<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Rowan Companies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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<PAGE> 2
ROWAN COMPANIES, INC.
2800 POST OAK BOULEVARD, SUITE 5450
HOUSTON, TEXAS 77056-6196
C. R. PALMER
CHAIRMAN OF THE BOARD
March 17, 2000
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders of Rowan
Companies, Inc., which will be held in the Williams Auditorium located on Level
2 of the Williams Tower, 2800 Post Oak Boulevard, Houston, Texas, on Friday,
April 28, 2000 at 9:00 a.m., Central 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 three Class III
Directors. YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
THREE NOMINEES FOR CLASS III DIRECTOR.
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. You are requested to sign, date and mail the enclosed proxy promptly.
Both your interest and participation in the affairs of the Company are
appreciated.
Sincerely,
/s/ C.R.PALMER
C. R. Palmer
Chairman, President and
Chief Executive Officer
<PAGE> 3
Rowan Companies, Inc. 2000 Proxy Statement
NOTICE OF ANNUAL MEETING OF ROWAN STOCKHOLDERS
DATE: Friday, April 28, 2000
TIME: 9:00 a.m., Central Time
PLACE: Williams Tower, Level 2 Auditorium
2800 Post Oak Boulevard
Houston, Texas
PURPOSE: - To elect three Class III Directors for three-year terms
- To conduct other business if properly raised
Only stockholders of record on March 3, 2000 may vote at the meeting.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED RETURN ENVELOPE AT YOUR EARLIEST
CONVENIENCE.
/S/ MARK H. HAY
Mark H. Hay
Secretary
March 17, 2000
<PAGE> 4
Rowan Companies, Inc. 2000 Proxy Statement
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
General Information....................................................... 1
Election of Directors..................................................... 2
Director Compensation..................................................... 4
Board Committees.......................................................... 4
Director and Officer Stock Ownership...................................... 6
Board Compensation Committee Report
on Executive Compensation........................................... 7
Executive Compensation Tables............................................. 10
Stock Performance Graphs.................................................. 13
Additional Information.................................................... 14
<PAGE> 5
Rowan Companies, Inc. 2000 Proxy Statement
GENERAL INFORMATION
WHO MAY VOTE
Stockholders of Rowan Companies, Inc., as recorded in our stock register on
March 3, 2000, may vote at the meeting.
HOW TO VOTE
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
HOW PROXIES WORK
Rowan's Board of Directors is asking for your proxy. Giving us your proxy means
you authorize us to vote your shares at the meeting in the manner you have
indicated on the proxy card. You may vote for all, some or none of our director
nominees. You may also abstain from voting.
If you sign and return the enclosed proxy card but do not indicate your vote,
the proxies will vote your shares in favor of our director nominees.
You may receive more than one proxy card depending on how you hold your shares.
Shares registered in your name are covered by one card and any shares held by
someone else, such as a stockbroker, may be covered by a separate card. Rowan
employees receive a separate card for any shares they hold in Rowan's 401(k)
plans.
HOW WE SOLICIT PROXIES
We are mailing this proxy statement and the proxy card on or about March 17,
2000. In addition to this mailing, Rowan employees may solicit proxies
personally, electronically or by telephone. Rowan will pay all costs of
solicitation and has retained D. F. King & Co., Inc. to assist with the
solicitation at an estimated cost of $8,000, plus reasonable expenses. We also
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their expenses in sending these materials to you.
REVOKING A PROXY
You may revoke your proxy before it is voted by submitting a new proxy card with
a later date, by voting in person at the meeting or by notifying Rowan's
Corporate Secretary in writing before 5:00 p.m., Central Time, on the day before
the meeting at the address listed under "Questions?" on page 15.
VOTING SECURITIES OUTSTANDING
On March 3, 2000, there were 92,387,446 shares of Rowan's common stock
outstanding. Each share is entitled to one vote on the matters to be presented
at the meeting.
QUORUM
In order to carry on the business of the meeting, we must have a quorum. This
means that at least a majority of the outstanding shares must be represented at
the meeting, either by proxy or in person. You are considered present at the
meeting if you attend or are represented by a valid proxy, regardless of whether
your proxy card is marked as casting a vote or as abstaining or is left blank.
Any shares owned by Rowan and held in treasury are not voted and do not count
for this purpose.
VOTES NEEDED
The election of each nominee for Class III Director will be approved if the
votes cast for such nominee exceed the votes cast against him. Approval of any
other matters requires a majority of the votes cast. Only votes cast for or
against count. Abstentions and broker non-votes count for quorum purposes but
not for voting purposes. Broker non-votes occur when a broker returns a proxy
but does not have the authority to vote on a particular matter. Brokers have the
authority to vote for the election of directors, but they may not have authority
to vote for other matters that may come before the meeting.
1
<PAGE> 6
Rowan Companies, Inc. 2000 Proxy Statement
ELECTION OF DIRECTORS
The Rowan Board of Directors consists of three classes:
- Class I has four directors
- Class II has three directors
- Class III presently has four directors
Each class of directors is elected for a three-year term, and the current terms
will expire on the date of Rowan's annual meeting, in the year indicated:
- Class I 2001
- Class II 2002
- Class III 2000
Three Class III Directors are to be elected at this meeting. Two of the members
of this Class, C. W. Yeargain (age 74), who has been a Director of the Company
for 25 years, and Ralph E. Bailey (age 75), who has served as a Director for
seven years, will not stand for reelection; accordingly, the Board expresses its
gratitude to each for their many years of valuable and devoted service to the
Company. The two remaining members of the Class, C. R. Palmer and Henry O.
Boswell, along with Frederick R. Lausen, who has not previously served on the
Board, have been selected by the Nominating Committee to be the Class III
nominees, a decision with which the Board concurred.
Because the effect of these actions is to reduce the Class III Directors and the
Board by one, a Board-approved amendment to the Bylaws to accomplish that
purpose will become effective April 28, 2000, the date of the 2000 Annual
Meeting of Stockholders.
If a director nominee becomes unavailable to serve prior to the election, your
proxy card authorizes us to vote for a replacement nominee if the Board names
one.
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
- --------------------------------------------------------------------------------
DIRECTOR NOMINEES
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME(1) FOR THE PAST FIVE YEARS AGE SINCE
- ------- ----------------------- --- --------
<S> <C> <C> <C>
CLASS III (TERM TO EXPIRE IN 2003)
Henry O. Boswell Retired; formerly President (1983-1987) of Amoco Production 70 1988
Company (oil and gas production)
Frederick R. Lausen Vice President (1986-present) of Davis Petroleum, Inc. (oil 62 --
and gas production)
C. R. Palmer Chairman of the Board, President and Chief Executive Officer 65 1969
of the Company (2)
</TABLE>
(Table continued on the following page)
2
<PAGE> 7
Rowan Companies, Inc. 2000 Proxy Statement
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME(1) FOR THE PAST FIVE YEARS AGE SINCE
- ------- ----------------------- --- --------
<S> <C> <C> <C>
CLASS I (TERM EXPIRES IN 2001)
Hans M. Brinkhorst Retired; formerly Managing Director of the Royal Dutch/Shell 70 1998
Group of Companies' oil and gas exploration, production and
transportation operations in Oman (1980-1986) and Malaysia
(1977-1980)
H. E. Lentz Managing Director of Lehman Brothers Inc. (investment 55 1990
bankers) since March 1993; Investment Banker for Wasserstein
Perella & Co., Inc. (March 1988 through February 1993)
Wilfred P. Schmoe Retired; formerly Executive Vice President, Director and 72 1992
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. Retired; formerly Chief Executive Officer (May 1995 to May 73 1991
1998 and from December 1989 to December 1992) and Chairman
of the Board (May 1995 to May 1999) of Cabot Oil & Gas
Corporation (natural gas exploration and production)
CLASS II (TERM EXPIRES IN 2002)
R. G. Croyle Executive Vice President of the Company since October 57 1998
1993(2)
D. F. McNease Executive Vice President of the Company since April 1999; 48 1998
Senior Vice President of the Company from October 1993 to
April 1999(2)
Lord Moynihan Senior Partner of London-based Colin Moynihan Associates 44 1996
(CMA) (energy advisors) since 1993 and Chairman of
London-based Consort Resources Ltd. since 1999; Member of
the British House of Lords (May 1997 to present) and the
British House of Commons (1983-1992); additionally, Minister
for Energy as Parliamentary Undersecretary of State at the
UK Department of Energy (1990-1992)
</TABLE>
- --------------------------------------------------------------------------------
(1) Directorships other than those listed in the table are as follows: Mr.
Boswell is a director of Service Master Company and Cabot Oil & Gas
Corporation; Mr. Lentz is a director of Imperial Sugar Co. and P&L Coal
Holdings, Inc.; Lord Moynihan is a director of Ranger Oil Limited and Mr.
Siess is a director of Cabot Corporation.
(2) Information regarding the compensation of Messrs. Croyle, McNease and Palmer
is disclosed in the Summary Compensation Table under "Executive Compensation
Tables" on page 10.
3
<PAGE> 8
Rowan Companies, Inc. 2000 Proxy Statement
DIRECTOR COMPENSATION
Rowan employees receive no extra compensation for serving as directors.
Nonemployee directors receive a base fee of $30,000 annually, $750 per regular
or special Board meeting attended, $500 per committee meeting attended and
reimbursement for reasonable travel expenses. The Board of Directors held five
meetings in 1999. Each director attended at least 75% of the meetings of the
Board and Committees on which he served.
Each nonemployee director may also be selected to receive a nonqualified stock
option grant under the 1998 Rowan Companies, Inc. Nonemployee Directors Stock
Option Plan, which was approved at the Company's 1998 Annual Meeting of
Stockholders. Eligibility and the terms and conditions of each grant are
determined by the Board of Directors. One grant was made in 1999 for an
aggregate of 24,000 shares with an option exercise price of $14.53 per share.
Two grants were made in 1998 for an aggregate of 40,000 shares, with option
exercise prices ranging from $17.47 to $29.75 per share. Options granted under
the plan become 100% exercisable one year after the date of grant and expire
after five years.
BOARD COMMITTEES
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.
Committee members: Messrs. Boswell (Chairman), Schmoe and Siess
1999 meetings: one
THE COMPENSATION COMMITTEE recommends to the Board of Directors 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.
Committee members: Messrs. Siess (Chairman), Bailey, Boswell and Schmoe
1999 meetings: one
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.
Committee members: Messrs. Palmer (Chairman), Boswell, Yeargain and Siess
1999 meetings: none
4
<PAGE> 9
Rowan Companies, Inc. 2000 Proxy Statement
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 at the
address listed under "Questions?" on page 15 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. Any such stockholder recommendations must be submitted not less
than 60 days prior to the anniversary date of the previous annual meeting 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.
Committee members: Messrs. Brinkhorst, Lentz, Moynihan, Schmoe and Siess
1999 meetings: one
THE 1986 DEBENTURE PLAN COMMITTEE and the 1998 DEBENTURE PLAN COMMITTEE
administer the Company's 1986 Convertible Debenture Incentive Plan and its 1998
Convertible Debenture Incentive Plan, respectively. Both Committees have broad
authority to interpret, amend, suspend or terminate the Plans and to make all
determinations necessary or advisable for the administration of the Plans.
Committee members: Messrs. Siess (Chairman), Bailey, Boswell and Schmoe
1999 meetings:
1998 Plan -- one
1986 Plan -- none
THE HEALTH, SAFETY AND ENVIRONMENT COMMITTEE reviews the Company's performance
and policies with respect to health, safety and environmental matters and, when
appropriate, makes recommendations to the full Board regarding such matters.
Committee members: Messrs. Palmer (Chairman), Croyle, McNease, Boswell and
Moynihan
1999 meetings: three
5
<PAGE> 10
Rowan Companies, Inc. 2000 Proxy Statement
DIRECTOR AND OFFICER STOCK OWNERSHIP
As of March 3, 2000, Rowan's directors and officers collectively owned 3,315,592
shares or 3.6% of the Company's outstanding common stock, including shares
acquirable through May 2, 2000 by the exercise of stock options or the
conversion of subordinated debentures. No continuing director, nominee or
executive officer owned more than 1% of Rowan's outstanding shares, except Mr.
Palmer who owned 1.7% of the common stock.
The following table sets forth the number of shares of Rowan stock owned by each
director, the five most highly compensated executive officers of the Company
("Named Executive Officers"), and all directors and executive officers as a
group. Unless otherwise indicated, each individual has sole voting and
dispositive power with respect to the shares shown below.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES ACQUIRABLE WITHIN 60 DAYS(2)
------------------------------------------
SHARES DEBENTURES TOTAL
BENEFICIALLY 401(K) PLAN -------------------------------- BENEFICIAL
NAME OWNED HOLDINGS(1) OPTIONS SERIES III SERIES A SERIES B OWNERSHIP
- ---------------------------------- ------------ ----------- ------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Directors:
Ralph E. Bailey 30,000 8,000 38,000
Henry O. Boswell 73,600(3) 8,000 81,600
Hans M. Brinkhorst 1,000 8,000 9,000
R. G. Croyle 6,000(4) 115,250 125,926 8,404 8,889 264,469
H. E. Lentz 30,200(5) 8,000 38,200
D. F. McNease 1,005 3,597 44,750 137,037 8,404 8,889 203,682
Lord Moynihan 1,000 8,000 9,000
C. R. Palmer 474,997(6) 5,630 265,250 711,111 42,016 44,444 1,543,448
Wilfred P. Schmoe 9,000 8,000 17,000
Charles P. Siess, Jr. 7,000 8,000 15,000
C. W. Yeargain 232,152 8,000 240,152
Nominee for Director:
Frederick R. Lausen 7,000(7) 7,000
Other Executive Officers:
E. E. Thiele 17,000 55,000 162,963 8,404 8,889 252,256
D. C. Eckermann 43,500 5,042 5,333 53,875
All Directors and Executive
Officers as a group (23 in
number) 1,114,734 14,513 757,375 1,262,964 80,674 85,332 3,315,592
</TABLE>
- --------------------------------------------------------------------------------
(1) Reflects shares of Rowan stock allocated to participants in the Rowan
Companies, Inc. Savings and Investment Plan. The Plan participants have sole
voting power and limited dispositive power over such shares.
(2) Included herein are shares of Rowan stock that may be acquired through May
2, 2000 through the exercise of Nonqualified Stock Options, the conversion
of Series III Floating Rate Convertible Subordinated Debentures, the
conversion of Series A Floating Rate Convertible Subordinated Debentures and
the conversion of Series B Floating Rate Convertible Subordinated
Debentures.
(3) Includes 23,000 shares held by Dome Lake Investments, Ltd., in which Mr.
Boswell and his wife hold a 59% interest in the general partner's 99%
interest and a 60% interest in the limited partner's 1% interest. Mr.
Boswell disclaims beneficial ownership of such shares except to the extent
of his pecuniary interest. Also included are 23,100 shares owned by Mr.
Boswell's wife. Mr. Boswell disclaims beneficial ownership of such shares.
(4) Includes 1,000 shares owned by Mr. Croyle's son. Mr. Croyle disclaims
beneficial ownership of such shares.
(5) 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.
(6) Includes 20,752 shares owned by Mr. Palmer's mother over which he has a
measure of investment control. Additionally, includes 33,132 shares held in
a charitable foundation for which Mr. Palmer is one of three trustees. Mr.
Palmer has no pecuniary interest in the shares held in such charitable
foundation.
(7) Mr. Lausen's shares are owned jointly with his wife.
6
<PAGE> 11
Rowan Companies, Inc. 2000 Proxy Statement
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICY FOR EXECUTIVE OFFICERS
Under the supervision of the Compensation Committee (the "Committee") of the
Board of Directors, Rowan has developed and implemented compensation policies
and programs that seek to retain and motivate employees whose performance
contributes to our goal of maximizing stockholder value in a volatile industry.
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 Rowan's common stock. The Committee makes
compensation decisions after reviewing recommendations prepared by Rowan's Chief
Executive Officer, with the assistance of other Company personnel. Rowan
historically 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 recognize 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 Rowan performance versus that of its competitors and
performance of Rowan's common stock in comparison to prior levels and to the
relative stock prices of its competitors. When evaluating individual
performance, particular emphasis has been placed on the executive officers'
ability to develop innovative ways to obtain better returns on Rowan's assets
and to respond to prevailing conditions in the drilling, aviation and
manufacturing industries. Emphasis is placed upon an individual's integrity,
loyalty and competence in his 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 Rowan's financial
viability. The factors that contribute the most towards these goals vary
depending on the state of the industries in which Rowan operates.
The Compensation Committee met in April 1999. Based upon the depressed industry
conditions that existed at the time, the Committee determined that only one of
the Named Executive Officers, Mr. D. F. McNease, would receive a salary increase
and a larger bonus in April 1999 than he received in April 1998. Mr. McNease's
increased compensation was coupled with his promotion from Senior Vice President
to Executive Vice President. The Committee also determined that Mr. D. C.
Eckermann would receive a larger bonus in April 1999 than he received in April
1998, commensurate with his being named an executive officer of the Parent
Company, though his salary would be unchanged from the previous year. The other
three Named Executive Officers, including Mr. Palmer (see "Chief Executive
Officer Compensation" below), received the same salary and bonus as they
received in the prior year. As discussed above, factors considered by the
Committee in setting compensation included each individual's past contributions
and performance, as well as Rowan's operating results and profitability,
management of its assets and debts, increasing market share and the performance
of Rowan's common stock in comparison to its competitors. 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 Rowan's principal competitors
and 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 Rowan does not make compensation awards based on the degree to
which an individual achieves predetermined objective criteria.
7
<PAGE> 12
Rowan Companies, Inc. 2000 Proxy Statement
In addition to regular salary payments to executive officers in 1999, the
Committee determined to offer Series B Floating Rate Subordinated Convertible
Debentures to each of the Named Executive Officers, including Mr. Palmer. The
Series B Debentures are ultimately convertible into Rowan common stock at the
rate of $14.0625 per share, the mean average of the high and low sales prices on
the date of offer, through April 2009. Other officers received either a grant of
stock options or an offer of Series B Debentures. The primary basis for these
Debenture offers and stock option grants was management's performance in
responding to the depressed conditions in the industry in an extremely
competitive environment. The Committee also took into account its 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 the officers were
taken into account when determining the amount of new option awards.
The Committee attempts to avoid treating salaries, bonuses, stock option grants
and debenture offerings as entitlements and, as was evidenced in 1999,
recommends revisions only when it believes such changes are warranted.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee's determination for establishing Mr. Palmer's compensation for
1999 was made in April 1999 based on the fact that Rowan had performed very well
in comparison to others in the offshore drilling industry during a period of
instability. Rowan had increased its market share and capitalized on the
significant increase in offshore drilling activity during the robust conditions
that existed until early-1998 to generate record revenues and profits and
achieve significant stock price appreciation. As conditions softened beginning
in the second quarter of 1998, Rowan maintained and improved its assets as
energy companies responded to decreased prices by reducing their drilling
expenditures, either by allowing contract options to lapse or by canceling or
deferring planned drilling projects. Conditions began to improve in mid-1999,
and Rowan was well positioned to take advantage of the upturn.
No specific quantitative measure of Rowan's performance was used for this
purpose. Emphasis was also placed on evaluating Rowan's performance versus the
performance of its principal competitors as well as certain additional public
companies in the energy service industry. The Committee believed, and believes,
that Rowan's relatively strong position in the contract drilling industry and
the successful design and implementation of its Super Gorilla Class rig
construction program has been in large part attributable to Mr. Palmer's
abilities and contributions.
In 1999, the Committee's deliberations with respect to Mr. Palmer's compensation
centered on the ongoing strong position that Rowan maintained in the contract
drilling industry during a period of extreme volatility, positioning the Company
to take advantage of the favorable change in conditions through the effective
redeployment of its offshore rig fleet to the most promising markets and
efficiently managing Rowan resources and personnel. Given the Committee's
continuing belief that tying a significant portion of the chief executive
officer's remuneration to the interests of the stockholders is a prudent
remuneration policy, it determined in April 1999 to offer to Mr. Palmer
$2,500,000 principal amount of Series B Debentures, convertible into 177,777
shares of common stock at a conversion price equal to the market value on the
date of offer of $14.0625 per share. In addition, in April 1999 the Committee
continued Mr. Palmer's annual salary at its existing level and awarded him the
same bonus he received in the prior year.
OTHER MATTERS
The Committee has also continued to discuss and consider a provision of the tax
code that will generally limit Rowan's ability to deduct compensation in excess
of $1 million to a particular executive. The Committee will continue to consider
the deductibility of the compensation paid to its executive officers in the
future.
8
<PAGE> 13
Rowan Companies, Inc. 2000 Proxy Statement
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 Securities Exchange Act of 1934, 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.
9
<PAGE> 14
Rowan Companies, Inc. 2000 Proxy Statement
EXECUTIVE COMPENSATION TABLES
The following table sets forth the compensation of the Chief Executive Officer
and the other four most highly paid executive officers of the Company (the
"Named Executive Officers") for each of the last three years.
During such period, no executive officer received any non-cash compensation
having an aggregate incremental cost to Rowan in excess of the lesser of $50,000
or 10% of his or her total annual salary and bonus as reported in this table.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
NAME AND ----------------------- ---------------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS OPTIONS(2) DEBENTURES(3) COMPENSATION(4)
- ------------------ ---- ---------- -------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
C. R. Palmer 1999 $1,000,000 $635,000 -- 177,777 $4,800
Chairman of the Board, 1998 975,000 635,000 -- 84,034 4,800
President and CEO 1997 910,000 450,000 75,000 -- 4,750
R. G. Croyle 1999 305,000 135,000 -- 35,556 4,301
Executive Vice President 1998 296,667 135,000 -- 16,807 4,800
1997 270,000 120,000 15,000 -- 4,750
D. F. McNease 1999 295,000 135,000 -- 35,556 4,800
Executive Vice President 1998 266,667 110,000 -- 16,807 4,175
1997 241,667 100,000 15,000 -- 4,750
E. E. Thiele 1999 250,000 65,000 -- 35,556 4,800
Senior Vice President -- 1998 241,667 65,000 -- 16,807 4,800
Finance, Administration 1997 216,667 60,000 15,000 -- 4,750
and Treasurer
D. C. Eckermann 1999 220,000 60,000 -- 21,333 5,000
Vice President -- 1998 209,321 45,000 -- 10,084 5,000
Manufacturing 1997 193,333 40,000 15,000 -- 4,638
</TABLE>
- --------------------------------------------------------------------------------
(1) Represents calendar year salary compensation based upon annual rates
approved by the Board of Directors effective May 1 of each year. Except for
D. F. McNease, no increase in the annual rate was awarded to the Named
Executive Officers in 1999, and the 1999 amounts shown above reflect a
continuation of annual salary rates approved in 1998.
(2) Represents shares of Rowan stock that may be acquired through the exercise
of stock options. No stock options were granted to the Named Executive
Officers during 1999.
(3) Represents shares of Rowan stock that may be acquired through the conversion
of Floating Rate Convertible Subordinated Debentures as follows:
1999 -- Series B offered and issued on April 22nd of that year;
1998 -- Series A offered and issued on April 24th of that year.
(4) Represents the amount of Rowan's matching contribution on behalf of the
Named Executive Officer to the Rowan Companies, Inc. Savings and Investment
Plan or the LeTourneau, Inc. Savings and Investment Plan (401(k) plans).
10
<PAGE> 15
Rowan Companies, Inc. 2000 Proxy Statement
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The table below reflects the value of stock options exercised during 1999 and
the value of outstanding options at year-end 1999 for each of the Named
Executive Officers.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
CLOSING UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
PRICE OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES ON DECEMBER 31, 1999 DECEMBER 31, 1999(2)
ACQUIRED ON EXERCISE VALUE ---------------------------- ----------------------------
NAME EXERCISE DATE(1) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
C. R. Palmer 16,000 $ 8.94 $127,000 227,750 56,250 $3,211,578 $198,047
R. G. Croyle -- -- -- 107,750 11,250 1,929,079 39,610
D. F. McNease 6,000 10.59 63,563 37,875 10,625 510,259 35,586
E. E. Thiele 6,250 13.88 80,469 48,125 10,625 722,305 35,586
D. C. Eckermann -- -- -- 38,500 12,500 524,594 74,844
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based upon the last reported per share sales price of Rowan's common stock
on the New York Stock Exchange on the date of exercise. A weighted average
price has been derived for multiple exercises during the year.
(2) Represents the difference between the last reported per share sales price of
Rowan's common stock on the New York Stock Exchange on December 31, 1999
($21.6875) and the per share exercise prices for in-the-money options
($1.00, $8.00, $15.25 and $19.625) times the number of underlying shares.
DEBENTURES OFFERED IN LAST FISCAL YEAR
The Rowan Companies, Inc. 1998 Convertible Debenture Incentive Plan (the "1998
Debenture Plan") was approved at the Company's 1998 Annual Meeting of
Stockholders. The table below sets forth information pertinent to the April 1999
offering to each of the Named Executive Officers. No Debentures are convertible
prior to April 2000 and all were outstanding at March 3, 2000. All employees
participating in the 1999 Debenture offering have borrowed the Debenture
purchase price from Rowan. Promissory notes evidencing the borrowings bear
interest at the same rate as the Debentures and are secured by a pledge of the
Debentures purchased.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE
PERCENTAGE AT ASSUMED ANNUAL RATES
OF TOTAL OF STOCK PRICE
NUMBER DEBENTURES APPRECIATION
FACE OF SHARES ISSUED IN CONVERSION FOR DEBENTURE TERM
AMOUNT OF UNDERLYING FISCAL PRICE EXPIRATION -------------------------
NAME DEBENTURE DEBENTURE 1999 PER SHARE DATE 5% 10%
- ---- ------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
C. R. Palmer $2,500,000(1) 177,777 52.1% $14.06 4-22-2009 $1,571,950 $3,983,630
R. G. Croyle 500,000(2) 35,556 10.4% 14.06 4-22-2009 314,395 796,740
D. F. McNease 500,000(2) 35,556 10.4% 14.06 4-22-2009 314,395 796,740
E. E. Thiele 500,000(2) 35,556 10.4% 14.06 4-22-2009 314,395 796,740
D. C. Eckermann 300,000(3) 21,333 6.3% 14.06 4-22-2009 188,632 478,030
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) After one, two, three and four years from the date of the Debenture (April
22, 1999) until the expiration date, 25% of the Debenture, or $625,000, is
convertible into approximately 44,444 shares of Rowan stock.
(2) After one, two, three and four years from the date of the Debenture (April
22, 1999) until the expiration date, 25% of the Debenture, or $125,000, is
convertible into approximately 8,889 shares of Rowan stock.
(3) After one, two, three and four years from the date of the Debenture (April
22, 1999) until the expiration date, 25% of the Debenture, or $75,000, is
convertible into approximately 5,333 shares of Rowan stock.
11
<PAGE> 16
Rowan Companies, Inc. 2000 Proxy Statement
PENSION PLANS
All Rowan employees (including executive officers but excluding non-U.S.
citizens) who have completed the requisite service are eligible to participate
in one of two non-contributory, defined benefit pension plans. Participants in
the drilling and aviation plan will generally 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. The manufacturing
employees plan is substantially similar to the drilling and aviation employees
plan except that benefits begin at age 65 and are subject to reduction for
Social Security benefits. As of January 31, 2000, Rowan had approximately 3,500
employees eligible to participate in its pension plans.
Rowan also sponsors pension restoration plans which essentially replace any
retirement income that is lost because of 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
Rowan. Currently, the plans have two participants, C. R. Palmer and C. W.
Yeargain. Mr. Yeargain retired in March 1991.
The following table illustrates, for representative average earnings and years
of credited service levels, the annual retirement benefits payable to eligible
drilling and aviation employees.
<TABLE>
<CAPTION>
PENSION PLAN TABLE (1)
- ------------------------------------------------------------------------------------
YEARS OF SERVICE(2)
---------------------------------------------------------------
COMPENSATION(3)(4) 15 20 25 30 35 40
- ------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 150,000 $ 39,375 $ 52,500 $ 65,625 $ 78,750 $ 91,875 $105,000
200,000 52,500 70,000 87,500 105,000 122,500 140,000
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
1,100,000 288,750 385,000 481,250 577,500 673,750 770,000
1,200,000 315,000 420,000 525,000 630,000 735,000 840,000
- ------------------------------------------------------------------------------------
</TABLE>
(1) The benefits payable under the drilling and aviation pension plan as
reflected in the table are not subject to reduction for Social Security
benefits or other offset amounts.
(2) As of December 31, 1999, the Named Executive Officers (excluding D. C.
Eckermann) 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:
<TABLE>
<S> <C>
C. R. Palmer 40
R. G. Croyle 26
D. F. McNease 25
E. E. Thiele 30
</TABLE>
(3) The estimated annual benefit amount payable upon retirement to Mr. Palmer is
$620,753. The other Named Executive Officers (excluding D. C. Eckermann)
will essentially receive an annual benefit based upon their 1999 salary
amount as set forth under "Salary" in the table on page 10 and their years
of credited service under the pension plan as shown in Footnote (2).
(4) The estimated annual benefit amount payable upon retirement to D. C.
Eckermann is approximately $35,333, such benefit being based upon his 19
years of projected service at age 65 under the Company's manufacturing
employees pension plan and four years under a predecessor plan.
12
<PAGE> 17
Rowan Companies, Inc. 2000 Proxy Statement
STOCK PERFORMANCE GRAPHS
The line graph below compares the yearly and cumulative percentage changes in
each of the Company's Common Stock, the Standard & Poor's Composite 500 Stock
Index and a Company-selected peer group index, for the five-year period ending
December 31, 1999.
- --------------------------------------------------------------------------------
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
ROWAN COMMON STOCK, S&P 500 INDEX & COMPANY-SELECTED PEER GROUP**
(Assumes $100 Invested on December 31, 1994)
[Comparison of Five-Year Cumulative Total Return Graph*]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Rowan....................................................... $100 $154 $362 $488 $158 $347
S&P 500..................................................... $100 $137 $169 $225 $285 $341
Peer Group**................................................ $100 $205 $438 $605 $187 $389
</TABLE>
Fiscal Year Ended December 31
*Total return assumes reinvestment of dividends.
**ENSCO International Incorporated, Global Marine, Inc., Noble Drilling
Corporation and R&B Falcon Corporation
- --------------------------------------------------------------------------------
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 seventeen-year period,
the Company, and the industry as a whole, have generally experienced conditions
more closely associated with the latter; though the Company anticipates 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 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 on page 14 which reflects the yearly percentage change
in and cumulative total
13
<PAGE> 18
Rowan Companies, Inc. 2000 Proxy Statement
stockholder return on each of the Company's Common Stock and the same
Company-selected peer group for the period of 17 calendar years commencing
January 1, 1983 and ending December 31, 1999.
- --------------------------------------------------------------------------------
COMPARISON OF SEVENTEEN-YEAR CUMULATIVE TOTAL RETURN*
ROWAN COMMON STOCK & COMPANY-SELECTED PEER GROUP**
(Assumes $100 Invested on December 31, 1982)
[GRAPH COMPARISON OF SEVENTEEN-YEAR CUMULATIVE TOTAL RETURN]
<TABLE>
<CAPTION>
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rowan................ $100 $113 $ 88 $ 78 $ 40 $ 53 $ 58 $113 $113 $ 58 $ 79 $ 91 $ 63
Peer Group**......... $100 $ 92 $ 61 $ 32 $ 21 $ 37 $ 25 $ 45 $ 36 $ 20 $ 16 $ 33 $ 28
<CAPTION>
1995 1996 1997 1998 1999
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Rowan................ $ 97 $228 $307 $100 $219
Peer Group**......... $ 57 $122 $168 $ 52 $108
</TABLE>
Fiscal Year Ended December 31
*Total return assumes reinvestment of dividends.
**ENSCO International Incorporated, Global Marine, Inc., Noble Drilling
Corporation and R&B Falcon Corporation
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN
TRANSACTIONS
During February and March 2000, the Company paid $5,150,000 in underwriting
commissions to Lehman Brothers Inc., an investment banking firm, for services
rendered by that firm as sole manager of the Company's 10.3 million share common
stock offering initiated in 1999 and concluded in early 2000. Mr. H. E. Lentz, a
Class I Director of the Company, is a Managing Director of Lehman Brothers Inc.
Mr. C. W. Yeargain, a Class III Director not standing for reelection and who was
an Executive Vice President of the Company until his retirement in March 1991,
earned and was paid by the Company $300,000 in consulting fees in 1999.
Mr. Hans M. Brinkhorst, a Class I Director of the Company, is also a director of
N.Z.D. (Noordzee Drill) B.V., a wholly owned subsidiary of the Company, and has
a consultancy agreement with Rowan Energy Investments, Inc., also a wholly owned
subsidiary. In 1999, Mr. Brinkhorst did not receive any director fees or
consulting fees from either entity.
14
<PAGE> 19
Rowan Companies, Inc. 2000 Proxy Statement
PRINCIPAL STOCKHOLDERS
To the knowledge of the Company, no person owned more than 5% of the outstanding
shares of Common Stock at March 3, 2000.
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 Securities Exchange
Act of 1934 to file with the Securities and Exchange Commission 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, 1999.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for presentation at the 2001
Annual Meeting of Stockholders must forward such proposal to the Secretary of
the Company, at the address below, so that the Secretary receives it no later
than November 16, 2000.
Other stockholder proposals submitted for consideration at the Company's 2001
Annual Meeting of Stockholders (but not for inclusion in the proxy statement or
proxy card) must be received by the Secretary of the Company at the address
indicated in the adjacent column no later than January 27, 2001.
If such timely notice of a stockholder proposal is given but is not accompanied
by a written statement in compliance with applicable securities laws, the
Company's proxy committee may exercise discretionary voting authority over
proxies with respect to such proposal if presented at the Company's 2001 Annual
Meeting of Stockholders.
OTHER BUSINESS
We are not aware of any other matters that 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 you indicate otherwise on your proxy.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP has been selected as principal auditors for
the Company for the year ending December 31, 2000. A representative of Deloitte
& Touche is expected to be present at the Annual Meeting of Stockholders on
April 28, 2000 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.
FORM 10-K
THE COMPANY WILL FURNISH WITHOUT CHARGE TO ANY PERSON WHOSE PROXY IS BEING
SOLICITED, UPON WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, 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 BELOW.
QUESTIONS?
If you have any questions or need more information about the annual meeting,
write to:
Mark H. Hay, Secretary
Rowan Companies, Inc.
2800 Post Oak Boulevard
Suite 5450
Houston, Texas 77056-6196
15
<PAGE> 20
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 28, 2000 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 PROPOSAL 1 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> 21
ROWAN COMPANIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
<TABLE>
<S> <C> <C> <C> <C>
The Board of Directors unanimously (Except nominee(s)
recommends a vote FOR: FOR WITHHOLD FOR ALL written below from
ALL ALL EXCEPT whom vote is withheld)
1. The election of the following nominees [ ] [ ] [ ] _____________________
for Class III Directors:
01-Henry O. Boswell, _____________________
02-Frederick R. Lausen
and 03-C. R. Palmer _____________________
2. In their discretion, the proxies are
authorized to vote on any other matter
that may properly come before the meeting.
_________________________________________
Signature
_________________________________________
Signature if held jointly
Dated _______________________ , 2000
Please complete, sign and return this
proxy promptly in the enclosed envelope.
Sign exactly as the name appears hereon.
Executors, administrators, trustees, etc.
should so indicate when signing. When
shares are held by joint tenants, both
should sign. If the signature is for a
corporation, please sign the full
corporate name by an authorized officer.
If the signature is for a partnership,
please sign the full partnership name
by an authorized person. If shares are
registered in more than one name, all
holders must sign.
- ----------------------------------------------------------------------------------------------------
</TABLE>
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
