def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule
14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o |
|
Preliminary Proxy Statement |
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ |
|
Definitive Proxy Statement |
o |
|
Definitive Additional Materials |
o |
|
Soliciting Material Pursuant to §240.14a-12 |
Parker Drilling Company
(Name of Registrant As Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
|
1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
3) |
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
|
|
|
|
|
|
4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
5) |
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
|
1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
2) |
|
Form, Schedule or Registration Statement No. |
|
|
|
|
|
|
|
|
|
|
|
3) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
4) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
Notice of
Annual Meeting of Shareholders and Proxy Statement
March 23, 2007
PARKER DRILLING COMPANY
1401 Enclave Parkway
Houston, TX 77077
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To our Shareholders:
The Annual Meeting of Shareholders of Parker Drilling Company, a Delaware corporation, will be
held on Wednesday, April 25, 2007, at 10 a.m. Central Time, at the Marriott Houston Westchase, 2900
Briarpark Drive, Houston, Texas, for the following purposes:
|
(1) |
|
to elect two nominees to Class II of our Board of Directors for a three-year
term; |
|
|
(2) |
|
to consider and vote upon a proposed amendment to the Companys Restated
Certificate of Incorporation to increase the authorized number of shares of Company
common stock from 140,000,000 to 280,000,000; |
|
|
(3) |
|
to consider and act upon a proposal for the ratification of the selection made
by our Audit Committee appointing KPMG LLP as our independent registered public
accounting firm for the year ending December 31, 2007; and |
|
|
(4) |
|
to transact such other business as may properly come before the meeting and all
adjournments or postponements thereof. |
We will also report our 2006 performance and answer your questions. You will have the
opportunity to meet the directors and officers of the Company. In addition, a representative of
KPMG LLP, our independent registered public accounting firm, will be present and available to
answer appropriate questions.
The record date for the determination of the shareholders entitled to vote at the Annual
Meeting is fixed as of the close of business on March 9, 2007.
A list of shareholders entitled to vote at the Annual Meeting will be open to examination by
any shareholder, for any purpose relevant to the meeting, at the location of the Annual Meeting on
April 25, 2007, and during ordinary business hours for ten days prior to the meeting at 1401
Enclave Parkway, Suite 600, Houston, Texas 77077.
Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you
will vote as soon as possible. You may vote over the Internet, as well as by telephone or by
mailing a proxy or voting instruction card. Voting on the Internet, by telephone or by written
proxy will ensure your representation at the Annual Meeting regardless of whether you attend in
person. Please review the instructions on the proxy or voting instruction card regarding each of
these voting options.
Thank you for your ongoing support and continued interest in Parker Drilling Company. We look
forward to seeing you at the meeting. If you cannot attend the Annual Meeting, please log on to
our Web site at http://www.parkerdrilling.com as we will post a summary of the Annual
Meeting shortly thereafter.
|
|
|
|
|
|
|
By order of the Board of Directors,
|
|
|
|
|
|
|
|
|
|
![-s- Ronald C. Potter](h43681dfh4368103.gif) |
|
|
|
|
|
|
|
|
|
Ronald C. Potter |
|
|
|
|
Corporate Secretary |
|
|
1
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
6 |
|
|
|
|
6 |
|
|
|
|
6 |
|
|
|
|
6 |
|
|
|
|
7 |
|
|
|
|
7 |
|
|
|
|
7 |
|
|
|
|
7 |
|
|
|
|
7 |
|
|
|
|
7 |
|
|
|
|
8 |
|
|
|
|
8 |
|
|
|
|
8 |
|
|
|
|
8 |
|
|
|
|
8 |
|
|
|
|
8 |
|
|
|
|
9 |
|
|
|
|
9 |
|
|
|
|
9 |
|
|
|
|
9 |
|
|
|
|
10 |
|
|
|
|
10 |
|
|
|
|
10 |
|
|
|
|
11 |
|
|
|
|
11 |
|
|
|
|
11 |
|
|
|
|
11 |
|
|
|
|
12 |
|
2
|
|
|
|
|
|
|
|
12 |
|
|
|
|
13 |
|
|
|
|
13 |
|
|
|
|
13 |
|
|
|
|
13 |
|
|
|
|
13 |
|
|
|
|
14 |
|
|
|
|
14 |
|
|
|
|
14 |
|
|
|
|
14 |
|
|
|
|
15 |
|
|
|
|
15 |
|
|
|
|
16 |
|
|
|
|
17 |
|
|
|
|
18 |
|
|
|
|
18 |
|
|
|
|
18 |
|
|
|
|
19 |
|
|
|
|
20 |
|
|
|
|
20 |
|
|
|
|
21 |
|
|
|
|
21 |
|
|
|
|
22 |
|
|
|
|
22 |
|
|
|
|
22 |
|
|
|
|
23 |
|
|
|
|
23 |
|
|
|
|
23 |
|
|
|
|
24 |
|
|
|
|
25 |
|
|
|
|
26 |
|
|
|
|
27 |
|
|
|
|
27 |
|
|
|
|
27 |
|
|
|
|
29 |
|
3
|
|
|
|
|
|
|
|
29 |
|
|
|
|
32 |
|
|
|
|
32 |
|
|
|
|
33 |
|
|
|
|
33 |
|
|
|
|
33 |
|
|
|
|
33 |
|
|
|
|
34 |
|
|
|
|
34 |
|
|
|
|
35 |
|
|
|
|
35 |
|
|
|
|
35 |
|
|
|
|
36 |
|
|
|
|
38 |
|
|
|
|
38 |
|
|
|
|
38 |
|
|
|
|
38 |
|
|
|
|
39 |
|
|
|
|
39 |
|
|
|
|
39 |
|
|
|
|
40 |
|
|
|
|
41 |
|
|
|
|
42 |
|
|
|
|
43 |
|
|
|
|
43 |
|
|
|
|
44 |
|
|
|
|
49 |
|
|
|
|
50 |
|
|
|
|
51 |
|
|
|
|
53 |
|
|
|
|
57 |
|
|
|
|
59 |
|
|
|
|
60 |
|
4
PARKER DRILLING COMPANY
1401 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077
PROXY STATEMENT
About the Annual Meeting
Why am I receiving these materials?
The accompanying proxy is solicited by the Board of Directors (Board) of Parker Drilling Company
(Parker, the Company, we, us, or our) in connection with our 2007 Annual Meeting of
Shareholders (the Annual Meeting) which will take place on April 25, 2007 at 10 a.m. Central
Time, at the Marriott Houston Westchase, 2900 Briarpark Drive, Houston, Texas. As a shareholder,
you are invited to attend the Annual Meeting and are entitled to and requested to vote on the items
of business described in this Proxy Statement. This Proxy Statement, form of proxy and voting
instructions are being distributed on or about March 23, 2007.
Who may attend the meeting?
Your proxy card is your invitation to attend the Annual Meeting. If you plan to attend the Annual
Meeting, please vote your proxy prior to the meeting, but you may also bring your proxy card and
vote at the meeting as explained below.
No cameras, recording equipment or electronic devices will be permitted in the Annual Meeting.
What information is contained in this Proxy Statement?
The information included in this Proxy Statement relates to the proposals to be voted on at the
Annual Meeting, the voting process, the compensation of directors and most highly paid executive
officers and certain other required information.
Who is entitled to vote at the Annual Meeting?
Holders of Parker common stock (Common Stock) at the close of business on the record date of
March 9, 2007, are entitled to vote their shares at the Annual Meeting. On the record date, there
were 109,215,683 shares of Common Stock issued and outstanding.
Each share of Common Stock is entitled to one vote on each matter properly brought before the
Annual Meeting. You may vote all shares owned by you as of this time, including (1) shares held
directly in your name as the shareholder of record, including shares acquired through Parkers
401(k) plan, and (2) shares held by you as the beneficial owner through a broker, trustee or other
nominee such as a bank.
How do I vote my shares at the Annual Meeting?
If you are a record shareholder of Parker Common Stock (that is, your shares are registered
directly in your name in Parkers stock records maintained by Parkers transfer agent, Wells Fargo
Bank, N.A.), you may complete and sign the accompanying proxy card and return it to Parker or
deliver it in person. In addition, you may vote through the Internet or by using a toll-free
telephone number by following the instructions included with the proxy card. Please note that you
may incur costs such as telephone and Internet access charges for which you will be responsible.
The Internet and telephone voting facilities for shareholders of record will close at 11:59 p.m.
Central Time on April 24, 2007.
Street name or beneficial shareholders of Parker Common Stock (that is, shareholders who hold
stock through a brokerage account or by another trustee or nominee) who wish to vote at the Annual
Meeting will receive a proxy form from the broker, trustee or nominee that holds their shares and
must follow the voting instructions on the form provided by the broker, trustee or nominee. As the
beneficial owner, you have the right to direct your broker, trustee or nominee how to vote and are
also invited to attend the Annual Meeting.
5
Since a beneficial owner is not the shareholder of record, you may not vote these shares in person
at the meeting unless you obtain a legal proxy from the broker, trustee or nominee that holds
your shares, giving you the right to vote the shares at the meeting. Your broker, trustee or
nominee has enclosed or otherwise provided voting instructions for you to use in directing the
broker, trustee, or nominee how to vote your shares.
If you are a participant in the Parker Drilling Company 401(k) or Stock Bonus Plan, you will
receive a separate proxy card for all shares that you own through this plan. That proxy card will
serve as a voting instruction card for the trustees or administrators of the plan where your
account is registered in the same name. If you own shares in this plan and do not vote, the
trustee of the plan will vote your plan shares in the same proportion as shares for which
instructions were received from other participants in the plan.
How can I vote my shares without attending the Annual Meeting?
Your vote is important. You can save us the expense of a second mailing by voting promptly.
Shareholders of record can vote by telephone, on the Internet, by mail or by attending the Annual
Meeting and voting by ballot as described below. (Please note, if you are a beneficial owner,
please refer to your proxy card or the information forwarded by your bank, broker or other holder
of record to see which options are available to you).
The Internet and telephone voting procedures are designed to authenticate shareholders by use of a
control number and to allow you to confirm that your instructions have been properly recorded. If
you vote by telephone or on the Internet, you do not need to return your proxy card. Telephone and
Internet voting facilities for shareholders of record will be available 24 hours a day, but the
vote needs to be submitted before 11:59 p.m., Central Time, on April 24, 2007.
Vote by Telephone
You do this by following the Vote by Telephone instructions on your proxy card. If you vote by
telephone, you do not have to mail in your proxy card.
Vote by Internet
You do this by following the Vote by Internet instructions on your proxy card. If you vote by
Internet, you do not have to mail in your proxy card.
Vote by Mail
You do this by completing and signing the proxy card that came with your Proxy Statement and
mailing it in the enclosed, prepaid and addressed envelope. If you mark your voting instructions
on the proxy card, your shares will be voted:
|
|
|
as you instruct, and |
|
|
|
|
according to the best judgment of Robert L. Parker Jr. and W. Kirk Brassfield if a
proposal comes up for vote at the meeting that is not on the proxy card. |
If you do not mark your voting instructions on your proxy card, your shares will be voted:
|
|
|
for the election of the two Class II nominees for director, |
|
|
|
|
for the proposal to amend the Restated Certificate of Incorporation to increase the
number of shares of authorized common stock from 140,000,000 to 280,000,000, |
|
|
|
|
for the proposal to ratify the appointment of KPMG LLP as the Companys independent
registered public accounting firm for 2007, and |
|
|
|
|
according to the best judgment of Robert L. Parker Jr. and W. Kirk Brassfield if a
proposal comes up for vote at the Annual Meeting that is not on the proxy card. |
6
What items of business will be voted on at the Annual Meeting?
The items of business scheduled to be voted on at the Annual Meeting are:
|
|
|
election of two Class II directors, |
|
|
|
|
amendment to the Restated Certificate of Incorporation to increase the number of shares
of authorized common stock from 140,000,000 to 280,000,000, and |
|
|
|
|
ratification of KPMG LLP as the Companys independent registered public accounting firm
for 2007. |
We will also consider other business that properly comes before the Annual Meeting, although the
Company is not aware of any such business at this time.
How does the Board recommend that I vote?
Our Board recommends that you vote your shares FOR each of the Class II nominees to the Board,
FOR the proposal to amend the Restated Certificate of Incorporation to increase the number of
shares of authorized common stock from 140,000,000 to 280,000,000, and FOR the ratification of
the appointment of KPMG LLP as our independent registered public accounting firm for 2007.
Can I change my vote?
If you are a shareholder of record, you can revoke your proxy and change your vote at any time
before the proxy is exercised by:
|
|
|
timely written notice to the Secretary of the Company, |
|
|
|
|
timely delivery of a valid, later-dated proxy or a later-dated vote by telephone or on the Internet, |
|
|
|
|
voting by ballot at the Annual Meeting. |
For shares you hold as beneficial owner, you may change your vote by submitting new voting
instructions to your broker, trustee, nominee or other record holder; or, if you have obtained a
legal proxy from your broker or nominee giving you the right to vote your shares, you can change
your vote by attending the meeting and voting in person.
What happens if additional matters are presented at the Annual Meeting?
Other than the three items of business described in this Proxy Statement, we are not aware of any
other business to be acted upon at the Annual Meeting. If you grant your proxy, the persons named
as proxy holders, Robert L. Parker Jr. and W. Kirk Brassfield, will have the discretion to vote
your shares on any additional matters properly presented for a vote at the Annual Meeting. If for
any unforeseen reason any of our nominees is not available as a candidate for director, the persons
named as proxy holders will vote your proxy for such other candidate or candidates as may be
nominated by the Board. We know of no reason why any of the nominees will be unavailable or unable
to serve.
The chairman of the meeting may refuse to allow the transaction of any business not presented
beforehand, or to acknowledge the nomination of any person other than as provided under Nomination
of Director Candidates on page 10.
What constitutes a quorum?
The presence of the holders of a majority of the outstanding shares of Common Stock entitled to
vote at the Annual Meeting, present in person or represented by proxy, is necessary to constitute a
quorum. Abstentions are counted as present and entitled to vote for purposes of determining a
quorum.
How can I vote my shares in person at the meeting?
We will pass out written ballots to any shareholder of record who wants to vote in person at the
meeting. However, if you are the beneficial owner of shares held in street name, you must request
and obtain a legal proxy, executed in your favor, from the broker, trustee, nominee or other holder
of record in order to vote at the meeting. Even if you plan to attend the Annual Meeting, we
recommend that you also submit your proxy or voting instruction card as described below so that
your vote will be counted if you later decide not to attend the Annual Meeting.
7
What are the voting requirements to approve each of the proposals?
A plurality of the votes cast is required for the election of directors. This means that the
director nominee with the most votes for a particular position on the Board is elected for that
position. Abstentions and withheld votes will have no effect on the election of directors.
Cumulative voting is not permitted.
The affirmative vote of a majority of the outstanding shares of common stock is required for the
approval of the proposal to amend the Restated Certificate of Incorporation to increase the number
of shares of authorized common stock and the affirmative vote of a majority of the shares of common
stock present in person or by proxy at the Annual Meeting and entitled to vote is required to
ratify the appointment of KPMG LLP as the independent registered public accounting firm for the
Company. You may vote for or against the proposal to amend the Restated Certification of
Incorporation to increase the number of shares of authorized common stock and for or against
the ratification of appointment of KPMG LLP as our independent registered public accounting firm,
or abstain from voting.
Votes withheld and abstentions are deemed as present at the Annual Meeting, are counted for
quorum purposes, and other than for Item 1, will have the same effect as a vote against the matter.
Broker non-votes, if any, while counted for general quorum purposes, are not deemed to be
present with respect to any matter for which a broker does not have authority to vote.
If you are a beneficial owner and your broker holds your shares in its name, the broker is
permitted to vote your shares on routine matters, e.g., the election of directors, the amendment of
the Restated Certificate of Incorporation and the ratification of the appointment of KPMG LLP as
our independent registered public accounting firm, even if your broker does not receive voting
instructions from you.
Where can I find the voting results of the Annual Meeting?
We will announce voting results at the meeting. We will publish these results in our quarterly
report on Form 10-Q for the first quarter of 2007 which will be filed with the Securities and
Exchange Commission (SEC). A copy of the report will be available in the Investor Relations
section of our Web site at http://www.parkerdrilling.com and through the SECs electronic data
system at http://www.sec.gov. You can get a paper copy by contacting our Investor Relations
Department at (281) 406-2370 or the SEC at (202) 942-8090 for the location of the nearest public
reference room.
What is the difference between holding shares as a shareholder of record and as a beneficial owner?
Most Parker shareholders hold their shares through a broker or other nominee rather than directly
in their own name. See above answer to How do I vote my shares at the Annual Meeting?
Who can help answer my questions?
If you have any questions about the Annual Meeting or how to vote or revoke your proxy, you should
contact:
Wells Fargo Bank, N.A.
Shareowner Services
P. O. Box 64854
St. Paul, MN 55164-0854
Toll free: (800) 468-9716
Phone: (651) 450-4064
If you need additional copies of this Proxy Statement or voting materials, please contact Wells
Fargo Bank, N.A. as described above.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual shareholders are
handled in a manner to protect your voting privacy. Your vote will not be disclosed to Parker or
to third parties, except: (1) as necessary to meet applicable legal requirements; (2) to allow for
the tabulation of votes and certification of the vote; and (3) to facilitate a successful proxy
solicitation.
What should I do if I receive more than one set of voting materials?
You may receive more than one set of voting materials, including multiple copies of this Proxy
Statement and multiple proxy cards or voting instruction cards. For example, if you hold your
shares in more than one brokerage account, you may receive a separate voting instruction card for
each brokerage account in
8
which you hold shares. If you are a shareholder of record and your shares are registered in more
than one name, you will receive more than one proxy card. Please vote each Parker proxy card
received via telephone, Internet or by mailing the proxy card.
If you would like to combine various accounts of your household into one for purposes of proxy
solicitation and voting, please contact our stock transfer agent at (800) 468-9716 and instruct the
shareowner services representative to do so.
If you are a Parker employee, you will receive a separate proxy card for all the shares you hold:
|
|
|
in your own name, and |
|
|
|
|
in the Parker 401(k) plan. |
If you do not specify voting instructions for shares in the Parker 401(k) plan, the trustee of the
401(k) plan will vote your shares in the same proportion to the votes for the other shares for
which voting instructions have been received.
How may I obtain a separate set of voting materials?
If you share an address with another shareholder, only one set of proxy materials (including our
Annual Report to Shareholders, 2006 Form 10-K and Proxy Statement) is being delivered to this
address, unless you have provided contrary instructions to us. If you wish to receive a separate
set of proxy materials now or in the future, you may write or call to request a separate copy of
these materials from our transfer agent at:
Wells Fargo Bank, N.A.
Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-0854
Toll free: (800) 468-9716
Phone: (651) 450-4064
Who will bear the cost of soliciting votes for the Annual Meeting?
Parker is making this solicitation and will pay the entire cost of preparing, assembling, printing,
mailing and distributing these proxy materials and soliciting votes. If you choose to vote over
the Internet, you are responsible for Internet access charges you may incur. If you choose to vote
by telephone, you are responsible for telephone charges you may incur. In addition to the mailing
of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone
or by electronic communications by our directors, officers and employees, who will not receive any
additional compensation for such solicitation activities. We have also hired Georgeson Inc.
(Georgeson) to assist us in the distribution of proxy materials and the solicitation of votes
described above. We will pay Georgeson a fee of $8,500 plus customary costs and expenses for these
services. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries
for forwarding proxy and solicitation materials to shareholders.
How can I get a list of shareholders?
The names of shareholders of record entitled to vote will be available at the Annual Meeting and
for ten days prior to the Annual Meeting for any purpose relevant to the Annual Meeting, between
the hours of 8:00 a.m. and 4:30 p.m., Central Time, at our principal corporate offices at 1401
Enclave Parkway, Suite 600, Houston, Texas, by contacting the Corporate Secretary of the Company.
What is the deadline to propose actions for consideration at next years Annual Meeting of
Shareholders or to nominate individuals to serve as directors?
You may submit proposals, including director nominations, for consideration at future shareholder
meetings.
Shareholder Proposals: In order for a shareholder proposal to be considered for inclusion
in the proxy statement for the annual meeting next year, the written proposal must be received by
the Corporate Secretary of Parker at our principal executive offices at 1401 Enclave Parkway, Suite
600, Houston, Texas 77077 no later than November 24, 2007. The 2008 Annual Meeting is currently
scheduled for April 23, 2008.
9
For a shareholder proposal that is not intended to be included in Parkers Proxy Statement under
Rule 14a-8, the shareholder must deliver a proxy statement and form of proxy to holders of a
sufficient number of shares of Parker Common Stock to approve that proposal, provide the
information required by the by-laws of Parker and give timely notice to the Corporate Secretary of
Parker, which, in general, requires that the notice be received by the Corporate Secretary of
Parker no later than 90 days and no more than 120 days in advance of next years annual meeting.
If less than 100 days notice or prior public disclosure of the date of the annual meeting is given
or made to shareholders, notice by the shareholder to be timely must be received not later than the
close of business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made.
Nomination of Director Candidates: You may propose director candidates for consideration
by the Corporate Governance Committee by submitting the candidates name and other relevant
information to the Presiding Director of Parkers Board at the principal executive offices set
forth above. In order to allow time for review of the candidates credentials, please submit
candidates to the Board by December 31, 2007. Our procedure for selection of director candidates
is described below under Selection of Nominees as Director Candidates.
In addition, the By-laws of Parker permit shareholders to nominate directors for election at the
Annual Meeting. To nominate a director, the shareholder must deliver the information required by
the By-laws of Parker and by Regulation 14A of the Securities Exchange Act of 1934. In addition,
the shareholder must give notice to the Corporate Secretary of Parker no later than 90 days and no
more than 120 days in advance of next years annual meeting. The 2008 Annual Meeting is currently
scheduled for April 23, 2008.
How may I obtain Parker Drillings Annual Report on Form 10-K?
A copy of our 2006 Annual Report on Form 10-K is enclosed. It is part of our Annual Report to
Shareholders.
Shareholders may request another free copy of the 2006 Annual Report on Form 10-K from our
corporate office address or it may be accessed on our Web site at http://www.parkerdrilling.com.
Where can I find more information about Parker?
Parker maintains a corporate Web site at http://www.parkerdrilling.com and shareholders can find
additional information about the Company through the Investor Relations section of the Web site.
Visitors to the Investor Relations portion of the Web site can view and print copies of the
Companys SEC filings, including Forms 10-K, 10-Q, and 8-K as soon as reasonably practicable after
those filings are made with the SEC. Copies of the charters for each of the Audit Committee, the
Compensation Committee and the Corporate Governance Committee, and Parkers Code of Corporate
Conduct and Parkers Corporate Governance Principles are all available through the Web site.
Alternatively, shareholders may obtain, without charge, copies of all of these documents by writing
to the Corporate Secretary at 1401 Enclave Parkway, Suite 600, Houston, Texas 77077. Please note
that the information contained on Parkers Web site is not incorporated by reference or considered
to be a part of this Proxy Statement.
How can I get a copy of By-Law provisions?
You may contact the Parker Corporate Secretary at our principal executive offices for a copy of the
relevant By-law provisions regarding the requirements for making shareholder proposals and
nominating director candidates.
10
GOVERNANCE OF THE COMPANY
Corporate Governance Principles
In January 2004, the Board of Directors (Board) approved the Companys Corporate Governance
Principles, which comply with the minimum requirements of the corporate governance listing
standards of the New York Stock Exchange (NYSE). In February of 2005, the Board approved certain
revisions to the Corporate Governance Principles to reflect the Boards determination regarding the
size of the Board. In February 2007 the Board approved further revisions to clarify that the
non-management members of the Board shall hold regular meetings and the independent directors shall
meet at least once each year and that the Board will appoint a Presiding Director at its first
regularly scheduled meeting each year to (i) preside at the meetings of the non-management and
independent directors, (ii) receive and address communications from interested parties and (iii)
act as the principal liaison between the non-management directors and the Chief Executive Officer.
A copy of the revised Corporate Governance Principles is attached hereto as Annex B. From time to
time we may further revise our Corporate Governance Principles in response to changing regulatory
requirements, evolving best practices, and the concerns of shareholders. Our Corporate Governance
Principles are also published on our Web site at http://www.parkerdrilling.com in the
About Us section under Governance and a free copy can be obtained by writing to Investor
Relations at the Companys headquarters.
Presiding Director
In accordance with the Corporate Governance Principles in effect during 2006, Dr. Robert M. Gates,
chairman of the Corporate Governance Committee, acted as Presiding Director of the meetings of the
non-management directors and at least one meeting of the independent directors, as required by the
NYSE corporate governance listing standards. As Presiding Director, Dr. Gates responsibilities
included (i) acting as the principal liaison between the non-management directors and the Chief
Executive Officer, (ii) coordinating the activities of the non-management directors and the
independent directors when acting as a group and (iii) receiving and addressing communications from
interested parties contacting the non-management directors. During 2006, the non-management
directors held three regularly scheduled meetings in conjunction with the regular Board meetings,
and the independent directors met separately on at least one occasion. Dr. Gates resigned as a
member of the Board on December 8, 2006, to accept a Presidential appointment as Secretary of
Defense of the United States. At a meeting of the Board on February 23, 2007, Mr. R. Rudolph
Reinfrank was appointed to act as Presiding Director in 2007.
Communications with the Board
Shareholders and other parties interested in communicating directly with the Presiding Director,
with the non-management directors as a group or with the Board may do so by writing to the
Presiding Director, Parker Drilling Company, 1401 Enclave Parkway, Suite 600, Houston, Texas 77077,
whose contact information is also provided on our Web site. The Board has approved a process for
handling these communications as follows:
|
|
|
The General Counsel is to review the correspondence. |
|
|
|
|
The Presiding Director has directed the General Counsel to forward all correspondence
that relates to human resource matters to the Director of Human Resources. |
|
|
|
|
The Presiding Director has directed the General Counsel to forward all non-human
resources correspondence to the Presiding Director. |
|
|
|
|
The Presiding Director will determine, based on a process and criteria unanimously
approved by the non-management directors, whether or not such communication warrants
consideration by a committee of the Board or by the entire Board. |
|
|
|
|
When appropriate, the Presiding Director will respond to the communication on behalf of
the non-management directors or the Board. |
|
|
|
|
Concerns relating to accounting, internal controls or auditing matters are immediately
brought to the attention of the Companys Director of Internal Audit and/or General Counsel
in accordance with the Companys whistleblower policy described below under Procedure for
Reporting Complaints Regarding Accounting Practices, Internal Accounting Controls and Audit
Practices. Such matters are investigated by the Director of Internal Audit and/or the
General Counsel and are reported to the Audit Committee and the Audit Committee directs any
remediation that it deems appropriate. |
11
Selection of Nominees as Director Candidates
The Corporate Governance Committee considers candidates for Board membership suggested by its
committee members and other Board members, as well as management and the shareholders. The
Corporate Governance Committee also has the authority to retain a third-party search firm to assist
in identification of qualified candidates. A shareholder who wishes to recommend a candidate to be
considered as a director nominee should notify the Presiding Director in writing at: Presiding
Director, Parker Drilling Company, 1401 Enclave Parkway, Suite 600, Houston, Texas 77077, and
include any supporting information that the shareholder deems appropriate by December 31, 2007, to
enable the Corporate Governance Committee sufficient time to review the qualifications of
candidates. The Corporate Governance Committee will also consider whether to nominate any person
submitted pursuant to the provisions of the Companys By-laws described above relating to
shareholder nomination.
The Corporate Governance Committee is responsible for reviewing candidates and proposing candidates
for director nominees each year. The Corporate Governance Committee Charter includes a provision
which requires the Corporate Governance Committee to review the qualifications of any candidate who
has been submitted by a shareholder for consideration as a director nominee and advise the Board of
its assessment. The Corporate Governance Principles and Corporate Governance Committee Charter do
not provide any minimum qualifications, but do provide that the directors should consider
independence, diversity, age, skills, and experience in the context of the needs of the Board in
making its determination of an appropriate candidate. The procedure for evaluating candidates
recommended by shareholders is identical to the procedure for evaluating candidates proposed by
other directors, management or by a search firm hired by the Corporate Governance Committee.
Upon the retirement of Mr. Robert L. Parker Sr. and the resignation of Dr. Robert M. Gates during
2006, the three classes of the Board were no longer similar in size, necessitating a
re-apportionment in order to comply with Section 304 of the NYSE Company Manual. At a meeting of
the Board on February 23, 2007, the Board determined to re-apportion the classes of the Board, by
moving Mr. Gibson, Jr. from Class I to Class III, resulting in the following classes:
Class I: Messrs. Reinfrank, Whalen and Goldman
Class II: Messrs. McKee and Donnelly
Class III: Messrs. Parker Jr., Gibson, Jr. and Plank
This re-apportionment will result in Mr. Gibson, Jr. standing for election one year earlier than he
otherwise would had he remained in Class I.
Director Independence Determination
In accordance with the NYSE corporate governance listing standards, on February 23, 2007, the Board
conducted its annual review of director independence to determine whether or not any non-management
directors had any material relationships or had engaged in material transactions with the Company.
The analysis was based on information obtained from the directors in response to a director and
officer questionnaire that each director and officer is required to complete each year, including
disclosure of any transaction(s) with the Company in which the director, or any member of his or
her immediate family, have a direct or indirect material interest. During these reviews, the Board
considered transactions and relationships between each director or any member of his immediate
family and the Company and its subsidiaries and affiliates, including those reported under Certain
Relationships and Related Party Transactions at page 22 of this Proxy Statement. The Board then
made a determination whether or not the identified transactions or relationships are addressed in
the specific independence criteria of the NYSE corporate governance listing standards, and, if so,
whether or not these transactions exceeded the objective thresholds for independence. The Board
further examined all other transactions and relationships to determine if such transaction(s),
irrespective of their magnitude in terms of the objective criteria specified by the NYSE, would
otherwise adversely affect the independence of any non-management director who had engaged in any
such transaction or had any relationship with the Company during 2006. As a result of this review,
the Board affirmatively determined that, with the exception of Mr. Whalen, former Chief Financial
Officer of the Company, who cannot be considered as independent for three years following the
termination of his Consulting Agreement on December 31, 2006, all of the non-management directors
are independent under the NYSE corporate governance listing standards on the basis that: (1) no
non-employee director has engaged in a transaction or has a
12
relationship with the Company that is contrary to or exceeds the thresholds of materiality as
established by the specific independence criteria of the NYSE at Section 303A.02(b) and (2) in the
considered opinion of the entire Board, the transactions of two subsidiaries of the Company with
Apache Corporation (Apache), of which Mr. Plank is Executive Vice President and Chief Financial
Officer, do not create any concern as to the independence of Mr. Plank, nor do they otherwise
impair Mr. Planks ability to render independent judgment under Section 303A.02(a), due to the size
of the transactions in comparison to Apaches gross revenues. Our independent directors are R.
Rudolph Reinfrank, John W. Gibson, Jr., Roger B. Plank, Robert E. McKee III, George J. Donnelly and
Robert W. Goldman. Dr. Robert M. Gates, who was a director in 2006 until his resignation effective
December 8, 2006, was determined by the Board to be an independent director during his tenure.
Parker Policy on Business Ethics and Conduct
All of our employees and Board members, including our Chief Executive Officer, Chief Financial
Officer and Principal Accounting Officer, are required to abide by Parkers Code of Corporate
Conduct to ensure that our business is conducted in accordance with the requirements of law and the
highest standards of ethics. The Code of Corporate Conduct contains provisions on financial ethics
consistent with the ethics requirements of the SEC that were instituted pursuant to the
Sarbanes-Oxley Act of 2002 (SOX) and the corporate governance listing standards of the NYSE.
The full text of the Parker Drilling Company Code of Corporate Conduct is published on our Web site
at http://www.parkerdrilling.com at About Us under the Governance section. In
accordance with the SEC rules, we will disclose any future amendments to the Code of Corporate
Conduct and any waivers of such code that affect directors and executive officers and senior
financial personnel within two business days following such amendment or waiver. A free copy of
the Code of Corporate Conduct is also available to anyone who requests it by writing to the
Corporate Secretary at 1401 Enclave Parkway, Suite 600, Houston, Texas 77077.
Procedure for Reporting Complaints Regarding Accounting Practices, Internal Accounting Controls and
Audit Practices
In accordance with the SEC regulations adopted pursuant to SOX, the Audit Committee has adopted a
procedure for the receipt, retention and handling of complaints regarding accounting practices,
internal accounting controls and auditing practices. This policy and procedure has been integrated
into the Companys existing whistleblower policy, which allows the confidential and anonymous
reporting of such matters, including other irregularities, via a hotline or over the Internet.
Additionally, such complaints can be reported directly to the Director of Internal Audit and/or the
General Counsel. The hotline number, the Internet site and the contact information for the
Director of Internal Audit and General Counsel are provided on the Companys Web site. The policy
provides that the complaints be reported to the Director of Internal Audit and/or General Counsel
for review, at which time they will be forwarded to the Audit Committee for further investigation
and handling as the Audit Committee deems appropriate.
Director Education
Parker is committed to ensuring that its directors remain informed regarding best practices in
corporate governance. Parker reimburses its directors for the costs of one seminar or training
class each year related to their service as members of the Board.
Policy on Director Attendance at Annual Meeting
Parkers Corporate Governance Principles provide that Board members are expected to be in
attendance at all meetings including the Annual Meeting of Shareholders. Each of the ten directors
was in attendance at the 2006 Annual Meeting.
Board and Committee Membership
The business of the Company is managed under the oversight of our Board. The Board has regularly
scheduled meetings and special meetings as necessary to effectively oversee the business of the
Company. In addition to meetings of the full Board, the non-management and independent directors
have separate meetings among themselves and also have the opportunity to meet with other officers
and review materials as provided to them or requested by them in order to be properly informed as
to the business affairs of the Company.
13
During 2006, the Board held four regularly scheduled meetings, one of which was a two-day
retreat, and five telephonic meetings. The non-management directors held three regularly
scheduled meetings in connection with regular Board meetings and the independent directors met
separately on at least one occasion. The Board has an Audit Committee, a Compensation Committee
and a Corporate Governance Committee. All of the incumbent directors attended at least 75% percent
of the meetings of the Board and its committees on which they served during their tenure as a
director and committee member during 2006.
The following table provides 2006 membership and meeting information for each of the committees of
the Board.
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
Name |
|
Audit |
|
Compensation |
|
Governance |
Mr. Reinfrank |
|
|
|
X* |
|
X |
Mr. McKee |
|
|
|
X |
|
|
Dr. Gates (1) |
|
|
|
|
|
X* |
Mr. Goldman |
|
|
|
X |
|
|
Mr. Gibson, Jr. |
|
X |
|
X |
|
|
Mr. Plank |
|
X* |
|
|
|
X |
Mr. Donnelly |
|
X |
|
|
|
|
2006 Meetings |
|
9 |
|
5 |
|
2 |
|
|
|
* |
|
Chair |
|
(1) |
|
Resigned from the Board and as chairman of the Corporate Governance Committee and Presiding
Director effective December 8, 2006. |
The Audit Committee
Audit Committee Independence Determination.
At a meeting in February 2007, the Board reviewed the
qualifications of the members of the audit committee and determined that, in addition to satisfying
the NYSE independence standards, each member of the Audit Committee satisfies the independence
requirements of the SEC, pursuant to Rule 10A-3 under the Securities Exchange Act of 1934.
Audit Committee Financial Expert.
At a meeting in February 2007, the Board confirmed that in
February 2005 it had reviewed the qualifications of each audit committee member and unanimously
determined that each member of the committee at that time met the requirements of an audit
committee financial expert pursuant to Item 407(d)(5)(ii) of Regulation S-K, including Mr. Plank,
who is currently chairman of the Audit Committee.
Financial Literacy and Financial Management Experience.
At a meeting in February 2007, the Board
reviewed the qualifications of each member of the Audit Committee and determined that each is
financially literate and that at least one member has financial management experience as required
by the NYSE corporate governance listing standards.
The Audit Committee has four regularly scheduled meetings each year, and schedules additional
meetings to review earnings releases and public filings. The Audit Committee also schedules
periodic meetings to be held separately with management, the internal auditor, the independent
accountant and other officers as the committee deems necessary to properly perform its functions
under its charter. The Audit Committee assists the Board with its monitoring of:
|
|
|
the integrity of the Companys financial statements and internal controls, |
|
|
|
|
the Companys compliance with legal and regulatory requirements, |
|
|
|
|
the independent registered public accounting firms qualifications and independence, and |
|
|
|
|
the performance of the internal audit function and the director of internal audit. |
The other specific responsibilities of the Audit Committee are set forth in its charter. The
committee reviewed its charter in February 2007 and determined, based on advice of counsel, that it
was consistent with best practices. The Audit Committee charter is available on our Web site at
http://www.parkerdrilling.com and in print upon request to: Parker Drilling Company, Corporate
Secretary, 1401 Enclave Parkway, Suite 600, Houston, Texas 77077; Telephone number: 281-406-2000.
14
The Compensation Committee
Compensation Committee Independence Determination.
In accordance with its Charter, the Compensation
Committee shall consist of no fewer than three directors, who shall not only meet the independence
requirements of the NYSE, but also be non-employee directors as defined by Rule 16b-3 under the
Securities Exchange Act of 1934 and outside directors as defined by Section 162(m) of the
Internal Revenue Code (IRC). The Committee is currently comprised of four members of the Board:
Mr. R. Rudolph Reinfrank, Chairman, and committee members: Mr. John W. Gibson, Jr., Mr. Robert E.
McKee III and Mr. Robert W. Goldman. Each member of the Committee is independent in accordance
with the corporate governance listing standards of the NYSE and satisfies the additional
requirements of the SEC and IRC. See page 12 of this Proxy Statement for independence analysis.
Although the Compensation Committee Charter has no specific requirements regarding the
qualifications of committee members, the committee conducts annual self-evaluations of its
performance and the Corporate Governance Committee reviews these evaluations and reports annually
to the Board whether or not the Compensation Committee is functioning efficiently and effectively.
In addition to remaining informed on the current issues and other matters relevant to the
performance of their duties as members of the committee, the current members of the committee
possess a significant amount of management experience in compensation related issues.
The primary responsibilities of the committee are set forth in its charter, and include without
limitation:
|
|
|
annually review and approve corporate goals and objectives relevant to CEO
compensation, annually evaluate the CEOs performance in light of those goals and
objectives, and establish the CEOs compensation based on this evaluation, |
|
|
|
|
annually review and recommend to the Board compensation of the non-CEO executive
officers, |
|
|
|
|
annually review the Companys incentive compensation and other stock-based plans and
recommend changes in such plans to the Board as they deem appropriate, |
|
|
|
|
define the compensation philosophy of the Company and assist in development and
implementation of the compensation policies of the Company consistent with this philosophy, |
|
|
|
|
establish the general framework for the rewards and incentives, both long and
short-term, to achieve the goals of the Companys compensation philosophy, |
|
|
|
|
regularly report to the Board the committees work, |
|
|
|
|
review and discuss with management the Compensation Discussion and Analysis and the
Compensation Committee Report recommending to the Board that the Compensation Discussion
and Analysis be included in the annual proxy statement, and |
|
|
|
|
annually review the Compensation Committee Charter. |
On February 23, 2007, the Compensation Committee recommended certain revisions in its charter in
connection with its annual review, which revisions contain changes recommended by the compensation
consultant and counsel to address recent SEC regulations on executive compensation and other
matters consistent with accepted practices. The revised charter was approved by the Board at a
meeting on the same date. The revised charter is attached hereto as Annex A and can also be found
on the Companys website at http://www.parkerdrilling.com. Alternatively, a print copy can
be obtained by writing to: Parker Drilling Company, Corporate Secretary, 1401 Enclave Parkway,
Suite 600, Houston, Texas 77077.
The charter of the committee grants the committee the authority to retain and terminate its own
compensation consultant and to obtain advice and assistance from internal or external legal,
accounting or other advisors. The Company provides appropriate funding, as determined by the
committee, for payment of compensation to any consulting firm or other advisers retained by the
committee.
The calendar of meetings of the committee, including the agendas for such meetings, are established
at the beginning of each calendar year by the committee, subject to adjustment for additional
matters that may arise during the year. The scope of authority of the committee is established by
its charter, which allows the committee to delegate certain authority to other person(s) who are
members of the committee. The committee has delegated limited power within a limited time frame to
individual member(s) of the committee to make certain decisions within defined parameters.
In 2006, the committee convened for five meetings either in person or by telephone. Each of these
meetings were attended in part by one or more members of the management team in order to obtain
information from management that was relevant to the compensation decisions that the committee was
15
considering and to discuss other compensation issues and legal issues. During these meetings the
committee met in executive session on three occasions, one of which was attended in part by the CEO
to discuss compensation recommendations for other executive officers and one of which was attended
in part by the general counsel and outside counsel and representative(s) of Pearl Meyer & Partners
(PM&P or Consultant) for the purpose of reviewing executive separation arrangements and general
executive contract terms. The committee also met formally in executive session on one occasion
with Clark Consultings Executive Benefit Group, a division of PM&Ps parent, along with other
related legal, accounting and insurance experts to provide the committee and the Board with
guidelines and recommendations on issues related to a settlement agreement regarding the split
dollar insurance agreement between the Company and Mr. Robert L. Parker Sr. and a severance
agreement in connection with the retirement of Mr. Robert L. Parker Sr. as Chairman and a member of
the Board. The committee also conferred informally on the latter matter on numerous occasions and
authorized Mr. Reinfrank to negotiate the terms and conditions of these agreements for
recommendation to the committee, which approved agreements were also reported to the Board.
During the first two months of each year, the committee customarily meets on two occasions,
supplemented by discussions among members, PM&P and management outside normal meeting times, to
review information, obtain recommendations from the CEO and PM&P, and discuss and analyze this
information in preparation for its review and analysis of the total executive compensation program
of the executive officers, which consists of base salary, annual cash incentive bonus, long-term
incentive awards, perquisites and other benefits. In making decisions regarding the total
executive compensation the committee reviews and considers the following information and factors:
|
|
|
The Companys executive compensation philosophy, policies and objectives, including the
reasons for providing each element of executive compensation, |
|
|
|
|
Tally sheets of each executive officer which include the following information: |
|
- |
|
Total compensation and the components thereof (base salary, annual
incentive bonus, long term incentive compensation, stock options and grants), |
|
|
- |
|
Future compensation opportunities, including without limitation, long term incentive plans,
|
|
|
- |
|
Post termination compensation, |
|
|
- |
|
Perquisites and |
|
|
- |
|
Past compensation. |
|
|
|
Benefit programs compared to the peer group, |
|
|
|
|
The relative pay level within the executive group, |
|
|
|
|
Job performance, responsibilities and experience of each executive officer, |
|
|
|
|
Competitive issues relevant to recruiting and retaining executive officers, including
benchmarking, and |
|
|
|
|
The reasons for providing each element of executive compensation. |
Based on the above review and analysis, the committee undertook the following actions regarding the
executive compensation program during 2006:
|
|
|
Recommended a 3-year long-term equity-based incentive plan, |
|
|
|
|
Established the base salary for the CEO and made recommendations to the Board regarding
the base salary for other executive officers, |
|
|
|
|
Approved the annual incentive bonuses for the executive officers for year 2005, |
|
|
|
|
Reviewed and approved the severance package and split dollar life insurance settlement
for Mr. Robert L. Parker Sr. in connection with his retirement as Chairman and a member of
the Board, and |
|
|
|
|
Recommended individual restricted stock grants for the executive officers. |
The Compensation Committee followed the same process for establishing total compensation for the
executive officers for 2007 and approving the annual incentive bonuses for 2006.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of R. Rudolph Reinfrank, John W. Gibson, Jr., Robert E.
McKee III and Robert W. Goldman, all of whom are independent directors. None of the members of the
Compensation Committee is or has been an officer or employee of the Company or its subsidiaries.
16
The Corporate Governance Committee
The Corporate Governance Committee was created and constituted in 2003 by the Board to be
responsible for making recommendations to the Board concerning issues relating to certain aspects
of corporate governance, including the review of nominees for candidates for Board positions under
principles established in the Companys corporate governance principles, to recommend Board members
for committee positions, to recommend and review annually the Corporate Governance Principles, to
assess the overall effectiveness of the Board and its committees on an annual basis, to make
recommendations on director compensation and to set guidelines on Board service. The Corporate
Governance Committee is composed entirely of directors who meet the independence requirements of
the NYSE. At a meeting of the Board on February 23, 2007, Mr. McKee was appointed as a member and
Chairman of the Corporate Governance Committee.
The Corporate Governance Committee Charter contains the specific duties and responsibilities of the
committee. In 2007, the Corporate Governance Committee recommended a re-apportionment of the
classes of directors in order to remain in compliance with Section 304 of the NYSE Company Manual.
The committee reviewed its charter in February 2007 and determined to amend the charter to provide
that the Presiding Director shall receive communications from shareholders and other interested
parties. Except for this amendment, the Corporate Governance Committee determined, based on the
advice of counsel, that it was consistent with best practices in corporate governance. A copy of
the charter is attached hereto as Annex C, and is available on our Web site at
http://www.parkerdrilling.com and in print upon request to: Parker Drilling Company, Corporate
Secretary, 1401 Enclave Parkway, Suite 600, Houston, Texas 77077; Telephone number: 281-406-2000.
17
BOARD OF DIRECTORS
NOMINEES FOR DIRECTOR (CLASS II) WITH TERM OF OFFICE EXPIRING AT THE 2010 ANNUAL MEETING OF
SHAREHOLDERS
ROBERT E. MCKEE III
DIRECTOR SINCE FEBRUARY 2005
Mr. McKee, age 60, retired in March 2003, after 36 years with ConocoPhillips and Conoco, Inc.,
serving the last ten years as Executive Vice President-Worldwide Exploration and Production. He
currently serves on the board of directors of Questar Corporation and Post Oak Bank (Houston,
Texas). From September 2003 through March 2004 Mr. McKee served as Senior Oil Advisor in Iraq by
Presidential appointment. He is also a member of the Advisory Committee for the University of
Texas Engineering Department and serves on the Colorado School of Mines Advisory Board and the
Institute of International Education Board (Southern Region). He is also Chairman of Enventure, a
joint venture company of Shell and Halliburton.
GEORGE J. DONNELLY
DIRECTOR SINCE OCTOBER 2005
Mr. Donnelly, age 68, was appointed to the Board in October 2005, and has served as president and
chief executive officer of the Houston Hispanic Chamber of Commerce since 2005 and managing partner
of Lilo Ventures, a venture capital firm, since 2001. Mr. Donnelly served as president of the San
Jacinto Museum of History from 2000 to 2002. He began his career at Texaco in 1962 and served in
various roles at Texaco and Gulf Oil until 1997, including vice president of the worldwide energy
and minerals division, vice president of the Latin American division and head of their Washington,
D.C. office. Mr. Donnelly serves on the board of directors of the Greater Houston Partnership and
the Institute of International Education.
CONTINUING DIRECTORS (CLASS III) WITH TERM OF OFFICE EXPIRING AT THE 2008 ANNUAL MEETING OF
SHAREHOLDERS
ROBERT L. PARKER JR.
DIRECTOR SINCE 1973
Mr. Parker Jr., age 58, is chairman, president and chief executive officer, having joined the
Company in 1973. He was elected president and chief operating officer in 1977 and chief executive
officer in 1991 and appointed chairman on April 28, 2006. He previously was elected a vice
president in 1973 and executive vice president in 1976. Mr. Parker Jr. is on the board of directors
of the University of Texas Engineering Foundation Advisory Council, the University of Texas
Development Board, the University of Texas Health Science Center (Houston) Development Board and
the International Association of Drilling Contractors. He is the son of Robert L. Parker, Chairman
Emeritus.
JOHN W. GIBSON, JR.
DIRECTOR SINCE 2001
Mr. Gibson, Jr., age 49, currently serves as President and CEO of Paradigm GeoTechnology B.V., a
role he accepted in September 2005. From January 2003 through December 2004, Mr. Gibson held the
position of president and chief executive officer of Halliburtons Energy Services Group, having
previously served as president of Halliburton Energy Services since March 2002. Mr. Gibson had also
served as president and chief executive officer of Landmark Graphics Corporation from 2000 to 2002
and earlier as chief operating officer. Mr. Gibson has served on the Board of Alaska
Communications Systems. He is also a national board member of KICKSTART.
18
ROGER B. PLANK
DIRECTOR SINCE MAY 2004
Mr. Plank, age 50, is Executive Vice President and Chief Financial Officer of Apache Corporation
(Apache), having served in this position since May 2000. Mr. Plank previously served as Vice
President of Corporate Communications, Vice President of External Affairs and Vice President of
Planning and Corporate Development for Apache. He is also a member of the Board of Trustees and
Audit Committee for Wyomings Ucross Foundation and a member of the board of directors of Houstons
Alley Theatre.
CONTINUING DIRECTORS (CLASS I) WITH TERM OF OFFICE EXPIRING AT THE 2009 ANNUAL MEETING OF
SHAREHOLDERS
R. RUDOLPH REINFRANK
DIRECTOR SINCE 1993
Mr. Reinfrank, age 51, is a co-founder of Clarity Partners, a private equity and venture capital
firm, where he has held the position of managing general partner since 1997. In 1997 Mr. Reinfrank
co-founded Rader Reinfrank & Co., LLC, Beverly Hills, California. From May 1993 through December
1996, Mr. Reinfrank was a managing director of the Davis Companies.
JAMES W. WHALEN
DIRECTOR SINCE OCTOBER 2005
Mr. Whalen, age 65, was elected to the Board as Vice-Chairman in October 2005 after serving as
senior vice president and chief financial officer for Parker Drilling from October 2002 until
October 2005. He has served as a director of Targa Resources, Inc., a mid-stream energy asset
company (Targa), since May 2004, and as President, Finance and Administration of Targa since
November 2005. In addition, Mr. Whalen has served as a director of Equitable Resources, Inc., an
integrated energy company (Equitable), since 2003 and has been chairman of the audit committee of
Equitable since 2004. Prior to joining Parker Drilling, Mr. Whalen served as the chief commercial
officer of Coral Energy, a wholesale natural gas and power marketing and trading company, from 1998
to 2000, where he was responsible for the marketing and trading for natural gas and power assets.
ROBERT W. GOLDMAN
DIRECTOR SINCE OCTOBER 2005
Mr. Goldman, age 64, was elected to the Board in October 2005. He retired from Conoco, Inc. in
2002, after 14 years of service, most recently as senior vice president, finance and chief
financial officer. Prior to that time he was employed for 23 years by E. I. du Pont de Nemours &
Co. in a variety of domestic and international finance and operating assignments. Since 2002 he
has been self employed as a financial consultant. Mr. Goldman is the elected vice
president-finance of the World Petroleum Council, a member of the Financial Executives Institute
and a member of the Outside Advisory Council of Global Infrastructure Partners, a private equity
fund investing in the global energy, transportation and water infrastructure sectors. He serves on
the board of directors of El Paso Corporation, McDermott International, Inc. and Tesoro
Corporation, as well as the board of directors of the Alley Theatre in Houston, Texas.
19
DIRECTOR COMPENSATION
Fees and Benefits For Non-Employee Directors
Annual Cash Retainer Fees. In 2006, the non-employee directors received an annual cash retainer
fee of $25,000 per year. The full annual retainer fee is paid to all current directors as of the
date of the annual meeting. Directors who are appointed during the year receive a pro-rated fee
for the remainder of the period until the next annual meeting, but directors who leave the Board
prior to serving the entire period between annual meetings do not forfeit any of the annual
retainer previously received.
Meeting Fees. In 2006, non-employee directors also earned a fee of $3,000 for each Board meeting,
including telephonic Board meetings, and $2,000 for each committee meeting, including telephonic
committee meetings, that they attended or in which they participated by telephone. These meeting
fees are accrued and paid quarterly.
Committee Chair Fees. In 2006, the Audit Committee Chair received an additional fee of $12,000 and
the Compensation and Corporate Governance Committee Chairs received an additional fee of $6,000
each.
On February 21, 2007, the Corporate Governance Committee reviewed the compensation for the
non-employee directors and received and considered a report from PM & P, who were retained to
evaluate non-employee director compensation. After consideration of the PM & P report and other
factors deemed relevant by the committee, the committee recommended, and the Board approved on
February 23, 2007, the following revisions to the non-employee director retainer and fees, with
these revised retainer and fees to be effective from and after February 23, 2007:
|
|
|
increase in annual retainer to $30,000, |
|
|
|
|
reduce the Board meeting fee to $2,500, |
|
|
|
|
increase all committee meeting fees to $2,500, and |
|
|
|
|
increase chair fees for Compensation and Corporate Governance Committees from $6,000 to
$12,000. |
Equity Grants. The non-employee directors are eligible to participate in the Companys 2005 Long
Term Incentive Plan (2005 LTIP), which allows for the grant of stock options and restricted stock
grants. As reported in the 2006 Proxy Statement the Board approved an award of 8,500 shares of
restricted stock for each of the non-employee directors, effective February 1, 2006, which shares
vested on the anniversary date of the grant, or February 1, 2007, with the exception of Dr. Gates,
the vesting of which shares was accelerated effective December 7, 2006, by unanimous consent of the
Board, due to Dr. Gates resignation to accept a Presidential appointment as Secretary of Defense.
Upon review of the 2007 report of PM&P and considering other factors that the committee deemed
relevant, the Corporate Governance Committee recommended, and the Board approved a grant of 11,135
shares of restricted stock to each of the non-employee directors, effective February 23, 2007,
which shares shall vest on the anniversary date of the grant.
20
2006 Director Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
Fees Earned |
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
or |
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
|
|
Paid in Cash |
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Name |
|
($) |
|
($)(1) |
|
($)(2) |
|
($) |
|
($) |
|
($) |
|
($) |
Mr. Reinfrank |
|
|
99,000 |
|
|
|
91,318 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
190,318 |
|
Dr. Gates |
|
|
55,000 |
|
|
|
99,620 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
154,620 |
|
Mr. Gibson, Jr. |
|
|
74,000 |
|
|
|
91,318 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
165,318 |
|
Mr. Plank |
|
|
81,000 |
|
|
|
91,318 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
172,318 |
|
Mr. McKee |
|
|
65,000 |
|
|
|
91,318 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
156,318 |
|
Mr. Donnelly |
|
|
66,000 |
|
|
|
91,318 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
157,318 |
|
Mr. Goldman |
|
|
65,000 |
|
|
|
91,318 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
156,318 |
|
Mr. Whalen |
|
|
55,000 |
|
|
|
91,318 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
416,655 |
(3) |
|
|
562,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
560,000 |
|
|
$ |
738,846 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
416,655 |
|
|
$ |
1,715,501 |
|
|
|
|
(1) |
|
Reflects the dollar amount recognized for financial statement reporting purposes for the
fiscal year ended December 31, 2006, of the 8,500 shares of restricted stock awarded to each
non-employee director on February 1, 2006, in accordance with FAS 123R, which represents the only
outstanding shares of restricted stock held by non-employee directors that have not vested as of
December 31, 2006. |
|
|
|
The grant date fair value for this award to each director for the fiscal year ended December 31,
2006, in accordance with FAS 123R is $99,620, based on the closing price of $11.72 of the Companys
common stock on February 1, 2006, which was the grant date. |
|
(2) |
|
As of December 31, 2006, each non-employee director had the following aggregate stock options
outstanding: Mr. Reinfrank 72,000, Dr. Gates 0, Mr. Gibson, Jr. 8,500, Mr. Plank 15,000,
Mr. McKee 0, Mr. Donnelly 0, Mr. Goldman 0, and Mr. Whalen 0. |
|
|
|
Does not include the dollar amount recognized for financial statement reporting purposes for the
fiscal year ended December 31, 2006, of outstanding stock options of Mr. Whalen that were granted
during his tenure as CFO. |
|
(3) |
|
Consulting fees paid to Mr. Whalen for consulting services provided in 2006 pursuant to the
Consulting Agreement, dated October 26, 2005, a copy of which was filed as Exhibit 10.1 to Form
8-K, dated November 1, 2005 and which terminated on December 31, 2006. |
Board members are reimbursed for their travel expenses incurred in connection with attendance
of Board and committee meetings and for one board education program each year. These amounts are
not included in the table above. Employee directors do not receive any compensation for their
participation on the Board.
Option/SAR Grants In 2006 To Non-Employee Directors
No stock options or SAR grants were made to non-employee directors in 2006.
21
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Corporate Governance Committee, or its designee, is charged with reviewing and approving any
transactions between the Company and current or former officers or directors, as specified in its
charter. During 2006 the Company entered into two agreements with Mr. Robert L. Parker Sr. related
to the Split Dollar Life Insurance Agreement with Robert L. Parker Sr. and The Robert L. Parker Sr.
and Catherine M. Parker Family Trust Under Indenture Dated the 23rd Day of July 1993 (Trust), and
the retirement of Mr. Parker as Chairman and a member of the Board.
Consulting Agreement
On April 12, 2006, in connection with the retirement of Robert L. Parker Sr. as Chairman and a
member of the Board (effective April 28, 2006), the Company entered into a Consulting Agreement
with Mr. Parker Sr. (the Consulting Agreement). Under the Consulting Agreement, Mr. Parker Sr.s
employment agreement with the Company, effective as of November 1, 2002, was terminated effective
April 30, 2006. The Consulting Agreement has a term of two years, and provides for:
|
(i) |
|
payment of unpaid vacation pay that has accrued through April 30, 2006, |
|
|
(ii) |
|
a lump sum payment of $397,500 on November 2, 2006, |
|
|
(iii) |
|
monthly payments of $66,250 commencing on December 1, 2006, through and
including May 1, 2008, and |
|
|
(iv) |
|
coverage under the Companys medical and dental plans for Mr. Parker Sr.
and his spouse through April 30, 2008. |
If Mr. Parker Sr. should die during the two-year term, the payments shall continue to be made to
his spouse, if she survives him, and if she does not survive him, to Mr. Parkers beneficiaries.
The Consulting Agreement requires Mr. Parker Sr. to be available to provide certain services to the
Company during the term of the Consulting Agreement, including without limitation, assisting with
projects on which Mr. Parker Sr. worked while Chairman of the Company, bridging relationships with
customers, and assisting with marketing efforts utilizing relationships developed during Mr. Parker
Sr.s tenure with the Company.
Mr. Parker Sr. will be required to maintain the confidentiality of any information he obtains while
an employee or consultant during the term of the Consulting Agreement, to disclose and assign to
the Company any ideas he conceives and any inventions he develops related to the business of the
Company or his consulting with the Company. During the term of and for one year after the
termination of the Consulting Agreement, Mr. Parker Sr. is prohibited from soliciting business from
any of the Companys customers or individuals with which the Company has done business, becoming
interested in any capacity in any business that competes with the Company and will be prohibited
from recruiting any employees of the Company.
Termination of Split Dollar Life Insurance Agreement
On April 12, 2006, Mr. Parker Sr. and The Robert L. Parker, Sr. and Catherine M. Parker Family
Trust Under Indenture Dated the 23rd Day of July, 1993 (the Trust) and the Company entered into a
Termination of Split Dollar Life Insurance Agreement (the Termination Agreement). The
Termination Agreement, which terminates the Split Dollar Life Insurance Agreement dated the
21st day of February, 1995, among the Company, Mr. Parker Sr. and the Trust, as amended
by the Amendment to and Restatement of Split Dollar Life Insurance Agreement dated the
19th day of April, 2000 (as amended, the Split Dollar Life Insurance Agreement),
provides that the Trust will pay the Company approximately $2,450,000 in exchange for a release of
the Companys collateral assignment of all insurance policies owned by the Trust on the lives of
Mr. Parker Sr. and his spouse, Mrs. Parker. Subject to the parties complying with their respective
undertakings in regard to the lawsuit filed by the Company and the Trust against the insurer and
brokers in connection with the insurance policies that were the subject of the Split Dollar Life
Insurance Agreement, the parties also agreed to mutually release each other from any further
obligations under the Split Dollar Life Insurance Agreement. The parties have agreed that the
Company will pay the expenses of such lawsuit and that any proceeds will be used first to repay
these expenses plus interest at 7% per annum and then the remaining balance will be shared equally.
The Company also has the right to terminate its participation in the lawsuit at any time. In the
event there is no monetary
22
award or it is not sufficient to reimburse the Company, the Trust will have no obligation to pay
the Company any portion of such amounts not reimbursed.
Due to the complexities of the above matters, the Board designated Mr. Rudolph Reinfrank to
represent the Board in connection with the negotiation of these two agreements. Mr. Reinfrank made
a full report to the Compensation Committee, which approved the terms and conditions of these
agreements and Mr. Reinfrank also made a full report to the Board.
Lease Agreements
As part of building business relationships and fostering closer ties to clients, the Company
traditionally hosts customers in a variety of activities such as sporting events and other outdoor
activities, often coupled with industry-related conferences.
Robert L. Parker, former chairman of the Company and now chairman emeritus, through the Robert L.
Parker, Sr. Family Limited Partnership (the Limited Partnership) owns a 2,987 acre ranch near
Kerrville, Texas, (the Cypress Springs Ranch) and a 4,982 acre ranch in Mazie, Oklahoma (the
Mazie Ranch). The Cypress Springs Ranch has lodging, conference facilities, sporting and other
outdoor activities which the Company utilized in connection with marketing and other business
purposes during 2006. The Mazie Ranch has hunting, fishing and other outdoor facilities.
Effective as of January 1, 2005, the Company and the Limited Partnership entered into a lease
agreement pursuant to which the Company pays the Limited Partnership a monthly fee in exchange for
unlimited access to the facilities at the Cypress Springs Ranch and the Mazie Ranch. During 2006,
the Company paid the Limited Partnership a total of $396,000 in lease fees. The Limited
Partnership also entered into a services agreement with the Company effective as of January 1,
2005, pursuant to which the Company provides certain personnel to the Limited Partnership to
maintain the Cypress Springs Ranch and the Mazie Ranch. During 2006, the Limited Partnership paid
the Company a total of $262,158 for the provision of such personnel. The lease agreement and the
services agreement were both terminated effective December 31, 2006.
Robert L. Parker Jr., president and chief executive officer of the Company, owns a 1,400 acre ranch
near Kerrville, Texas (the Camp Verde Ranch). The Camp Verde Ranch has lodging as well as
hunting, fishing and other outdoor facilities. Effective January 1, 2005, the Company entered into
a lease agreement pursuant to which the Company pays Robert L. Parker Jr. a monthly fee in exchange
for unlimited access to the Camp Verde Ranch facilities. During 2006, the Company paid Robert L.
Parker Jr. a total of $92,400 in lease fees. Mr. Parker Jr. also entered into a services agreement
with the Company effective as of January 1, 2005, pursuant to which the Company provides certain
personnel to Mr. Parker Jr. to maintain the Camp Verde Ranch. During 2006, Mr. Parker Jr. paid the
Company a total of $63,188 for the provision of such personnel.
Other Transactions
Mr. Plank is a continuing director and it is anticipated he will stand for election as a Class III
director in 2008. Mr. Plank is Executive Vice President and Chief Financial Officer of Apache
Corp. (Apache), a large independent oil and gas producer. During 2006, subsidiaries of the
Company received approximately $5,075,421 million in gross revenues for drilling and rental tool
services provided to Apache and its affiliates.
On February 21, 2007, the Corporate Governance Committee reviewed the business between the Company
and Apache and determined that it would not impair the independence of Mr. Plank and reported its
findings to the Board on February 23, 2007. See page 13 for the Boards analysis and determination
that the business between the Company and Apache is not material to either company and does not
present a conflict of interest or otherwise impair the independence of Mr. Plank or his ability to
render independent judgment under the corporate governance listing standards of the NYSE.
Related Party Transaction Policy
On February 23, 2007, the Corporate Governance Committee recommended and the Board approved a
formal Related Party Transaction Policy that requires the prior approval by the Corporate
Governance Committee of any transaction between the Company and any Related Party, which expanded
the role of the Corporate Governance Committee from its previous responsibilities for reviewing
contracts between the Company and current or former officers and directors. For the purposes of
the policy, a Related Party
23
is (i) any senior officer (which shall include at a minimum each executive vice president and
Section 16 officer) or director of the Company, (ii) a shareholder owning in excess of five percent
of the Company (or its controlled affiliates), (iii) a person who is an immediate family member of
a senior officer or director, or (iv) an entity which is owned or controlled by a person or entity
listed in (i), (ii) or (iii) above, or an entity in which a person or entity listed in (i), (ii) or
(iii) above has a substantial ownership interest or control.
INDEMNIFICATION
In accordance with our By-laws, we indemnify our directors and officers to the fullest extent
permitted by law. We also have signed agreements with each of the directors and officers
contractually obligating us to provide indemnification to each director and officer.
24
SECURITY OWNERSHIP OF OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning beneficial ownership of the Companys common
stock as of January 31, 2007, based on 109,146,332 shares issued and outstanding on such date, by
(a) all persons known by the Company to be beneficial owners of more than five percent (5%) of such
stock, (b) each director and nominee for director of the Company, (c) each of the executive
officers of the Company named in the Summary Compensation Table, and (d) all directors and the
executive officers as a group. Unless otherwise noted, the persons named below have sole voting and
investment power with respect to such shares.
AMOUNT AND NATURE OF SHARES BENEFICIALLY OWNED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RIGHT |
|
|
|
|
SHARES |
|
TO |
|
PERCENT OF |
|
|
OWNED |
|
ACQUIRE |
|
OUTSTANDING |
NAME |
|
(#)(1) |
|
(#)(2) |
|
SHARES(3) |
FMR Corp. ** |
|
|
10,375,029 |
(4) |
|
|
|
|
|
|
9.50 |
% |
Barclays*** |
|
|
6,277,636 |
(5) |
|
|
|
|
|
|
5.75 |
% |
Robert L. Parker |
|
|
0 |
|
|
|
445,000 |
|
|
|
* |
|
Robert L. Parker Jr. |
|
|
763,051 |
|
|
|
795,000 |
|
|
|
1.42 |
% |
R. Rudolph Reinfrank |
|
|
18,500 |
|
|
|
72,000 |
|
|
|
* |
|
Robert W. Goldman |
|
|
8,500 |
|
|
|
0 |
|
|
|
* |
|
John W. Gibson, Jr. |
|
|
85,000 |
|
|
|
8,500 |
|
|
|
* |
|
Roger B. Plank |
|
|
188,500 |
|
|
|
15,000 |
|
|
|
* |
|
Robert E. McKee III |
|
|
18,500 |
|
|
|
0 |
|
|
|
* |
|
James W. Whalen |
|
|
299,312 |
|
|
|
0 |
|
|
|
* |
|
George J. Donnelly |
|
|
8,500 |
|
|
|
0 |
|
|
|
* |
|
David C. Mannon |
|
|
269,105 |
|
|
|
25,000 |
|
|
|
* |
|
W. Kirk Brassfield |
|
|
107,678 |
|
|
|
115,000 |
|
|
|
* |
|
Denis Graham |
|
|
133,710 |
|
|
|
70,000 |
|
|
|
* |
|
Ronald C. Potter |
|
|
83,604 |
|
|
|
62,500 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and
executive officers
as a group (14
persons) |
|
|
2,053,667 |
|
|
|
1,163,000 |
|
|
|
2.92 |
% |
|
|
|
* |
|
Less than 1%
|
|
** |
|
82 Devonshire St., Boston, MA 02109 |
|
*** |
|
45 Fremont St., San Francisco, CA 94105 |
|
(1) |
|
Includes shares for which the person: |
|
|
|
- has sole voting and investment power, or |
|
|
|
- has shared voting and investment power with his/her spouse |
|
|
|
Also includes restricted stock held by directors and executive officers over which they have
voting power but not investment power. Excludes shares that may be acquired through stock
option exercises. |
|
(2) |
|
Shares that can presently be acquired through stock option exercises and within sixty (60)
days of January 31, 2007. |
|
(3) |
|
Shares of common stock which are not outstanding but which could be acquired by a person upon
exercise of an option within 60 days of January 31, 2007, are deemed outstanding for the
purpose of computing the percentage of outstanding shares beneficially owned by such person.
Such shares, however, are not deemed to be outstanding for the purpose of computing the
percentage of outstanding shares beneficially owned by any other person. |
|
(4) |
|
Based on information obtained from Schedule 13G dated February 14, 2007, filed by FMR Corp. |
|
(5) |
|
Based on information obtained from Schedule 13G filed by Barclays Global Investors, and
includes amounts held by Barclays Global Fund Advisors (Barclays) dated January 31, 2007. |
25
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Companys directors
and executive officers, and persons who own more than 10 percent of the Common Stock, to report
their initial ownership of the Common Stock and any subsequent changes in that ownership to the SEC
and the NYSE, and to furnish the Company with a copy of each such report. SEC regulations impose
specific due dates for such reports, and the Company is required to disclose in this proxy
statement any failure to file by these dates during and with respect to fiscal 2006.
To the Companys knowledge, based solely on review of the copies of such reports
furnished to us and written representations that no other reports were required, during and with
respect to fiscal 2006, our officers, directors and more than 10 percent shareholders complied with
all Section 16(a) filing requirements, with the exception of (i) the acquisition by Mr. Mannon of
5,000 shares of common stock on June 13, 2006, which was reportable on a Form 4 on June 15, 2006,
and was filed on July 5, 2006, and (ii) the transfer by Mr. Whalen of ownership of 92,700 shares
of common stock to his spouse on December 21, 2005, which was reportable on a Form 5 on February
14, 2006, and was filed on February 13, 2007.
26
PROPOSALS TO BE VOTED ON
ITEM 1 ELECTION OF DIRECTORS
The By-laws of the Company currently provide that the number of directors which shall constitute
the whole Board shall be fixed from time to time by resolution of the Board. Due to the retirement
and resignation of Mr. Parker Sr. and Dr. Gates, respectively, during 2006, on February 23, 2007,
the Company currently has eight directors, and the Board approved the re-allocation of the
directors among the three classes of directors in compliance with Section 304 of the NYSE Company
Manual. See page 12 of this Proxy Statement.
Our directors serve staggered terms. This is accomplished as follows:
|
|
|
each director who is elected at an annual meeting of shareholders serves a three-year term, |
|
|
|
|
the directors are divided into three classes, |
|
|
|
|
the classes are as nearly equal in number as possible, and |
|
|
|
|
the term of each class begins on a staggered schedule. |
Nominees for directors this year are Messrs. McKee and Donnelly. These two directors currently
comprise Class II of the three classes of directors. Mr. McKee and Mr. Donnelly were appointed as
directors by the Board in February 2005 and October 2005 respectively and are standing for election
by the shareholders for the first time this year. For biographical information on these directors,
see page 18. The remaining directors will continue to serve the terms described in their
biographies under Board of Directors at pages 18 and 19.
Each of the two nominees for director this year currently is a director of the Company and has
consented to serve a three-year term.
The Board of Directors recommends a vote FOR these nominees.
ITEM 2 PROPOSAL TO AMEND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
FROM 140,000,000 TO 280,000,000
The authorized capital of the Company is Twenty-five million, two hundred eighty thousand Dollars
($25,280,000) and presently consists of 140,000,000 shares of common stock, par value Sixteen and
2/3 Cents ($0.16 2/3) per share (Common Stock) and 1,942,000 shares of Preferred Stock, $1.00 par
value (Preferred Stock). The number of shares of Common Stock outstanding as of December 31,
2006, was 109,128,451. Allowing for the number of shares of Common Stock outstanding or reserved
for future issuance under the Companys employee benefit plans (5,758,766 shares), only 25,112,783
authorized shares of Common Stock remain freely available for issuance, including 838,875 shares
held in treasury at December 31, 2006.
The Board has determined that the number of unreserved shares of Common Stock presently available
for issuance is not sufficient to provide for future contingencies and needs of the Company, such
as possible future financings, stock splits, business acquisitions, business combinations, stock
distributions, equity incentives for employees, officers or directors, or other corporate purposes.
The Company explores potential acquisitions on a regular basis and may issue shares of Common Stock
in connection with such acquisitions. While the currently authorized shares of Common Stock are
sufficient to provide for the Companys immediate needs, an increase in such authorized shares
available for issuance would give the Company greater flexibility to respond to opportunities
without the expense and delay of a special meeting of shareholders. As of the date on which this
Proxy Statement is being mailed, there are no definite proposals in place with respect to any
material transaction which could involve the issuance of Common Stock. If there are any potential
business combination transactions which require shareholder approval, such approval will be
requested at the appropriate time.
The Board has unanimously adopted a resolution for a proposed amendment (Proposed Amendment) to
the Companys Restated Certificate of Incorporation to increase the number of shares of authorized
common stock, $0.16 2/3 par value, from 140,000,000 to 280,000,000. The Companys Restated
Certificate of Incorporation presently authorizes 140,000,000 shares of common stock. The Proposed
Amendment, a copy of which is attached to this Proxy Statement as Annex D, will have no effect on
the
27
number of shares of Preferred Stock that the Company is authorized to issue. The resolutions
adopted by the Board, which will be presented for approval by the shareholders at the Annual
Meeting are set forth below:
RESOLVED, that, subject to the approval of the shareholders of the Company, the Restated
Certificate of Incorporation of the Company, as amended, be, and the same hereby is, amended
by changing only the first paragraph of ARTICLE FOURTH so that, as amended, said first
paragraph of ARTICLE FOURTH shall read in its entirety as follows:
ARTICLE FOURTH: The aggregate number of shares of all classes of stock which the
corporation shall have the authority to issue is 281,942,000, of which 1,942,000 shares
shall be Preferred Stock of the par value of One Dollar ($1.00) per share (hereinafter
called Preferred Stock), and the remaining 280,000,000 shares shall be Common Stock of the
par value of sixteen and two-thirds cents ($.16-2/3) per share (hereinafter called Common
Stock). The designations and the powers, preferences and rights, and the qualifications,
limitations, restrictions and other special or relative attributes granted to or imposed
upon the shares of Preferred Stock shall be as fixed in Section 1 of this ARTICLE FOURTH, or
as may be fixed by the Board of Directors in accordance with the provisions thereof, and the
designations and the powers, preferences and the rights, and the qualifications,
limitations, restrictions and other special or relative attributes granted to or imposed
upon the shares of Common Stock shall be fixed in Section 2 of this ARTICLE FOURTH.
AND FURTHER RESOLVED that a Certificate of Amendment to the Restated Certificate of
Incorporation of the Company be, and the same hereby is, authorized and approved, to record
the amendment of ARTICLE FOURTH of the Companys Restated Certificate of Incorporation as
authorized and approved in the preceding resolution.
The Board believes that the Proposed Amendment will provide several long-term advantages to the
Company and its shareholders. The passage of the Proposed Amendment would enable the Company to
pursue acquisitions or enter into transactions which the Board believes will provide the potential
for growth and profit in accordance with the Companys strategic plan. If additional authorized
shares are available, transactions dependent upon the issuance of additional shares will be less
likely to be adversely affected by delays and uncertainties that could result from the need to
obtain shareholder authorization to provide the shares necessary to complete such transactions.
The additional authorized shares of Common Stock could also be used for such purposes as raising
additional capital for the expansion and/ or upgrade of the Companys drilling rig fleet or rental
tool inventory. As of the date on which this Proxy Statement is being mailed, there are no
definite plans relating to the issuance of any of the additional shares of Common Stock proposed to
be authorized. Such shares would be available for issuance without future action by the
shareholders, unless required by the Companys Restated Certificate of Incorporation or By-laws, by
the rules of any stock exchange on which the Common Stock may be listed, or by applicable law.
Without an increase in authorized shares, the Company may have to forego an investment opportunity.
The availability of authorized but unissued shares of Common Stock could, under certain
circumstances, have an anti-takeover effect. Although the Board of Directors has no present
intention of doing so, the issuance of new shares of Common Stock could be used to dilute certain
rights of a person seeking to obtain control of the Company should the Board consider the action of
such person not to be in the best interest of the shareholders of the Company. The Company is not
aware of any pending or proposed effort to obtain control of the Company or to change the Companys
management.
In the event additional shares of Common Stock are issued by the Company, existing holders of
Common Stock would have no preemptive rights under the Companys Restated Certificate of
Incorporation, or otherwise, to purchase any of such shares. It is possible that shares of Common
Stock may be issued at a time and under circumstances that may dilute the voting power of existing
shareholders, increase or decrease earnings per share, and increase or decrease the book value of
shares presently held.
An affirmative vote of the holders of a majority of the outstanding shares of Common Stock is
required for approval of the Proposed Amendment. If approved by the shareholders, the Proposed
Amendment will become effective upon the filing of a Certificate of Amendment to the Restated
Certificate of Incorporation with the Secretary of State of the State of Delaware, which will occur
as soon as reasonably practicable.
28
No changes will be made in the respective rights and privileges pertaining to the outstanding
shares of Common Stock.
The Board of Directors recommends a vote FOR approval of the Proposed Amendment.
ITEM 3 RATIFY APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has engaged KPMG LLP to serve as our independent registered public accounting
firm for 2007. Shareholders are being asked to ratify the appointment of KPMG LLP as the Companys
independent registered public accounting firm for 2007. If the shareholders do not ratify the
appointment, the Audit Committee will re-consider the appointment. Representatives of KPMG LLP
will be present at the Annual Meeting to answer appropriate questions. They will also have the
opportunity to make a statement should they desire to do so.
On March 9, 2007, the Audit Committee approved the dismissal of PricewaterhouseCoopers LLP (PwC)
as the Companys independent auditors effective March 9, 2007. A PwC representative will not be
present at the Annual Meeting.
During the Companys fiscal years ended December 31, 2006 and 2005, and in the subsequent interim
period through March 9, 2007, there were no disagreements with PwC on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PwC, would have caused PwC to make reference
thereto in its reports on the financial statements of the Company for such years. Also, during
those time periods, there were no reportable events, as such term is used in Item 304(a)(1)(v) of
Regulation S-K.
PwCs reports on the financial statements of the Company for the fiscal years ended December 31,
2006 and 2005, neither contained an adverse opinion or disclaimer of opinion nor were they
qualified or modified as to uncertainty, audit scope or accounting principle.
On March 15, 2007, the Audit Committee engaged KPMG LLP as the Companys independent auditors for
its 2007 fiscal year.
During the Companys fiscal years ended December 31, 2006 and 2005, and in the subsequent interim
period through March 15, 2007, the Company did not consult with KPMG LLP with respect to either (1)
the application of accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Companys financial statements, and
neither a written report was provided to the Company or oral advice was provided that KPMG LLP
concluded was an important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue; or (2) any matter that was either the subject of
a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related
instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item
304(a)(1)(v) of Regulation S-K.
The Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP as our
independent registered public accounting firm for 2007.
Audit Committee Report
The following report does not constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this
report by reference in such filing.
The Audit Committee is responsible for providing independent, objective oversight of Parkers
accounting functions and internal controls. Management has the primary responsibility for the
financial statements and the reporting process, including the system of internal controls over
financial reporting, audit processes and compliance with laws, regulations and Company policies.
The Audit Committee oversees the financial reporting process on behalf of the Board, reviews the
financial disclosures and meets privately with the independent registered public accounting firm
(the independent accountants) to discuss the internal accounting control policies and procedures.
The Audit Committee reports on these meetings to the Board.
29
The committee operates pursuant to a Charter, which sets forth the duties and responsibilities of
the committee, which duties are summarized on page 14 of this Proxy Statement. While the committee
has certain duties as set forth in the Charter, it is not the duty of the committee to plan or
conduct audits or to determine that the Companys financial statements and disclosures are complete
and accurate and are in accordance with generally accepted accounting rules and regulations, as
these functions are the responsibility of management and the independent accountants. In the
performance of its oversight function, the committee addressed the following specific matters:
|
|
|
Reviewed quarterly financial statements, the 2006 year-end audited financial
statements (10-K) and earnings releases, including disclosures made in the management
discussion and analysis, the quality of the accounting principles, the reasonableness of
significant judgments and the sufficiency of the disclosures, and discussed them with
management and the independent accountants, |
|
|
|
|
Received the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1, and has discussed with the
independent accountant the independent accountants independence and confirmed the
independence of the independent accountants, |
|
|
|
|
Engaged in private discussions with the independent accountants to discuss matters
relevant to the planning and implementation of the Companys audit, |
|
|
|
|
Discussed with the independent accountants the matters required to be discussed by the
Statement on Auditing Standards No. 61, as amended by SAS 90, including without limitation,
the quality as well as the completeness and accuracy of the financial statements, |
|
|
|
|
Discussed with management and the independent accountants significant financial and
reporting issues and judgments made in connection with the preparation of the Companys
financial statements, including all critical accounting policies and practices and
alternative treatment of financial transactions, |
|
|
|
|
Discussed with management, the Companys use of pro forma or adjusted non-GAAP
information, as well as financial information and earnings guidance provided to analysts
and rating agencies, |
|
|
|
|
Met regularly with the director of internal audit (including private meetings) and
reviewed reports prepared by the internal auditing department and management responses, and
approved the scheduling, budget and staffing of the planned scope of internal audits, |
|
|
|
|
Discussed with management various matters regarding the compliance of the Company and
its subsidiaries with the Companys Code of Corporate Conduct, including the Foreign
Corrupt Practices Act, |
|
|
|
|
Discussed with management and the independent accountants the effect of major
legislative, regulatory or accounting initiatives as well as any off-balance sheet
structures on the Companys financial statements, |
|
|
|
|
Discussed with management the Companys major financial risk exposures and steps
management has taken to monitor and control such exposures, including policies regarding
risk assessment and risk management policies, |
|
|
|
|
Discussed certain legal matters with counsel, |
|
|
|
|
Received a report describing all related-party transactions, |
|
|
|
|
Maintained oversight over the anonymous reporting, including a third party hotline
service, of any alleged accounting or audit complaints or other irregularities consistent
with the requirements of the SEC pursuant to SOX and reviewed matters with the director of
internal audit and general counsel that were reported to ensure they were properly
investigated and that appropriate remedial action was taken when necessary, |
|
|
|
|
Approved the fees charged by the independent accountants for services performed in 2006
in accordance with the pre-approval policy approved in January 2004. These fees are set
forth in the table immediately following this report, |
|
|
|
|
Monitored the Companys compliance with internal controls over financial reporting
pursuant to Section 404 of SOX, |
30
|
|
|
Met privately with the independent accountants at various times throughout the year, |
|
|
|
|
Retained KPMG LLP as the independent registered public accounting firm of the Company
for 2007, and |
|
|
|
|
Reviewed the report on internal control over financial reporting filed pursuant to
Section 404 of SOX, which report did not note any material weaknesses, and discussed with
management the adequacy of changes in internal control over financial reporting to address
minor issues. |
Based on the review and discussions described in this report, the Audit Committee recommended to
the Board that the audited financial statements for the year ended December 31, 2006, be included
in Parkers Annual Report on Form 10-K for the year ended December 31, 2006, for filing with the
SEC.
Respectfully submitted,
Roger B. Plank, Chairman
John W. Gibson Jr.
George J. Donnelly
31
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered by
PricewaterhouseCoopers LLP for the audit of the Companys financial statements for the years ended
December 31, 2006, and December 31, 2005, and fees billed for other services rendered by PwC during
those periods.
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
2005 |
|
Audit fees: (1) |
|
$ |
1,666,152 |
|
|
$ |
2,030,308 |
|
Audit-related Fees: (2) |
|
$ |
3,283 |
|
|
$ |
19,597 |
|
Tax fees:(3) |
|
$ |
43,900 |
|
|
$ |
115,564 |
|
All other fees:(4) |
|
$ |
139,159 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
Total |
|
$ |
1,854,500 |
|
|
$ |
2,167,474 |
|
|
|
|
(1) |
|
Audit fees consisted of audit of the annual financial statements, quarterly reviews of
financial statements, statutory audits of foreign subsidiaries, assistance in any required
filings with the SEC and the SOX internal control audit. |
|
(2) |
|
Audit related fees consisted primarily of audits of benefit plans. |
|
(3) |
|
Tax fees consisted principally of assisting Company affiliates in the preparation of foreign
tax returns. |
|
(4) |
|
All other consisted primarily of fees incurred in filing Form S-3 in connection with offering
of common stock in January 2006. |
100% of all audit fees and allowable non-audit fees were pre-approved by the audit committee
in accordance with the pre-approval policy.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Registered Public Accounting Firm
Consistent with SEC rules regarding auditor independence, the Audit Committee has responsibility
for appointing, setting compensation and overseeing the work of the independent registered public
accounting firm. In response to these rules, the Audit Committee established a policy in April
2003, which was amended in January 2004, in connection with the pre-approval of all audit and
permissible non-audit services provided by the independent registered public accounting firm, which
policy was attached to the 2004 Proxy Statement. Such services are pre-approved to a specific
dollar threshold. All other permitted services, as well as proposed services exceeding such
specified dollar thresholds, must be separately approved by the Audit Committee. In July 2006, the
Audit Committee pre-approved the audit and non-audit fees for 2006 and separately authorized the
chairman of the Audit Committee to approve non-material amounts in excess of the pre-approved
amounts.
32
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy
Our compensation philosophy is to provide competitive total compensation to our executive officers
that rewards performance and is appropriate considering all relevant factors and circumstances. We
believe that the goals and objectives of our compensation philosophy are best served by adhering to
the following principles:
|
|
|
First, to tie a significant portion of executive compensation to our performance, taking
into consideration pre-established financial objectives, operational objectives, and
personal performance objectives that are established in a manner to reward our executive
officers for achieving the goals of our five year strategic plan, |
|
|
|
|
Second, to implement a compensation philosophy that conveys to our shareholders that our
executive compensation is aligned with our shareholders interests, |
|
|
|
|
Third, to design each component of executive compensation to be competitive with the
compensation practices of peer companies, and |
|
|
|
|
Fourth, to use a mix of salary, annual incentives and long-term incentives to attract
and retain highly qualified personnel. |
We have adopted this philosophy because we believe it is important to our success, which is
directly affected by our ability to attract and retain the type of highly qualified personnel who
are motivated to achieve our business goals and thereby increase shareholder value.
Administration
Compensation Committee. Our executive compensation program is administered by the Compensation
Committee (the Committee) of the Board in accordance with the charter of the Committee and other
corporate governance requirements of the SEC and the NYSE. We describe the specific duties and
responsibilities of the Committee and the process the Committee utilizes in making compensation
decisions in this Proxy Statement under Governance of the CompanyThe Compensation Committee at
page 15.
Compensation Consultant. The Committee has engaged PM&P upon the terms that the Committee has
negotiated with PM&P, to advise the Committee on certain compensation issues from time to time as
discussed below. The assignments of the Consultant are determined primarily by the Committee,
although management may have input into these assignments. The Committee considers PM&P to be
independent based on the following factors:
|
|
|
the Committee has the ability to hire and fire PM&P, |
|
|
|
|
PM&P receives substantially all of its assignments from the Committee with regard to
executive compensation matters, and |
|
|
|
|
PM&P has performed only limited work for management in connection with its extensive
database for the industry and in its application to employee incentives and general
compensation and routinely reports this work to the Committee. |
During 2006 the Committee engaged PM&P to provide compensation consulting services:
|
|
|
Compile financial performance norms for the Companys peer group in the oil and gas
drilling business which were used by the Committee to analyze the Companys performance in
connection with the peer group compensation data, |
|
|
|
|
Provide peer group compensation data to assist the Committee in establishing executive
compensation for the CEO and recommending compensation for other executive officers that is
competitive, |
|
|
|
|
Assist in formulation of a long-term incentive plan that incorporates equity awards
based on performance measures to determine ultimate payouts, and |
|
|
|
|
Assist in designing annual incentive bonus program. |
33
Roles of Executives in Establishing Compensation. The CEO plays a key role in determining
executive compensation for the other executive officers. The CEO attends the initial meeting of
the Committee regarding executive compensation and discusses his recommendations with the
Committee, including his evaluation of the performance of the executives in arriving at his
recommendations, which is based on his direct evaluation of such officers and/or the evaluations of
the supervisors reports of such officers when the officers do not report directly to the CEO.
These recommendations are considered by the Committee, along with other relevant data from PM&P, in
determining its recommendations regarding the base salary for such executive officers.
Compensation Programs Design
Overview
Our executive total compensation is a mix of base salary, annual incentive compensation, long-term
incentive compensation, employee benefits program and other financial incentives and perquisites.
For the fiscal year ended December 31, 2006, the total compensation package for the executive
officers consisted of:
|
|
|
Base Salary, |
|
|
|
|
Annual Incentive Compensation Bonus, |
|
|
|
|
Long-term Incentive Compensation, |
|
|
|
|
Restricted Stock Grants, |
|
|
|
|
Post-termination benefits, and |
|
|
|
|
Employee benefits and perquisites. |
We have chosen these elements to remain competitive in attracting and retaining executive talent
and to provide strong incentives for high performance with current and potential financial rewards.
We pay salary as compensation that is fixed and not contingent at a level we think sufficient to
be competitive. We provide employee benefits such as medical and life insurance, disability and
travel accident and 401(k) plans that are provided to our salaried employees generally.
The amount of additional compensation that our executives may receive is contingent and may not
provide any actual compensation depending upon how well or poorly the business performs. Further
information on the relative size of the different elements of compensation is contained in this
discussion under Relative Size of Major Compensation Elements below. We think this mix of
compensation will instill in our executives the importance of achieving our business goals and
thereby increase shareholder value.
Benchmarking. We use benchmarking as a tool for determining the appropriate base salaries, annual
incentives, long-term incentives and other financial benefits that comprise the total compensation
for the executive officers. However, this tool is subject to the Committees overall determination
as to what compensation is appropriate considering all the relevant factors and circumstances and
is otherwise consistent with the Companys compensation philosophy.
With input from senior management and PM&P, the Committee determined that the following companies
represent the appropriate peer group which should be used for benchmarking purposes: TODCO, Nabors
Industries, Ltd., Helmerich & Payne, Inc., Grey Wolf, Inc., Pride International, Inc. and
Weatherford International, Inc. The Committee believes these companies are appropriate peers for
the Company based on the following factors:
|
|
|
each is a direct competitor in the drilling industry with similar rig fleets, |
|
|
|
|
each is considered a peer company by industry analysts who specialize in tracking the
oil and gas drilling industry, |
|
|
|
|
each is perceived as generally comparable by the shareholder community based on the
nature of the business and customers, including similar business cycles, and |
|
|
|
|
financial performance. |
34
In evaluating the data from peer companies, the Committee takes into account differences in the
size of individual peer companies. PM&P provides the Committee with this adjusted data as part of
its comparative process. The Committee uses the adjusted data as a basis to include both smaller
and larger companies in the peer group similar to the method used by the investment community and
Institutional Shareholder Services in comparing the Company to peer companies. The Committee, in
monitoring the peer industry practices, may over time make slight modifications to the peer group
due to consolidations within and for new companies entering the drilling industry. The Committee
will continue to monitor the appropriateness of the peer group and the relative measures drawn from
the process with the primary objective of utilizing a peer group that provides the most appropriate
comparison to the Company as part of the Committees competitiveness evaluation.
Relative Size of Major Compensation Elements. Consistent with our total executive compensation
philosophy set forth in the initial section of this analysis, in setting or recommending executive
compensation, the Committee considers the total compensation payable to an executive officer and
the form of the compensation. The Committee seeks to achieve a balance between immediate cash
rewards for the achievement of company-wide and personal objectives and long-term incentives
designed to align the interests of our executive officers with those of our shareholders. The
Committee determines the size of each element based primarily on:
|
|
|
the achievement of Company performance goals based on our five-year strategic plan, |
|
|
|
|
market practice determined from benchmarking data from our peer group, and |
|
|
|
|
individual performance. |
The percentage of compensation that is contingent incentive compensation typically increases in
relation to an executive officers responsibilities within the company, with contingent incentive
compensation for more senior executive officers being a greater percentage of total compensation
than for less senior executive officers. The Committee believes that making a significant portion
of an executive officers incentive compensation contingent on long-term stock price performance
more closely aligns the executive officers interests with those of our shareholders.
Internal Pay Equity. Additionally, PM&P compared the Companys CEO compensation against that of
the other named executive officers for the Committee and determined that it was appropriate based
on benchmarking data from peer companies and otherwise appropriate based on all relevant factors
and circumstances.
Tally Sheets. The Committee relies upon information compiled by the Company and PM&P in tally
sheets to provide the Committee with a comprehensive understanding of the total compensation
package of each executive officer, including potential value from previous stock grants and stock
options and long-term incentive plans, and potential payouts in post termination and change of
control situations. This information is factored into the Committees analysis in establishing or
recommending each element that comprises the total compensation for the executive officers to
ensure that the total compensation package for each executive officer is appropriate considering
all relevant factors and circumstances.
Elements of Total Compensation
Base Salary. We review base salaries annually and target salary compensation at or near the median
base salary practices of the market, but maintain flexibility to deviate from market-median
practices for individual circumstances.
The Committee used benchmarking as a tool to target base salary compensation for executive officers
for 2006 generally within 10% of the median of the peer group for comparable positions. This tool
was used in conjunction with evaluations of performance, responsibilities and experience of each
respective executive officer in establishing base salary. In addition, the Committee considered
information from tally sheets, which tally sheets included information regarding past compensation,
in establishing base salaries that are appropriate considering all the relevant factors and
circumstances, including retention of personnel that will promote the success of the Company and
reward shareholders. The 2006 base salaries are reported in the Summary Compensation Table which
follows this Compensation Discussion and Analysis, including narrative information as appropriate.
Annual Incentive Compensation Plan (ICP). The ICP provides the short-term incentive compensation
element of our executive officer compensation program. It is a cash-based performance incentive
program designed to motivate and reward our executive officers and other key employees for their
35
contributions to factors and business goals that we believe drives our earnings and creates
shareholder value. The ICP is an authorized incentive plan under the 2005 Long Term Incentive Plan
(2005 LTIP) which 2005 LTIP was approved by the shareholders in 2005 and which authorizes the
Committee to approve and administer such incentive plans.
In March 2006, the Committee approved the metrics and performance measurers for the 2006 ICP. The
metrics to determine the amount of this annual cash incentive compensation for the executive
officers were developed in alignment with the Companys Five-Year Strategic Plan using the approved
budget and quality goals as parameters, which quality goals reflect the Companys best estimate of
superior performance for the Company. The ultimate payout of annual cash incentive compensation is
based on attainment of these pre-established performance objectives. Because the ICP has a
threshold condition of positive net income, based on the Committees previous established policy,
the payout of the ICP could range from 0, which would be at the bottom of the peer group, to a
maximum payout of 200% of base salary for the CEO, which is in the upper 25% of the peer group.
Actual performance drives the amount of payout based on a scorecard of specific goal metrics
established during the first quarter of each year. 100% payout of a metric is generally based on
the budgeted amount. The threshold, target and maximum payouts for 2006 are described in the table
titled: Grants of Plan Based Awards found on page 41 of this proxy statement. Each metric is
weighted relative to its potential impact on the performance of the Company which aligns the
interests of the shareholders with the executive officers performance. For each of the executive
officers, 80% of the annual incentive bonus is based on the performance of three factors/metrics
that are closely aligned with our shareholders interests, i.e., net income results (35%), Company
EBITDA, or earnings before interest, taxes, depreciation and amortization (30%), and stock
performance (15%). The other factors/metrics are safety (10%) and controlling general and
administrative costs (10%).
In addition to the metrics described above, two negative factors were built into the 2006 ICP plan.
These metrics were included not only because they represent managements primary concern about
safety and the integrity of our financial statements, but also because management believes there is
a direct correlation between Companys performance and safety and financial integrity, and as a
result, these factors have a direct impact on our shareholders. If the negative factors are
triggered this would result in a decrease to the potential payout of 5% per factor. The negative
factors are potential catastrophic loss (potential 5% deduction) and results of testing of internal
controls pursuant to SOX (potential deduction of 5%).
The actual amount of the annual cash incentive compensation paid pursuant to the 2006 ICP plan was
determined in early 2007 based on the executive officers scorecard for each metric after 2006
financial results were verified. A multiplier or performance index is determined based on the
performance achieved for each metric and the weighting of each metric. For example, a performance
index of 1.0 for the executive officers would typically mean that the Company achieved the budgeted
goals for each metric. The performance index for the named executive officers for the 2006 ICP is
1.51.
The actual payouts are computed by the following formula:
|
|
|
(executive officers salary) X (performance index) X (target % for each executive officer) |
|
|
|
|
Target percentages are: CEO 100%, Senior Vice Presidents 75% and Vice Presidents 50%. |
The actual payout for the named executive officers for 2006 is included in the Summary Compensation
Table immediately following this Compensation Discussion and Analysis.
Long Term Incentive Plan. Our 2005 LTIP also allows for the granting of long term incentive awards
in addition to traditional grants of restricted stock, stock options and annual cash incentive
compensation (see ICP described immediately above). These long-term incentive awards can be in the
form of cash, stock options, restricted stock or stock appreciation rights and they can be based on
profits, profit-related return ratios, return measures (including, but not limited to, return on
assets, capital, equity, investment or sales), cash flow (including, but not limited to, operating
cash flow, free cash flow or cash flow return on capital or investments), earnings (including but
not limited to, total shareholder return, earnings per share or earnings before or after taxes),
net sales growth, net earnings or income (before or after taxes, interest, depreciation and/or
amortization), gross, operating or net profit margins, productivity ratios, share price (including,
but not limited to, growth measures and total shareholder return), turnover of assets, capital, or
inventory, expense targets, margins, measures of health, safety or environment, operating
36
efficiency, customer service or satisfaction, market share, credit quality, and working capital
targets, all of which are described in the 2005 LTIP. We choose from among these metrics the
particular metrics which we judge will result in management of the business in a manner that
increases shareholder value and are appropriate for the peer group within the drilling industry.
The Committee believes that the interests of our shareholders are best served when a significant
percentage of our officers compensation is comprised of equity-based and other long-term
incentives that appreciate in value contingent upon increases in the share price of our common
stock and other indicators that reflect improvements in business fundamentals. Through the use of
time vesting conditions, such awards also provide retention benefits. Consistent with our
compensation philosophy, the Committee seeks to target equity-based and other long-term incentive
awards generally reflecting the market-median value of annual stock awards.
After due consideration, pursuant to its authorization under the 2005 LTIP, the Committee approved
and implemented a three-year incentive award plan (Three-Year LT Incentive Plan) based on the
performance factors contained in the 2005 LTIP. PM&P assisted the Committee in formulation of the
Three-Year LT Incentive Plan, including development of performance measures to determine ultimate
payouts. Under the Three-Year LT Incentive Plan, the executive officers and certain middle
management personnel (total of 14 participants) may earn restricted stock over three years based
on the Company achieving pre-established targets based on the following factors/metrics and
respective weighting for each factor/metric:
|
|
|
earnings per share (40% weighting), subject to a negative adjustment of 50% if the
Companys EPS growth is not equal to or greater than the EPS growth of the peer group, |
|
|
|
|
cash flow (40% weighting), and |
|
|
|
|
debt to capital ratio (20% weighting), |
The target for each individual factor/metric is established in accordance with the Companys
Five-Year Strategic Plan.
The restricted stock award that may be earned in any given year depends on the Companys
performance goals that were established based on the Five-Year Strategic Plan. Superior
performance, meaning all performance metrics have been achieved or exceeded both annually and for
the cumulative three year measurement period, would result in earning total awards which are in the
upper 25% of the peer group. If the Company incurs a net loss in any given year no restricted
stock awards can be earned. In addition, EPS and/or cash flow underperformance in any particular
year during the three year plan will negatively impact the cumulative award. The Committee sets
the minimum, target and maximum levels in accordance with the performance goals established in the
Five-Year Strategic Plan. Achievement of the maximum goals will require superior performance of
the executives in implementing the Five-Year Strategic Plan, although the relative difficulty of
achieving these goals is affected by certain risk factors that are outside the control of the
Company and the executives, which risk factors are disclosed in our periodic filings.
Target award levels are set for each participant based on relative base salary of each executive
officer. The total target number of shares for all participants is approximately 1.7 million shares
over the three year period, of which 1,134,000 is the target number of shares which may be earned
by the named executive officers if the target performance goals are satisfied. For each
participant a maximum of 25% of the total award can be earned the first year, 30% the second year
and 45% the third year, split equally between a current award and a cumulative award. Annual
awards are not determinable by the Committee until peer performance data is available. When
available, the data is compiled and compared to the pre-established performance goals of the
Company in light of the Companys actual performance for the year. When performance against the
financial measures, both relative and absolute, are determined, the awards are granted, typically
before the end of March. Awards then vest evenly over a two year period beginning one year after
the grant date. The cumulative award potential builds each year and is not quantified or granted
until the end of the three year period and then vests in equal amounts over the two years following
the end of the three year period. Awards under the Plan are weighted toward the end of the three
year period as the results of the three year performance period (the Cumulative Award) makes up
62.5% of the target award level. As with the annual award portion of the Three-Year Incentive LT
Plan, the Cumulative Award is dependent upon a combination of Company and relative performance
against the peer group. While no fixed shares are allocated to either portion of the
37
awards, the Company feels that over the three year period, the awards will be competitive if the
Company performs at or near target performance levels.
Similar to the ICP, the Three Year LT Incentive Plan is consistent with the Companys philosophy of
tying a significant portion of each executives compensation to performance because this aligns the
executive officers compensation to shareholder interests. This plan differs from the ICP in that
it also provides retention benefits, because the executive officers must remain in the employ of
the Company throughout the vesting period of five years from inception to receive the full benefit,
subject to exceptions for termination of executives not for cause, termination for good reason,
termination due to death or disability and termination due to change in control.
Restricted Stock Grants. It is the intent of the Committee that long-term compensation programs
like the Three Year LT Incentive Plan will replace the traditional grants of stock options or
restricted stock. Because any awards of restricted stock earned under the Three Year LT Incentive
Plan will not begin to vest until the second year and are weighted such that a majority of the
grants will not vest until the fourth and fifth year, in order to provide continued long-term
incentives that are competitive, the Committee determined to make a special grant of restricted
stock to the executive officers in April 2006, which grant is consistent with the equity awards to
comparable positions at our peer companies. These awards also provide an opportunity for increased
equity ownership by the executives to further the link between the creation of shareholder value
and long term incentive compensation. This restricted stock grant will vest in three equal
portions beginning one year from the date of the grant.
All restricted stock earned under the Three-Year LT Incentive Plan and the special
non-performance based restricted stock grant, as is the case with the earlier grants of restricted
stock and stock options, will be forfeited if they are not vested prior to the date the executive
officer terminates his employment, except in the cases of termination of executives not for cause,
termination for good reason, termination due to death or disability and termination due to change
in control.
Perquisites and Other Personal Benefits. Consistent with our compensation philosophy, we provide
certain perquisites to our executive officers, which the Company and the Committee believe are
reasonable and which better enable the Company to attract and retain employees for key positions.
The Committee periodically reviews the levels of perquisites provided to the named executive
officers.
Certain of the executive officers are provided with a car allowance, club dues, home use of
computer equipment and personal use of corporate aircraft. Each named executive officer is
entitled to receive a cash payment upon such executives death through the executive life insurance
provided for said executives.
Specific information regarding these perquisites and the incremental cost to the Company for
providing these perquisites is set forth in the Summary Compensation Table and the related
narrative disclosure at page 40 of this Proxy Statement.
Impact of Accounting and Tax Treatments
Tax Treatment. Section 162(m) of the Internal Revenue Code limits tax deductions for certain
executive compensation over $1 million. Certain types of compensation are deductible only if
performance criteria are specified in detail, and shareholders have approved the compensation
arrangements. While the restricted stock grants to the executives in the past three years have a
material performance-based component, these awards do not qualify as performance-based under
162(m). The Compensation Committee remains aware of these provisions and may in the future
determine to make grants under the 2005 LTIP whereby all or any such awards may qualify for
deductibility, but the Committee has not yet adopted a formal policy with respect to qualifying
compensation paid to its executive officers for an exemption from this limitation on deductibility
imposed by this section.
Nonqualified Deferred Compensation. On October 22, 2004, the American Jobs Creation Act of 2004
was signed into law, changing the tax rules applicable to nonqualified deferred compensation
arrangements. While the final regulations have not become effective yet, the Company believes it is
operating in good faith compliance with the statutory provisions which were effective January 1,
2005.
Post-Employment Benefits
The Company has entered into employment agreements with its executive officers which provide for
the payment of severance and other post-termination benefits depending on the nature of the
termination,
38
including, severance payments in the event of a change in control. The Company and the Committee
believe that the terms and conditions of these employment agreements are reasonable and help the
Company retain the executive talent needed to achieve the objectives of the strategic plan. In
particular, the severance agreements in the event of a change in control help executives focus
their attention on the performance of their duties in the best interests of the shareholders
without being concerned about a change of control and help promote continuity of senior management.
Information regarding the specific payments that are applicable to each termination event, as
well as the effect on unvested equity awards, is provided under the heading Potential Payments
Upon Termination or Change in Control on page 44.
Compensation-Related Policies
As noted above, the 2005 LTIP also authorizes the granting of traditional awards of stock options
and restricted stock, in addition to the annual incentive cash compensation plan and the long-term
incentive equity plan described above. Upon approval of the 2005 LTIP, all other existing stock
plans were frozen and all shares available for granting under the frozen plans were listed on the
NYSE and authorized for granting under the 2005 LTIP. The Committee adopted a general practice in
2002 that restricted stock awards were to be preferred over stock options, based in part on the
fact that the ability to tie vesting to performance restrictions better aligned the executives
compensation to the shareholders. Since that time all stock option grants to executive officers
have been in connection with the hiring of executive officers, with one exception. Each of these
grants has been at a strike price equal to or greater than the closing price of the Companys
common stock on the NYSE on the date the grant was approved by the Committee, in accordance with
the terms of the 2005 LTIP.
Because stock option grants under the 2005 LTIP are used primarily for new hires, the Company has
not established a policy regarding the timing of stock option grants.
In certain instances the Committee and management have determined it is appropriate to have a
formal policy regarding certain compensation matters. During 2006, the Committee recommended a
formal policy, with input from PM&P and benefits counsel, on use of corporate aircraft, which
policy was adopted by the Board in early 2007. This policy restricts the use of the Companys
corporate aircraft for personal use and requires that all personal use must be approved by the CEO.
Other Compensation Matters
The Company has not formally adopted a clawback provision that would allow recovery of
compensation in any form that was paid or granted to executive officers based on reporting of
inaccurate financial results. However, it is the stated intention of the Board and senior
management that to the extent any executive is complicit in fraudulent actions that substantially
contributed to any misstatement of financial statements that requires a restatement, the Company
will pursue all appropriate remedies to recover the amount of any compensation paid or granted to
said individual to the extent the compensation paid or granted exceeds the amount that would have
been paid or granted to said individual based on the restated financial statements.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion
and Analysis as required by Item 402(b) of Regulation S-K with management and, based on such review
and discussions, the Compensation Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this Proxy Statement.
THE COMPENSATION COMMITTEE
R. Rudolph Reinfrank, Chairman
John W. Gibson, Jr.
Robert E. McKee III
Robert W. Goldman
39
SUMMARY COMPENSATION TABLE
The following table summarizes the total compensation paid or earned by the principal executive
officer (PEO), the principal financial officer (PFO) and the three most highly compensated
executive officers of the Company, other than the PEO and the PFO, plus up to two other executive
officers who would have been in the table but for the fact that they were not an executive officer
as of December 31, 2006, (collectively, the Named Executive Officers), for the year ended
December 31, 2006. A description of the material terms of the employment agreements for each of the
Named Executive Officers, other than Mr. Parker Sr., is found at page 42.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
Compensa- |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Compensa- |
|
tion |
|
Compensa- |
|
|
Name and Principal |
|
|
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
tion |
|
Earnings |
|
tion |
|
Total |
Position |
|
Year |
|
($) |
|
($) |
|
($)(2) |
|
($) |
|
($)(3) |
|
($) |
|
($)(4)(5)(6) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
Mr. Parker Jr-PEO(1) |
|
|
2006 |
|
|
|
550,000 |
|
|
|
0 |
|
|
|
1,216,294 |
|
|
|
0 |
|
|
|
830,500 |
|
|
|
0 |
|
|
|
56,246 |
|
|
|
2,653,040 |
|
Mr. Brassfield-PFO |
|
|
2006 |
|
|
|
250,000 |
|
|
|
0 |
|
|
|
303,104 |
|
|
|
0 |
|
|
|
283,125 |
|
|
|
0 |
|
|
|
23,846 |
|
|
|
860,075 |
|
Mr. Mannon- SVP
& COO |
|
|
2006 |
|
|
|
347,923 |
|
|
|
0 |
|
|
|
745,540 |
|
|
|
0 |
|
|
|
396,375 |
|
|
|
0 |
|
|
|
40,717 |
|
|
|
1,530,555 |
|
Mr. Graham- VP
Engineering |
|
|
2006 |
|
|
|
244,857 |
|
|
|
0 |
|
|
|
230,599 |
|
|
|
0 |
|
|
|
185,730 |
|
|
|
0 |
|
|
|
23,335 |
|
|
|
684,521 |
|
Mr. Potter- VP &
General Counsel |
|
|
2006 |
|
|
|
255,637 |
|
|
|
0 |
|
|
|
242,511 |
|
|
|
0 |
|
|
|
196,300 |
|
|
|
0 |
|
|
|
8,800 |
|
|
|
703,248 |
|
Mr. Parker Sr.-
former Chairman (7) |
|
|
2006 |
|
|
|
648,270 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
155,688 |
|
|
|
803,958 |
|
|
|
|
(1) |
|
Appointed Chairman on April 28, 2006. |
|
(2) |
|
The amounts in column (e) reflect the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended December 31, 2006, in accordance with FAS 123R of
awards pursuant to the 2005 Long-Term Incentive Plan and thus may include amounts from awards
granted in and prior to 2006. Assumptions used in the calculation of these amounts are
included in footnote 8 to the Companys audited financial statements for the fiscal year ended
December 31, 2006, included in the Companys Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 1, 2007. |
|
(3) |
|
The amounts in column (g) reflect the cash awards that were earned by the named individuals
under the ICP, which is discussed in further detail on page 35 under the heading Annual
Incentive Compensation Plan. |
|
(4) |
|
The amounts in column (i) include for each named executive officer the matching contributions
allocated by the Company to each of the named executive officers pursuant to the Stock Bonus
Plan (401(k)). |
|
(5) |
|
The amounts in column (i) also include for each named executive officer, other than Mr.
Potter: |
|
(a) |
|
the value attributable to life insurance benefits provided to the named executive officer,
which life insurance is described in the Compensation Discussion and Analysis on page 38; |
|
|
(b) |
|
a car allowance; and |
|
|
(c) |
|
club dues. |
|
|
|
(6) |
|
In addition to the items noted in footnotes (4) and (5) above, the amount in column (i)
includes: |
|
(a) |
|
the cost of tax preparation services provided to Mr. Parker Sr. of $55,439; |
|
|
(b) |
|
the cost of tax preparation services for Mr. Parker Jr.; |
|
|
(c) |
|
accrued vacation benefits paid to Mr. Parker Sr. upon his retirement; |
|
|
(d) |
|
legal fees incurred by Mr. Parker Sr. in connection with negotiation of the
Consulting Agreement and the Termination of Split Dollar Life Insurance Agreement with the
Company (see page 22); and |
|
|
(e) |
|
personal use of corporate aircraft by Mr. Parker Sr. and Mr. Parker Jr. |
|
|
|
|
|
The aggregate incremental cost of Mr. Parker Sr.s and Mr. Parker Jr.s personal use of
corporate aircraft is determined on a per flight basis and includes the direct operating costs
for the flight staging, the cost of landing fees, trip related hangar and parking costs, crew
expenses and other variable costs attributable to a specific trip. |
|
(7) |
|
Mr. Parker Sr. served as the Companys Chairman of the Board until April 28, 2006, at which
time he retired and became Chairman Emeritus, which is not an executive officer or paid
position. The amount shown in column (c) is the salary paid to Mr. Parker Sr. as Chairman and
the severance he received in 2006 pursuant to the Consulting Agreement with the Company dated
April 6, 2006, the terms of which are specified in detail at page 22 of this Proxy Statement.
If Mr. Parker Sr. had remained employed by the Company as of December 31, 2006, he would have
been one of the three most highly compensated executive officers of the Company. |
40
GRANTS OF PLAN-BASED AWARDS TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
Awards: |
|
Exercise |
|
Grant Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
Number |
|
or Base |
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
of |
|
Price of |
|
of Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock |
|
Securities |
|
Option |
|
and Option |
|
|
Grant |
|
Approval |
|
Estimated Possible Payouts Under |
|
Estimated Future Payouts |
|
or Units |
|
Underlying |
|
Awards |
|
Awards |
Name |
|
Date |
|
Date |
|
Non-Equity Incentive Plan Awards(1) |
|
Under Equity Incentive Plan Awards |
|
(#)(2) |
|
Options (#) |
|
($/Sh) |
|
($)(3) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
(k) |
|
(l) |
|
(m) |
|
|
|
|
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Parker,
Jr., PEO |
|
|
4/6/06 |
|
|
|
4/5/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,000 |
|
|
|
|
|
|
|
|
|
|
|
1,160,220 |
|
|
|
|
n/a |
|
|
|
|
|
|
|
275,000 |
|
|
|
550,000 |
|
|
|
1,100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Kirk Brassfield,
PFO |
|
|
4/6/06 |
|
|
|
4/5/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,000 |
|
|
|
|
|
|
|
|
|
|
|
418,440 |
|
|
|
|
n/a |
|
|
|
|
|
|
|
93,750 |
|
|
|
187,500 |
|
|
|
375,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Mannon |
|
|
4/6/06 |
|
|
|
4/5/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,000 |
|
|
|
|
|
|
|
|
|
|
|
589,620 |
|
|
|
|
n/a |
|
|
|
|
|
|
|
131,250 |
|
|
|
262,500 |
|
|
|
525,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denis Graham |
|
|
4/6/06 |
|
|
|
4/5/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000 |
|
|
|
|
|
|
|
|
|
|
|
256,770 |
|
|
|
|
n/a |
|
|
|
|
|
|
|
61,500 |
|
|
|
123,000 |
|
|
|
246,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald C. Potter |
|
|
4/6/06 |
|
|
|
4/5/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,000 |
|
|
|
|
|
|
|
|
|
|
|
275,790 |
|
|
|
|
n/a |
|
|
|
|
|
|
|
65,000 |
|
|
|
130,000 |
|
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Parker Sr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown in columns (d) through (f) reflect potential payouts under the ICP
which is described in detail on page 35. The amount in column (d) is the amount that the
executive will earn if the threshold, which is 50% of target, is met. The amount in
column (f) is 200% of the target amount. |
|
(2) |
|
The amounts shown in column (j) reflect the number of shares of stock granted to each
named executive officer pursuant to the 2005 Long Term Incentive Plan. The restricted
stock was granted to each executive pursuant to an award agreement providing for vesting
in equal amounts on the first, second and third anniversary dates of the grant. |
|
(3) |
|
Determined based on the number of shares in column (j) times the closing price of the
Companys common stock on April 6, 2006 of $9.51. |
41
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
Incentive |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Plan Awards: |
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
Market or |
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
|
|
|
|
|
|
|
|
Number of |
|
Market |
|
Number of |
|
Payout Value |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
Shares or |
|
Value of |
|
Unearned |
|
of Unearned |
|
|
Number of |
|
Number of |
|
Securities |
|
|
|
|
|
|
|
|
|
Units of |
|
Shares or |
|
Shares, Units |
|
Shares, Units |
|
|
Securities |
|
Securities |
|
Underlying |
|
|
|
|
|
|
|
|
|
Stock |
|
Units of |
|
or Other |
|
or Other |
|
|
Underlying |
|
Underlying |
|
Unexercised |
|
Option |
|
|
|
|
|
That |
|
Stock That |
|
Rights That |
|
Rights That |
|
|
Unexercised |
|
Unexercised |
|
Unearned |
|
Exercise |
|
Option |
|
Not |
|
Have Not |
|
Have Not |
|
Have Not |
|
|
Options |
|
Options |
|
Options |
|
Price |
|
Expiration |
|
Vested |
|
Vested |
|
Vested |
|
Vested |
|
|
(#) |
|
(#) |
|
(#) |
|
($) |
|
Date |
|
(#)(1) |
|
($)(2) |
|
(#) |
|
($) |
Name |
|
Exercisable |
|
Unexercisable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Parker, Jr.- PEO |
|
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
8.875 |
|
|
|
5/13/07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000 |
|
|
|
|
|
|
|
|
|
|
|
5.35 |
|
|
|
4/3/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
2.24 |
|
|
|
8/6/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
322,001 |
|
|
|
2,630,748 |
|
|
|
|
|
|
|
|
|
Mr. Brassfield- PFO |
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
10.8125 |
|
|
|
3/25/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
5.35 |
|
|
|
4/3/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
|
|
|
|
|
|
|
|
|
2.24 |
|
|
|
8/6/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,334 |
|
|
|
631,819 |
|
|
|
|
|
|
|
|
|
Mr. Mannon- SVP & COO |
|
|
16,666 |
|
|
|
8,334 |
(3) |
|
|
|
|
|
|
3.85 |
|
|
|
1/3/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,334 |
|
|
|
2,004,379 |
|
|
|
|
|
|
|
|
|
Mr. Graham- VP Engineering |
|
|
70,000 |
|
|
|
|
|
|
|
|
|
|
|
2.24 |
|
|
|
8/6/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,334 |
|
|
|
492,929 |
|
|
|
|
|
|
|
|
|
Mr. Potter-
VP & General Counsel |
|
|
37,500 25,000 |
|
|
|
|
|
|
|
|
|
|
|
2.61 8.875 |
|
|
|
7/15/10 5/11/07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,334 |
|
|
|
509,269 |
|
|
|
|
|
|
|
|
|
Mr. Parker
Sr.- former Chairman |
|
|
400,000 45,000 |
|
|
|
|
|
|
|
|
|
|
|
8.875 5.35 |
|
|
|
5/13/07 4/3/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts in column (g) vest as follows: |
|
|
|
Mr. Parker Jr. 40,667 shares will vest on April 6, 2007, 40,000 will vest on May 6, 2007, 120,000
will vest on May 7, 2007, 40,666 will vest on April 6, 2008, 40,001 on May 6, 2008 and 40,667 will
vest on April 6, 2009. |
|
|
|
Mr. Brassfield- 14,667 shares will vest on April 6, 2007, 6,667 will vest on May 6, 2007, 20,000
will vest on May 7, 2007, 14,666 will vest on April 6, 2008, 6,667 will vest on May 6, 2008 and
14,667 will vest on April 6, 2009. |
|
|
|
Mr. Mannon 20,667 shares will vest on April 6, 2007, 16,667 will vest on May 7, 2007, 50,000 will
vest on May 7, 2007, 20,667 will vest on April 6, 2008, 16,667 will vest on May 6, 2008 and 20,667
will vest on April 6, 2009. |
|
|
|
Mr. Graham 9,000 shares will vest on April 6, 2007, 6,667 will vest on May 6, 2007, 20,000 will
vest on May 7, 2007, 9,000 will vest on April 6, 2008, 6,667 will vest on May 6, 2008 and 9,000
will vest on April 6, 2009. |
|
|
|
Mr. Potter 9,667 shares will vest on April 6, 2007, 6,667 will vest on May 6, 2007, 20,000 will
vest on May 7, 2007, 9,666 will vest on April 6, 2008, 6,667 will vest on May 6, 2008 and 9,667
will vest on April 6, 2009. |
|
(2) |
|
Based on closing price of Company common stock on December 29, 2006 of $8.17. |
|
(3) |
|
These options vested on January 4, 2007. |
42
2006 OPTION EXERCISES AND STOCK VESTED TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number of Shares |
|
|
|
|
|
Number of |
|
|
|
|
Acquired |
|
Value Realized |
|
Shares Acquired |
|
Value Realized |
|
|
on Exercise |
|
on Exercise |
|
on Vesting |
|
on Vesting |
Name |
|
(#) |
|
($) |
|
(#) |
|
($)(1) |
Mr. Parker- PEO |
|
|
150,000 |
|
|
|
1,222,125 |
|
|
|
39,999 |
|
|
|
349,591 |
|
Mr. Brassfield-PFO |
|
|
60,000 |
|
|
|
526,846 |
|
|
|
6,666 |
|
|
|
58,261 |
|
Mr. Mannon |
|
|
|
|
|
|
|
|
|
|
16,666 |
|
|
|
145,661 |
|
Mr. Graham |
|
|
95,000 |
|
|
|
544,257 |
|
|
|
6,666 |
|
|
|
58,261 |
|
Mr. Potter |
|
|
62,500 |
|
|
|
254,650 |
|
|
|
6,666 |
|
|
|
58,261 |
|
Mr. Parker Sr. |
|
|
100,000 |
|
|
|
811,322 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Value based on closing price of Company common stock on date of vesting. |
EMPLOYMENT AGREEMENTS
Each of the current executive officers has an employment agreement with the Company, all of which
became effective in 2002, with the exception of Mr. Mannons and Mr. Potters, which became
effective in January 2005 and June 2003, respectively. The term of each agreement is for three
years and each provides for automatic extensions of two years, with the exception of Mr. Grahams,
Mr. Potters and Mr. Brassfields, whose agreement is for two years with automatic two year
extensions. The employment agreements provide for the following benefits:
|
|
|
payment of current salary, which may be increased upon review by the CEO (or the Board
in the case of the CEO and the Chairman) on an annual basis but cannot be reduced except
with consent of the executive, |
|
|
|
|
payment of bonuses of up to 100% (75% for Mr. Mannon and Mr. Brassfield, and 50% for Mr.
Graham and Mr. Potter) of salary based on meeting certain incentives, |
|
|
|
|
to be eligible to receive stock options and to participate in other benefits, including
without limitation, paid vacation, 401(k) plan, health insurance and life insurance. |
The employment agreements also restrict the executive officers from engaging in business that
competes with the Company and from soliciting employees of the Company for one year after their
employment with the Company terminates.
The post termination payments payable under certain events are discussed in the table and
accompanying narrative in the section titled Potential Payments Upon Termination or Change in
Control immediately following.
43
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The tables below reflect the amount of compensation to each of the named executive officers of the
Company in the event of termination of such executives employment. The amount of compensation
payable to each named executive officer upon voluntary termination, normal retirement, involuntary
not-for-cause termination, for cause termination, termination following a change in control and in
the event of disability or death of the executive is shown below. The amounts shown assume that
such termination was effective as of December 31, 2006.
The following table describes the potential payments upon termination or change in control of the
Company for Mr. Robert L. Parker Jr., the Companys Chairman, President and CEO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
For |
|
|
|
|
|
|
|
|
Executive |
|
|
|
|
|
|
|
|
|
Not for |
|
Cause |
|
Involuntary |
|
|
|
|
|
Death |
Benefits and |
|
Voluntary |
|
Normal |
|
Cause |
|
Termi- |
|
Good Reason |
|
Change In |
|
or |
Payments Upon |
|
Termination |
|
Retirement |
|
Termination |
|
nation |
|
Termination |
|
Control |
|
Disability |
Termination |
|
($) |
|
(2) ($) |
|
(2) ($) |
|
($) |
|
(2) ($) |
|
(3) ($) |
|
(2) ($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
($550,000) |
|
|
(1 |
) |
|
|
1,100,000 |
|
|
|
1,100,000 |
|
|
|
0 |
|
|
|
1,100,000 |
|
|
|
1,650,000 |
|
|
|
1,100,000 |
|
Annual Incentive
Compensation |
|
|
0 |
|
|
|
2,155,748 |
|
|
|
2,155,748 |
|
|
|
0 |
|
|
|
2,155,748 |
|
|
|
3,233,622 |
|
|
|
2,155,748 |
|
Long-term
Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 year LT Plan |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Restricted
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested
and
Accelerated |
|
|
0 |
|
|
|
2,630,748 |
|
|
|
2,630,748 |
|
|
|
0 |
|
|
|
2,630,748 |
|
|
|
2,630,748 |
|
|
|
2,630,748 |
|
Benefits and
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement
health care (4) |
|
|
0 |
|
|
|
24,168 |
|
|
|
24,168 |
|
|
|
0 |
|
|
|
24,168 |
|
|
|
36,252 |
|
|
|
24,168 |
|
Accrued
Vacation Pay |
|
|
40,192 |
|
|
|
40,192 |
|
|
|
40,192 |
|
|
|
40,192 |
|
|
|
40,192 |
|
|
|
40,192 |
|
|
|
40,192 |
|
Tax Gross-Up |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,930,382 |
|
|
|
0 |
|
Total: |
|
|
40,192 |
(1) |
|
|
5,950,856 |
|
|
|
5,950,856 |
|
|
|
40,192 |
|
|
|
5,950,856 |
|
|
|
9,521,196 |
|
|
|
5,950,856 |
|
|
|
|
(1) |
|
Would receive salary for the remainder of the month in which terminated. The total amount
shown does not include any amount for such salary. |
|
(2) |
|
In the event of termination due to any of these reasons, Mr. Parker Jrs employment agreement
provides that he shall be paid 2 times the highest base salary he was paid during previous
three years, 2 times the highest annual bonus paid during previous three years and 2 years of
continued health benefits, plus accrued vacation pay and acceleration of all unvested
restricted stock grants. |
|
(3) |
|
In the event of termination due to a Change in Control, Mr. Parker Jrs employment agreement
provides that he shall be paid 3 times the highest base salary he was paid during previous
three years, 3 times the highest annual bonus paid during previous three years and 3 years of
continued health benefits, plus accrued vacation pay and acceleration of all
unvested restricted stock grants. |
|
(4) |
|
Value based on COBRA rate. |
44
The following table describes the potential payments upon termination or change in control of
the Company for Mr. W. Kirk Brassfield, the Companys CFO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
For |
|
|
|
|
|
|
|
|
Executive |
|
|
|
|
|
|
|
|
|
Not for |
|
Cause |
|
Involuntary |
|
|
|
|
|
Death |
Benefits and |
|
Voluntary |
|
Normal |
|
Cause |
|
Termi- |
|
Good Reason |
|
Change In |
|
Or |
Payments Upon |
|
Termination |
|
Retirement |
|
Termination |
|
nation |
|
Termination |
|
Control |
|
Disability |
Termination |
|
($) |
|
(2) ($) |
|
(2) ($) |
|
($) |
|
(2) ($) |
|
(3) ($) |
|
(2) ($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
($250,000) |
|
|
(1 |
) |
|
|
375,000 |
|
|
|
375,000 |
|
|
|
0 |
|
|
|
375,000 |
|
|
|
750,000 |
|
|
|
375,000 |
|
Annual Incentive
Compensation |
|
|
0 |
|
|
|
424,687 |
|
|
|
424,687 |
|
|
|
0 |
|
|
|
424,687 |
|
|
|
849,375 |
|
|
|
424,687 |
|
Long-term
Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 year LT Plan |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Restricted
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
631,819 |
|
|
|
631,819 |
|
|
|
0 |
|
|
|
631,819 |
|
|
|
631,819 |
|
|
|
631,819 |
|
Benefits and
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement
health care (4) |
|
|
0 |
|
|
|
18,126 |
|
|
|
18,126 |
|
|
|
0 |
|
|
|
18,126 |
|
|
|
36,252 |
|
|
|
18,126 |
|
Accrued
Vacation Pay |
|
|
17,308 |
|
|
|
17,308 |
|
|
|
17,308 |
|
|
|
17,308 |
|
|
|
17,308 |
|
|
|
17,308 |
|
|
|
17,308 |
|
Tax Gross-Up |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
629,460 |
|
|
|
0 |
|
Total: |
|
|
17,308 |
(1) |
|
|
1,466,940 |
|
|
|
1,466,940 |
|
|
|
17,308 |
|
|
|
1,466,940 |
|
|
|
2,914,214 |
|
|
|
1,466,940 |
|
|
|
|
(1) |
|
Would receive salary for the remainder of the month in which terminated. The total amount
shown does not include any amount for such salary. |
|
(2) |
|
In the event of termination due to any of these reasons, Mr. Brassfields employment
agreement provides that he shall be paid 1.5 times the highest base salary he was paid during
previous three years, 1.5 times the highest annual bonus paid during previous three years and
1.5 years of continued health benefits, plus accrued vacation pay and acceleration of all
unvested restricted stock grants. |
|
(3) |
|
In the event of termination due to a Change in Control, Mr. Brassfields employment agreement
provides that he shall be paid 3 times the highest base salary he was paid during previous
three years, 3 times the highest annual bonus paid during previous three years and 3 years of
continued health benefits, plus accrued vacation pay and acceleration of all unvested
restricted stock grants. |
|
(4) |
|
Value based on COBRA rate. |
45
The following table describes the potential payments upon termination or change in control of
the Company for Mr. David C. Mannon, the Companys COO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
For |
|
|
|
|
|
|
|
|
Executive |
|
|
|
|
|
|
|
|
|
Not for |
|
Cause |
|
Involuntary |
|
|
|
|
|
Death |
Benefits and |
|
Voluntary |
|
Normal |
|
Cause |
|
Termi- |
|
Good Reason |
|
Change In |
|
Or |
Payments Upon |
|
Termination |
|
Retirement |
|
Termination |
|
nation |
|
Termination |
|
Control |
|
Disability |
Termination |
|
($) |
|
(2) ($) |
|
(2) ($) |
|
($) |
|
(2) ($) |
|
(3) ($) |
|
(2) ($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
($350,000) |
|
|
(1 |
) |
|
|
700,000 |
|
|
|
700,000 |
|
|
|
0 |
|
|
|
700,000 |
|
|
|
1,050,000 |
|
|
|
700,000 |
|
Annual Incentive
Compensation |
|
|
0 |
|
|
|
975,150 |
|
|
|
975,150 |
|
|
|
0 |
|
|
|
975,150 |
|
|
|
1,462,725 |
|
|
|
975,150 |
|
Long-term
Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 year LT Plan |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Restricted
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
2,004,379 |
|
|
|
2,004,379 |
|
|
|
0 |
|
|
|
2,004,379 |
|
|
|
2,004,379 |
|
|
|
2,004,379 |
|
Benefits and
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement
health care (4) |
|
|
0 |
|
|
|
24,168 |
|
|
|
24,168 |
|
|
|
0 |
|
|
|
24,168 |
|
|
|
36,252 |
|
|
|
24,168 |
|
Accrued
Vacation Pay |
|
|
25,384 |
|
|
|
25,384 |
|
|
|
25,384 |
|
|
|
25,384 |
|
|
|
25,384 |
|
|
|
25,384 |
|
|
|
25,384 |
|
Tax Gross-Up |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,282,625 |
|
|
|
0 |
|
Total: |
|
|
25,384 |
(1) |
|
|
3,729,081 |
|
|
|
3,729,081 |
|
|
|
25,38 |
|
|
|
4 3,729,081 |
|
|
|
5,861,365 |
|
|
|
3,729,081 |
|
|
|
|
(1) |
|
Would receive salary for the remainder of the month in which terminated. The total amount
shown does not include any amount for such salary. |
|
(2) |
|
In the event of termination due to any of these reasons, Mr. Mannons employment agreement
provides that he shall be paid 1.5 times the highest base salary he was paid during previous
three years, 2 times the highest annual bonus paid during previous three years and 2 years of
continued health benefits, plus accrued vacation pay and acceleration of all unvested
restricted stock grants. |
|
(3) |
|
In the event of termination due to a Change in Control, Mr. Mannons employment agreement
provides that he shall be paid 3 times the highest base salary he was paid during previous
three years, 3 times the highest annual bonus paid during previous three years and 3 years of
continued health benefits, plus accrued vacation pay and acceleration of all unvested
restricted stock grants. |
|
(4) |
|
Value based on COBRA rate. |
46
The following table describes the potential payments upon termination or change in control of
the Company for Mr. Denis Graham, the Companys VP-Engineering.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
For |
|
|
|
|
|
|
|
|
Executive |
|
|
|
|
|
|
|
|
|
Not for |
|
Cause |
|
Involuntary |
|
|
|
|
|
Death |
Benefits and |
|
Voluntary |
|
Normal |
|
Cause |
|
Termi- |
|
Good Reason |
|
Change In |
|
Or |
Payments Upon |
|
Termination |
|
Retirement |
|
Termination |
|
nation |
|
Termination |
|
Control |
|
Disability |
Termination |
|
($) |
|
(2) ($) |
|
(2) ($) |
|
($) |
|
(2) ($) |
|
(3) ($) |
|
(2) ($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
($245,000) |
|
|
(1 |
) |
|
|
245,000 |
|
|
|
245,000 |
|
|
|
0 |
|
|
|
245,000 |
|
|
|
735,000 |
|
|
|
245,000 |
|
Annual Incentive
Compensation |
|
|
0 |
|
|
|
230,452 |
|
|
|
230,452 |
|
|
|
0 |
|
|
|
230,452 |
|
|
|
691,356 |
|
|
|
230,452 |
|
Long-term
Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 year LT Plan |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Restricted
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
492,929 |
|
|
|
492,929 |
|
|
|
0 |
|
|
|
492,929 |
|
|
|
492,929 |
|
|
|
492,929 |
|
Benefits and
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement
health care (4) |
|
|
0 |
|
|
|
12,084 |
|
|
|
12,084 |
|
|
|
0 |
|
|
|
12,084 |
|
|
|
36,252 |
|
|
|
12,084 |
|
Accrued
Vacation Pay |
|
|
12,385 |
|
|
|
12,385 |
|
|
|
12,385 |
|
|
|
12,385 |
|
|
|
12,385 |
|
|
|
12,385 |
|
|
|
12,385 |
|
Tax Gross-Up |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
510,102 |
|
|
|
0 |
|
Total: |
|
|
12,385 |
(1) |
|
|
992,850 |
|
|
|
992,850 |
|
|
|
12,385 |
|
|
|
992,850 |
|
|
|
2,017,120 |
|
|
|
992,850 |
|
|
|
|
(1) |
|
Would receive salary for the remainder of the month in which terminated. The total amount
shown does not include any amount for such salary. |
|
(2) |
|
In the event of termination due to any of these reasons, Mr. Grahams employment agreement
provides that he shall be paid 1.5 times the highest base salary he was paid during previous
three years, 1 times the highest annual bonus paid during previous three years and 1 year of
continued health benefits, plus accrued vacation pay and acceleration of all unvested
restricted stock grants. |
|
(3) |
|
In the event of termination due to a Change in Control, Mr. Grahams employment agreement
provides that he shall be paid 3 times the highest base salary he was paid during previous
three years, 3 times the highest annual bonus paid during previous three years and 3 years of
continued health benefits, plus accrued vacation pay and acceleration of all unvested
restricted stock grants. |
|
(4) |
|
Value based on COBRA rate. |
47
The following table describes the potential payments upon termination or change in control of
the Company for Mr. Ronald C. Potter, the Companys VP & General Counsel.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
For |
|
|
|
|
|
|
|
|
Executive |
|
|
|
|
|
|
|
|
|
Not for |
|
Cause |
|
Involuntary |
|
|
|
|
|
Death |
Benefits and |
|
Voluntary |
|
Normal |
|
Cause |
|
Termi- |
|
Good Reason |
|
Change In |
|
Or |
Payments Upon |
|
Termination |
|
Retirement |
|
Termination |
|
nation |
|
Termination |
|
Control |
|
Disability |
Termination |
|
($) |
|
(2) ($) |
|
(2) ($) |
|
($) |
|
(2) ($) |
|
(3) ($) |
|
(2) ($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
($260,000) |
|
|
(1 |
) |
|
|
260,000 |
|
|
|
260,000 |
|
|
|
0 |
|
|
|
260,000 |
|
|
|
780,000 |
|
|
|
260,000 |
|
Annual Incentive
Compensation |
|
|
0 |
|
|
|
213,053 |
|
|
|
213,053 |
|
|
|
0 |
|
|
|
213,053 |
|
|
|
639,156 |
|
|
|
213,053 |
|
Long-term
Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 year LT Plan |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Restricted
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and
Accelerated |
|
|
0 |
|
|
|
509,269 |
|
|
|
509,269 |
|
|
|
0 |
|
|
|
509,269 |
|
|
|
509,269 |
|
|
|
509,269 |
|
Benefits and
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement
health care (4) |
|
|
0 |
|
|
|
12,084 |
|
|
|
12,084 |
|
|
|
0 |
|
|
|
12,084 |
|
|
|
36,252 |
|
|
|
12,084 |
|
Accrued
Vacation Pay |
|
|
14,769 |
|
|
|
14,769 |
|
|
|
14,769 |
|
|
|
14,769 |
|
|
|
14,769 |
|
|
|
14,769 |
|
|
|
14,769 |
|
Tax Gross-Up |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
576,046 |
|
|
|
0 |
|
Total: |
|
|
14,769 |
(1) |
|
|
1,009,175 |
|
|
|
1,009,175 |
|
|
|
14,769 |
|
|
|
1,009,175 |
|
|
|
2,555,492 |
|
|
|
1,009,175 |
|
|
|
|
(1) |
|
Would receive salary for the remainder of the month in which terminated. The total amount
shown does not include any amount for such salary. |
|
(2) |
|
In the event of termination due to any of these reasons, Mr. Potters employment agreement
provides that he shall be paid 1.5 times the highest base salary he was paid during previous
three years, 1 times the highest annual bonus paid during previous three years and 1 year of
continued health benefits, plus accrued vacation pay and acceleration of all unvested
restricted stock grants. |
|
(3) |
|
In the event of termination due to a Change in Control, Mr. Potters employment agreement
provides that he shall be paid 3 times the highest base salary he was paid during previous
three years, 3 times the highest annual bonus paid during previous three years and 3 years of
continued health benefits, plus accrued vacation pay and acceleration of all unvested
restricted stock grants. |
|
(4) |
|
Value based on COBRA rate. |
Mr. Parker Sr. retired from the Company on April 28, 2006, and pursuant to the terms of the
Consulting Agreement with the Company dated April 12, 2006, agreed to accept the severance and
other payments provided in the Consulting Agreement in lieu of any severance or other payments to
which he may have otherwise been entitled under the terms of his employment agreement.
48
EQUITY COMPENSATION PLAN INFORMATION
The following table lists the equity compensation plan information for plans approved by security
holders and the equity compensation plans not approved by security holders as of December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A |
|
B |
|
C |
|
|
|
|
|
|
|
|
|
|
NUMBER OF |
|
|
|
|
|
|
|
|
|
|
SECURITIES |
|
|
NUMBER OF |
|
|
|
|
|
REMAINING AVAILABLE |
|
|
SECURITIES |
|
|
|
|
|
FOR FUTURE |
|
|
TO BE ISSUED UPON |
|
WEIGHTED-AVERAGE |
|
ISSUANCE |
|
|
EXERCISE OF |
|
EXERCISE PRICE OF |
|
UNDER EQUITY |
|
|
OUTSTAND- |
|
OUT- |
|
COMPENSATION PLANS |
|
|
ING OPTIONS, |
|
STANDING OPTIONS, |
|
(EXCLUDING SECURITIES |
|
|
WARRANTS |
|
WARRANTS AND |
|
REFLECTED IN |
PLAN CATEGORY |
|
AND RIGHTS (#) |
|
RIGHTS($) |
|
COLUMN A) (#) |
Equity
compensation plans
approved by
security holders |
|
|
1,560,182 |
(1) |
|
|
9.6678 |
|
|
|
2,059,134 |
|
Equity compensation
plans not approved
by security holders |
|
|
1,678,618 |
(2) |
|
|
5.6227 |
|
|
|
0 |
|
Total |
|
|
3,238,800 |
(3) |
|
|
7.5713 |
|
|
|
2,059,134 |
(4) |
|
|
|
(1) |
|
Includes 1,037,981 incentive stock options issued under the Parker Drilling 1997 Stock Plan
(the 1997 Plan), which ISOs were approved by the security holders in 1997. For a more complete
description of the 1997 Plan, see Note 8 to the financial statements in the Companys Form 10-K
filed March 1, 2007. |
|
(2) |
|
These stock options were issued under the1997 Plan, which was adopted as a broad-based plan
pursuant to the NYSE regulations in existence at the time the 1997 Plan was adopted. Pursuant to
the broad-based requirements of the NYSE, more than 50% of the stock awards under the 1997 Plan
were granted to non-officers. The 1997 Plan provided for the issuance of stock options and
restricted stock grants to officers, directors and consultants who are in a position to contribute
to the growth, management and success of the business of the Company and its subsidiaries with
additional incentive to promote the success of the Company and its subsidiaries. |
|
(3) |
|
Excludes grants of 1,554,485 shares of restricted stock, of which 100,000 were granted under
the 1991 Stock Grant Plan and 1,454,485 were granted under the 2005 LTIP. |
|
(4) |
|
These shares are available for grants of restricted stock and various incentive awards under
the 2005 LTIP. |
49
OTHER INFORMATION
If you have questions or need more information about the Annual Meeting, call 281-406-2000, or
write to:
Parker Drilling Company
Corporate Secretary
1401 Enclave Parkway, Suite 600
Houston, Texas 77077
Whether or not you plan to attend the Annual Meeting, please vote by telephone or Internet or mark,
sign, date and promptly return your completed proxy in the enclosed envelope. The toll free number
to vote by telephone is at no cost to you. No postage is required for mailing in the United States.
By order of the Board of Directors,
Ronald C. Potter
Corporate Secretary
Houston, Texas
March 23, 2007
50
Annex A
Compensation Committee Charter
COMPENSATION COMMITTEE CHARTER
Status
The Compensation Committee is a committee of the Board of Directors.
Committee Membership
The Compensation Committee shall consist of three or more directors. The members of the
Compensation Committee shall meet the independence requirements of the New York Stock Exchange
listing standards. All committee members shall also be non-employee directors as defined by Rule
16b-3 under the Securities Exchange Act of 1934 and satisfy the requirements of an outside
director as defined by Section 162(m) of the Internal Revenue Code.
The members of the Compensation Committee shall be appointed by the Board of Directors on the
recommendation of the Corporate Governance Committee. Compensation Committee members may be
replaced by a majority vote of the Board in its discretion.
Purpose
The purposes of the Compensation Committee are (i) to discharge the responsibilities of the Board
of Directors relating to compensation of the Companys CEO and other executive officers, (ii) to
review and discuss with the Companys management the Compensation Discussion and Analysis (CD&A)
to be included in the Companys annual proxy statement and determine whether to recommend to the
Board of Directors that the CD&A be included in the proxy statement and (iii) to provide the
Compensation Committee Report for inclusion in the Companys proxy statement that complies with the
rules of the Securities and Exchange Commission. Except as otherwise required by applicable laws,
regulations or listing standards, all major decisions are considered by the Board of Directors as a
whole.
Committee Authority, Duties and Responsibilities
1. |
|
The Compensation Committee is directly responsible for establishing annual and long-term
performance goals and objectives for our executive officers, as well as setting the overall
compensation philosophy for the Company. This responsibility includes: |
|
|
|
evaluating the performance of the CEO and other executive officers in light of approved
performance goals and objectives; |
|
|
|
|
setting the compensation of the CEO based upon the evaluation of the performance of the
CEO, including the long-term incentive component of CEOs compensation, which evaluation
may also consider the Companys performance and relative shareholder return, the value of
similar incentive awards to CEOs at comparable companies, and the awards given to the CEO
in past years; |
|
|
|
|
reviewing at least annually the long-term incentive plan performance measures, the
annual and longer-term progress against those goals of the program in place at the time,
and assessing its effectiveness against the objectives of the program; |
|
|
|
|
recommending the compensation of the other executive officers and other officers to the
Board of Directors for approval, based upon the evaluation of the performance of the other
executive and other officers and the recommendation of the CEO; and |
|
|
|
|
reviewing the current compensation plans and making recommendations to the Board of
Directors with respect to new cash-based and equity-based compensation plans. |
51
2. |
|
In addition, the Compensation Committee: |
|
|
|
administers the Companys stock plans in accordance with the terms and conditions of such plans; |
|
|
|
|
determines the shares awarded under corporate performance-based plans; |
|
|
|
|
grants options and awards under the stock plans, except where such authority is granted
to the CEO under the terms and conditions of the plans, and |
|
|
|
|
monitors compliance with the Companys policies regarding compensation. |
3. |
|
The Compensation Committee may form and delegate authority to subcommittees comprised of
members of the Committee as the Committee may deem appropriate in its sole discretion. |
|
4. |
|
The Compensation Committee may, in its sole discretion, retain and terminate any compensation
consultant to be used to assist in the evaluation of CEO and executive officer compensation
and shall have sole authority to approve the consultants fees and other retention terms. The
Compensation Committee shall also have authority to obtain advice and assistance from internal
or external legal, accounting or other advisors. The Company will provide appropriate
funding, as determined by the Committee, for payment of compensation to any consulting firm or
other advisers retained by the Compensation Committee. |
|
5. |
|
The Compensation Committee shall make regular reports to the Board. |
|
6. |
|
The Compensation Committee shall review and reassess the adequacy of this Charter annually
and recommend any proposed changes to the Board for approval. The Compensation Committee
shall annually review its own performance. |
Meetings
The Compensation Committee shall meet periodically and usually at least four times each year and at
such other times as its members deem necessary to fulfill the Committees responsibilities. The
Chairman of the Compensation Committee will establish annually an agenda calendar which will
include meeting schedules, recurring action items, foreseeable events, timelines for review of
filings, matters to be periodically reported to the Board and related recurring responsibilities.
The Chairman will ensure that appropriate records and minutes are maintained for each meeting
including agenda items, actions taken and will furnish copies of the minutes of such meetings to
the Board. Additionally the Chairman will revise the agenda to include any special agenda items
that will require deliberation of the Committee.
A majority of the Committee members will constitute a quorum for the transaction of business by the
Committee and the vote of a majority of the members of the committee so voting will constitute an
act of the Committee.
The Committee will schedule meetings with independent advisors as needed to conduct its business
and retain the necessary expertise to augment its planning, assessment and regulatory
responsibilities to the Board.
The Committee will hold executive sessions without the participation by management.
The meetings of the Compensation Committee are open to all directors.
52
Annex B
Corporate Governance Principles
PARKER DRILLING COMPANY
CORPORATE GOVERNANCE PRINCIPLES
1. Director Qualifications
The Board of Directors (Board) will have a majority of directors who meet the criteria for
independence required by the New York Stock Exchange (the NYSE) and the Securities Exchange Act
of 1934 (the SEC Act). The Corporate Governance Committee is responsible for reviewing with the
Board, on an annual basis, the requisite skills and characteristics of new Board members as well as
the composition of the Board as a whole. This assessment will include members qualification as
independent in accordance with the NYSE and SEC Act, as well as consideration of diversity, age,
skills, and experience in the context of the needs of the Board. Candidates for nominees for
directorship may be made by any member of the Board and by any shareholder and referred to the
Corporate Governance Committee for review in accordance with its charter and these principles. The
invitation to join the Board should be extended on behalf of the Board by the Chairman of the
Board.
It is the sense of the Board that the appropriate size of the Board is between 7-10 members.
However, the Board would be willing to increase the size in order to accommodate the availability
of an outstanding candidate.
When a directors principal occupation or business associations changes substantially during his or
her tenure as a director, the Corporate Governance Committee shall review the continued
appropriateness of Board membership under the circumstances and make its recommendations to the
Board. It is not the sense of the Board that in every instance a director who retires or changes
the occupation or business associations he or she held when they became a Board member should
necessarily leave the Board.
Directors should advise the Chairman of the Board and the Chairman of the Corporate Governance
Committee in advance of accepting an invitation to serve on another public company board.
The Board does not believe it should establish term limits. While term limits could help insure
that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of
losing the contribution of directors who have been able to develop, over a period of time,
increasing insight into the Company and its operations and, therefore, provide an increasing
contribution to the Board as a whole. As an alternative to term limits, the Corporate Governance
Committee will review each directors continuation on the Board every three years. This will allow
each director the opportunity to conveniently confirm his or her desire to continue as a member of
the Board.
2. Director Responsibilities
It is the general policy of the Company that all major decisions be considered by the Board as a
whole. The basic responsibility of the directors is to exercise their business judgment to act in
what they reasonably believe to be in the best interests of the Company and its shareholders. In
discharging that obligation, directors should be entitled to rely on the honesty and integrity of
the Companys senior executives and its outside advisors and auditors. The directors shall also be
entitled to have the Company purchase reasonable directors and officers liability insurance on
their behalf, to the benefits of indemnification to the fullest extent permitted by law and the
Companys charter, by-laws and any indemnification agreements, and to exculpation as provided by
state law and the Companys charter.
Directors are expected to attend Board meetings and meetings of committees on which they serve, and
to spend the time needed and meet as frequently as necessary to properly discharge their
responsibilities. Directors are also expected to attend the annual meeting of shareholders.
Information and data that are important to the
Boards understanding of the business to be conducted at a Board or committee meeting should
generally be distributed in writing to the directors before the meeting, and directors should
review these materials in advance of the meeting.
53
The Board has no policy with respect to the separation of the offices of Chairman and the Chief
Executive Officer (CEO). The Board believes that this issue is part of the succession planning
process and that it is in the best interests of the Company for the Board to make a determination
when it elects a new chief executive officer.
The Chairman and CEO will establish the agenda for each Board meeting with the understanding that
the items necessary for the Board to perform its advisory and monitoring functions be brought to it
periodically for review and/or approval. The Board will review the Companys long-term strategic
plans and the principal issues that the Company will face in the future during at least one Board
meeting each year. Each Board member is free to suggest the inclusion of items on the agenda.
Each Board member is free to raise at any Board meeting subjects that are not on the agenda for
that meeting.
The non-management directors will meet in executive session on a regular basis four times a year
and the independent directors shall meet separately at least one time per year. Each year the
directors will appoint a Presiding Director who will preside at these meetings and be disclosed in
the annual proxy statement as required by the NYSE. Any contract with present or former directors
or officers of the Company shall be approved by the Corporate Governance Committee regardless of
quantitative materiality.
The Chairman and CEO are responsible for establishing effective communications with the Companys
shareholders, customers, company associates, communities, suppliers, creditors, governments and
corporate partners. It is the Companys policy that management speaks for the Company. Individual
Board members may, from time to time, meet or otherwise communicate with various constituencies
that are involved with the Company. But it is expected that Board members would do this with the
knowledge of the management and, absent unusual circumstances or as contemplated by the committee
charters, only at the request of management.
3. Board Committees
The Board will have at all times an Audit Committee, a Compensation Committee and a Corporate
Governance Committee. All of the members of these committees will be independent directors under
the criteria established by the NYSE and SEC Act. Committee members will be appointed by the Board
upon recommendation of any member of the Board and approval thereof by the Corporate Governance
Committee.
Each committee will have its own charter. The charters will set forth the purposes, goals and
responsibilities of the committees as well as qualifications for committee membership, procedures
for committee member appointment and removal, committee structure and operations and committee
reporting to the Board. The charters will also provide that each committee will annually evaluate
its performance.
The Chairman of each committee, in consultation with the committee members, will determine the
frequency and length of the committee meetings consistent with any requirements set forth in the
committees charter. The Chairman of each committee, in consultation with the appropriate members
of the committee and management, will develop the committees agenda. At the beginning of the year
each committee will establish a schedule of agenda subjects to be discussed during the year (to the
degree these can be foreseen). The schedule for each committee will be furnished to all directors.
The Board and each committee have the power to hire independent legal, financial or other advisors
as they may deem necessary, without consulting or obtaining the approval of any officer of the
Company in advance.
The Board may, from time to time, establish or maintain additional committees as necessary or
appropriate.
54
4. Director Access to Officers and Employees
Directors have full and free access to officers and employees of the Company. Any meetings or
contacts that a director wishes to initiate may be arranged through the CEO or the Corporate
Secretary or directly by the director. The directors will use their judgment to ensure that any
such contact is not disruptive to the business operations of the Company and will, to the extent
not inappropriate, copy the CEO on any written communications between a director and an officer or
employee of the Company.
The Board welcomes regular attendance at each Board meeting of senior officers of the Company. If
the CEO wishes to have additional Company personnel attendees on a regular basis, this suggestion
should be brought to the Board for approval.
5. Director Compensation
The form and amount of director compensation will be annually reviewed and recommended by the
Corporate Governance Committee and approved by the Board. The Corporate Governance Committee will
consider that directors independence may be jeopardized if director compensation and perquisites
exceed customary levels.
6. Director Orientation and Continuing Education
All new directors shall be provided with a director orientation packet that describes the various
operations of the Company, the officers and their respective duties and other information to
adequately inform the director of the nature of the Companys business. The Company will make
management available to new Board members and existing Board members at corporate headquarters in
order to receive presentations by senior management to familiarize the directors with the Companys
strategic plans, its significant financial, accounting and risk management issues, its compliance
programs, its Code of Corporate Conduct, its principal officers, and its internal and independent
auditors.
Board members are encouraged to attend conferences and other programs that will increase their
knowledge of board functions and duties as well as other board responsibilities. The Company will
reimburse each Board member for attending one conference or program each year.
It is the sense of the Board that off-site board retreats may be beneficial from time to time to
address strategic planning and other critical decisions to be made by the Board.
7. CEO Evaluation and Management Succession
The Compensation Committee is responsible for setting annual and long-term performance goals for
the CEO and will conduct an annual review of the CEOs performance against such goals, as set forth
in its charter. The Compensation Committee shall meet annually with the CEO to receive his or her
recommendations concerning such goals. Both the goals and the evaluation are then submitted for
consideration by the Board at an executive session.
The Corporate Governance Committee should make an annual report to the Board on succession
planning, which shall include its recommendations on development of potential candidates so that
the Company is adequately prepared in the event that a successor is needed. The entire Board will
work with the Corporate Governance Committee to evaluate development plans for potential successors
to the CEO. The CEO should at all times make available his or her recommendations and evaluations
of potential successors, along with a review of any development plans recommended for such
individuals.
8. Annual Performance Evaluation
The Board will conduct an annual self-evaluation to determine whether the Board and each committee
are functioning effectively. The Corporate Governance Committee will receive comments from all
directors and report annually to the Board with an assessment of the Boards performance. The
assessment will focus on the Boards contribution to the Company and specifically focus on areas in
which the Board or management believes that the Board could improve.
55
9. Reporting of Accounting/Auditing and Other Irregularities; Communications with the
Board
Anyone who has a concern about the Companys accounting, internal accounting controls or auditing
matters or other irregularities, may communicate that concern directly to the Director of Internal
Audit or the General Counsel, or to a third party hotline established by the Company for this
purpose, the contact information for each to be provided on the Companys website. Such
communications may be confidential and/or anonymous. Concerns relating to accounting, internal
controls, or auditing shall be reviewed by the Director of Internal Audit and/or General Counsel
and, if credible and if confirmed would warrant remedial or disciplinary action, will be reported
to the Audit Committee and addressed by the Company in the same way as other concerns, including
the retention of outside advisors or counsel to investigate or advise on such concerns.
Anyone, including shareholders of the Company, may communicate with the Board or the non-management
directors about officer conduct or other concerns or matters by submitting such concerns or matters
in writing to the Presiding Director at the special address published on the Companys website.
Such communications may be confidential and/or anonymous. The concerns or matters will be reviewed
by the Presiding Director pursuant to the criteria approved by a majority of the non-management
directors. Any matter which falls within the criteria approved by the non-management directors
shall be presented to the Audit Committee or the full Board and addressed in the same way as other
concerns, including the retention of outside advisors or counsel to investigate or advise on such
matters or concerns.
The Companys policies prohibit any retaliation or taking any adverse action against anyone for
raising or helping to resolve reports of misconduct or ethical violations.
56
Annex C
Corporate Governance Committee Charter
CORPORATE GOVERNANCE
COMMITTEE CHARTER
Purpose
The purpose of the Corporate Governance Committee shall be to assist the Board (1) in identifying
qualified individuals which have been proposed by Board members, by independent search firms, by
shareholders or by others to become Board members; (2) in determining the director nominees to
stand for election by the shareholders; (3) in developing and implementing the Corporate Governance
Principles applicable to the Company; (4) in its annual review of the Boards performance and in
overseeing the evaluation of management; and (5) in selecting director nominees for each committee.
Committee Membership
The Corporate Governance Committee shall consist of no fewer than three members. The members of
the Corporate Governance Committee shall meet the independence requirements of the New York Stock
Exchange.
The members of the Corporate Governance Committee shall be appointed and replaced by the Board.
Meetings
The Governance Committee shall meet as often as it determines, but not less frequently than twice a
year. At least two members shall be present at each meeting of the Governance Committee to
establish a quorum. The Governance Committee may request any director, officer or employee of the
Company or the Companys outside counsel or other consultants of the Company to attend a meeting of
the Committee or to meet with any members of, or consultants to, the Committee. The meetings of
the Governance Committee are open to all directors.
Committee Authority and Responsibilities
The Corporate Governance Committee shall have the sole authority to retain and terminate any search
firm to be used to identify director candidates and shall have sole authority to approve the search
firms fees and other retention terms. The Corporate Governance Committee shall also have
authority, to the extent it deems necessary or appropriate, to obtain advice and assistance from
internal or external legal, accounting or other advisors and to have access to such advisors
without the presence of any officer of the Company. The Company shall provide for appropriate
funding, as determined by the Governance Committee, for payment of compensation to any advisors
employed by the Governance Committee.
1. |
|
The Corporate Governance Committee will provide a forum for Board members and others to
submit nominees to the Board as well as facilitate the submission of director candidates by
shareholders. Once the nominees have been submitted, the Corporate Governance Committee shall
review the qualifications of director nominees in accordance with the minimum qualifications
specified in the Corporate Governance Principles and report to the Board their recommendation
in regard to such nominees. |
2. |
|
The Corporate Governance Committee shall receive comments from all directors and report
annually to the Board with an assessment of the Boards performance and the composition and
size of the Board as a whole. |
3. |
|
The Corporate Governance Committee shall review and reassess the adequacy of the Corporate
Governance Principles of the Company and recommend any proposed changes to the Board for
approval. |
4. |
|
The Corporate Governance Committee may form and delegate authority to subcommittees or to any
one of its members as it deems appropriate. |
|
5. |
|
The Corporate Governance Committee shall make regular reports to the Board. |
57
6. |
|
The Corporate Governance Committee shall review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board for approval. The Corporate
Governance Committee shall annually review its own performance. |
7. |
|
The Corporate Governance Committee shall establish a procedure to allow interested parties to
address their concerns to the Presiding Director, who shall review and report such concerns to
the Board or other committees as the Presiding Director determines appropriate, in accordance
with the procedure and criteria approved by the Board. |
8. |
|
The Corporate Governance Committee shall review periodically the Companys policy in regard
to a Shareholder Rights Plan. |
9. |
|
The Corporate Governance Committee shall review periodically the succession plans relating to
Chairman and Chief Executive Officer. |
10. |
|
The Corporate Governance Committee shall review and approve all related party transactions
as such term is defined in the rules of the Securities Exchange Act of 1934, and any
transactions between the Company and its current or former officers and directors, prior to
execution by the Company. |
11. |
|
The Corporate Governance Committee annually shall review and recommend compensation for Board
and committee members. |
|
13. |
|
The Corporate Governance Committee shall oversee the evaluation of management. |
Governance Committee Powers
The Committee shall also have the following powers:
14. |
|
To interview and meet with any employee of the Company without the presence of any officer of
the Company. |
|
15. |
|
To investigate any matter brought to its attention within the scope of its duties. |
16. |
|
Such other powers as may be necessary to fulfill its purposes as defined in this Charter. |
58
Annex D
Proposed Amendment to
Restated Certificate of Incorporation
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION
Parker Drilling Company (the Company) organized and existing under and by virtue of the
General Corporation Law of the State of Delaware does hereby certify:
FIRST: That at a meeting of the Board of Directors of the Company resolutions were duly
adopted setting forth a proposed amendment of the Companys Restated Certificate of Incorporation,
as amended, declaring said amendment to be advisable and calling a meeting of the stockholders of
the Company for consideration thereof. The resolutions setting forth the proposed amendment
provided, in part, as follows:
RESOLVED, that, subject to the approval of the shareholders of the Company, the
Restated Certificate of Incorporation of the Company, as amended, be, and the same hereby
is, amended by changing only the first paragraph of ARTICLE FOURTH so that, as amended, said
first paragraph of ARTICLE FOURTH shall read in its entirety as follows:
ARTICLE FOURTH: The aggregate number of shares of all classes of stock which
the corporation shall have the authority to issue is 281,942,000, of which 1,942,000
shares shall be Preferred Stock of the par value of One Dollar ($1.00) per share
(hereinafter called Preferred Stock), and the remaining 280,000,000 shares shall be
Common Stock of the par value of sixteen and two-thirds cents ($.16-2/3) per share
(hereinafter called Common Stock). The designations and the powers, preferences
and rights, and the qualifications, limitations, restrictions and other special or
relative attributes granted to or imposed upon the shares of Preferred Stock shall be
as fixed in Section 1 of this ARTICLE FOURTH, or as may be fixed by the Board of
Directors in accordance with the provisions thereof, and the designations and the
powers, preferences and the rights, and the qualifications, limitations, restrictions
and other special or relative attributes granted to or imposed upon the shares of
Common Stock shall be fixed in Section 2 of this ARTICLE FOURTH.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting
of the stockholders of the Company was duly called and held upon notice in accordance with Section
222 of the General Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this certificate to be signed this ___day of , 2007.
|
|
|
|
|
|
PARKER DRILLING COMPANY
|
|
|
By: |
|
|
|
|
|
|
|
|
|
|
59
Annual Report
The Company has provided to each person whose proxy is being solicited a copy of its 2006 Annual
Report to Shareholders. The Company will provide without charge to each person who requests, a copy
of the Companys Annual Report on Form 10-K (including the financial statements and financial
schedules thereto) required to be filed with the Securities and Exchange Commission for the year
ended December 31, 2006. Such requests should be directed to Mr. David Tucker, Investor Relations
Department, Parker Drilling Company, 1401 Enclave Parkway, Suite 600, Houston, Texas 77077.
Shareholders are invited to keep current on the Companys latest contracts, news releases and other
developments throughout the year by way of the Internet. The Parker Drilling Company homepage can
be accessed by setting your World Wide Web browser to
http://www.parkerdrilling.com for regularly
updated information.
60
PARKER DRILLING COMPANY
ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April 25, 2007
10:00 a.m. Central Time
Marriott Houston Westchase
2900 Briarpark Drive
Houston, Texas
|
|
|
|
|
|
|
PARKER DRILLING COMPANY |
|
|
|
|
This proxy is solicited on behalf of the Board of Directors
|
|
proxy |
|
The undersigned appoints ROBERT L. PARKER JR. and W. KIRK BRASSFIELD, or either of them, as
Proxies, with the power of substitution, and authorizes them to represent the undersigned at the
Annual Meeting of Shareholders to be held April 25, 2007, or any adjournment thereof, and to vote
all the shares of common stock of Parker Drilling Company held of record by the undersigned on
March 9, 2007, as designated on the reverse side.
This Proxy, when properly executed, will be voted in the manner directed by the undersigned
shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS IN EACH
SUCH CASE.
See reverse for voting instructions.
There are three ways to vote your Proxy:
Your telephone or Internet vote authorizes the named Proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
VOTE BY TELEPHONE TOLL FREE 1-800-560-1965 QUICK *** EASY *** IMMEDIATE |
|
|
Use any touch-tone telephone to vote your proxy 24 hours a
day, 7 days a week, before 11:59 p.m. (CT) on April 24, 2007. |
|
|
Please have your proxy card and the last four digits of your
Social Security Number or Tax Identification Number
available. Follow the simple instructions the Voice provides
you. |
VOTE BY INTERNET http://www.eproxy.com/pkd/ QUICK *** EASY *** IMMEDIATE
|
|
Use the Internet to vote your proxy 24 hours a day, 7 days a
week, before 11:59 p.m. (CT) on April 24, 2007. |
|
|
Please have your proxy card and the last four digits of your
Social Security Number or Tax Identification Number
available. Follow the simple instructions to obtain your
records and create an electronic ballot. |
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope provided or
return it to Parker Drilling Company, c/o Shareowner ServicesSM, P.O. Box 64873, St.
Paul, MN 55164-0873.
If you vote by Telephone or Internet, please do not mail your Proxy Card
ß Please detach here ß
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Election of directors director nominees:
|
o |
Vote FOR
|
|
|
o |
Vote WITHHELD
|
|
|
01 Robert E. McKee III 02 George J. Donnelly |
|
all nominees (except as marked) |
|
|
|
|
|
from all nominees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(instructions: To withhold authority to vote for any individual nominee,
write the number(s) of the nominee(s) in the box provided to the
right.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. |
|
PROPOSAL TO AMEND Restated
Certificate of Incorporation to increase authorized common stock from 140,000,000 to 280,000,000 shares.
|
o |
For |
o |
Against |
o |
Abstain
|
|
3. |
|
PROPOSAL TO RATIFY the appointment
of KPMG LLP as independent registered public accounting firm for 2007. |
o |
For |
o |
Against |
o |
Abstain
|
|
4. |
|
IN THEIR DISCRETION, the Proxies are authorized to vote in their best judgment upon such other business as may properly come before the meeting. |
|
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Address Change? Mark Box
Indicate change below: |
o |
|
I Plan to Attend the Meeting o |
|
|
|
Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature(s)
in Box
Please sign exactly as your name(s)
appears on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the
proxy. |