving as such shall nevertheless continue as a director of the class of
which he is a member until the expiration of his current term, or his prior
death, retirement, resignation, or removal for cause, and (ii) the newly
created or eliminated directorships resulting from such increase or decrease
shall be apportioned by the Board of Directors among the three classes of
directors so as to maintain such classes as nearly equal as possible.
Section 4. Vacancies. Should a vacancy occur or be created, whether
arising through death, resignation or removal of a director for cause, or
through an increase in the number of directors of any class, such vacancy shall
be filled by a majority vote of the remaining directors of the class in which
such vacancy occurs, or by the sole remaining director of that class if only
one such director remains, or by the majority vote of the remaining directors
of the other two classes if there be no remaining member of the class in which
the vacancy occurs. A director so elected to fill a vacancy shall serve for
the remainder of the then present term of office of the class to which he was
elected.
Section 5. Compensation. The Board of Directors shall have the
authority to fix the compensation of directors.
Article IV
Meetings of the Board of Directors
Section 1. Meetings of Directors. The directors may hold their
meetings and may have an office and keep the books of the corporation, except
as otherwise provided by the Certificate of Incorporation or Bylaws, in such
place or places in the State of Delaware, or outside the State of Delaware, as
the Board of Directors may from time to time determine.
Section 2. First Meeting. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of the stockholders, and no notice of such meeting shall be
necessary.
Section 3. Election of Officers. At the first meeting of the Board
of Directors in each year at which a quorum shall be present, held next after
the annual meeting of stockholders, the Board of Directors shall proceed to the
election of the officers of the Corporation.
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Section 4. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as shall be designated from
time to time by resolution of the Board of Directors. Notice of such regular
meetings shall not be required.
Section 5. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, the
President, or by a majority of the directors in office at the time. Each such
special meeting shall be held at such time and place as shall be designated by
the officer or directors calling such meeting.
Section 6. Notice. The Secretary shall give notice of each special
meeting in person, or by mail or telegraph to each director at least
twenty-four (24) hours before the time of such meeting. The attendance of a
director at any meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business on the grounds that the meeting is not
lawfully called or convened. Notice may also be waived in writing as provided
in Article IX, Section 3 of these Bylaws. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in any written waiver of notice of such meeting.
Section 7. Quorum. Unless the Certificate of Incorporation or these
Bylaws otherwise require, a majority of the total number of directors then in
office shall constitute a quorum for the transaction of business, but if at any
meeting of the Board of Directors there is less than a quorum present, a
majority of those present or any director solely present may adjourn the
meeting from time to time without further notice. The act of a majority of the
directors present at a meeting at which a quorum is in attendance shall be the
act of the Board of Directors, unless the act of a greater number is required
by the Certificate of Incorporation or by these Bylaws.
Section 8. Order of Business. At meetings of the Board of
Directors, business shall be transacted in such order as from time to time the
Board of Directors may determine and the Chairman of the Board shall preside.
In the absence of the Chairman of the Board, the President shall preside, and
in the absence of the President a chairman shall be chosen by the Board of
Directors from among the directors present. The Secretary of the Corporation
shall act as secretary of the meetings of the Board of Directors, but in the
absence of the Secretary, the presiding officer may appoint any person to act
as secretary of the meeting.
Section 9. Presumption of Assent. A director of the Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
Section 10. Action Without a Meeting or Telephone Conference Meeting.
Any action permitted or required by law, the Certificate of Incorporation or
these Bylaws, to be taken at a meeting of the Board of Directors (or any
committee designated by the Board of Directors) may be taken without a meeting
if a consent in writing, setting forth the action to be taken is signed by all
the members of the Board of Directors or committee, as the case may be. Such
consent shall have the same force and effect as a unanimous vote at a meeting,
and may be stated as such in any document or instrument filed with the
Secretary of State. Subject to the
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requirement for notice of meetings, members of the Board of Directors (or
members of any committee designated by the Board of Directors), may participate
in and hold a meeting of such Board of Directors or committee, as the case may
be, by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other,
and participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
Article V
Committees
Section 1. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the whole Board of Directors,
may designate from among its members an Executive Committee and one or more
other committees, each of which, to the extent provided in such resolution,
shall have and may exercise all of the authority of the Board of Directors in
the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority of the
Board of Directors in reference to amending the Certificate of Incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the Board
of Directors pursuant to Article Fourth of the Restated Certificate of
Incorporation of the Corporation, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending, altering or repealing the bylaws of
the Corporation or adopting new bylaws for the Corporation, filling vacancies
in the Board of Directors or any such committee, electing or removing officers
or members of any such committee, fixing the compensation of any member of such
committee or altering or repealing any resolution of the Board of Directors
which by its terms provided that it shall not be so amendable or repealable
and, unless such resolution expressly so provides, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of
shares of the Corporation or to adopt a certificate of ownership and merger
pursuant to Section 253 of the Delaware General Corporation Law. The
designation of such committee and the delegation thereto of authority shall not
operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law.
All action by any committee shall be reported to the Board of
Directors at its meeting next succeeding such action, and shall be subject to
revision or alteration by the Board of Directors; provided that no rights of
third parties shall be affected by any such revision or alteration.
Section 2. Procedure; Meetings; Quorum. The Board of Directors
shall designate the Chairman and Secretary of each committee appointed by the
Board of Directors. Each such committee shall fix its own rules or procedure,
and shall meet at such times and at such place
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or places as may be provided by such rules, or by resolution of the Executive
Committee or of the Board of Directors. A majority of all the then members of
a committee shall be necessary to constitute a quorum and the affirmative vote
of a majority of the members present shall be necessary for the adoption by it
of any resolution. The Board of Directors shall have power at any time to
change the number, subject as aforesaid, and members of any such committee, to
fill vacancies, and to discharge any such committee.
Article VI
Officers
Section 1. Number, Titles and Term of Office. The officers of the
Corporation shall be a Chairman of the Board, a President, one or more Vice
Presidents, a Secretary, a Treasurer, and such other officers as the Board of
Directors may from time to time elect or appoint. Each officer shall hold
office until his successor shall have been duly elected and qualified or until
his death or until he shall resign or shall have been removed in the manner
hereinafter provided. Any two offices may be held by the same person. None of
the officers need be a director, except that the Chairman of the Board and the
President shall be directors.
Section 2. Salaries. The salaries or other compensation of the
officers shall be fixed from time to time by the Board of Directors, and no
officer shall be prevented from receiving such salary or other compensation by
reason of the fact that he is also a director of the Corporation.
Section 3. Removal of Officers. Any officer or agent elected or
appointed by the Board of Directors may be removed, either with or without
cause, by the Board of Directors whenever in its judgment the best interests of
the Corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create contract
rights.
Section 4. The Chairman of the Board. The Chairman of the Board
shall preside at all meetings of stockholders and directors and shall have such
other powers and duties as from time to time may be assigned to him by the
Board of Directors.
Section 5. Powers and Duties of the President. The President shall
be the chief executive and administrative officer of the Corporation and,
subject to the Board of Directors, he shall be in charge of, and manage the
properties and operations of the Corporation in the ordinary course of its
business with all such powers with respect to such properties and operations as
may be reasonably incident to such responsibilities; in the absence of the
Chairman of the Board, he shall preside at all meetings of stockholders and
directors; he may agree upon and execute all division and transfer orders,
bonds, agreements, contracts and other obligations in the name of the
Corporation; and he shall have such other powers and duties as designated in
these Bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 6. Vice Presidents. Each Vice President shall have such
powers and duties as may be assigned to him by the Board of Directors and shall
exercise the powers of Chairman of the Board or President during their absence,
refusal or inability to act. Any action taken by a Vice President in the
performance of the duties of the Chairman of the Board or the President shall
be conclusive evidence of the absence, refusal or inability of the Chairman of
the Board or the President to act at the time such action was taken.
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Section 7. Treasurer. The Treasurer shall have custody of all the
funds and securities of the Corporation which come into his hands. When
necessary or proper, he may endorse, on behalf of the Corporation, for
collection, checks, notes and other obligations and shall deposit the same to
the credit of the Corporation in such bank or banks or depositaries as shall be
designated by, and in the manner prescribed by, the Board of Directors; he may
sign all receipts and vouchers for payments made to the Corporation, either
alone or jointly with such other officer as is designated by the Board of
Directors; he shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements.
Whenever required by the Board of Directors, he shall render a statement of his
cash account; he shall enter or cause to be entered regularly in the books of
the Corporation to be kept by him for that purpose full and accurate accounts
of all monies received and paid out on account of the Corporation; and he shall
perform all acts incident to the position of Treasurer subject to the control
of the Board of Directors; he shall, if required by the Board of Directors,
give such bond for the faithful discharge of his duties in such form as the
Board of Directors may require.
Section 8. Assistant Treasurer. Each Assistant Treasurer shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as may be assigned to him by the Board of Directors. The
Assistant Treasurer shall exercise the powers of the Treasurer during the
officer's absence, refusal or inability to act.
Section 9. Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors and the minutes of all meetings of the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may sign with the Chairman of the Board or the
President in the name of the Corporation all contracts of the Corporation and
affix the seal of the Corporation thereto; he may affix and attest the seal of
the Corporation to such instruments and documents as may be properly executed
by the Corporation; and he shall have charge of the certificate books, transfer
books and stock ledgers, and such other books and papers as the Board of
Directors may direct, all of which shall at all reasonable times be open to the
inspection of any director upon application at the office of the Corporation
during ordinary business hours, and he shall in general perform all duties
incident to the office of Secretary subject to the control of the Board of
Directors.
Section 10. Assistant Secretaries. Each Assistant Secretary shall
have the usual powers and duties pertaining to his office, together with such
other powers and duties as may be assigned to him by the Board of Directors or
the Secretary. The Assistant Secretaries shall exercise the powers of the
Secretary during the officer's absence, refusal or inability to act.
Article VII
Indemnification of Directors,
Officers, Employees and Agents
Section 1. Right to Indemnification. Each person who was or is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is the legal
representative, is or was or has agreed to become a director or officer of the
Corporation or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any
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other capacity while serving or having agreed to serve as a director or
officer, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended, (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment) against all expense, liability and loss
(including without limitation, attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to serve in the
capacity which initially entitled such person to indemnity hereunder and shall
inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred
in this Article VII shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
current, former or proposed director or officer in his or her capacity as a
director or officer or proposed director or officer (and not in any other
capacity in which service was or is or has been agreed to be rendered by such
person while a director or officer, including, without limitation, service to
an employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such indemnified person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified person is not entitled to be
indemnified under this Section or otherwise.
Section 2. Indemnification of Employees and Agents. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers provided for in
this Article.
Section 3. Right of Claimant to Bring Suit. If a written claim
received by the Corporation from or on behalf of an indemnified party under
this Article VII is not paid in full by the Corporation within ninety days
after such receipt, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
-13-
<PAGE> 14
Section 4. Nonexclusivity of Rights. The right to indemnification
and the advancement and payment of expenses conferred in this Article VII shall
not be exclusive of any other right which any person may have or hereafter
acquire under any law (common or statutory), provision of the Certificate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at
its expense, to protect itself and any person who is or was serving as a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
Section 6. Savings Clause. If this Article VII or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify and hold
harmless each director and officer of the Corporation, as to costs, charges and
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Article VII that shall not have been invalidated and
to the fullest extent permitted by applicable law.
Section 7. Definitions. For purposes of this Article, reference to
the "Corporation" shall include, in addition to the Corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger prior to (or, in the case of an entity
specifically designated in a resolution of the Board of Directors, after) the
adoption hereof and which, if its separate existence had continued, would have
had the power and authority to indemnify its directors, officers and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
Article VIII
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of
the capital stock of the Corporation shall be in such form, not inconsistent
with statutory provisions and the Certificate of Incorporation, as shall be
approved by the Board of Directors. The Chairman of the Board, President or a
Vice President shall cause to be issued to each stockholder one or more
certificates under the seal of the Corporation and signed by the Chairman of
the Board, President or Vice President and the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer certifying the number of
shares (and, if the stock of the Corporation shall be divided into classes or
series, the class and series of such shares) owned by such stockholder in the
Corporation; provided, however, that any or all of the signatures on the
certificate may be facsimile. The stock record books and the blank stock
certificate books shall be kept by the Secretary, or at the office of such
transfer agent or transfer agents as the Board of Directors or the Executive
Committee may from time to time by resolution determine. In case any officer,
transfer agent or registrar who shall have signed or whose facsimile signature
or signatures
-14-
<PAGE> 15
shall have been used on, any such certificate or certificates shall cease to be
such officer, transfer agent or registrar, whether because of death,
resignation or otherwise, before such certificate or certificates shall have
been issued by the Corporation, such certificate or certificates may
nevertheless be issued and delivered by the Corporation as though the officer,
transfer agent or registrar who signed such certificate or certificates or
whose facsimile signature or signatures shall have been used thereon had not
ceased to be such officer, transfer agent or registrar.
Section 2. Transfer of Shares. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled
to treat the holder of record of any share or shares as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Delaware.
Section 4. Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of stockholders for any other proper purpose, the
Board of Directors of the Corporation may fix, in advance, a date as record
date for any such determination of stockholders, such date in any case not to
be more than sixty (60) days (unless a shorter period is provided for in the
Certificate of Incorporation) and, in case of a meeting of stockholders, not
less than ten (10) days prior to the date on which the particular action
requiring such determination of stockholders is to be taken. If no record date
is fixed for the determination of stockholders entitled to notice of or to vote
at a meeting of stockholders or either (a) to notice of or to vote at a meeting
of stockholders or (b) to receive payment of a dividend, the close of business
on the day next preceding the date on which the notice of the meeting is mailed
or on the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders.
Section 5. Regulations Regarding Certificates. The Board of
Directors shall have the power and authority to make all such rules and
regulations as they may deem expedient concerning the issue, transfer and
registration or the replacement of certificates for shares of capital stock of
the Corporation.
Section 6. Dividends. The Board of Directors may, from time to
time, declare, and the Corporation may pay, dividends on its outstanding shares
in the manner and upon the terms and conditions provided by law and the
Certificate of Incorporation.
Section 7. Lost or Destroyed Certificates. The Board of Directors
or the Executive Committee may determine the conditions upon which a new
certificate of stock may be issued in place of a certificate which is alleged
to have been lost or destroyed; and may, in their discretion, require the owner
of such certificate or his legal representative to give bond, with sufficient
surety, to indemnify the Corporation and each transfer agent against any and
all losses or claims which may arise by reason of the issue of a new
certificate in the place of the one so lost or destroyed.
-15-
<PAGE> 16
Article IX
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
the calendar year or such other period as shall be established by the Board of
Directors from time to time.
Section 2. Seal. The seal of the Corporation shall be such as from
time to time may be approved by the Board of Directors.
Section 3. Notice and Waiver of Notice. Whenever any notice
whatever is required to be given under the provisions of these Bylaws, said
notice shall be deemed to be sufficient if given by depositing the same in a
post office box in a sealed postpaid wrapper addressed to the person entitled
thereto at his post office address, as it appears on the books of the
Corporation, and such notice shall be deemed to have been given on the day of
such mailing. A waiver of notice, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Section 4. Resignations. Any director or officer may resign at any
time. Such resignations shall be made in writing and shall take effect at the
time specified therein, or, if no time be specified, at the time of its receipt
by the Chairman of the Board, the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
Article X
Amendments
As provided in the Certificate of Incorporation of the Corporation,
the Board of Directors shall have the power to make, adopt, alter, amend and
repeal from time to time bylaws of the Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to adopt, alter, amend and
repeal such bylaws as adopted, altered or amended by the Board of Directors;
provided, however, that bylaws shall not be adopted, altered, amended or
repealed by the stockholders of the Corporation except by the vote of the
holders of not less than eighty percent (80%) of the outstanding shares of
capital stock of the Corporation normally entitled to vote in the election of
directors.
Amendment No. 1 herein: Article III Section 2. Classes of Directors
and Term of Office, October 26, 1984.
Amendment No. 2 herein: Article II Section 4. Annual Meetings;
Election of Directors, July 26, 1985.
Amendment No. 3 herein: Article V Section 1. Executive Committee and
Other Committees, June 30, 1986.
Amendment No. 4 herein: Article VII (in entirety) Indemnification of
Directors, Officers, Employees and Agents, April 23, 1987.
-16-
<PAGE> 17
Amendment No. 5 herein: Article III Section 2. Classes of Directors
and Term of Office, October 23, 1987.
Amendment No. 6 herein: Article III Section 2. Classes of Directors
and Term of Office, April 28, 1989.
Amendment No. 7 herein: Article III Section 2. Classes of Directors
and Term of Office, January 25, 1990.
Amendment No. 8 herein: Article II Section 5. Special Meetings,
February 25, 1992.
Amendment No. 9 herein: Article III Section 2. Classes of Directors
and Term of Office, April 24, 1992.
Amendment No. 10 herein: Article II Section 3. Quorum and Section 6.
Voting; Elections; Inspectors; Votes by Ballot, December 21, 1992.
Amendment No. 11 herein: Article III Section 2. Classes of Directors
and Term of Office, April 23, 1993.
Amendment No. 12 herein: Article III Section 2. Classes of Directors
and Term of Office, April 26, 1996.
Amendment No. 13 herein: Article III Section 1. Number, Qualifications
and Nominations, September 1, 1996.
Amendment No. 14 herein: Article III Section 2. Classes of Directors
and Term of Office, April 25, 1997
-17-
<PAGE> 1
Exhibit 10a
ROWAN COMPANIES, INC.
Amendment No. 2
Dated April 25, 1997
to the
1988 Nonqualified Stock
Option Plan As Amended
Resolution adopted by the registrant's Board of Directors on April 25, 1997:
RESOLVED, that Paragraph III. OPTION AGREEMENTS of the Plan is hereby amended
effective as of April 25, 1997 by adding thereto the following paragraph:
"The Committee may, in its discretion, provide in an Option Agreement
that the Option granted thereby to the employee may be transferred (in
whole or in part and subject to such other conditions or limitations,
if any, as the Committee may impose with respect to such transfer) by
the employee to (i) the spouse, children or grandchildren of the
employee ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of the Immediate Family Members and, if applicable,
the employee, (iii) a partnership or limited liability company in
which such Immediate Family Members and, if applicable, the employee
are the only partners or members, or (iv) an organization that has
been determined by the Internal Revenue Service to be exempt under
Section 501(c)(3) of the Internal Revenue Code. Following a transfer,
such transferred Option shall continue to be subject to the same terms
and conditions as were applicable to the Option immediately prior to
transfer and no transferred Option shall be exercisable unless
arrangements satisfactory to the Company have been made with respect
to the Option."
<PAGE> 2
Exhibit 10a
ROWAN COMPANIES, INC.
Amendment
Dated April 25, 1997
to the
Stock Option Agreement
to the 1988
Nonqualified Stock
Option Plan
Amendments to the above identified agreement were approved by
the Registrant's Board of Directors on April 25, 1997:
3. EXERCISE OF OPTION. Except as otherwise set forth
below with respect to the acceleration of exercisability upon Disability (as
defined in Schedule A hereto) or death and subject to the earlier expiration of
this Option as herein provided, this Option may be exercised, by written notice
to the Company at its principal executive office addressed to the attention of
its Chief Financial Officer, at any time and from time to time after one year
after the date of grant hereof, but this Option shall not be exercisable for
more than a percentage of the aggregate number of shares offered by the Option
determined by the number of full years from the date of grant hereof to the
date of such exercise, in accordance with the following schedule:
<TABLE>
<CAPTION>
NUMBER OF FULL YEARS PERCENTAGE OF SHARES PURCHASABLE
-------------------- --------------------------------
<S> <C>
Less than 1 year 0%
1 year 25%
2 years 50%
3 years 75%
4 years 100%
</TABLE>
Subject to the following, this Option may be exercised only by
Employee during his lifetime and while Employee remains an employee of the
Company:
(a) If Employee's employment with the Company terminates by
reason of normal retirement, Employee may exercise this Option
at any time during the period of five years following the date
of such termination, but only as to the number of shares
Employee was entitled to purchase hereunder as of the date his
employment so terminates, plus such additional number of shares,
if any, that the Committee (as defined in the Plan), in its sole
discretion, determines to be exercisable as of such retirement.
(b) If Employee dies within the five year period following
the date of Employee's termination of employment by reason of
normal retirement, Employee's estate, or the person who acquires
this Option by bequest or inheritance or by reason of the death
of Employee, may exercise this Option at any time during the
period of two years following the date of Employee's death, but
only as to the number of shares Employee was entitled to
purchase hereunder as of the date Employee's employment
terminated by reason of normal retirement.
<PAGE> 3
Exhibit 10a
(c) If Employee's employment with the Company terminates by
reason of Disability, Employee may exercise this Option at any
time during the period of five years following the date of such
termination, and the times at which portions of this Option
become exercisable shall be accelerated upon such termination
of employment by reason of Disability so that, regardless of
how long it has been held after the date of grant, this Option
shall be exercisable in full during such five year period for
100% of the shares purchasable hereunder.
(d) If Employee dies while in the employ of the Company or
within the five year period following the date of Employee's
termination of employment by reason of Disability, Employee's
estate, or the person who acquires this Option by bequest or
inheritance or by reason of the death of Employee, may exercise
this Option at any time during the period of two years
following the date of Employee's death, and the times at which
portions of this Option become exercisable shall be accelerated
upon the death of Employee so that, regardless of how long it
has been held after the date of grant, this Option shall be
exercisable in full during the two year period following the
date of Employee's death for 100% of the shares purchasable
hereunder.
(e) Notwithstanding anything to the contrary in this
Agreement, this Option may be transferred (in whole or in part
pursuant to such form as approved by the Company) by Employee
to (i) the spouse, children or grandchildren of Employee
("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of the Immediate Family Members and, if
applicable, Employee, (iii) a partnership or limited liability
company in which such Immediate Family Members and, if
applicable, Employee are the only partners or members, or (iv)
an organization that has been determined to be exempt under
Section 501(c)(3) of the Internal Revenue Code; provided,
however, that subsequent transfers of the Option shall be
prohibited, except that after the death or dissolution of the
transferee, as applicable, any exercisable portion of the
transferred Option may be exercised by the transferee's
personal representative or by any person empowered to do so
under the transferee's will or under the then applicable laws
of descent and distribution. Following transfer, the Option
shall continue to be subject to the same terms and conditions
as were applicable to Employee with respect to the Option
immediately prior to the transfer, including, without
limitation, vesting and the expiration provisions of Paragraphs
(a), (b), (c) and (d) above, which shall be applied "as if"
Employee continued to be the holder of the Option. No
transferred Option shall be exercisable unless arrangements
satisfactory to the Company have been made to satisfy any tax
withholding obligations the Company may have with respect to
the exercise of the Option. Further, the Company shall have no
obligation to provide any notices to an Option transferee of
any event, term or provision with respect to the Option,
including, without limitation, the early termination of the
Option on account of termination of Employee's employment.
If Employee's employment with the Company terminates other than by reason of
normal retirement, Disability or death, this Option (to the extent not exercised
prior thereto) shall terminate as of the date Employee's employment so
terminates. Notwithstanding any other provision of this Agreement, this Option
shall not be exercisable in any event after the expiration of ten years from the
date of grant hereof. The purchase price of shares as to which this Option is
exercised shall be paid in full in cash at the time of such exercise. Unless
and until a
<PAGE> 4
Exhibit 10a
certificate or certificates representing such shares shall have been issued by
the Company to Employee, or the person permitted to exercise this Option (i)
following the transfer of the Option as permitted by Paragraph (e) above or
(ii), in the event of Employee's death prior to any transfer (such person being
the "Option Holder"), neither Employee nor the Option Holder, as the case may
be, shall be, or have any of the rights or privileges of, a stockholder of the
Company with respect to shares acquirable upon an exercise of this Option.
<PAGE> 1
Exhibit 10b
ROWAN COMPANIES, INC.
1988 NONQUALIFIED STOCK OPTION PLAN
I. PURPOSE OF THE PLAN
The Rowan Companies, Inc. 1988 Nonqualified Stock Option Plan (the
"Plan") is intended to provide a means whereby certain employees of Rowan
Companies, Inc., a Delaware corporation (the "Company"), and its subsidiaries
and affiliates may develop a sense of proprietorship and personal involvement
in the development and financial success of the Company, and to encourage them
to remain with and devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its stockholders.
Accordingly, the Company may grant to certain employees the option ("Option")
to purchase shares of the $0.125 par value common stock of the Company
("Stock"), as hereinafter set forth.
II. ADMINISTRATION
The Plan shall be administered by a committee of the Board of
Directors of the Company (the "Committee") appointed by the Board of Directors.
Members of the Committee shall not be eligible, and shall not have been
eligible at any time within one year prior to their appointment to the
Committee, to participate in the Plan or in any other stock plan of the Company
or any of its affiliates. The Committee shall have sole authority to select
the employees who are to be granted Options from among those eligible hereunder
and to establish the number of shares which may be issued under each Option.
The Committee is authorized to interpret the Plan and may from time to time
adopt such rules and regulations, not inconsistent with the provisions of the
Plan, as it may deem advisable to carry out the Plan. All decisions made by
the Committee in selecting the employees to whom Options shall be granted, in
establishing the number of shares which may be issued under each Option, and in
construing the provisions of the Plan shall be final.
III. OPTION AGREEMENTS
Each Option shall be evidenced by an Option Agreement and shall
contain such terms and conditions as may be approved by the Committee. The
terms and conditions of the respective Option Agreements need not be identical.
The Committee may, in its discretion, provide in an Option agreement
that the Option granted thereby to the employee may be transferred (in whole or
in part and subject of such other conditions or limitations, if any, as the
Committee may impose with respect to such
1
<PAGE> 2
Exhibit 10b
transfer) by the employee to (i) the spouse, children or grandchildren of the
employee ("Immediate Family Members"), (ii) a trust or trusts for the exclusive
benefit of the Immediate Family Members and, if applicable, the employee, (iii)
a partnership or limited liability company in which such Immediate Family
Members and, if applicable, the employee are the only partners or members, or
(iv) an organization that has been determined by the Internal Revenue Service
to be exempt under Section 501(c)(3) of the Internal Revenue Code. Following a
transfer, such transferred Option shall continue to be subject to the same
terms and conditions as were applicable to the Option immediately prior to
transfer and no transferred Option shall be exercisable unless arrangements
satisfactory to the Company have been made with respect to the Option.
IV. ELIGIBILITY OF OPTIONEE
Options may be granted only to individuals who are employees
(including officers and directors who are also employees) of the Company or any
subsidiary corporation (as defined in Section 425 of the Internal Revenue Code)
or affiliated corporation (as defined by the Board of Directors) of the Company
at the time the Option is granted. Options may be granted to the same employee
on more than one occasion.
V. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options
granted under the Plan shall not exceed 7,000,000* shares of Stock. Such
shares may consist of authorized unissued shares of Stock or previously issued
shares reacquired by the Company. Any of such shares which remain unissued and
which are not subject to outstanding Options at the termination of the Plan
shall cease to be subject to the Plan, but until termination of the Plan, the
Company shall at all times make available a sufficient number of shares to meet
the requirements of the Plan. Should any Option hereunder expire prior to its
exercise in full, the shares theretofore subject to such Option may again be
subject to an Option granted under the Plan. The aggregate number of shares
which may be issued under the Plan may be adjusted to reflect a change in
capitalization of the Company, such as a stock dividend or stock split.
VI. OPTION PRICE
The purchase price of stock issued under each Option shall be
determined by the Committee, which purchase price may be less than the fair
market value of the Stock subject to the Option at the time the Option is
granted. In no event, however, may the purchase price of Stock issued under
any Option be less than the par value of such Stock.
- ---------------
* The total number of shares issuable under the Plan increased from 2,000,000
to 7,000,000 by a Plan amendment approved by the stockholders on April 24,
1992.
2
<PAGE> 3
Exhibit 10b
VII. TERM OF PLAN
The Plan shall be effective upon the date of its adoption by the Board
of Directors, subject to its approval by the stockholders of the Company.
Except with respect to Options then outstanding, if not sooner terminated under
provisions of Paragraph IX, the Plan shall terminate upon, and no further
Options shall be granted after, the expiration of fifteen years* from the
effective date of the plan.
VIII. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Options granted hereunder
shall not affect in any way the right or power of the Board of Directors or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any
issue of debt or equity securities ahead of or affecting Stock or the rights
thereof, the dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.
(b) The shares with respect to which Options may be granted are
shares of Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Company, the number
of shares of Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased.
(c) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an Option theretofore granted the
optionee shall be entitled to purchase under such Option, in lieu of the number
of shares of Stock as to which such Option shall then be exercisable, the
number and class of shares of stock and securities to which the optionee would
have been entitled pursuant to the terms of the recapitalization if,
immediately prior to such recapitalization, the optionee had been the holder of
record of the number of shares of Stock as to which such Option is then
exercisable. If (i) the Company shall not be the surviving entity in any
merger or consolidation (or survives only as a
- -----------------
* The term of the Plan was extended from ten years to fifteen years by a Plan
amendment approved by the stockholders on April 24, 1992.
3
<PAGE> 4
Exhibit 10b
subsidiary of an entity other than a previously wholly-owned subsidiary of the
Company), (ii) the Company sells, leases or exchanges or agrees to sell, lease
or exchange all or substantially all of its assets to any other person or
entity (other than a wholly-owned subsidiary of the Company), (iii) the Company
is to be dissolved and liquidated, (iv) any person or entity, including a
"group" as contemplated by Section 13(d) (3) of the 1934 Act, acquires or gains
ownership or control (including, without limitation, power to vote) of more
than 50% of the outstanding shares of Stock, or (v) as a result of or in
connection with a contested election of directors, the persons who were
directors of the Company before such election shall cease to constitute a
majority of the Board of Directors (each such event is referred to herein as a
"Corporate Change"), then effective as of a date (selected by the Committee)
within (a) ten days after the approval by the shareholders of the Company of
such merger, consolidation, sale, lease or exchange of assets or dissolution
or such election of directors or (b) thirty days of such change of control,
the Committee, acting in its sole discretion without the consent or approval of
any optionee, shall effect one or more of the following alternatives, which may
vary among individual optionees: (1) accelerate the time at which Options then
outstanding may be exercised so that such Options may be exercised in full for
a limited period of time on or before a specified date (before or after such
Corporate Change) fixed by the Committee, after which specified date all
unexercised Options and all rights of optionees thereunder shall terminate, (2)
require the mandatory surrender to the Company by selected optionees of some or
all of the outstanding Options held by such optionees (irrespective of whether
such Options are then exercisable under the provisions of the Plan) as of a
date, before or after such Corporate Change, specified by the Committee, in
which event the Committee shall thereupon cancel such Options and pay to each
optionee an amount of cash per share equal to the excess of the amount
calculated in Subparagraph (d) below (the "Change of Control Value") of the
shares subject to such Option over the exercise price(s) under such Options for
such shares, (3) make such adjustments to Options then outstanding as the
Committee deems appropriate to reflect such Corporate Change (provided,
however, that the Committee may determine in its sole discretion that no
adjustment is necessary to Options then outstanding) or (4) provide that
thereafter upon any exercise of an Option theretofore granted the optionee
shall be entitled to purchase under such Option, in lieu of the number of
shares of Stock as to which such Option shall then be exercisable, the number
and class of shares of stock or other securities or property to which the
optionee would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior
to such merger, consolidation or sale of assets and dissolution the optionee
had been the holder of record of the number of shares of Stock as to which such
Option is then exercisable.
4
<PAGE> 5
Exhibit 10b
(d) For the purposes of clause (2) in Subparagraph (c) above, the
"Change of Control Value" shall equal the amount determined in clause (i), (ii)
or (iii), whichever is applicable, as follows: (i) the per share price offered
to shareholders of the Company in any such merger, consolidation, sale of
assets or dissolution transaction, (ii) the price per share offered to
shareholders of the Company in any tender offer or exchange offer whereby a
Corporate Change takes place, or (iii) if such Corporate Change occurs other
than pursuant to a tender or exchange offer, the fair market value per share of
the shares into which such Options being surrendered are exercisable, as
determined by the Committee as of the date determined by the Committee to be
the date of cancellation and surrender of such Options. In the event that the
consideration offered to shareholders of the Company in any transaction
described in this Subparagraph (d) or Subparagraph (c) above consists of
anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered which is other than
cash.
(e) Any adjustment provided for in Subparagraphs (b) or (c) above
shall be subject to any required shareholder action.
(f) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to Options theretofore granted or the
purchase price per share.
IX. AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors in its discretion may terminate the Plan at any
time with respect to any shares for which Options have not heretofore been
granted. The Board of Directors shall have the right to alter or amend the
Plan or any part thereof from time to time; provided, that no change in any
Option theretofore granted may be made which would impair the rights of the
optionee without the consent of such optionee; and provided, further, that the
Board of Directors may not make any alteration or amendment which would
materially increase the benefits accruing to participants under the Plan,
increase the aggregate number of shares which may be issued under the Plan
(other than an increase reflecting a stock dividend or stock split), change the
class of employees eligible to receive Options under the Plan, or extend the
term of the Plan, without the approval of the stockholders of the Company.
5
<PAGE> 6
Exhibit 10b
X. SECURITIES LAWS
The Company shall not be obligated to issue any Stock pursuant to any
Option granted under the Plan at any time when the shares covered by such
Option have not been registered under the Securities Act of 1933 and such other
state and federal laws, rules or regulations as the Company or Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules or regulations
available for issuance and sale of such shares.
6
<PAGE> 7
Exhibit 10b
ROWAN COMPANIES, INC.
STOCK OPTION AGREEMENT
Agreement made this______ day of ________________________, 19___,
between ROWAN COMPANIES, INC. (the "Company"), and ______________________,
("Employee").
To carry out the purposes of the Rowan Companies, Inc. 1988
Nonqualified Stock Option Plan (the "Plan") by affording Employee the
opportunity to purchase shares of the $0.125 par value common stock of the
Company ("Stock"), the Company and Employee hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to
Employee the right and option ("Option") to purchase all or any part of an
aggregate of shares of Stock, on the terms and conditions set
forth herein and in the Plan, which is incorporated herein by reference as a
part of this Option.
2. PURCHASE PRICE. The purchase price of Stock purchased pursuant
to the exercise of this Option shall be $ per share.
3. EXERCISE OF OPTION. Except as otherwise set forth below with
respect to the acceleration of exercisability upon Disability (as defined in
Schedule A hereto) or death and subject to the earlier expiration of this
Option as herein provided, this Option may be exercised, by written notice to
the Company at its principal executive office addressed to the attention of its
Chief Financial Officer, at any time and from time to time after one year after
the date of grant hereof, but this Option shall not be exercisable for more
than a percentage of the aggregate number of shares offered by the Option
determined by the number of full years from the date of grant hereof to the
date of such exercise, in accordance with the following schedule:
<TABLE>
<CAPTION>
NUMBER OF FULL YEARS PERCENTAGE OF SHARES PURCHASABLE
-------------------- --------------------------------
<S> <C>
Less than 1 year 0%
1 year 25%
2 years 50%
3 years 75%
4 years 100%
</TABLE>
Subject to the following, this Option may be exercised only by
Employee during his lifetime and while Employee remains an employee of the
Company:
(a) If Employee's employment with the Company terminates by
reason of normal retirement, Employee may exercise this
Option at any time during the period of five years
following the date of such termination, but only as to
the number of shares Employee was entitled to purchase
hereunder as of the date his employment so terminates,
plus such additional number of shares, if any, that the
Committee (as defined in the Plan), in its sole
discretion, determines to be exercisable as of such
retirement.
(b) If Employee dies within the five year period following
the date of Employee's termination of employment by
reason of normal retirement, Employee's estate, or the
person who acquires this Option by
1
<PAGE> 8
Exhibit 10b
bequest or inheritance or by reason of the death of
Employee, may exercise this Option at any time during
the period of two years following the date of Employee's
death, but only as to the number of shares Employee was
entitled to purchase hereunder as of the date Employee's
employment terminated by reason of normal retirement.
(c) If Employee's employment with the Company terminates by
reason of Disability, Employee may exercise this Option
at any time during the period of five years following
the date of such termination, and the times at which
portions of this Option become exercisable shall be
accelerated upon such termination of employment by
reason of Disability so that, regardless of how long it
has been held after the date of grant, this Option shall
be exercisable in full during such five year period for
100% of the shares purchasable hereunder.
(d) If Employee dies while in the employ of the Company or
within the five year period following the date of
Employee's termination of employment by reason of
Disability, Employee's estate, or the person who
acquires this Option by bequest or inheritance or by
reason of the death of Employee, may exercise this
Option at any time during the period of two years
following the date of Employee's death, and the times at
which portions of this Option become exercisable shall
be accelerated upon the death of Employee so that,
regardless of how long it has been held after the date
of grant, this Option shall be exercisable in full
during the two year period following the date of
Employee's death for 100% of the shares purchasable
hereunder.
(e) Notwithstanding anything to the contrary in this
Agreement, this Option may be transferred (in whole or
in part pursuant to such form as approved by the
Company) by Employee to (i) the spouse, children or
grandchildren of Employee ("Immediate Family Members"),
(ii) a trust or trusts for the exclusive benefit of the
Immediate Family Members and, if applicable, Employee,
(iii) a partnership or limited liability company in
which such Immediate Family Members and, if applicable,
Employee are the only partners or members, or (iv) an
organization that has been determined to be exempt under
Section 501(c)(3) of the Internal Revenue Code;
provided, however, that subsequent transfers of the
Option shall be prohibited, except that after the death
or dissolution of the transferee, as applicable, any
exercisable portion of the transferred Option may be
exercised by the transferee's personal representative or
by any person empowered to do so under the transferee's
will or under the then applicable laws of descent and
distribution. Following transfer, the Option shall
continue to be subject to the same terms and conditions
as were applicable to Employee with respect to the
Option immediately prior to the transfer, including,
without limitation, vesting and the expiration
provisions of Paragraphs (a), (b), (c) and (d) above,
which shall be applied "as if" Employee continued to be
the holder of the Option. No transferred Option shall
be exercisable unless arrangements satisfactory to the
Company have been made to satisfy any tax withholding
obligations the Company may have with respect to the
exercise of the Option. Further, the Company shall have
no obligation to provide any notices to an Option
transferee of any event, term or provision with respect
to the Option, including, without limitation, the early
2
<PAGE> 9
Exhibit 10b
termination of the Option on account of termination of
Employee's employment.
If Employee's employment with the Company terminates other than by reason of
normal retirement, Disability or death, this Option (to the extent not exercised
prior thereto) shall terminate as of the date Employee's employment so
terminates. Notwithstanding any other provision of this Agreement, this Option
shall not be exercisable in any event after the expiration of ten years from the
date of grant hereof. The purchase price of shares as to which this Option is
exercised shall be paid in full in cash at the time of such exercise. Unless
and until a certificate or certificates representing such shares shall have been
issued by the Company to Employee, or the person permitted to exercise this
Option (i) following the transfer of the Option as permitted by Paragraph (e)
above or (ii), in the event of Employee's death prior to any transfer (such
person being the "Option Holder"), neither Employee nor the Option Holder, as
the case may be, shall be, or have any of the rights or privileges of, a
stockholder of the Company with respect to shares acquirable upon an exercise of
this Option.
4. WITHHOLDING OF TAX. To the extent that the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this
Option results in compensation income to Employee for federal or state income
tax purposes, Employee shall pay to the Company at the time of such exercise or
disposition such amount of money as the Company may require to meet its
obligation under applicable tax laws or regulations, and if Employee fails to
do so, the Company is authorized to withhold from any cash remuneration then or
thereafter payable to Employee any tax required to be withheld by reason of
such resulting compensation income.
5. STATUS OF STOCK. The Company intends to register for issue
under the Securities Act of 1933, as amended (the "Act") the shares of Stock
acquirable upon exercise of this Option, and to keep such registration
effective throughout the period this Option is exercisable. In the absence of
such effective registration or an available exemption from registration under
the Act, issuance of shares of Stock acquirable upon exercise of this Option,
will be delayed until registration of such shares is effective or exemption
from registration under the Act is available. The Company intends to use its
best efforts to ensure that no such delay will occur. In the event exemption
from registration under the Act is available upon exercise of this Option,
Employee (or the person permitted to exercise this Option in the event of
Employee's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Employee agrees that the shares of Stock which he may acquire by
exercising this Option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable securities laws, whether
federal or state. Employee also agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Committee deems appropriate in order to assure compliance with applicable
securities laws, (ii) that the Company may refuse to register the transfer of
the shares of Stock purchased under this Option on the stock transfer records of
the Company if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the shares of Stock
purchased under this Option.
3
<PAGE> 10
Exhibit 10b
6. EMPLOYMENT RELATIONSHIP. Employee shall be considered to be in
the employment of the Company as long as he remains an employee of either the
Company, a parent or subsidiary corporation (as defined in Section 424 of the
Internal Revenue Code ) or an affiliated corporation (as defined in the Plan)
of the Company, or a corporation or a parent or subsidiary of such corporation
assuming or substituting a new option for this Option. Any question as to
whether and when there has been a termination of such employment, and the cause
of such termination, shall be determined by the Board of Directors of the
employing corporation, and its determination shall be final.
7. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under Employee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and Employee has executed
this Agreement, all as of the day and year first above written.
ROWAN COMPANIES, INC.
By:
---------------------------------
ATTEST: Senior Vice President
- ----------------------------------- ------------------------------------
Assistant Secretary Employee
4
<PAGE> 11
Exhibit 10b
SCHEDULE A
TO
STOCK OPTION AGREEMENT
DISABILITY. For purposes of the foregoing Stock Option
Agreement, the "Disability" of an Employee shall have occurred if he has a
mental or physical condition which totally and presumably permanently prevents
him from engaging in any substantial gainful employment with the Company which
(i) did not arise while engaged in or as a result of being engaged in an
illegal act or enterprise, (ii) did not result from chronic alcoholism,
addiction to narcotics or the use of illegal or unauthorized drugs in any
manner, (iii) did not result from service in the Armed Forces of the United
States which entitled the Employee to a Veteran's Disability Pension, and (iv)
did not arise while employed by an employer other than the Company or a
subsidiary or affiliated corporation (as defined in the Plan) of the Company.
The existence of such Disability must be certified by two duly licensed and
practicing physicians selected, respectively, at the direction of the Committee
(as defined in the Plan) and at the direction of the Employee or his
representative. If they fail to agree, a third physician shall be selected at
the direction of the Committee, and the determination of any two of such three
physicians shall be final and controlling on all interested parties. The
determination of any such physicians shall be evidenced by appropriate written
certifications delivered to the Committee. Notwithstanding the foregoing, the
Committee may, in its discretion, waive the requirement for certification of
Disability by licensed physicians, and, in lieu of such certification, rely on
such other appropriate medical evidence of Disability as is deemed satisfactory
by the Committee. Determination of whether such Disability exists shall be
made as promptly as possible after the date such Disability is claimed to have
commenced. Determination of the date of termination of employment by reason of
Disability shall be based on such evidence as the Committee may require and a
determination by the Committee of such date of termination shall be final and
controlling on all interested parties.
5
<PAGE> 1
Exhibit 10c
ROWAN COMPANIES, INC.
Amendment No. 5
Dated April 25, 1997
to the
1986 Convertible Debenture
Incentive Plan As Amended
Resolution adopted by the registrant's Board of Directors on April 25,
1997:
RESOLVED that, Section 3.04 of the Plan is hereby amended effective as of April
25, 1997 to read as follows:
"Transfer and Pledge of Debentures. A Purchaser may not sell,
assign, transfer, pledge, hypothecate or otherwise dispose of a
Debenture except by (1) will or the laws of descent and distribution
or (2) a pledge ("Permitted Pledge") of Debentures to a lender (which
may be the Company if a loan is made pursuant to Section 8 hereof) as
security for loans to provide all or part of the financing to purchase
the Debentures, or (3), with respect to a Series III Debenture, a
transfer to (a) the spouse, children or grandchildren of the employee
("Immediate Family Members"), (b) a trust or trusts for the exclusive
benefit of the Immediate Family Members and, if applicable, the
employee, (c) a partnership or limited liability company in which such
Immediate Family Members and, if applicable, the employee are the only
partners or members, or (d) an organization that has been determined
by the Internal Revenue Service to be exempt under Section 501(c)(3)
of the Internal Revenue Code (a "Permitted Transfer"). If such loan
shall be made by other than the Company, the Purchaser shall give
advance written notice to the Company prior to making any Permitted
Pledge and the Purchaser and such lender shall give notice of
discharge of any Debenture from a Permitted Pledge, which notice shall
be conclusive evidence that the conversion privilege with respect to
such Debenture will again be exercisable subject to the provisions of
Section 3.03. If a Permitted Transfer is made, such transferred
Debenture shall continue to be subject to the same terms and
conditions as were applicable to the Debenture immediately prior to
transfer, including any Permitted Pledge, and in no event shall any
transfer of a Debenture be made, unless the Transferee acknowledges
the terms and conditions applicable to the Debenture in a form that is
satisfactory to the Company."
<PAGE> 1
Exhibit 10d
ROWAN COMPANIES, INC.
1986 CONVERTIBLE DEBENTURE INCENTIVE PLAN
AS AMENDED
1. Purpose. The Rowan Companies, Inc. 1986 Convertible Debenture
Incentive Plan (the "Plan") is intended to promote the interests of Rowan
Companies, Inc. (the "Company") and its stockholders by allowing officers and
other key personnel of the Company and its subsidiaries the opportunity to
invest in corporate debt in the form of the Company's floating interest rate
subordinated debentures (the "Debentures") which are convertible into shares of
Preferred stock, $1 par value, of the Company (the "Preferred Stock"), which
shares of Preferred Stock are convertible into shares of common stock, $.125
par value, of the Company (the "Common Stock"), thereby giving key personnel
added incentive to work toward the continued growth and success of the Company.
The Company's Board of Directors also contemplates that the Plan will enable
the Company and its subsidiaries to compete more effectively for the services
of management personnel needed for the continued growth and success of the
Company.
2. Issuance of the Debentures. The Company shall have authority to
issue Debentures in such amounts and to such of the key employees of the
Company and its subsidiaries (as defined by Section 425 of the Internal Revenue
Code of 1954, as amended) as the Committee (as defined in Section 9) shall from
time to time determine. Such employees purchasing Debentures are designated
herein as "Purchasers".
3. General Terms and Conditions of the Debentures.
Section 3.01. General. The Committee shall from time to time determine
with respect to each series of Debentures to be issued the interest rate
thereof, the conversion price applicable thereto (including the conversion
ratio of the Preferred Stock), and such other terms and conditions of the
Debentures, all to the extent not inconsistent with the provisions of this
Plan.
Section 3.02. Form and Term of Debentures. Debentures will be issued in
series the terms and conditions of which may differ among series and shall be
in such form and in such denominations as the Committee may approve. Each
series will be due not earlier than five years, or later than ten years, from
the date of issuance, or on such earlier date as the Company redeems any
Debenture, which date is referred to herein as the "Due Date".
Section 3.03. Conversion of the Debentures. Subject to the provisions of
this Section 3.03, the Debentures will be convertible at the conversion price
in effect at the time of conversion into fully paid and non-assessable shares
of Preferred Stock, which will be immediately convertible into fully paid and
nonassessable shares of Common Stock of the Company, at any time in quantities
and after time periods determined by the Committee, which in no event will be
less than one year after the date of issuance until the close of business on
the Due Date. Each series of Debentures shall be convertible into a separate
series of Preferred Stock. The conversion privilege with respect to any
Debenture may be exercised only by the Purchaser thereof or by the estate of a
deceased Purchaser or a beneficiary under such estate.
Upon termination of a Purchaser's employment, the conversion privilege
will terminate with respect to each Debenture issued to such Purchaser on the
earlier of the Due Date or a date determined as follows:
<PAGE> 2
Exhibit 10d
(a) Three years after the date of termination of
employment as a result of retirement or disability;
(b) Two years after the date of termination of employment
as a result of death;
(c) Prior to the date of termination of employment as a
result of discharge for cause (as determined in the sole discretion of
the Committee); or
(d) Three months after the date of termination of
employment for any other reason.
The conversion privilege with respect to any Debenture (i) will
terminate if the Purchaser, without the Company's consent, sells, assigns,
transfers, pledges, hypothecates or otherwise disposes of a Debenture except as
permitted by Section 3.04 and (ii) will not be exercisable during such time as
the Debenture is pledged to secure loans as permitted by Section 3.04.
In no event may any Purchaser or the estate of a deceased Purchaser or
a beneficiary under such estate exercise the conversion privilege associated
with a Debenture prior to one year from the date of issuance of such Debenture
or after the Due Date.
Notwithstanding the foregoing or any provision in the Plan to the
contrary, effective with the occurrence of a Corporate Change, as defined in
the Company's 1988 Nonqualified Stock Option Plan, each Debenture that has been
issued and outstanding for more than one year as of the date of the Corporate
Change shall automatically be fully convertible on and after the date of such
Corporate Change.
Section 3.04. Transfer and Pledge of Debentures. A Purchaser
may not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of a Debenture except by (1) will or the laws of descent and
distribution or (2) a pledge ("Permitted Pledge") of Debentures to a
lender (which may be the Company if a loan is made pursuant to Section
8 hereof) as security for loans to provide all or part of the
financing to purchase the Debentures, or (3), with respect to a Series
III Debenture, a transfer to (a) the spouse, children or grandchildren
of the employee ("Immediate Family Members"), (b) a trust or trusts
for the exclusive benefit of the Immediate Family Members and, if
applicable, the employee, (c) a partnership or limited liability
company in which such Immediate Family Members and, if applicable, the
employee are the only partners or members, or (d) an organization that
has been determined by the Internal Revenue Service to be exempt under
Section 501(c)(3) of the Internal Revenue Code (a "Permitted
Transfer"). If such loan shall be made by other than the Company, the
Purchaser shall give advance written notice to the Company prior to
making any Permitted Pledge and the Purchaser and such lender shall
give notice of discharge of any Debenture from a Permitted Pledge,
which notice shall be conclusive evidence that the conversion
privilege with respect to such Debenture will again be exercisable
subject to the provisions of Section 3.03. If a Permitted Transfer is
made, such transferred Debenture shall continue to be subject to the
same terms and conditions as were applicable to the Debenture
immediately prior to transfer, including any Permitted Pledge, and in
no event shall any transfer of a Debenture be made, unless the
Transferee acknowledges the terms and conditions applicable to the
Debenture in a form that is satisfactory to the Company."
<PAGE> 3
Exhibit 10d
Section 3.05. Redemption of Debentures. Subject to the provisions of
this Section 3.05, the Company may, upon at least thirty days prior written
notice to all Debenture holders, redeem as a class, on any interest payment
date, all of the Debentures issued under this Plan. The Company (i) shall
redeem on the next interest payment date after termination of the conversion
privilege with respect thereto any Debenture with respect to which the
conversion privilege has terminated pursuant to clauses (a), (b) or (d) of
Section 3.03, (ii) may redeem any Debenture pledged pursuant to Section 3.04 on
the next interest payment date following notice received by the Company from a
lender (other than the Company) that a loan for which such Debenture is pledged
is in default, provided such default has not been cured, and (iii) may at its
option redeem, on any interest payment date, any Debenture with respect to
which the conversion privilege has terminated for any other reason provided in
Section 3.03. The holder of any Debenture redeemed pursuant to this Section
3.05 shall be entitled to receive only the face amount of the Debenture plus
accrued interest thereof to the Due Date.
4. Authorized Amount of Debentures. The Company may issue up to
$20,000,000 in aggregate principal amount of all Debentures.
5. Effective Date. The Plan shall become effective upon approval
thereof by the vote of the holders of a majority of the shares of Common Stock
of the Company voting at the 1986 Annual Meeting of Stockholders, and shall
expire when all of the Company's obligations with respect to all of the
outstanding Debentures have been discharged; provided, however, that no
Debenture shall be issued after April 1, 1995.
6. Offers and Sales Price of Debentures. The Debentures shall be
sold by the Company to Purchasers at a price equal to the higher of (a) face
value plus any accrued interest to the date of sale or (b) the fair market value
of the Debentures as of the date the Purchaser elects to purchase the
Debentures, as determined by an independent investment banking firm. If the
Internal Revenue Service determines that the value of a Debenture at the time
of sale exceeded its sale price and if (a) the Company receives a federal
income tax benefit as a result of such determination and (b) the Purchaser has
contested such determination in a manner which the Company determines to be
appropriate under the circumstances, then the Company will pay to the Purchaser
or his estate or a beneficiary under his estate the lesser of (x) the federal
income tax benefit derived by the Company as a result of the sale of the
Debenture to the Purchaser or (y) the amount estimated by the Company (based on
the highest marginal federal income tax rate applicable with respect to
compensation income for the year in which the sale occurred and the amount
determined by the Internal Revenue Service to be taxable income to the Purchaser
as a result of his purchase of the Debenture) to be Purchaser's federal income
tax liability resulting from his purchase of the Debenture.
The Debentures may be offered only on April 15, May 30, August 30 and
November 30 of each year (any such date is referred to herein as an "Offering
Date"). An employee may elect to purchase all or none of the Debentures offered
to him on an Offering Date by giving written notice to the Company of his
election within 10 business days of such Offering Date. Payment for such
Debentures shall be in cash or in Common Stock (valued at the reported last
sales price of Common Stock prior to the date of such payment, as shown on the
Composite Tape for securities listed on the New York Stock Exchange) and shall
be made within 20 business days of such Offering Date.
7. Conversion Price. The price (the "Conversion Price") at which
shares of Preferred Stock shall be delivered upon conversion of a series of
Debentures shall be set at a price at least equal to the reported last sales
price of the Company's Common Stock prior to the date of sale of such series of
Debentures, as shown on the Composite Tape for securities listed on the New
York Stock Exchange. The
<PAGE> 4
Exhibit 10d
number of shares of Common Stock which shall be delivered upon conversion of any
shares of a series of Preferred Stock (the "Conversion Ratio") shall not exceed
the face value of the related Debentures which were converted into such
Preferred Stock divided by the reported last sales price of the Company's Common
Stock prior to the date of sale of such Debentures as shown on the composite
tape for securities listed on the New York Stock Exchange. Upon any change in
the capital stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, spin-off, split up, dividend in
kind or other change in the corporate structure or distribution to stockholders,
appropriate adjustments to the Conversion Price and Conversion Ratio and the
kind of shares delivered upon conversion of the Debentures and Preferred Stock
may be made by the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation) with respect to both outstanding and unissued Debentures and
Preferred Stock. If the Internal Revenue Service determines that the conversion
of Debentures into Preferred Stock or that the subsequent conversion of
Preferred Stock into Common Stock is a taxable transaction and if (a) the
Company receives a federal income tax benefit as a result of such determination
and (b) the Purchaser has contested such determination in a manner which the
Company deems to be appropriate under the circumstances, then the Company will
pay to the Purchaser or his estate or a beneficiary under his estate the lesser
of (x) the federal income tax benefit derived by the Company with respect to
such conversion or (y) the amount estimated by the Company (based on the highest
marginal federal income tax rate applicable with respect to compensation income
for the year in which the conversion occurred and the amount determined by the
Internal Revenue Service to be taxable income to the Purchaser as a result of
such conversion) to be Purchaser's federal income tax liability resulting from
such conversion.
8. Company Loans. The Company may, from time to time, make full
recourse (or, in the case of (1) an aggregate of $5,125,000 in principal amount
of loans made by the Company to Purchasers on June 13, 1986 and (2) an
aggregate of $10,300,000 in principal amount of loans made by the Company to
Purchasers on November 30, 1994, non- recourse) loans ("Company Loans") to
Purchasers for the purpose of providing all or part of the financing necessary
to purchase any Debenture; provided, however, that the maximum amount of the
Company Loan shall not exceed the purchase price of the Debentures. Subject to
the foregoing, Company Loans may be made to such Purchasers in such amounts
bearing interest at such rates (not less than the higher of the interest rate
on the Debenture or a floating rate determined under Sections 483 and 1274(d)
of the Internal Revenue Code of 1954, as amended), shall be secured by a pledge
of and lien on the Debenture (which may be inferior to the pledge and lien
securing the Bank Loan) and on such other terms and conditions as the Committee
may from time to time approve.
9. Administration. The Plan shall be administered by a committee of
the Board of Directors (the "Committee") which shall consist of three or more
persons. No Debentures may be sold to any member of the Committee during the
term of his membership on the Committee. No person shall be eligible to serve
on the Committee unless he is a "disinterested person" within the meaning of
Paragraph (d)(3) of Rule 16b-3, under the Securities Exchange Act of 1934 or
any successor thereto as then in effect ("Rule 16b-3"). The members of the
Committee shall be appointed by the Board of Directors, and any vacancy on the
Committee shall be filled by the Board of Directors.
Subject to the foregoing paragraphs, the Committee shall interpret the
Plan and the Debentures sold under the Plan, shall make such rules as it deems
necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defect or supply any omission or reconcile any inconsistency
in the Plan or in any Debenture in the manner and to the extent the Committee
deems desirable to administer the Plan or the Debentures.
<PAGE> 5
Exhibit 10d
The Committee's determination of any matter within its authority shall be
conclusive and binding upon the Company and all other persons.
10. Amendment and Discontinuance. Subject to the provisions of
this Section 10, the Committee may amend, suspend or terminate the Plan. No
amendment, suspension or termination of the Plan may:
(a) Without the consent of the holder of a Debenture,
terminate his Debenture or adversely affect his rights under the
Debenture in any material respect;
(b) Without the consent of a majority of the shares of
voting stock of the Company voting at any meeting of Stockholders (i)
increase the amount of Debentures available under the Plan, (ii)
change materially the persons eligible to purchase Debentures under
the Plan, (iii) increase materially the benefits under the Plan, or
(iv) extend the termination date of the Plan; or
(c) Cause the plan to fail to meet the requirements of
Rule 16b-3.
11. Other Provisions.
(a) The Purchaser of a Debenture shall not be entitled to
any rights as a stockholder of the Company until such Purchaser has
exercised the conversion privilege contained in the Debenture.
(b) No Debenture shall be construed as limiting any right
which the Company or any subsidiary of the Company may have to
terminate at any time, with or without cause, the employment of a
Purchaser to whom a Debenture has been sold.
(c) Notwithstanding any provision of the Plan or the
terms of any Debenture sold pursuant to the Plan, (i) the Company
shall not be required to issue any Debentures hereunder if such
issuance would, in the judgment of the Committee, constitute a
violation of any state or Federal law, or of the rules or regulations
of any governmental regulatory body, and (ii) any amount of interest
paid or payable on a Debenture which exceeds the amount legally
payable to a Purchaser under the applicable usury laws will be paid by
the Company as compensation to the Purchaser.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ROWAN COMPANIES, INC. FOR THE THREE MONTHS
ENDED MARCH 31, 1997 INCLUDED IN ITS FORM 10-Q FOR THE QUARTERLY PERIOD THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 116,924
<SECURITIES> 0
<RECEIVABLES> 107,326
<ALLOWANCES> 0
<INVENTORY> 92,419
<CURRENT-ASSETS> 327,554
<PP&E> 1,388,031
<DEPRECIATION> 815,263
<TOTAL-ASSETS> 933,909
<CURRENT-LIABILITIES> 140,584
<BONDS> 235,874
0
0
<COMMON> 10,894
<OTHER-SE> 490,810
<TOTAL-LIABILITY-AND-EQUITY> 933,909
<SALES> 35,335
<TOTAL-REVENUES> 144,765
<CGS> 26,462
<TOTAL-COSTS> 133,779
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,403
<INCOME-PRETAX> 7,865
<INCOME-TAX> 234
<INCOME-CONTINUING> 7,631
<DISCONTINUED> 0
<EXTRAORDINARY> 3,478
<CHANGES> 0
<NET-INCOME> 4,153
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
<PAGE> 1
EXHIBIT 99
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> 2
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> 3
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> 4
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> 5
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> 6
(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> 7
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> 8
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> 9
- ---------------
(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> 10
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 $50,000 or 10% of his or her total annual salary and
bonus as reported in this table.
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information pertinent to stock options granted
under the Company's 1988 Nonqualified Stock Option Plan (the "1988 Plan") to the
Named Executive Officers during 1996:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
----------------------------------------------------- REALIZABLE VALUE
PERCENT AT ASSUMED ANNUAL
NUMBER OF OF TOTAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL 1996 ($/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> 12
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> 13
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> 14
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> 15
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> 16
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> 17
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> 18
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> 19
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> 20
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.
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<PAGE> 21
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> 22
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> 23
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.
