SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant []
Check the appropriate box:
[] Preliminary proxy statement. [X] Confidential, for use of
the Commission
only (as permitted by Rule 14a-6(e)(2).
[X] Definitive proxy statement.
[] Definitive additional materials.
[] Soliciting material pursuant to Rule 14a-12.
ATWOOD OCEANICS, INC.
(Name of Registrant as Specified in Its Charter)
ATWOOD OCEANICS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of
securities to which transactions applies: N/A
(2) Aggregate number of
securities to which transaction applies: N/A
(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: N/A
(4) Proposed maximum aggregate
value of transaction: N/A
(5) Total fee paid: None
[] Fee paid previously with preliminary materials.
[] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identified 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:
N/A
(2) Form, schedule or
registration statement no.: N/A
(3) Filing party: N/A
(4) Date filed: N/A
EXPLANATORY NOTE
We are re-filing our definitive Proxy Statement for the
annual shareholder meeting to be held February 14, 2008, in order to include the notice of
internet availability of proxy materials which was inadvertently omitted from the original
filing, but which does not include any fundamental changes to the original filing or our
preliminary Proxy Statement. No other information in the definitive Proxy Statement
has been supplemented, updated or amended.
Important Notice Regarding the Availability of Proxy
Materials for
the Annual Shareholder Meeting of Atwood Oceanics,
Inc.
to Be Held on February 14, 2008
The Proxy Statement dated January 15,
2008
, Form of Proxy,
and the
Atwood Oceanics, Inc. 2007 Annual Report to
Shareholders
for th
e year
ended September 30, 2007
are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=115338&p=proxy
.
The annual shareholder meeting will be held at the principal
executive offices of Atwood Oceanics, Inc., 15835 Park Ten Place Drive, in the City of
Houston, Texas 77084, at 10:00 o'clock A.M., Houston Time, on Thursday, February 14, 2008,
for the following purposes:
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1.
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To elect six (6) members of the Board of
Directors for the term of office specified in the accompanying Proxy
Statement.
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2.
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To approve Amendment No. 1 to the Atwood
Oceanics, Inc. 2007 Long-Term Incentive Plan as described in the accompanying
Proxy Statement.
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3.
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To approve Amendment No. 1 to our Amended and
Restated Certificate of Formation to increase the authorized shares of Common
Stock of the Company from 50,000,000 shares to 90,000,000 shares as described
in the accompanying Proxy Statement.
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4.
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To ratify our early election to be governed by
the Texas Business Organizations Code.
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5.
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To transact such other business as may properly
come before the meeting or any adjournments thereof.
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The Board of Directors of Atwood Oceanics, Inc. recommends a
vote
“FOR”
each of
Proposals 1 to
4.
No
other
matters
are expected to
be considered at the
annual
shareholder
meeting.
Shareholders of record at the close of business on December 31, 2007 will be entitled to
notice of and to vote at the annual shareholder meeting.
Shareholders are cordially invited to attend the meeting in person.
Shareholders may call our main offices at 281-749-7800 for
directions to our principal executive offices in order to attend the meeting in
person.
Those who will not attend
in person
are requested
to sign and promptly mail the enclosed proxy for which a stamped return envelope is
provided.
The following documents are available
at
http://phx.corporate-ir.net/phoenix.zhtml?c=115338&p=proxy
:
1.
Proxy
Statement dated January 15,
2008,
2.
Form of Proxy, and
3.
The Atwood Oceanics, Inc. 2007 Annual Report to Shareholders
for the year ended September 30, 2007.
ATWOOD OCEANICS, INC.
15835 PARK TEN PLACE DRIVE
HOUSTON, TEXAS 77084
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Houston, Texas
January 15, 2008
To the Shareholders of
ATWOOD OCEANICS, INC.:
Notice is hereby given that, pursuant to the provisions of the Second Amended and Restated
By-laws, as amended, of Atwood Oceanics, Inc., the Annual Meeting of the Shareholders of
Atwood Oceanics, Inc. will be held at the principal executive offices of Atwood Oceanics,
Inc., 15835 Park Ten Place Drive, in the City of Houston, Texas 77084, at 10:00 o'clock
A.M., Houston Time, on Thursday, February 14, 2008, for the following purposes:
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1.
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To elect six (6) members of the Board of Directors for the term of office
specified in the accompanying Proxy Statement.
|
|
2.
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To approve Amendment No. 1 to the Atwood Oceanics, Inc. 2007 Long-Term
Incentive Plan as described in the accompanying Proxy Statement.
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3.
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To approve Amendment No. 1 to our Amended and Restated Certificate of
Formation to increase the authorized shares of Common Stock of the Company from
50,000,000 shares to 90,000,000 shares as described in the accompanying Proxy
Statement.
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4.
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To ratify our early election to be governed by the Texas Business
Organizations Code.
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5.
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To transact such other business as may
properly come before the meeting or any adjournments thereof.
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Shareholders of record at the close of business on December 31, 2007 will be entitled to
notice of and to vote at the Annual Meeting.
Shareholders are cordially invited to attend the meeting in person. Those who will not
attend are requested to sign and promptly mail the enclosed proxy for which a stamped
return envelope is provided.
By Order of the Board of Directors
/s/ James M. Holland
JAMES M. HOLLAND, Secretary
ANNUAL MEETING OF SHAREHOLDERS
ATWOOD OCEANICS, INC.
_______________
PROXY STATEMENT
_______________
January 15, 2008
SECURITY HOLDERS ENTITLED TO VOTE
Holders of shares of common stock, par value $1.00 per share ("Common Stock") of Atwood
Oceanics, Inc., (hereinafter sometimes referred to as “we”, “us”,
“our” or the "Company") of record at the close of business on December 31, 2007
will be entitled to vote at the Annual Meeting of Shareholders to be held February 14, 2008
at 10:00 o'clock A.M., Houston Time, at our principal executive offices, 15835 Park Ten
Place Drive, Houston, Texas, 77084 and at any and all adjournments thereof.
Shareholders who execute proxies retain the right to revoke them at any time before they
are voted. A proxy, when executed and not so revoked, will be voted in accordance
therewith. This proxy material is first being mailed to shareholders on or about January
15, 2008.
PERSONS MAKING THE SOLICITATION
This proxy is solicited on behalf of the Board of Directors of the Company. In addition to
solicitation by mail, for which we will bear the cost, we may request banks, brokers and
other custodians, nominees and fiduciaries who hold our Common Stock in street name to send
proxy material to the beneficial owners of stock and to secure their voting instructions,
if necessary. Further solicitation of proxies may be made by telephone, mail, facsimile, or
oral communication with some of our shareholders, following the original solicitation. All
such further solicitation will be made by our regular employees and we will bear the cost
for such solicitation.
VOTING SECURITIES
At the close of business on December 31, 2007, the time which has been fixed by the Board
of Directors as the record date for determination of shareholders entitled to notice of and
to vote at the meeting, we had 31,702,399 shares of Common Stock outstanding.
The election as directors of the persons nominated in this Proxy Statement will require the
vote of the holders of a plurality of the shares entitled to vote and represented in person
or by proxy at a meeting at which a quorum is present. The approval of Amendment No. 1 to
the Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan, referred to herein as Amendment
No. 1 to the 2007 Plan, will require the vote of the holders of a majority of the shares
entitled to vote and represented in person or by proxy at a meeting at which a quorum is
present. The approval of Amendment No. 1 to our Amended and Restated Certificate of
Formation to increase the authorized shares of Common Stock of the Company from 50,000,000
shares to 90,000,000 shares and the ratification of our early election to be governed by
the Texas Business Organizations Code will each require the vote of the holders of
two-thirds (2/3) of the shares entitled to vote and represented in person or by proxy at a
meeting at which a quorum is present. Abstentions and broker non-votes (which result when a
broker holding shares for a beneficial owner has not received timely voting instructions on
certain matters from such beneficial owner) are counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but will operate to
prevent the election of the directors nominated in this Proxy Statement or the approval of
such other matters as may properly come before the meeting to the same extent as a vote
withholding authority to vote for the election of directors so nominated or a vote against
such other matters as may properly come before the meeting.
Each share of Common Stock entitles its owner to one vote except with respect to the
election of directors. With respect to the election of directors, each shareholder has the
right to vote in person or by proxy the number of shares registered in his name for as many
persons as there are directors to be elected, or to cumulate such votes and give one
candidate as many votes as shall equal the number of directors to be elected multiplied by
the number of his shares, or to distribute the votes so cumulated among as many candidates
as he may desire. In the event of cumulative voting, the candidates for directors receiving
the highest number of votes, up to the number of directors to be elected, shall be
elected
.
If
a shareholder desires to exercise his right to cumulate votes for directors, the laws of
the State of Texas, the State in which we are incorporated, require the shareholder to give
our Secretary written notice of such intention on or before the day preceding the meeting.
Such notice should be sent to: Atwood Oceanics, Inc., P. O. Box 218350, Houston, Texas
77218, Attn: James M. Holland. If any shareholder gives such notice, all shareholders have
the right to use cumulative voting at the meeting. The persons appointed by the enclosed
form of proxy are not expected to exercise the right to cumulate votes for election of the
directors named elsewhere in this Proxy Statement, although such persons shall have
discretionary authority to do so.
PRINCIPAL SHAREHOLDERS
The following table reflects certain information known to us concerning persons
beneficially owning more than 5% of our outstanding Common Stock as of close of business on
December 31, 2007 based on information (other than with respect to Helmerich & Payne
International Drilling Co. (“H&PIDC)) provided by a third party service provider
in reports prepared for us. Unless otherwise noted, each shareholder listed below has sole
voting and disposition power with respect to the shares listed.
Name and
Address
Shares of Common
Stock
Percent
Beneficially
Owned
of Class
H&PIDC
(1)
4,000,000
12.63%
1437 South Boulder Avenue
Tulsa, Oklahoma 74119
Columbia Wanger Asset Management, L.P.
(2)
3,688,000
11.64%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
FMR LLC
(3)
2,943,450
9.29%
Edward C. Johnson 3d
(3)
82 Devonshire Street
Boston, Massachusetts 02109
___________________
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(1)
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Mr. Helmerich, a current Director of the Company
and Director Nominee, is President, Chief Executive Officer and a director of
Helmerich & Payne, Inc. (“H&P”). Mr. Helmerich, together
with other family members and the estate of W.H. Helmerich, deceased, are
controlling shareholders of H&P, which has one hundred percent (100%)
ownership of H&PIDC,
and
which currently owns of record and beneficially
4,000,000 shares of our Common Stock. Mr. Helmerich has disclaimed beneficial
ownership of the Common Stock owned by H&PIDC. Mr. Dotson, a current
Director of the Company and Director Nominee, served as Vice President Drilling
of H&P and
President of H&PIDC
until his retirement in 2006.
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(2)
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The information set forth above concerning shares
of Common Stock beneficially owned by Columbia Wanger Asset Management, L.P.
("Columbia") was obtained from a report prepared by a third party service
provider for us and the Schedule 13G dated January 9, 2007 filed with the SEC
by Columbia. According to the Schedule 13G, Columbia had sole voting power with
respect to 3,502,950 shares, shared voting power with respect to 142,000
shares, and sole dispositive power with respect to 3,644,950 shares of our
Common Stock or 11.64% of our Common Stock as of the record date. We do not
have any information with respect to 44,950 shares of our Common Stock acquired
by Columbia subsequently to the filing of Schedule 13G on January 9, 2007. The
information set forth above includes the shares of our Common Stock held by
Columbia Acorn Trust, a Massachusetts business trust to which Columbia is an
advisor.
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(3)
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The information set forth above concerning shares
of Common Stock beneficially owned by FMR LLC (“FMR”) and Edward C.
Johnson 3d (“Johnson”) were obtained from a report prepared by a
third party service provider for us and
from the Schedule 13G
dated October 9, 2007 filed with the SEC by FMR
and Johnson. This Schedule 13G indicated that FMR and Johnson had sole voting
power
with respect to 586,450 shares and
sole dispositive power with respect to all of the shares reported as
beneficially owned.
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APPROVAL OF RELATED PERSON TRANSACTIONS
In accordance with the directive of the Board of Directors, our Audit Committee is
responsible for reviewing and approving the terms and conditions of all proposed
transactions between us, any of our officers or directors, or relatives or affiliates of
any such officers or directors, to ensure that such “related-party”
transactions are fair and are in our overall best interest. No transactions requiring
approval occurred in fiscal year 2007.
COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the amount of Common Stock beneficially owned as of the
close of business on December 31, 2007, by each of our directors, by each of our executive
officers, and by all of our directors and executive officers as a group. Unless otherwise
indicated below, each of the named persons and members of the group has sole voting and
investment power with respect to the shares shown.
Name of Director,
Executive Officer or Group
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|
Shares of Common Stock
Beneficially
Owned
|
|
Percent
of Class
|
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Deborah A. Beck
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11,244
(2)
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(1)
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Robert W. Burgess
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22,644
(3)
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(1)
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George S. Dotson
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18,644
(3)
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(1)
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Hans Helmerich
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18,644
(3) (4)
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(1)
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James R. Montague
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2,231
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(1)
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William J. Morrissey
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19,444
(3)
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(1)
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John R. Irwin
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96,650
(5)
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(1)
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James M. Holland
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40,843
(6)
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(1)
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Glen P. Kelley
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97,175
(7)
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(1)
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Alan Quintero
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48,000
(8)
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(1)
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Darryl Smith
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9,500
(9)
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(1)
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All directors and executive officers as a group (11 persons)
__________________
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385,019
(10)
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%
(1)
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(2)
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Includes 9,000 shares which may be acquired
upon exercise of options.
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(3)
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Includes 17,000 shares which may be acquired
upon the exercise of options.
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(4)
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See Note (1) on page 3 under “Principal
Shareholders” for more information.
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(5)
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Includes 96,250 shares which may be acquired
upon the exercise of options.
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(6)
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Includes 36,575 shares which may be acquired
upon the exercise of options.
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(7)
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Includes 96,575 shares which may be acquired
upon the exercise of options.
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(8)
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Includes 48,000 shares which may be acquired
upon the exercise of options.
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(9)
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Includes 9,500 shares which may be acquired
upon the exercise of options.
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(10)
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Includes 363,900 shares which may be acquired
upon the exercise of options.
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EXECUTIVE OFFICERS
The persons indicated below are our executive officers. The office held, date of first
election to that office and the age of each officer as of the close of business on December
31, 2007 are indicated opposite his name.
Date of
First
Name
Offices
Held
Election
Age
John R.
Irwin
President
and
Chief
March
62
Executive
Officer
1993
James M. Holland
Chief Financial
Officer October
62
Senior Vice
President
1988
and Secretary
Glen P. Kelley
Senior
Vice President -
October 59
Marketing
and
1988
Administration
Alan
Quintero
Vice President
-
April
44
Engineering
2007
Darryl R.
Smith
Vice President
- April
62
Operations
2007
No family relationship exists between any of the above executive officers or the nominated
directors listed below. All of our officers serve at the pleasure of the Board of Directors
and may be removed at any time with or without cause. Messrs. Irwin, Holland and Kelly have
served as our executive officers during the past five (5) years. Messrs. Quintero and Smith
have served as executive officers since April 2007.
Mr. Irwin joined us in July 1979, serving as Operations Manager - Technical Services. He
was elected Vice President - Operations in November 1980, Executive Vice President in
October 1988, President and Chief Operating Officer in November 1992, and President and
Chief Executive Officer in March 1993.
Mr. Holland joined us as Accounting Manager in April 1977. He was elected Vice President -
Finance in May 1981 and Senior Vice President, Chief Financial Officer and Secretary in
October 1988.
Mr. Kelley rejoined us in January 1983 as Manager of Operations Administration. He was
elected Vice President - Contracts and Administration in October 1988 and Senior Vice
President – Marketing and Administration in December 2004.
Mr. Quintero
joined us in July 1993 as Senior Project Engineer. He was
promoted to Manager of Engineering in August 1994 and to General Manager of Engineering in
January 2005. In April 2007, he was elected as Vice President - Engineering.
Mr. Smith joined us in October 1999 as Operations Support Manager. He was promoted to
General Manager of Operations in October 2000 and elected as Vice President –
Operations in April 2007.
ITEM 1 - ELECTION OF DIRECTORS
At the meeting, six (6) directors (leaving one position vacant in February 2008 with Mr.
Morrissey’s not standing for re-election to our Board of Directors) are to be elected
for terms of one year each. All six (6) director nominees are currently serving as
directors and are standing for re-election. Although our Second Amended and Restated
Bylaws, as amended, provide that the Board of Directors consist of seven (7) persons, at
this time, the Company has not yet identified a suitable nominee to replace Mr. Morrissey
on our Board of Directors. Accordingly, only six (6) persons are nominated for election as
directors, and shares may not be voted for a greater number of persons than the number of
nominees named.
The persons
named in the enclosed form of proxy (James M. Holland and Glen P. Kelley) have advised that
they will vote all shares represented by proxies for the election of the six (6) nominees
for director listed below, unless authority to so vote is withheld by the shareholder. Such
persons will have the discretion to cumulate the votes of the shares represented by proxy,
although the exercise of such discretion is not expected. If any of the nominees listed
below becomes unavailable for any reason, the shares represented by the proxies will be
voted for the election of such person, if any, as may be designated by the Board of
Directors.
Mr. William J. Morrissey, who has served as a director continuously since 1969, has advised
of his intended retirement from our Board of Directors in February 2008 prior to the
February 14, 2008, annual shareholder meeting and will, therefore, not stand for
re-election to our Board of Directors at that meeting. Mr. Morrissey has provided over
thirty-five years of outstanding leadership as our director. In recognition of Mr.
Morrissey’s long-term service as a director, the Board of Directors in December 2007
awarded Mr. Morrissey a $35,000 bonus plus restricted stock equivalent to the number of
shares of the Company’s Common Stock valued at $60,000 on the date of grant. The
restricted stock award vests thirteen months from date of grant.
Present
Served as
Position a
Director
with
the Continuously
Term
to
Nominees
Company
Since
Extend
to
Age
Deborah A.
Beck
Director
February
February
60
2003
2009
Robert W.
Burgess
Director
September
February
66
1990
2009
George S.
Dotson
Director February February
67
1988
2009
Hans
Helmerich
Director February
February
49
1989
2009
John R.
Irwin
Director, November
February
62
President 1992 2009
and Chief
Executive
Officer
James R.
Montague
Director June
February 60
2006
2009
Until her retirement in 2006, Ms. Beck was employed by the Northern Mutual
Life Insurance Company for over five (5) years where she served in various executive
capacities including Executive Vice President Planning and Technology, Senior Vice
President-Insurance Operations, Vice President – New Business, and Vice-President of
Policy Benefits. Northwestern Mutual is a leading direct provider of individual life
insurance and offers insurance products, investment products and advisory
services.
Until his retirement in 1999, Mr. Burgess served for over five (5) years as Chief Financial
Officer (Senior Vice President) for CIGNA Investment Division, CIGNA Companies. CIGNA is a
diversified financial services company with major businesses in insurance, health care,
pensions and investments.
Until his retirement in 2006, Mr. Dotson served for over five (5) years as Vice President
Drilling of H&P and President of H&PIDC. H&P is an energy-oriented company
engaged in contract drilling.
At all times during the previous five (5) years, Mr. Helmerich has served as the Chief
Executive Officer as well as a director of H&P.
Mr. Irwin has been employed by us in various executive capacities for the last twenty-nine
(29) years; of which, the last fourteen (14) years he has been President and Chief
Executive Officer.
Mr. Montague has been retired at all times during the previous five (5) years. From
December 2001 to October 2002, Mr. Montague served as President of Encana Gulf of Mexico,
Inc., a subsidiary of Encana Corporation, which is involved in oil and gas exploration and
production. From 1996 to June 2001, he served as President of two subsidiaries of
International Paper Company, IP Petroleum Company, an exploration and production oil and
gas company, and GCO Minerals Company, a company that manages International Paper Company's
mineral holdings. Mr. Montague is a director of Penn Virginia Resource Partners (NYSE:PVR),
Magellan Midstream Partners (NYSE:MMP), and the non-executive Chairman of the Board of
Davis Petroleum Company, a private company.
Board of Director Meetings and Committees
We have standing Audit, Compensation and Human Resources, Executive, and Nominating &
Corporate Governance Committees. The following chart shows the current Committee membership
and positions of each director:
Director
|
Audit Committee
|
Compensation
and Human Resources
Committee
|
Executive Committee
|
Nominating
&
Corporate Governance Committee
|
Deborah A. Beck
|
X
|
X
|
|
X
|
Robert W. Burgess
|
X (Financial Expert)
|
X
|
|
X
|
George S. Dotson
|
X
|
X (Chairperson)
|
X
|
X
|
Hans Helmerich
|
|
|
X
|
X (Chairperson)
|
John R. Irwin
|
|
|
X
|
|
James R. Montague
|
|
X
|
|
X
|
William J. Morrissey
(1)
|
X (Chairperson)
|
|
|
X
|
(1) Mr. Morrissey has advised he will retire from the Company’s Board of
Directors in February 2008.
|
The Audit Committee members are Ms. Beck and Messrs. Burgess, Dotson and Morrissey. The
Board of Directors has determined that Mr. Burgess is our “Audit Committee Financial
Expert” as that term is defined under the relevant federal securities laws and
regulations. The Audit Committee functions to review, in general terms, the Company’s
accounting policies and audit procedures and to supervise internal accounting controls. Our
Board of Directors has adopted a written charter for the Audit Committee, a copy of which
is accessible on our website, www.atwd.com, and available in print to any shareholder who
requests it. The Audit Committee held six (6) meetings during fiscal year 2007, of which
four (4) were telephone conferences. Upon Mr. Morrissey’s retirement, a new
chairperson for the Audit Committee will be appointed.
The Executive Committee composed of Messrs. Dotson, Helmerich and Irwin, meets frequently,
generally by telephone conference, for review of major decisions and to act as delegated by
the Board of Directors. Our Board of Directors has adopted a written charter for the
Executive Committee, a copy of which is accessible on our website, www.atwd.com
The Compensation and Human Resources Committee members, Ms. Beck, Messrs. Burgess, Dotson
and Montague, are responsible for administration of our stock incentive plans, and for
review and approval of all salary and bonus arrangements. During fiscal year 2007, there
were eleven (11) meetings of the Compensation and Human Resources Committee, of which six
(6) were telephone conferences. Our Board of Directors has adopted a written charter for
the Compensation and Human Resources Committee, a copy of which is attached hereto as
Appendix A and which is also accessible on our website, www.atwd.com, and available in
print to any shareholder who requests it.
The Nominating & Corporate Governance Committee, composed of Ms. Beck and Messrs.
Burgess, Dotson, Helmerich, Montague and Morrissey, is to assist the Board of Directors
regarding the appropriate size and composition of the Board of Directors, as well as
monitor and make recommendations regarding the Board of Directors’ performance. The
Nominating & Corporate Governance Committee held two (2) meetings during fiscal year
2007. The Nominating & Corporate Governance Committee will consider all director
nominees recommended to it, including those recommended by third parties, such as
shareholders. Such nominations should be directed to any member of the Nominating &
Corporate Governance Committee. A specific process for communication between shareholders
and the Nominating & Corporate Governance Committee is accessible on our website,
www.atwd.com, under “Investor Information” – “Corporate
Governance” – “Contact the Atwood Oceanics, Inc. Board of
Directors”. The Nominating & Corporate Governance Committee will evaluate all
nominees, including those recommended by third parties such as shareholders, for the
following: personal qualities such as leadership, statesmanship and responsiveness; general
management qualities such as a global perspective on the business, short term results,
strategic thinking and planning, knowledge of the business and preparedness; financial
expertise such as value creation, capital planning, and communications with the financial
investment communities; and qualities relating to the use of human resources such as
developing management talent and creating an effective organization. Our Board of Directors
has adopted a written charter for the Nominating & Corporate Governance Committee, a
copy of which is accessible on our website, www.atwd.com, and available in print to any
shareholder who requests it.
Each of the Audit Committee charter, the Compensation and Human Resources Committee charter
and the Nominating & Corporate Governance Committee charter state that each member must
be independent as required by the New York Stock Exchange Listing Standards and as
determined by the Board of Directors in its business judgment. No member of the Audit
Committee, the Compensation and Human Resources Committee or the Nominating & Corporate
Governance Committee shall have a relationship to the Company that may interfere with the
exercise of his or her independent judgment and all members of such committees shall be
non-employee directors. The Board of Directors has made a determination that each member of
the Audit Committee, Compensation and Human Resources Committee and the Nominating &
Corporate Governance Committee is independent and meets the requirements of the committee
on which he or she serves. The Board of Directors specifically considered the relationship
of H&P and H&PIDC to the Company and determined that they are not our affiliates.
Based on that fact and other considerations, Mr. Helmerich is also not our affiliate. Prior
to his retirement from H&P, the Board of Directors determined that Mr. Dotson was not
our affiliate and after his retirement, the Board of Directors determined that Mr. Dotson
continues not to be our affiliate.
Our Board of Directors has determined that our
President, John R. Irwin, is not an independent director. Our
current
independent directors are Deborah A. Beck,
Robert W. Burgess, George S. Dotson, Hans Helmerich,
James R. Montague
and William J. Morrissey.
As discussed above, Mr. Morrisey is not
standing for re-election.
We have a
specific process for communications between interested parties and either the Board of
Directors as a
whole
or the non-management members of the Board of
Directors,
accessible on our
website,
www.atwd.com
, under “Investor Information”
– “Corporate Governance” – “Contact the Atwood Oceanics, Inc.
Board of Directors”.
The interested party
may
also
submit such communications in
care of our Secretary, James M. Holland, at the
mailing
address of our headquarters,
which is
P.O. Box 218350, Houston,
Texas 77218
. Each
written communication intended for the Board of Directors as a whole or the non-management
members of the Board of Directors and received by the Secretary, will be promptly forwarded
to the specified party.
The interested party may
alternatively submit such communications through the MySafeWorkplace system. The
MySafeWorkplace system can be contacted via telephone at 1-800-461-9330 or on the internet
at
www.MySafeWorkplace.com
. The interested party should
click
“Go”
on “Make A Report”, choose Atwood Oceanics Management LP as the organization,
and then select “Communicate with Non-Management Directors” as
the “Incident
Type”.
The communication process
is also further detailed on our website,
www.atwd.com
, along with other of our corporate governance
guidelines, and is available in print to any shareholder who requests it.
Four (4) meetings of the Board of Directors were held during fiscal year 2007, all of which
were regularly scheduled meetings. Each director attended, during the time of his or her
membership, at least seventy-five (75%) percent of Board of Director and Committee meetings
to which he or she was assigned. Additionally, the non-employee members of the Board of
Directors held four (4) meetings, of which all were in person. Mr. Helmerich presided over
the meetings of the non-employee members of the Board of Directors as our “Lead
Independent Director.” The Company does not have a policy with regard to Board of
Directors’ attendance at the annual meeting. Last year, one member of the Board of
Directors, Mr. Irwin, attended the annual meeting.
Code of Ethics
Included in our corporate governance guidelines detailed on our website, www.atwd.com, and
available in print to any shareholder who requests it, is the business conduct and code of
ethics we have adopted which is applicable to our chief executive officer and our chief
financial officer, Mr. Irwin and Mr. Holland, respectively. We intend to satisfy the
disclosure requirement regarding any changes in our code of ethics we have adopted and/or
any waiver therefrom by posting such information on our website or by filing a Form 8-K for
such event.
Required Vote for Election of Directors
Election as directors of the persons nominated in this Proxy Statement will require the
vote of the holders of a plurality of the shares of Common Stock present or represented by
proxy and entitled to vote at a meeting at which a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ELECTION AS DIRECTORS OF THE
PERSONS NOMINATED HEREIN.
ITEM 2 - PROPOSAL TO ADOPT AMENDMENT NO. 1 TO THE ATWOOD OCEANICS, INC. 2007 LONG-TERM
INCENTIVE PLAN
General
At our annual meeting of shareholders on February 8, 2007, our shareholders approved the
Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan, which is referred to herein as the
“2007 Plan.” Upon shareholder approval, the 2007 Plan was effective as of
December 7, 2006. Awards may be made under the 2007 Plan through December 6, 2017, which is
10 years from the effective date of the 2007 Plan.
The principal features of the 2007 Plan and Amendment No. 1 to the 2007 Plan are summarized
below. The summary does not purport to be a complete statement of the 2007 Plan or
Amendment No. 1 to the 2007 Plan and is qualified in its entirety by reference to the 2007
Plan, a copy of which was attached as Appendix B to this Proxy Statement for the annual
meeting held February 8, 2007 and to Amendment No. 1 to the 2007 Plan, a copy of which is
attached as Appendix C to this Proxy Statement. Defined terms not defined herein have the
meaning set forth in the 2007 Plan.
Purpose of the 2007 Plan
The 2007 Plan was established to create incentives to motivate participants to put forth
maximum effort toward our success and growth and to enable us to attract and retain
experienced individuals who, by their position, ability and diligence, are able to make
important contributions to our success. Participants include our non-employee directors,
our officers and employees, as well as those of our subsidiaries and affiliates. There are
currently approximately 900 potential participants in the 2007 Plan.
Purpose of Amendment No. 1 to the 2007 Plan
Amendment No. 1 to the 2007 Plan makes the following changes to the 2007 Plan:
1. The restriction period for shares of Common Stock included in a restricted stock award
to eligible directors will be reduced from three years to a minimum of thirteen months.
2. Instead of vesting immediately, shares of Common Stock included in a restricted stock
award to eligible directors will be subject to a vesting period of a minimum of thirteen
months.
3. A provision
providing for acceleration of vesting of shares of Common Stock included in restricted
stock awards to eligible directors in the case of death, retirement, or resignation will be
added to reflect that the shares included in such awards will no longer immediately
vest.
4. A provision will be added relating to the ability of participants to defer delivery of
shares of Common Stock included in awards, at the Compensation Committee’s
discretion, pursuant to a separate deferred compensation plan, if any. If delivery is
deferred under such a plan, at the Compensation Committee’s discretion, the
participant may further elect to receive payment in the form of either shares of Common
Stock or a cash amount equal to the value of the shares of Common Stock at the deferred
delivery date.
The first three changes are discussed further below under “Restricted Stock”
and “Termination of Employment; Termination of Service.” Those changes relate
to the vesting and restriction periods solely with regard to restricted stock awards made
to eligible directors.
The fourth change is not intended to increase the value of or number of shares of Common
Stock included in an award; rather this change is intended to give the Compensation
Committee further flexibility in establishing the components of our compensation program.
We have adopted a deferred compensation plan for non-employee directors, who are the
eligible directors under the 2007 Plan, and while we have no plans to adopt additional
plans for other participants at this time, we expect that such plans will be considered by
the Compensation Committee in the future as part of our overall compensation program.
Shares Available
Under the 2007 Plan, the Compensation Committee may award restricted stock awards, stock
options, stock appreciations rights (SARs), or performance units. The total number of
shares reserved and currently available for distribution pursuant to the 2007 Plan is
1,769,304 shares of our Common Stock (approximately 6% of our outstanding Common Stock as
of December 31, 2007, the record date for shareholders entitled to vote on this proposal),
subject to adjustment in the event of a future stock dividend, stock split, merger,
consolidation, recapitalization, reclassification, spin off, combination of shares or other
similar events. Any shares of Common Stock granted as restricted stock awards or as SARs or
performance units settled in shares of Common Stock shall be counted as 1.6 shares for each
share granted, while any shares issuable pursuant to an Option shall be counted as one
share for each issuable share. We have registered with the SEC the shares available for
distribution pursuant to the 2007 Plan on Form S-8, File No. 333-140781. As of January 2,
2008, the closing price on the New York Stock Exchange of our Common Stock was $102 per
share.
Pursuant to the 2007 Plan, shares of Common Stock underlying awards which terminate,
expire, are forfeited or are cancelled without the issuance of such shares shall be
available for distribution in connection with future awards pursuant to the 2007 Plan.
Administration
The 2007 Plan is administered by the Compensation Committee of the Board of Directors, who
are appointed or removed as set forth in the Committee’s Charter, which is available
on our website at www.atwd.com. As described in its Charter, all members of the
Compensation Committee are “independent” as required by the rules and
regulations of the SEC and the New York Stock Exchange Listing Standards. They are also
“non-employee directors” as defined under SEC Rule 16b-3 and “outside
directors” as defined in the Internal Revenue Code, section 162(m). The Compensation
Committee has the power and authority to grant awards to participants as provided in the
2007 Plan, and to determine the form, terms and conditions, not inconsistent with the terms
of the 2007 Plan, of any award granted, based on such factors and criteria as the
Compensation Committee shall determine. The Compensation Committee has the authority to
establish, adopt, or revise such rules and regulations governing the 2007 Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the 2007 Plan
and any award granted and any agreements relating thereto; and to otherwise take any and
all action it deems necessary or advisable for the operation or administration of the 2007
Plan.
Eligibility
All participants may be awarded Nonqualified Stock Options, restricted stock awards, SARs
or performance units. Eligible employees may also receive Incentive Stock Options.
Stock Options
The 2007 Plan permits the granting of two types of options: (i) those that qualify as
incentive stock options, or ISOs, under Section 422 of the Internal Revenue Code of 1986,
as amended, or the Code, or (ii) those that do not so qualify, or Nonqualified Stock
Options. Stock options granted under the 2007 Plan shall be subject to the terms and
conditions set forth in the 2007 Plan and may contain such additional terms and conditions
not inconsistent with the terms of the 2007 Plan as the Compensation Committee deems
appropriate. The option exercise price for each share of Common Stock covered by an option
shall be determined by the Compensation Committee, but shall be not less than the Fair
Market Value of a share of Common Stock on the date of grant.
The term of each stock option will be fixed by the Compensation Committee, but may not
exceed 10 years from the date of grant in the case of an ISO or 10 years and one day after
the date of grant in the case of a Nonqualified Stock Option. Stock options shall become
exercisable at such time or times and subject to such terms and conditions (including,
without limitation, installment exercise provisions) as shall be determined by the
Compensation Committee.
The option exercise may be paid (i) in cash or by check, bank draft or money order payable
to the order of the Company, (ii) with certain requirements, by delivering shares of Common
Stock having a Fair Market Value on the date of payment equal to the amount of the exercise
price, or (iii) by a combination of the foregoing.
The Compensation Committee may, in its discretion, authorize all or a portion of any
Nonqualified Stock Options to be granted on terms which permit transfer by the participant
to (i) the ex-spouse of the participant pursuant to the terms of a domestic relations
order, (ii) the spouse, children or grandchildren of the participant, (iii) a trust or
trusts for the exclusive benefit of the spouse, children or grandchildren of the
participant, or (iv) a partnership or limited liability company in which the spouse,
children or grandchildren of the participant are the only partners or members; provided in
each case that (x) there may be no consideration for any such transfer, (y) the Option
agreement pursuant to which such stock options are granted must expressly provide for
transferability in a manner consistent with the foregoing, and (z) subsequent transfers of
transferred stock options shall be prohibited except those made in accordance with the
transferability provisions of the 2007 Plan or by will or by the laws of descent and
distribution. Following transfer, any such stock options shall continue to be subject to
the same terms and conditions as were applicable immediately prior to transfer. Except as
set forth in the 2007 Plan and in the applicable Option agreement, no Option shall be
transferable by the participant otherwise than by will or by laws of descent and
distribution.
Restricted Stock
Restricted stock may be issued to participants either alone or in addition to other awards
granted under the 2007 Plan. The Compensation Committee determines participants to whom,
and the time or times at which, such grants will be made, the number of shares of Common
Stock to be awarded, the price (if any) to be paid by the recipient of an award, and other
conditions of the awards. The Compensation Committee may condition grants of restricted
stock upon the attainment of specified performance goals or such other factors or criteria
as the Compensation Committee may determine.
Under the 2007 Plan as currently in effect, with respect to eligible directors, restricted
stock vests immediately subject to a three-year restriction period. Pursuant to Amendment
No. 1 to the 2007 Plan, the restriction period and the vesting period for eligible
directors shall both be a minimum of thirteen months. This change is intended to better
align the restriction and vesting periods for such awards, while still requiring a minimum
period for both.
In
general, restricted stock awarded to eligible employees vests over a minimum three-year
period, with all such shares vesting on or after the third anniversary, with the
restriction period set out in the award.
During the restriction period, the Compensation Committee may grant to the participant,
with respect to the shares of restricted stock covered by any award, all or any of the
rights of a shareholder of the Company, including the right to vote the shares of Common
Stock included in the award, the right to receive any dividends, and the right to purchase
securities pursuant to the Rights Agreement between the Company and Continental Stock
Transfer and Trust Company dated October 18, 2002. During the restriction period
established by the Compensation Committee, the participant shall not be permitted to sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the shares of restricted
stock awarded under the 2007 Plan.
Stock Appreciation Rights
A Stock Appreciation Right, or SAR, permits the participant to receive an amount (in cash,
Common Stock or a combination thereof) equal to the number of SARs exercised by the
participant multiplied by the excess of the Fair Market Value of a share of Common Stock on
the exercise date over the exercise price of the SAR. SARs may or may not be granted in
connection with the grant of an Option. The exercise price of SARs granted under the 2007
Plan shall not be less than the Fair Market Value of a share of Common Stock on the date of
grant. A SAR may be exercised in whole or in such installments and at such times as
determined by the Compensation Committee.
Performance Units
Performance units may be awarded to the participant subject to the provisions of the 2007
Plan and such other terms and conditions as the Compensation Committee may determine.
Performance units give the participant the right to receive cash or Common Stock based upon
the achievement of performance goals established by the Compensation Committee. These goals
must exceed one year and are subject to the fulfillment of conditions that may be
established by the Compensation Committee including, without limitation, the achievement of
operational, financial or stock performance criteria.
Change in Control Provisions
In the event of a Change in Control, any awards granted under the 2007 Plan to any
participant shall be immediately fully vested, fully earned and exercisable, and any
Restriction Period shall terminate immediately.
Termination of Employment; Termination of Service
Stock Options and SARs.
If an eligible employee’s employment with the Company,
a Subsidiary or an Affiliated Entity terminates as a result of death, disability or
retirement, the eligible employee (or personal representative in the case of death) shall
be entitled to exercise all or any part of any (a) vested Incentive Stock Option for a
period of up to three months from such date of termination (one year in the case of death
or Disability (as defined above) in lieu of the three-month period), or (b) vested
Nonqualified Stock Option or SAR during the remaining term. If an eligible employee’s
employment terminates for any other reason, the eligible employee shall be entitled to
exercise all or any part of any vested Option or SAR for a period of up to three months
from such date of termination.
If an eligible director’s service with the Company, a Subsidiary or an Affiliated
Entity terminates, the eligible director (or personal representative in the case of death)
shall be entitled to exercise all or any part of any Nonqualified Stock Options or SARs
which are otherwise exercisable on his date of termination of service during the remaining
term of such award.
The Committee may, in its discretion, accelerate the vesting of any stock option or SAR in
the case of termination of employment or service of a participant for any reason, including
death, retirement, disability, or resignation, as the case may be. In no event shall any
stock option or SAR be exercisable past the term established in the award agreement. Any
vested stock option or SAR which is not exercised before the earlier of the dates provided
above or its term, shall expire.
Restricted Stock Awards.
Under the current Plan,
the Committee may, in its discretion, (i) accelerate the vesting of a restricted stock
award in the case of death or disability of an eligible employee or (ii) provide for early
termination of any restriction period in the case of death, retirement, or resignation of
an eligible director. Amendment No. 1 to the 2007 Plan provides that the Committee may
also, in its discretion, accelerate the vesting of a restricted stock award in the case of
death, retirement, or resignation of an eligible director. This change was made to account
for the fact that pursuant to Amendment No. 1 to the 2007 Plan, restricted stock awards to
eligible directors will no longer immediately vest.
In the case of retirement of an eligible employee, the vesting of a restricted stock award
shall be accelerated as follows:
|
§
|
no acceleration in the case of retirement within a period less than one year
subsequent to the date of grant,
|
|
§
|
acceleration of vesting of one-third (1/3) of the shares included in the
restricted stock award in the case of retirement within a period greater than
one year, but less than two years subsequent to the date of grant, and
|
|
§
|
acceleration of vesting of two-thirds (2/3) of the shares included in the
restricted stock award in the case of retirement within a period greater than
two years, but less than three years subsequent to the date of
grant.
|
Unless otherwise accelerated pursuant to the terms of
the relevant award agreement or by the Committee as set forth herein, all unvested
restricted stock awards shall be forfeited upon termination of employment of the eligible
employee or termination of service of the eligible director.
Amendments and Termination
The Board of Directors may alter, suspend or terminate the 2007 Plan at any time. The Board
may amend the 2007 Plan, but may not, without shareholder approval, adopt any amendment
which would (i) increase the total number of shares of Common Stock reserved for purposes
of the 2007 Plan, except as specifically provided for in the 2007 Plan, (ii) materially
modify the eligibility requirement for participation in the 2007 Plan, or (iii) materially
increase the benefit or rights of any participant provided by the 2007 Plan. With the
exception of repricing awards, the Compensation Committee may amend the terms of any award
agreement, but no such amendment shall be allowed which is adverse to the rights of any
participant without his or her consent.
Federal Income Tax Consequences
In the 2007 Plan, the following summary is a description of the federal income tax
consequences to the participant and to us of the issuance and exercise of stock options,
SARs, performance units, and restricted stock granted pursuant to the 2007 Plan. The
summary does not purport to be complete, does not attempt to be a comprehensive description
of all possible tax effects, and does not discuss state, local or non-U.S. tax consequences
except as set forth below.
ISO’s.
The grant of an ISO will not be treated as taxable income to the
eligible employee for federal tax purposes, and will not result in a deduction for us for
tax purposes, provided that no disposition is made by the eligible employee of the shares
of Common Stock acquired pursuant to the ISO within two years after the date of grant of
the ISO nor within one year after the date of issuance of shares of Common Stock to the
eligible employee pursuant to the ISO. In general, on exercise of an ISO, the eligible
employee will not recognize any taxable income, and we will not be entitled to a deduction
for tax purposes, although exercise of an ISO may give rise to liability under the
alternative minimum tax provisions of the Code. Upon the sale or exchange of the shares of
Common Stock at least two years after the grant date of the ISO and one year after the
exercise date of the ISO, the eligible employee will recognize long-term capital gain or
loss based on the difference between (i) the amount realized upon the sale or other
disposition of the purchased shares of Common Stock and (ii) the exercise price paid for
such shares. If these holding periods are not satisfied, the eligible employee will
recognize ordinary income (and we will be entitled to a deduction for tax purposes) in an
amount equal to the difference between the exercise price and the lower of (i) the fair
market value of the shares of Common Stock on the date the ISO was exercised or (ii) the
sale price of such shares. A different rule for measuring ordinary income upon such a
premature disposition may apply if the eligible employee is also our officer, director or
10% shareholder. Any gain recognized by the eligible employee on such a premature
disposition of the shares of Common Stock in excess of the amount treated as ordinary
income will be characterized as capital gain.
Nonqualified Stock Options and Stock Appreciation Rights.
No taxable income is
reportable by the participant at the time a Nonqualified Stock Option or SAR is granted.
Upon exercise, the amount by which the Fair Market Value of the purchased shares of Common
Stock on the exercise date exceeds the exercise price of the option or SAR will generally
be taxable to the participant as ordinary income and deductible by us for tax purposes.
Upon disposition of the shares of Common Stock, appreciation or depreciation after the
exercise date is treated as a short-term or long-term capital gain or loss to the
participant and will not result in any deduction by us.
Restricted Stock.
In general, a participant who receives a restricted stock award
will recognize ordinary compensation income on the difference between the fair market value
of the shares of Common Stock on the date when the shares are no longer subject to a
substantial risk of forfeiture (as such term is defined in the Code) and any amount paid
for the shares, and the Company will be entitled to a deduction for tax purposes in the
same amount. Any gain or loss on the participant’s subsequent disposition of the
shares will receive long or short-term capital gain or loss treatment depending on how long
the stock has been held since the restrictions lapsed.
If a participant receiving a stock award makes a timely election under Section 83(b) of the
Code to have the tax liability determined at the date of grant rather than when the
restrictions lapse, the participant will recognize ordinary compensation income in an
amount equal to the difference between the fair market value of the stock on the date of
issuance of the stock and any amount paid for such stock, and we shall be entitled to a
deduction at that time of the same amount treated as ordinary compensation income to the
participant. If such an election is made, the participant recognizes no further amounts of
compensation income upon the lapse of any restrictions, and any gain or loss on subsequent
disposition will be long or short-term capital gain or loss to the participant. The Section
83(b) election must be made within thirty days from the time the restricted stock is issued
to a participant.
Performance Units.
The federal income tax consequences of performance units will
very depending upon the individual structure of the award. Generally, the performance unit
will be taxable upon payment.
Deductibility of Compensation.
The 2007 Plan has been designed to permit the
Compensation Committee to grant awards that qualify as performance-based for purposes of
satisfying the conditions of Section 162(m) of the Code, and accordingly, we anticipate
that any compensation deemed paid by us to our executive officers as a result of stock
options or restricted stock will remain deductible by us and will either (a) not have to be
taken into account for purposes of the $1,000,000 limitation per covered individual on the
deductibility of the compensation paid to certain of our executive officers or (b) will not
cause such limit to be exceeded.
Withholding.
No later than the date as of which an amount first becomes includible
in the gross income of the participant for federal income tax purposes with respect to any
stock option or other award under the 2007 Plan, the participant shall pay to us, or make
any arrangements satisfactory to the Compensation Committee regarding the payment of, any
federal, state or local taxes of any kind required by law to be withheld with respect to
such amount. Unless otherwise determined by us, withholding obligations may be settled with
Common Stock, including Common Stock that is part of the award that gives rise to the
withholding requirement. Generally, we will not withhold any amount from awards made to
directors in such capacity, as those awards are treated as self-employment income, and, as
such, are not subject to withholding.
Awards Pursuant to the 2007 Plan
All future awards under the 2007 Plan will be at the discretion of the Compensation
Committee. Therefore should Amendment No. 1 to the 2007 Plan receive shareholder approval,
no executive officers or directors, nor any other participant, would be guaranteed an
award.
Required Vote to Adopt Amendment No. 1 to the Atwood Oceanics, Inc. 2007 Long-Term
Incentive Plan
Approval
to adopt Amendment No. 1 to the Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan
requires the affirmative vote of the holders of a majority of the shares of Common Stock
present or represented by proxy and entitled to vote at a meeting at which a quorum is
present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
ADOPTION OF
Amendment No. 1 to
THE ATWOOD OCEANICS, INC.
2007 LONG-TERM INCENTIVE PLAN.
ITEM 3 - PROPOSAL TO ADOPT AMENDMENT NO. 1 TO THE AMENDED AND RESTATED CERTIFICATE OF
FORMATION
General
Our Amended and Restated Certificate of Formation authorizes the issuance of a total of
fifty-one million (51,000,000) shares of capital stock, consisting of fifty million
(50,000,000) shares of Common Stock, each with a par value of $1.00 per share, and one
million (1,000,000) shares of Preferred Stock, each with no par value. As of the date of
this Proxy Statement, 31,704,740 shares of Common Stock were outstanding and no shares of
Preferred Stock were outstanding. In addition, as of the date of this Proxy Statement, we
had 941,901 shares of Common Stock subject to outstanding stock options and 1,769,304
shares of Common Stock reserved for issuance pursuant to future grants under the 2007 Plan.
Our total Common Stock share requirement as of the date of this Proxy Statement is
approximately 34,415,950 shares, or the Share Requirement.
General
On December 7, 2007, our Board of Directors approved, subject to approval of our
shareholders, proposed Amendment No. 1 to the Amended and Restated Certificate of Formation
in order to increase the total number of authorized shares of our Common Stock from fifty
million (50,000,000) to ninety million (90,000,000). Proposed Amendment No. 1 to the
Amended and Restated Certificate of Formation is set forth in full in Appendix D.
Proposed Amendment No. 1 to the Amended and Restated Certificate of Formation, will become
effective upon filing with the Texas Secretary of State. The authorized but unissued shares
of Common Stock would be available for issuance from time to time for such purposes and for
such consideration as our Board of Directors may determine to be appropriate without
further action by the shareholders, except for those instances in which approval is
required by Texas law or the rules of any national securities exchange or automated
quotation system on which shares of our Common Stock are then listed or traded. Our shares
of Common Stock are currently listed on the New York Stock Exchange.
Purpose
The Board of Directors believes that it is in our best interest to increase the total
number of authorized shares of Common Stock so that it may have greater flexibility in
issuance of shares of Common Stock. In particular, the Board of Directors would like to
have a sufficient number of shares of Common Stock available to effect a two-for-one stock
split in the form of a stock dividend of one share of Common Stock for each share of Common
Stock outstanding on the record date for such stock split, which has not yet been
determined. The Board of Directors believes that a stock split would be in our best
interest and that of our shareholders because it would be expected to place the market
price of our Common Stock in a range that is more attractive to investors and may result in
improved liquidity and enhanced trading volume for our Common Stock. The record date of any
future stock split would be based in part on market factors, and therefore, no definite
record date has been determined and no stock split declared.
Based on
our Share Requirement, we do not have a sufficient number of authorized shares of Common
Stock to effect a two-for-one stock split. Therefore, the Board of Directors approved,
subject to shareholder approval, the increase of the total number of authorized shares of
Common Stock from fifty million (50,000,000) to ninety million (90,000,000). The Board of
Directors believes that a total of ninety million (90,000,000) authorized shares of Common
Stock would be sufficient to effect a two-for-one stock split and to meet our business
needs as they arise without the expense or delay of a special meeting of shareholders to
approve additional increases in authorized shares of Common Stock at such time. Such
business needs may include other future stock dividends or splits, equity financings,
acquisitions, new or current stock incentive plans and other proper corporate purposes
identified by the Board of Directors in the future. No increase in the total number of
authorized shares of Preferred Stock is proposed.
Effect on Rights of Shareholders
The additional shares of authorized Common Stock, when issued, would have the same rights
and privileges as the shares of Common Stock currently issued and outstanding. Any future
issuance of Common Stock would remain subject to shareholder approval if required by Texas
law or the rules of any national securities exchange or automated quotation system on which
shares of our Common Stock are then listed or traded. Our shares of Common Stock are
currently listed on the New York Stock Exchange.
Other than as permitted or required under the Company’s existing stock incentive
plans and outstanding securities, the Board of Directors has no immediate plans,
understandings, agreements or commitments to issue additional shares of Common Stock for
any purposes other than the two-for-one stock split discussed above. The Company reserves
the right to seek a further increase in the total number of authorized shares of Common
Stock from time to time in the future as considered appropriate by the Board of
Directors.
Required Vote for Approval of Amendment No. 1 to the Amended and Restated Certificate of
Formation
Approval of the increase in the total number of authorized shares of Common Stock from
fifty million (50,000,000) to ninety million (90,000,000) pursuant to Amendment No. 1 to
the Amended and Restated Certificate of Formation requires the affirmative vote of the
holders of two-thirds (2/3) of the shares of Common Stock present or represented by proxy
and entitled to vote at a meeting at which a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
Approval of AMENDMENT NO. 1 TO THE AMENDED AND
RESTATED CERTIFICATE OF FORMATION.
ITEM 4 - PROPOSAL TO RATIFY THE COMPANY’S EARLY ELECTION TO BE GOVERNED BY THE
TEXAS BUSINESS ORGANIZATIONS CODE
General
At our annual shareholder meeting on February 8, 2006, our shareholders approved the
adoption of our Amended and Restated Certificate of Formation. The Board of Directors
believed it to be in our best interest to early elect to be governed by the Texas Business
Organization Code, or TBOC, which went into effect January 1, 2006, and which would apply
to the Company on January 1, 2010 without regard to early election. In connection with the
early election to be governed by the TBOC, the Board of Directors had approved, subject to
shareholder approval, the adoption of the Amended and Restated Certificate of Formation to,
among other things, conform to changes in law effected by the TBOC. The Texas legislature
has since clarified that they intended to require shareholder approval to early elect to be
governed by the TBOC. While we believe the early election to be governed by TBOC was
properly made at the time of such election and that our shareholders did in fact approve
such early election by approving the adoption of our Amended and Restated Certificate of
Formation, we are seeking shareholder ratification of the early election to be governed by
the TBOC. Failure of the shareholders to ratify the early election to be governed by the
TBOC will have no effect as the Company has already made the election and there is no
stated procedure to reverse the election, and even if the Company undertook to reverse the
early election, the TBOC will apply to the Company on January 1, 2010 in any event.
Required Vote for Ratification of the Company’s Early Election to be Governed by
the TBOC
Ratification of the Company’s early election to be governed by the
TBOC requires the affirmative vote of the holders of a two-thirds (2/3) of the shares of
Common Stock present or requested by proxy and certified to vote of a meeting at which a
quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
RATIFICATION OF THE COMPANY’S EARLY ELECTION TO BE GOVERNED BY THE
TBOC.
Compensation Discussion and Analysis
Compensation Policies for Executive
Officers
Philosophy
Our executive compensation policies are designed by the members of our Compensation and
Human Resources Committee of our Board of Directors (the “Committee”) to
provide competitive levels of compensation commensurate with performance, recognize
individual initiative and achievements, and assist us in attracting and retaining qualified
executives. Our policies seek to align executive compensation with our objectives, business
strategy and financial performance. In applying these policies, we seek to:
·
|
reward executives for long-term strategic
management and the enhancement of shareholder value;
|
·
|
support an environment that rewards performance with
respect to our goals, as well as our performance
|
|
relative to our competitor
companies;
|
·
|
integrate compensation programs with our
short and long-term strategic plans;
|
·
|
attract and retain key executives critical
to our long-term success; and
|
·
|
align the interests of executives with the
long-term interests of shareholders through equity awards.
|
Business Context and Peer Group
We are engaged in international offshore drilling and the completion of exploratory and
developmental oil and gas wells.
The international offshore drilling services business is highly competitive with numerous
participants and the competition for hiring talented individuals in the international
offshore drilling industry has been steadily growing, making it increasingly difficult to
attract and retain employees on our rigs and in our offices. Therefore, it is more
imperative than ever that each element of our compensation be competitive, while still
demanding of our employees the extra effort that returns value to our shareholders.
Our primary competitive market for talent includes other companies in the energy industry
(oil and gas companies, offshore drilling companies, and other energy services companies)
of similar market value, size, operating complexity and growth potential (our “peer
group”). With assistance from our professional consultants, we have determined that
our peer group for compensation purposes in fiscal year 2007 was: Bronco Drilling Company
Inc., Dril-Quip Inc., GulfMark Offshore, Inc., Hercules Offshore Inc., Parker Drilling Co.,
Petroleum Development Corp., RPC Inc., Swift Energy Co. and Todco. The composition of the
peer group is periodically reviewed and updated by the Committee with assistance from our
professional consultant. As further discussed below, we received studies from our
professional consultants, including salary and bonus compensation data, as well as the
nature and amount of stock awards given, based on our peer group. This data is used by our
Committee in determining the salary, bonus and amount of stock incentives to award our
executives.
Administration and Oversight of the Executive
Compensation Program
Our executive compensation program is administered by the members of our Committee. The
Board of Directors who are members on our Committee are
independent as required by the New York Stock Exchange Listing
Standards and as determined by the Board in its business judgment. No member of the
Committee has a relationship to the Company that may interfere with the exercise of
his or her
independent
judgment, as such independence is defined by New York Stock Exchange Listing Standards, and
all of the Committee members are "non-employee directors" as that term is defined under the
Securities and Exchange Commission Rule 16b-3 and "outside directors" as that term is
defined for the purposes of the Internal Revenue Code, section 162(m).
The Committee
currently consists of four members: George S. Dotson, who is the chairman, Deborah A. Beck,
Robert W. Burgess and James R. Montague. The Committee’s responsibilities include,
but are not limited to, the following:
|
·
|
making recommendations to the Board regarding both
long and short term incentive compensation and equity-based plans for all
employees of the Company;
|
|
·
|
r
ecommending to the Board the compensation
of
non-employee
directors of the Company;
|
|
·
|
reviewing and approving Company goals and
objectives relevant to Chief Executive Officer compensation, evaluating the
Chief Executive Officer's performance in light of those goals and objectives,
and, either as a Committee or together with the other independent directors (as
directed by the Board), determining and approving the Chief Executive Officer's
compensation level based on this evaluation;
|
|
·
|
producing a
Committee
report on executive compensation as required by
the Securities and Exchange Commission ("SEC") to be included in the Company's
annual proxy statement or annual report on Form 10-K filed with the SEC;
and
|
|
·
|
performing such general oversight and
investigation functions related to Company compensation inherent to the
responsibilities designated herein or set forth in future resolutions of the
Board.
|
For
fiscal year 2007, the Committee engaged Longnecker & Associates (“L&A”)
as its professional consultant. The Committee felt it was beneficial to have independent
third party analysis and L&A has extensive experience in providing executive
compensation advice, including specific experience in the oil and gas industry. The
Committee took into consideration the discussions and guidance from L&A, as well as the
compensation studies created and assembled by L&A, in the analysis it used in making
its competitive compensation decisions.
Overall
Targets
In creating its report to the Committee, L&A first determined our peer group, as
discussed above, based upon market studies and information provided by the Company, and the
Committee agreed with the selection of our peer group. L&A then reviewed the total
direct compensation (base salary, annual incentives, and long-term incentives) for our
executive officers and assessed the competitiveness of our executive compensation based on
size and performance as compared to our peer group and as compared to published survey data
on companies in the oil and gas wells drilling and services industry with annual revenue
levels similar to our projected fiscal year 2007 revenues. Historically, we have aimed to
pay our executives at a level that generally approximates the 50th percentile of overall
total compensation for similarly situated executives at the reviewed companies. We believe
that this level of compensation has enabled us to attract and retain quality executives
while allowing us to keep compensation costs manageable, producing a good return for our
shareholders
.
The L&A report concluded that, overall, base salaries and direct total compensation for
our executive officers are closely aligned with the 50th percentile of the surveyed
companies, and that our process for determining executive compensation is well aligned with
shareholder interests. Based upon our analysis of the L&A report, we believe that our
total compensation package remains within our target levels.
Compensation Program Components
In order to implement our compensation philosophy, as described above, we have developed a
straightforward compensation package consisting of:
·
|
|
base salary;
|
|
·
|
|
discretionary annual bonus;
|
|
·
|
|
long-term stock incentive awards;
|
|
·
|
|
severance and change-in-control
arrangements;
|
|
·
|
|
perquisites; and
|
|
·
|
|
benefits
|
|
Each element of our compensation package serves a particular purpose and the balance of
these components is established annually by the Committee and is designed to recognize past
performance, retain key employees and encourage future performance. We also used the
L&A report in our analysis of the balance of these components as compared to our peer
group. Based upon our review of the L&A report, while our annual discretionary bonuses
are higher than our peer group and our long-term stock incentives are smaller in value than
our peer group, we believe that the elements of our compensation package are in line with
those offered by our peers, continuing to provide competitive compensation to our
executives.
Base Salary
We provide our executive officers and other employees with base salaries to compensate them
for services rendered during the fiscal year. Base salaries are conservatively set to
recognize individual performance while attempting to compensate for market movement of
salaries in our peer group, which is why our target position for salary is the
50
th
percentile of our peer group, although individual circumstances can allow
for certain positions to be above or below this percentile. Generally, we review salary
levels for our executive officers annually after the end of each fiscal year based on a
variety of factors, including individual performance, general levels of market salary
increases, our company’s overall financial condition and industry
conditions.
Discretionary Annual Bonus
We provide incentive compensation to our executive officers and other key employees in the
form of a discretionary annual bonus relating to financial and operational achievements
during the prior fiscal year for the purpose of retaining and motivating them. The amounts
of the bonuses are determined by the Committee and are primarily based upon our analysis of
the person’s job performance and his or her specific accomplishments during the
preceding fiscal year. The bonus amounts are linked to the achievement of Company-wide
goals and are designed to put a significant portion of total compensation at risk,
especially for our top executive officers, with a greater portion of total compensation at
risk the more senior the executive. The Committee seeks input from the CEO on executive
officer performance and internal equity. The Committee also takes into consideration the
results of key strategic metrics related to safety, health, environment and security,
financial performance and operational excellence. See the Analysis section below for a
further discussion of these metrics.
Individual named executive officers may be awarded a discretionary annual bonus with a
minimum multiple of 0.5 to a maximum multiple of 2.0 times a fixed percentage of their base
salary, which in calendar year 2007 ranged from 40% to 65% for our named executive
officers.
Long-Term
Stock
Incentive Awards
Pursuant to our shareholder–approved Atwood Oceanics, Inc. 2007 Long-Term Incentive
Plan (the “2007 Plan”), the Committee has the ability to grant options,
restricted stock awards, stock appreciation rights and performance units to eligible
employees and grant nonqualified stock options, restricted stock awards, stock appreciation
rights and performance units to eligible directors. The 2007 Plan is designed to motivate
participants to put forth maximum effort toward the success and growth of the Company and
to enable the Company to attract and retain experienced individuals who, by their position,
ability and diligence, are able to make important contributions to the Company’s
success. The determination of the size and type of award granted is based on the level and
contribution of the intended recipient, as well as the results of the key strategic metrics
related to safety, health, environment and security, financial performance and operational
excellence. For fiscal year 2007, the Committee awarded restricted stock and stock options
to our named executive officers, which was primarily designed to tie a portion of each
executive’s compensation to long-term future performance of the Company. As we
believe that stock ownership by management through stock-based compensation arrangements is
beneficial in aligning management’s and shareholders’ interest, the value of
these awards will increase or decrease based upon the future price of our Common Stock.
Severance and Change-In-Control Arrangements
The Company has established the Atwood
Oceanics, Inc. Retention Plan for Certain Salaried Employees (the “Retention
Plan”)
, which has a one-year
term and is adopted annually, as well as Executive Agreements with Messrs. Irwin, Holland
and Kelley (the “Executive Agreements”)
in order
to secure the interests of
our
shareholders in the event of a
change-in-control of the Company by encouraging certain valued employees to remain employed
with the Company during that period of financial uncertainty preceding and following the
change-in-control.
We feel that this
protection helps minimize turnover of our executive talent and ensures that our
executive’s attention remains focused on the Company’s and our
shareholders’ interests. Other than the Retention Plan and Executive Agreements,
there are no severance agreements with executive officers.
In the event of a change-in-control, any
outstanding
awards granted
to any participant
under
the 2007 Plan or any prior stock incentive
plans
are immediately fully vested,
fully earned and exercisable, if an option, and any restriction period terminates
immediately.
For further information regarding our
change-in-control arrangements see “Potential Payments upon Termination or
Change-In-Control” on page 22
of
this proxy.
Perquisites
The Company provides each of our named executive officers a membership to a luncheon and
exercise facility.
Benefits
The named executive officers participate in the Company’s other benefit plans on the
same terms as other employees, except for an increase in medical and life insurance
benefits and the participation in the Rabbi Trust. The increased medical and life insurance
benefits to our named executive officers is due to competitive considerations and the
importance of each of them to our long term success. Other benefits include a defined
contribution plan, or 401(k) plan, for which the Company matches up to 10% of the first 5%
of salary contributed by the employee. The Chief Executive Officer and his direct reports,
including all of our named executive officers, are able to participate in an additional
plan (the “Rabbi Trust”) which allows contribution of amounts in excess of the
allowable amount under our 401(k) plan. All amounts paid to the Rabbi Trust must be
withdrawn within five years of the participant’s retirement.
Analysis
In determining executive compensation for fiscal year 2007, as noted above, the Committee
first relied upon the L&A report to determine our peer group, overall compensation
levels, and the elements of our compensation package. Then the Committee turned to the
determination of the individual levels of compensation for each executive for each element
of our compensation package. In making this analysis, the Committee next considered our
overall historical performance and our future objectives. The Committee has established a
number of key strategic metrics related to financial and operational performance. The
measures for financial performance included:
·
|
gross revenue,
|
·
|
earnings before income tax, depreciation and
amortization,
|
·
|
return on equity,
|
·
|
income tax,
|
·
|
stock price performance, and
|
·
|
operating margin
.
|
For benchmark comparison purposes in fiscal year 2007 the
Committee evaluated the Company’s above measures for financial performance against
the following “metrics peer group”: Diamond Offshore Drilling, Inc., ENSCO
International, Inc., GlobalSantaFe Corporation, Noble Corporation, Pride International,
Inc., Rowan Companies, Inc. and Transocean, Inc.
The measures for operational performance
included:
·
|
the number and severity of safety, operational
and/or security incidents,
|
·
|
superior results for environmental
impact,
|
·
|
rig utilization, and
|
·
|
rig downtime.
|
Rig downtime is assessed based upon whether the downtime is due to repairs, operational
incidents, or lack of contract, and whether the downtime is at a repair rate or at zero
rate. Most of these measures are compared to both Company targets and performance in prior
fiscal years as well as to industry benchmarks. With these key strategic metrics in mind,
the Committee set goals such as 100% rig utilization, no zero rate downtime and zero
operational incidents for fiscal year 2007, which goals were communicated to the named
executive officers at the beginning of fiscal year 2007. As we pride ourselves on our
safety record, although operational incidents during fiscal year 2007 were below our peer
group average we had a greater number of incidents than in prior years, which factor was
taken into consideration by the Committee when determining the discretionary annual
bonus.
In addition to these objective measures, the Committee included a more subjective analysis
of actions taken by the executive officers to benefit the long term goals of the Company.
Such matters as succession planning, executive development, employee satisfaction, and
reputation among customers were included in this part of the analysis, particularly for Mr.
Irwin, our Chief Executive Officer.
When setting base salary and bonus targets for fiscal year 2007, the Committee recognized
that our performance in fiscal year 2006 and the market environment as a whole supported
continued improvements in cash flows which were expected to, and did, lead to earnings at
historic levels for fiscal year 2007. Nevertheless, the Committee recognized that superior
individual performance in fiscal 2007 would be necessary to achieve the Company’s
desired financial results. The Committee established the percentage of base salary which
determines the annual discretionary bonus target for each executive officer based upon a
review of the competitive data for that position, level of responsibility and ability to
impact our success, with the multiplier determined by the individual and Company
performance.
At the end of fiscal 2007, the Committee reviewed the results of the strategic metrics
discussed above, considering both historical and benchmark results. The Committee also
reviewed the competitive information provided by L&A and again obtained input from
L&A on the process used to determine compensation and on the specific compensation
actions. After further consultation with L&A, we believe that the results of the
compensation actions were well aligned with performance, with the marketplace midpoint, and
with shareholder interests, although the fiscal year 2007 bonuses awarded were slightly
higher than in our peer group. The Committee also sought input from the CEO on individual
named executive officer performance and internal equity.
Based on the Committee’s analysis of its goal and objectives described above, the
Committee set fiscal year 2007 base salaries as follows:
Name
|
Title
|
Fiscal Year
2007 Base Salary
|
Percent Increase from
Fiscal Year
2006 Base Salary
|
John R. Irwin
|
President and Chief Executive Officer
|
$438,040
|
5%
|
James M. Holland
|
Chief Financial Officer, Senior Vice President and Secretary
|
$255,960
|
5%
|
Glen P. Kelley
|
Senior Vice President – Marketing and Administration
|
$249,920
|
5%
|
Alan Quintero
|
Vice President – Engineering
|
$211,730
|
13%
|
Darryl Smith
|
Vice President – Operations
|
$209,190
|
14%
|
The larger increases in salary for Messrs. Quintero and Smith from fiscal year 2006 to 2007
reflect their promotions to senior management to align their compensation with similarly
situated executives within our peer group.
Based upon fiscal year 2007 performance, the Committee awarded stock options and restricted
stock awards to our named executive officers as follows:
Name
|
Stock Options Awarded in December 2007
|
Restricted Stock Awarded in December 2007
|
Total
|
John R. Irwin
|
18,280
|
5,364
|
23,644
|
James M. Holland
|
5,476
|
2,684
|
8,160
|
Glen P. Kelley
|
5,476
|
2,236
|
7,712
|
Alan Quintero
|
3,664
|
7,108
|
10,772
|
Darryl Smith
|
2,284
|
896
|
3,180
|
TOTAL
|
35,180
|
18,288
|
53,468
|
A total of 53,468 stock options and shares of restricted stock were awarded to our named
executive officers in December 2007, all of which except for 5,320 shares of restricted
stock awarded to Mr. Quintero, relates to fiscal year 2007 performance. The Committee
believes the awards are reasonable in relation to our peer group and also support a goal of
tying a portion of each executive’s compensation to long-term future performance of
the Company. The Committee sets the size of the awards based upon the fair market value of
our Common Stock on the date of grant, based in part upon Company and individual
performance for fiscal year 2007 as well as our long term goals. The Committee determined a
ratio of allocation between stock options and shares of restricted stock, ranging from
approximately 2 to 3.4 stock options to each share of restricted stock.
As part of succession planning, the Committee granted a group of upper management special
one-time awards of restricted stock in order to encourage retention. These awards have four
year vesting and may not be accelerated for any reason other than change-in-control. Mr.
Quintero was the only named executive officer included in the group, which accounts for
5,320 shares of restricted stock awarded to him.
Based on the Committee’s analysis of its goals and objectives, the Committee set
fiscal year 2008 base salaries and awarded bonuses in December 2007 as follows:
Name
|
Bonus Awarded in December 2007
|
Fiscal Year
2008 Base Salary
|
Percent Increase fr
o
m
Fiscal Year
2007 Base Salary
|
John Irwin
|
$520,000
|
$470,930
|
8%
|
James Holland
|
225,000
|
274,820
|
7%
|
Glen Kelley
|
194,000
|
268,060
|
7%
|
Alan Quintero
|
123,000
|
233,370
|
10%
|
Darryl Smith
|
109,000
|
233,370
|
12%
|
For fiscal year 2007 the fixed percentage of calendar year base salary for purposes of
determining discretionary bonuses were 65% for Mr. Irwin, 48% for Messrs. Holland and
Kelley and 40% for Messrs. Quintero and Smith. As previously discussed, the Committee
believes that the more senior an executive, the greater percentage of compensation should
be at risk, which accounts for the difference among percentages.
No named executive officer received the entire multiple of 2 times their percentage base
salary for fiscal year 2007 as Messrs. Irwin and Holland received a multiple of 1.8, Mr.
Kelley a multiple of 1.6, Mr. Quintero a multiple of 1.4 and Mr. Smith a multiple of 1.25.
The multiple is based upon both Company and individual performance, with individual
performance based upon the named executive officer’s primary area of responsibility,
except in the case of Mr. Irwin. For Mr. Irwin, the Committee considered both his
individual performance as well as the individual performance of each of his direct reports,
including the other named executive officers. As Chief Executive Officer, the Committee
believes that it is appropriate to hold him accountable for the performance of his direct
reports in addition to his own performance.
The fiscal year 2008 base salary increases were based on both fiscal year 2007
performance of the Company as a whole and peer group competitiveness.
Chief Executive Officer Compensation
Mr. Irwin’s compensation is determined in the same manner as the other executive
officers except that the Committee looks not only at his performance but also takes into
account the performance of each person who directly reports to him as discussed above. The
Committee also placed a higher emphasis on succession planning and executive development
when determining Mr. Irwin’s compensation package. In establishing Mr. Irwin’s
base salary for fiscal year 2008, the Committee assessed his then current base salary
compared to the Company’s performance in fiscal year 2007, market information and his
fiscal year 2007 performance. The Committee considered that Mr. Irwin’s base salary,
based on the L&A report, was below the market median. Mr. Irwin was granted a salary
increase to be effective on January 1, 2008 of approximately 8%, and was awarded a bonus at
119% of his fiscal year 2007 base salary based on his individual performance, the
performance of those who report directly to him, the Company’s performance in fiscal
year 2007 and the market environment as a whole, which supported continued improvements in
cash flows and which experienced earnings at historic levels. The Committee in December
2007 also awarded Mr. Irwin stock options to purchase 18,280 shares of Common Stock plus a
restricted stock award of 5,364 shares of Common Stock. The Committee based this award
assessment on Mr. Irwin’s leadership in achieving operating results and major
strategic accomplishments.
Based on the Company's performance in fiscal year 2006 coupled with an improving market
environment supporting continuing improvements in cash flows and earnings at historic
levels, Mr. Irwin was awarded a bonus of $370,000 relating to fiscal year 2006 performance
in December 2006, which fell into fiscal year 2007. Similarly, Mr. Irwin was also granted a
salary increase effective on January 1, 2007 of approximately 5%. The Committee in December
2006 also awarded Mr. Irwin stock options to purchase 23,000 shares of Common Stock plus a
restricted stock award of 13,000 shares of Common Stock. The Committee based this award on
its subjective assessment of Mr. Irwin's performance as Chief Executive Officer and
President as well as his service as a Company director.
The Committee reviewed similar considerations for each of the other named executives,
keeping in mind the targeted compensation levels in our compensation philosophy and using
the analysis described above.
Tax Considerations
Section 162(m) of the Internal Revenue Code
provides that certain compensation to certain executive officers in excess of $1 million
annually will not be deductible for federal income purposes.
Due to exercising stock options during
fiscal year 2007,
the compensation levels
for Messrs. Irwin and Kelley
were
above
the $1 million threshold.
M
essr
s. Irwin
and Kelly’s
total compensation relating to fiscal year
2007 performance exceeded $1 million by approximately
$4.2 million and $3.0 million,
respectively.
COMPENSATION COMMITTEE
REPORT
The Compensation Committee has reviewed and discussed with Company
management the Compensation Discussion and Analysis included in its proxy statement. Based
on that review and discussion, the Compensation Committee has recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in the Company’s
proxy statement.
Submitted by the Compensation Committee of the Board of
Directors:
George S. Dotson - Chairman of the Compensation Committee
Deborah A. Beck - Compensation Committee Member
Robert W. Burgess - Compensation Committee Member
James R. Montague - Compensation Committee Member
COMPENSATION OF
MANAGEMENT
|
Summary Compensation Table
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock Awards ($)
|
Option Awards ($)
|
Non-Equity Incentive Plan Compensation
($)
|
Change in Pension Value and
Nonqualified Deferred Compensation Earnings
($)
|
All Other
Compen
sation
(
$
)
|
Total
($)
|
John R. Irwin
President and Chief
Executive Officer
|
2007
|
438,040
|
370,000
|
353,810
|
632,700
|
---
|
187,200
|
98,100
|
2,079,850
|
James M. Holland
Senior Vice President,
Chief Financial Officer
and Secretary
|
2007
|
255,960
|
155,000
|
160,360
|
215,600
|
---
|
54,000
|
47,290
|
888,210
|
Glen P. Kelley
Senior Vice President
Marketing and
Administration
|
2007
|
249,920
|
150,000
|
160,360
|
215,600
|
---
|
16,300
|
45,580
|
837,760
|
Alan Quintero
Vice President Engineering
|
2007
|
211,730
|
70,000
|
117,740
|
97,000
|
---
|
5,060
|
29,880
|
531,410
|
Darryl R. Smith
Vice President
Operations
|
2007
|
209,190
|
70,000
|
78,790
|
92,150
|
---
|
23,040
|
36,770
|
509,940
|
GRANTS OF PLAN-BASED AWARDS
|
|
Estimated future payouts under non-equity
incentive plan awards
|
Estimated future payouts under equity incentive
plan awards
|
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
All other stock awards: number of shares of stock
or units
(#) (A)
|
All other option awards: number of securities
underlying options
(#) (B)
|
Exercise or base price of option awards
($/Sh)
|
Grant – Date Value of Stock
Awards
($)
(C)
|
Grant – Date Value of Option
Awards
($)
(D)
|
John R. Irwin
|
12/7/2006
|
---
|
---
|
---
|
---
|
---
|
---
|
13,000
|
23,000
|
49.97
|
649,610
|
543,720
|
James M. Holland
|
12/7/2006
|
---
|
---
|
---
|
---
|
---
|
---
|
6,200
|
4,300
|
49.97
|
309,814
|
101,652
|
Glen P. Kelley
|
12/7/2006
|
---
|
---
|
---
|
---
|
---
|
---
|
6,200
|
4,300
|
49.97
|
309,814
|
101,652
|
Alan Quintero
|
12/7/2006
|
---
|
---
|
---
|
---
|
---
|
---
|
4,200
|
3,000
|
49.97
|
209,874
|
70,920
|
Darryl R. Smith
|
12/7/2006
|
---
|
---
|
---
|
---
|
---
|
---
|
3,000
|
1,000
|
49.97
|
149,910
|
23,640
|
_______________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) The awards were made pursuant to our Amended
and Restated 2001 Plan (the “2001 Plan”), which is no longer
active, and vest at the end of three years from the date of grant, based on the
passage of time and the continued employment of the named executive, subject to
acceleration of vesting upon the occurrence of certain events related to
termination of employment or change of control of the Company.
(B) The options were granted for a
term of ten (10) years (pursuant to our 2001 Plan), subject to earlier
termination in certain events related to termination of employment. Each option
entitles the option holder to purchase one share of Common Stock at an exercise
price equal to the fair market value of a share of Common Stock on the date of
grant. Twenty-five percent (25%) of such options become exercisable at each of
one (1) year, two (2) years, three (3) years and four (4) years, respectively,
from the date of grant. Subject to certain conditions, the exercise price may
be paid by delivery of shares of Common Stock owned by the option holder prior
to the option exercise, and tax withholding obligations related to exercise may
be paid by offset of underlying shares of Common Stock.
(C) The amounts disclosed in this column represents the aggregate FAS 123 (R)
grant date fair value of the restricted stock awards granted to each named
executive officer.
(D) The amount disclosed in this column represents
the aggregate FAS 123 (R) grant date fair value of non-qualified stock options
granted to each named executive officer.
|
OUTSTANDING EQUITY AWARDS AT SEPTEMBER 30,
2007
|
|
Option
awards
|
Stock
awards
|
Name
|
Number of
securities underlying unexercised options (#) exercisable
|
Number of securities underlying
unexercised options (#) unexercisable
|
Equity incentive plan awards
number of securities underlying unex
ercised unearned options
(#)
|
Option exercise price
($)
|
Option expiration date
|
Number of shares or units of stock
that have not vested (#)
|
Market value of shares or units of
stock that have not vested ($)
|
Equity incentive plan awards:
number of unearned shares, units or other rights that have not vested
(#)
|
Equity incentive plan awards:
market or payout value of unearned shares, units or other rights that have not
vested ($)
|
John R. Irwin
|
0
|
20
,000
|
---
|
13.50
|
12/
3/2013
|
---
|
---
|
---
|
---
|
|
40,000
|
40,000
|
---
|
24.62
|
12/
1/2014
|
---
|
---
|
---
|
---
|
|
5,250
|
15,750
|
---
|
37.15
|
1
1/30/2015
|
---
|
---
|
---
|
---
|
|
---
|
23,000
|
|
49.97
|
12/
6/2016
|
---
|
---
|
---
|
---
|
|
|
|
|
---
|
--
|
27,000
|
2,067,120
|
---
|
---
|
|
45
,250
|
98
,750
|
---
|
|
27,000
|
2,067,120
|
---
|
---
|
|
|
|
|
|
|
|
|
James M. Holland
|
0
|
10,0
00
|
---
|
13.50
|
12/
3/2013
|
---
|
---
|
---
|
---
|
|
15,000
|
15,000
|
---
|
24.62
|
12/
1/2014
|
---
|
---
|
---
|
---
|
|
1,500
|
4,500
|
---
|
37.15
|
1
1/
30
/2015
|
---
|
---
|
---
|
---
|
|
---
|
4,300
|
|
49.97
|
12/
6/2016
|
---
|
---
|
---
|
---
|
|
|
|
|
|
|
12,200
|
934,
032
|
---
|
---
|
|
16
,
5
00
|
33
,
8
00
|
---
|
|
|
12,200
|
934,
032
|
---
|
---
|
|
|
|
|
|
|
|
|
Glen P. Kelley
|
30,000
|
---
|
---
|
15.38
|
9/1
1/2012
|
---
|
---
|
---
|
---
|
|
30,000
|
10,000
|
---
|
13.50
|
12/
3/2013
|
---
|
---
|
---
|
---
|
|
15,000
|
15,000
|
---
|
24.62
|
12/
1/2014
|
---
|
---
|
---
|
---
|
|
1.500
|
4,500
|
---
|
37.15
|
1
1/
30
/2015
|
---
|
---
|
---
|
---
|
|
---
|
4,300
|
---
|
49.97
|
12/
6/2016
|
---
|
---
|
---
|
---
|
|
|
|
|
|
|
12,200
|
934,
032
|
---
|
---
|
|
76,500
|
33,800
|
---
|
|
|
12,200
|
934,
032
|
----
|
---
|
|
|
|
|
|
|
|
|
|
|
Alan Quintero
|
8,750
|
---
|
---
|
18.88
|
12/
1/2009
|
---
|
---
|
---
|
---
|
|
1,250
|
---
|
---
|
15.35
|
12/
6/2010
|
---
|
---
|
---
|
---
|
|
2,000
|
---
|
---
|
16.08
|
9/
5/2011
|
---
|
---
|
---
|
---
|
|
8,000
|
---
|
---
|
15.38
|
9/1
1/2012
|
---
|
---
|
---
|
---
|
|
11,250
|
3,750
|
---
|
13.50
|
12/
3/2013
|
---
|
---
|
---
|
---
|
|
7,500
|
7,500
|
---
|
24.62
|
12/
1/2014
|
---
|
---
|
---
|
---
|
|
500
|
1,500
|
---
|
37.15
|
1
1/
30
/2015
|
---
|
---
|
---
|
---
|
|
---
|
3,000
|
---
|
49.97
|
12/
6/2016
|
---
|
---
|
---
|
---
|
|
|
|
|
|
|
9,000
|
689
,040
|
---
|
---
|
|
39,250
|
15,750
|
---
|
|
|
9,
000
|
689
,04
0
|
---
|
---
|
|
|
|
|
|
|
|
|
Darryl R. Smith
|
0
|
5,00
0
|
---
|
13.50
|
12/
3/2013
|
---
|
---
|
---
|
---
|
|
0
|
6,500
|
---
|
24.62
|
12/2
12014
|
---
|
---
|
---
|
---
|
|
500
|
1,500
|
---
|
37.15
|
1
1/
30
/2015
|
---
|
---
|
---
|
---
|
|
---
|
1,000
|
---
|
49.97
|
12/
6/2016
|
---
|
---
|
---
|
---
|
|
|
|
|
|
|
6,000
|
459,360
|
---
|
---
|
|
500
|
14
,000
|
---
|
|
|
6,000
|
459,360
|
---
|
---
|
OPTION EXERCISES AND STOCK VESTED
|
|
Option Awards
|
Stock Awards
|
Name
|
Number of shares acquired on exercise (#)
|
Value realized on exercise ($)
|
Number of shares acquired on vesting (#)
|
Value realized on vesting ($)
|
John R. Irwin
|
240,000
|
11,060,763
|
---
|
---
|
James M. Holland
|
99,800
|
4,559,027
|
---
|
---
|
Glen P. Kelley
|
76,000
|
3,587,858
|
---
|
---
|
Alan Quintero
|
23,250
|
676,135
|
---
|
---
|
Darryl R. Smith
|
16,750
|
570,890
|
---
|
---
|
NONQUALIFIED DEFERRED COMPENSATION
|
Name
|
Executive
contributions
in Fiscal
Year 2007
($)
(A)
|
Registrant
contributions
in Fiscal
Year 2007
($)
(A)
|
Aggregate
earnings in
in Fiscal
Year 2007
($)
|
Aggregate
withdrawals/
distributions
($)
|
Aggregate
balance at
September 30,
2007
($)
(A)
|
John R. Irwin
|
411,120
|
67,370
|
187,200
|
---
|
1,838,430
|
James M. Holland
|
170,650
|
26,020
|
54,000
|
---
|
711,100
|
Glen P. Kelley
|
7,000
|
14,000
|
16,300
|
---
|
107,160
|
Alan Quintero
|
26,760
|
17,460
|
5,060
|
---
|
60,250
|
Darryl R. Smith
|
14,130
|
9,496
|
23,045
|
---
|
162,190
|
____________
(A) Contributions were made to the Rabbi Trust.
|
Non-Employee
Director
S
Compensation
|
Name
|
Fees earned or paid in cash ($)
|
Stock awards ($) (A)
|
Option awards ($)
|
Non-equity incentive plan compensation ($)
|
Change in pension value and nonqualified deferred compensation
earnings
|
All other compensation ($)
|
Total ($)
|
Deborah Beck
|
48,500
|
60,000
|
---
|
---
|
---
|
---
|
108,500
|
Robert Burgess
|
48,500
|
60,000
|
---
|
---
|
---
|
---
|
108,500
|
George Dotson
|
53,500
|
60,000
|
---
|
---
|
---
|
---
|
113,500
|
Hans Helmerich
|
37,000
|
60,000
|
---
|
---
|
---
|
---
|
97,000
|
James Montague
|
44,500
|
60,000
|
---
|
---
|
---
|
---
|
104,500
|
William Morrissey
|
51,000
|
60,000
|
---
|
---
|
---
|
---
|
111,000
|
Total
|
283,000
|
360,000
|
|
|
|
|
643,000
|
______________
(A) Pursuant to our existing 2007 Plan, each of our non employee directors was
awarded restricted
stock during fiscal year 2007 equivalent to the number of shares of Common
Stock valued at $60,000
on the dates of grant. Of these awards, $40,000 vest immediately to each
eligible Director but have a
three-year restriction period on ownership transfer. The remaining $20,000 does
not vest until the
end of three years.
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The Company entered into Executive Agreements on September 18, 2002, with Messrs. Irwin,
Holland and Kelley. The Executive Agreements address the terms of executive employment and
compensation in the event of a termination of employment due to a change of control in our
ownership. The Executive Agreements state that a change in control occurs in the event of
(a) an acquisition or formal tender offer by any individual, entity or group of beneficial
ownership of twenty percent (20%) of (i) the then outstanding shares of our Common Stock or
(ii) the combined voting power of our then outstanding voting securities entitled to vote
generally in the election of directors (certain exceptions apply); (b) a sale of
substantially all of our assets; or (c) a change of the majority of the members of our
Board of Directors. In the event of a change of control, Messrs. Holland and Kelley shall
remain in the employ of the Company following such change of control for one year and six
months and Mr. Irwin shall remain in the employ of the Company for two years and six months
following such change in control. During such employment terms, the executive shall receive
his base salary, annual bonus, incentive, savings and retirement plan benefits, welfare
plan benefits, executive life insurance benefits, indemnification, expense reimbursement,
and vacation commensurate with those benefits that the executive enjoyed prior to the
change in control. In the event their employment is terminated within such time period,
depending upon the circumstances of termination, they may be entitled to a severance
payment generally equal to the salary and bonus for the remainder of such period. The
Executive Agreements each have three (3) year “evergreen” terms in that they
automatically extend so as to cover a three (3) year period from any date then in effect
unless we give notice to the executive that the term will no longer be so extended.
Compensation
AND HUMAN
RESOURCES
Committee
Interlocks and Insider Participation
Ms. Beck and Messrs. Burgess, Dotson and Montague, the current members of the Compensation
and Human Resources Committee, were the only persons who served on this Committee during
the 2007 fiscal year.
No member of our Compensation and Human Resources Committee of the Board of Directors was,
during the 2007 fiscal year, an officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or any of its subsidiaries or had
any relationships requiring disclosure by us under Item 404 of Regulation S-K, except for
the current relationship of Mr. Helmerich and prior relationship of Mr. Dotson with H&P
and H&PIDC.
During the Company's 2007 fiscal year, no executive officer of the Company served as (i) a
member of the Compensation and Human Resources Committee (or other board committee
performing equivalent functions) of another entity, one of whose executive officers served
on our Compensation and Human Resources Committee, (ii) a director of another entity, one
of whose executive officers served on our Compensation and Human Resources Committee, or
(iii) a member of the Compensation and Human Resources Committee (or other board committee
performing equivalent functions) of another entity, one of whose executive officers served
as our director.
CONTRIBUTIONS TO TAX EXEMPT ORGANIZATIONS
We have made no contributions to any tax exempt organization in which any independent
director serves as an executive officer.
AUDIT COMMITTEE CHARTER
The Audit Committee is composed of four (4) non-employee independent Directors and is
established in accordance with section 3(a)(58)(A) of the Exchange Act. The Board of
Directors has determined that Mr. Burgess is the Audit Committee’s financial expert.
The members of the Audit Committee are governed by a written Charter duly adopted by the
Board of Directors, which requires their independence from management of the Company and
their freedom from any other relationship which would interfere with their independent
judgment as required by the New York Stock Exchange Listing Standards
and as determined by the Board in its business judgment. The
members of the Audit Committee are also required to be "non-employee directors" as that
term is defined under the SEC Rule 16b-3.
The Board of Directors has made a
determination that all of the members of the Audit Committee meet the Audit Committee
Charter membership requirements, including that of independence. The Board of Directors
specifically considered the relationship of H&P and H&PIDC to the Company and
determined that they are not our affiliates. Mr. Dotson retired from H&P during fiscal
year 2006. Prior to his retirement from H&P, the Board of Directors determined that Mr.
Dotson was not our affiliate and after his retirement, the Board of Directors determined
that Mr. Dotson continues not to be our affiliate. Further, the Board of Directors believes
that Mr. Dotson’s membership on the Audit Committee is in the best interests in the
Company due to his expertise, experience, and tenure as a director of the Company. The
Audit Committee Charter is posted on our website, www.atwd.com
Report of the Audit Committee of the Board of Directors of Atwood Oceanics, Inc.
The Board of Directors
Management is primarily responsible for the Company’s financial statements and the
reporting process, including the systems of internal controls. PricewaterhouseCoopers LLP
(“PwC”), the Company’s independent Registered Public Accounting Firm, is
responsible for performing an independent audit of the Company’s consolidated
financial statements in accordance with the standards of the Public Company Accounting
Oversight Board and for issuing a report on those statements. As the Audit Committee, we
oversee the financial reporting process and internal control system on behalf of the Board
of Directors. The Audit Committee met in person two (2) times, with an additional four (4)
conference call meetings, during fiscal year 2007. At various times during the 2007 fiscal
year, the Audit Committee met with PwC and the internal auditors, with and without
management present.
In the course of fulfilling our oversight responsibilities, we reviewed and discussed the
audited financial statements, as well as Management’s Discussion and Analysis,
included in the Company’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2007, with management and PwC.
This review included a discussion of, among others:
|
·
|
All critical accounting policies followed by the Company;
|
|
·
|
The reasonableness of significant financial reporting issues and judgments made
in connection with the preparation of the Company’s financial statements,
including the quality of the Company’s accounting principles;
|
|
·
|
The clarity and completeness of financial disclosures;
|
|
·
|
The adequacy of internal controls that could significantly affect the
Company’s financial statements;
|
|
·
|
Items that could be accounted for using alternative treatments within GAAP and
the treatment preferred by PwC;
|
|
·
|
Any internal control points raised by PwC during its audit of the
Company’s financial statements; and
|
|
·
|
The potential effects of regulatory and accounting initiatives, as well as any
off balance sheet structures, on the Company’s financial statements.
|
We have discussed with the independent Registered Public Accounting Firm the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communications With
Audit Committees
, as modified or supplemented, by the Auditing Standards Board of the
American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from the independent
Registered Public Accounting Firm required by Standard No. 1,
Independence Discussions
with Audit Committees
, as modified or supplemented, by the Independence Standards
Board, and have discussed with the auditors their independence. We reviewed the
independence of PwC from the Company and its management and reviewed and approved the
Company’s policies regarding the provision of non-audit services by PwC to the
Company and the hiring of employees of PwC by the Company.
As the Audit Committee, we recommended to the Board of Directors the selection of PwC as
the Company’s independent Registered Public Accounting Firm. Additionally, we
|
·
|
reviewed the scope of an overall plan for the annual audit and the internal
audit program;
|
|
·
|
approved fees for all services provided by PwC;
|
|
·
|
reviewed the adequacy of certain financial policies;
|
|
·
|
considered PwC’s quality control procedures;
|
|
·
|
on a quarterly basis, reviewed the Company’s financial results prior to
their public issuance; and
|
|
·
|
reviewed significant legal developments.
|
Based on the review and discussions referred to above, we recommend to the Board of
Directors that the audited financial statements referred to above be included in the
Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007 to
be filed with the Securities and Exchange Commission.
Audit Committee
William J. Morrissey, Chairman
Robert W. Burgess, Member (Financial Expert)
Deborah A. Beck, Member
George S. Dotson, Member
November 28, 2007
Notwithstanding SEC filings by the Company that have incorporated or may incorporate by
reference other SEC filings (including this Proxy Statement) in their entirety, the Report
of the Audit Committee shall not be incorporated by reference into such filings and shall
not be deemed to be “filed” with the SEC except as specifically provided
otherwise or to the extent required by Item 306 of Regulation S-K.
FISCAL YEAR 2007 AUDIT FIRM FEE SUMMARY
During fiscal years 2007 and 2006, PwC was our independent registered public accounting
firm, and it provided services in the following categories and amounts.
|
|
Fiscal Year
|
|
|
2007
|
|
2006
|
Audit Fees
Audit-Related Fees (A)
Tax Fees
All Other Fees (B)
Total
|
|
$ 960,471
$ --
$ --
$
2,000
$
962,471
|
|
$ 1,273,132
$ 20,200
$ ----
$
2,000
$
1,295,332
|
___________
|
(A)
|
For fiscal year 2006, these fees related to
statutory audit services provided in one of our foreign locations.
|
|
(B)
|
Software licensing fees.
|
The Audit Committee approves the engagement of an independent registered public accounting
firm to render audit or non-audit services prior to the engagement based upon a proposal by
such firm and an estimate of fees and expected scope of engagement. The Audit Committee has
adopted a pre-approval policy which allows management to engage PwC to provide certain
services not to exceed $25,000. Our pre-approval policy requires that the Audit Committee
be informed of each service and does not include delegation of Audit Committee
responsibilities to management. In fiscal year 2007, there were no fees for services
provided pursuant to the Audit Committee’s pre-approval policy.
EQUITY COMPENSATION PLANS
The table below provides information relating to our equity compensation
plans as of September 30, 2007, all of which have been approved by our
shareholders:
Number of shares of Common Stock to be issued upon exercise of outstanding
options
|
Weighted-average exercise price of outstanding options
|
Number of shares of Common Stock available for future issuance under equity
compensation plans (excluding securities to be issued upon exercise of
outstanding options)
|
881,388
|
$24.54
|
1,997,636
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors,
and persons who own more than ten percent (10%) of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the SEC. Officers,
directors and greater than ten-percent (10%) shareholders are required to furnish us with
copies of all Section 16(a) reports or forms they file.
Based solely on our review of the copies of such forms we have received, and written
representations from certain reporting persons that no reports on Form 5 were required for
those persons, we believe that, during the period from October 1, 2006 through September
30, 2007, all filing requirements applicable to our officers, directors and greater than
ten-percent (10%) beneficial owners were complied with.
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PwC audited our financial statements for the years ended September 30, 2007, 2006 and 2005,
and has been selected to audit our financial statements for the year ended September 30,
2008. PwC will have representatives present at the shareholders’ meeting who will
have the opportunity to make a statement if they so desire and will be available to respond
to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of our shareholders intended to be presented for consideration at the Annual
Meeting of our Shareholders to be held in February 2009 must be received by us no later
than September 17, 2008 and must comply with the requirements of the proxy rules
promulgated by the SEC in order to be included in the proxy statement and form of proxy
related to that meeting. If notice of any shareholder proposal not eligible for inclusion
in our proxy statement and form of proxy is given to us after December 1, 2008, then proxy
holders will be allowed to use their discretionary voting authority on such shareholder
proposal when the matter is raised at such meeting.
OTHER MATTERS
Management does not intend to bring any other matters before the meeting and has not been
informed that any matters are to be presented by others. In the event any other matters
properly come before the meeting, the persons named in the enclosed form of proxy will vote
the proxies under discretionary authority therein in accordance with their judgment on such
matters.
If you do not contemplate attending the meeting in person, you are respectfully requested
to sign, date and return the accompanying proxy in the enclosed, stamped envelope at your
earliest convenience.
We will provide, without charge, upon written request of any shareholder, a copy of our
Annual Report on Form 10-K including financial statements and financial statement schedules
for the fiscal year ended September 30, 200
7
as filed with the SEC. Please
direct such request to James M. Holland, Secretary, Atwood Oceanics, Inc., P.O. Box 218350,
Houston, Texas 77218, 281-749-7800.
Only one proxy statement and annual report are being delivered to multiple shareholders
sharing an address who have previously consented to such delivery unless we have received
contrary instructions from one or more such shareholders. If a shareholder desires to
receive a separate copy of the proxy statement, or annual report or future proxy statements
or annual reports, the shareholder should provide oral or written notification to James M.
Holland, our Secretary, at the above address and provide instructions for delivery of the
separate copy. If shareholders who share an address and are receiving multiple copies of
the proxy statement or annual report desire to receive only one copy of the proxy statement
or annual report they should also notify Mr. Holland at the above address and provide
delivery instructions.
By order of the Board of Directors
/s/ John R. Irwin
John R. Irwin, President
Houston, Texas
January 15, 2008
PROXY ATWOOD
OCEANICS, INC.
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 14, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James M. Holland and Glen P. Kelley, or either of them as
Proxy Holders, each with the power to appoint a substitute, and hereby authorizes them to
represent and to vote, as designated below, all the shares of common stock, par value $1.00
per share, held of record by the undersigned as of the close of business on December 31,
2007, at the Annual Meeting of Shareholders to be held on February 14, 2008 or any
adjournment thereof:
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED
1. ELECTION OF DIRECTORS:
o
FOR all nominees
listed
(except as marked to the
contrary)
o
WITHHOLD authority to vote for all nominees listed
Nominees:
DEBORAH A.
BECK GEORGE S.
DOTSON JOHN R. IRWIN
ROBERT W. BURGESS
HANS HELMERICH
JAMES R. MONTAGUE
(INSTRUCTION: To withhold authority to vote for one or more individual
nominees, write the nominee’s name(s) in the line provided below or strike through
their name above.)
2. To approve Amendment No. 1 to the Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan as
described in the accompanying Proxy Statement:
FOR AGAINST ABSTAIN
3. To approve Amendment No. 1 to our Amended and Restated Certificate of Formation to
increase the authorized shares of Common Stock of the Company from 50,000,000 shares to
90,000,000 shares as described in the accompanying Proxy Statement:
FOR AGAINST ABSTAIN
4. To ratify our early election to be governed by the Texas Business
Organizations Code:
FOR AGAINST ABSTAIN
4. In their discretion, the Proxy Holders are authorized to vote upon such
other business as may properly come before the meeting.
(see reverse side)
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder.
If no direction is made, the Proxy will be voted FOR the election of all
Directors, FOR approval of Amendment No. 1 to the
Atwood Oceanics, Inc. 2007
Long-Term Incentive Plan
, FOR approval to the increase of authorized shares of
Common Stock of the Company from 50,000,000 shares to 90,000,000 shares and FOR
ratification of our early election to be governed by the Texas Business Organizations
Code
.
Please sign exactly as name appears hereon.
________________________,
2008 _________________________________________
DATED
SIGNATURE
_________________________________________
SIGNATURE IF JOINTLY HELD
NOTE: When shares are held by joint tenants, both should sign. When signing
as attorney, as executor, administrator, trustee, or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person. Please
note any change in your address alongside the address as it appears in the
proxy.
PLEASE MARK IN BLUE OR BLACK INK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Appendix A
COMPENSATION AND HUMAN RESOURCES COMMITTEE CHARTER
|
1.
|
Purpose and General
Responsibilities
|
The
function of the Compensation
and Human
Resources
Committee ("Committee") is to assist the Board of Directors ("Board") of
Atwood Oceanics, Inc. in fulfilling its oversight responsibilities regarding the
compensation of directors, officers, and employees of Atwood Oceanics, Inc. and its
subsidiaries (collectively, the "Company").
To perform this
function, the Committee shall have the authority to perform the specific duties enumerated
in this Charter and, upon the direction or approval of the Board, to undertake other
activities on behalf of the Board. The Committee is authorized to request reports on
matters related to its authority, its duties as described in this Charter and on any
subject that it deems related to its responsibilities. All employees of the Company shall
cooperate as requested by the Chairman of the Committee. The Committee shall recommend to
the Board any extensions or changes in the authority or duties of the Committee that it
deems appropriate.
The Committee's primary responsibilities
include:
|
·
|
Making recommendations to the
Board regarding both long and short term incentive compensation and
equity-based plans that are subject to Board approval for all employees of the
Company;
|
|
·
|
Recommending to the Board the compensation of directors
who are not employees of the Company;
|
|
·
|
Reviewing and approving Company goals and objectives
relevant to Chief Executive Officer compensation, evaluating the Chief
Executive Officer's performance in light of those goals and objectives, and,
either as a Committee or together with the other independent directors (as
directed by the Board), determining and approving the Chief Executive Officer's
compensation level based on this evaluation; and
|
|
·
|
Considering and analyzing
the matters to be discussed in the Compensation Discussion and Analysis
(“CD&A”) to be included in the Company’s annual proxy or
information statement or annual report on Form 10-K filed with the Securities
and Exchange Commission (“SEC”); overseeing the drafting of the
CD&A; and reviewing and discussing the CD&A with Company
management.
|
|
·
|
Producing a Compensation Committee report on
executive compensation
as required by the SEC to
be included in the Company’s annual proxy
or information
statement or annual report
on Form 10-K filed with the SEC.
|
|
·
|
Performing such general oversight and
investigation functions related to Company compensation inherent to the
responsibilities designated herein or set forth in future resolutions of the
Board.
|
The authority of the Committee
with respect to any future stock incentive plans of the Company may be limited by the
provisions of such plans as adopted by the Board and approved by the shareholders of the
Company. However, the Committee is not precluded from approving awards (with or without
ratification by the Board) as may be required to comply with applicable tax laws such as
Rule 162(m).
|
2.
|
Membership and Organization
|
All members of the Committee
shall be independent as required by the rules and regulations of the SEC
and the New York Stock Exchange Listing Standards and as determined
by the Board in its business judgment. No member of the Committee shall have a relationship
to the Company that may interfere with the exercise of their independent judgment, as
determined in accordance with the rules and regulations of the SEC and the New York Stock
Exchange Listing Standards. The members of the Committee shall be "non-employee directors"
as that term is defined under the SEC Rule 16b-3 and "outside directors" as that term is
defined for the purposes of the Internal Revenue Code, section 162(m). The members of the
Committee shall have sufficient background and experience to enable them to discharge their
responsibilities.
The members of the Committee shall be appointed by the
independent members of the Board. The Committee shall have a Chairman appointed by the
independent members of the Board. The Committee shall consist of that number of directors
as the Board shall determine from time to time, such number not to be less than two
members. The Board may add additional members to the Committee or remove members in its
sole discretion.
The Committee may delegate its authority to a subcommittee or subcommittees, provided that
the subcommittee is composed entirely of independent directors and has a published
charter.
The Committee shall promptly inform the Board of the actions taken or issues discussed at
its meetings. This will generally take place at the Board meeting following a Committee
meeting.
|
3.
|
Meeting Attendance and Minutes
|
The Committee shall meet at
such times as the Chairman of the Committee shall designate and notice of such meetings
shall be given to Committee members in accordance with the manner set forth in the Amended
and Restated By-Laws (the "By-laws") of Atwood Oceanics, Inc. which notices of meetings of
the Board are given. One-third of the Committee, but not less than two members, shall
constitute a quorum for the transaction of business. Unless the Committee by resolution
determines otherwise, any action required or permitted to be taken by the Committee may be
taken without a meeting if all members of the Committee consent thereto in writing and the
writing or writings are filed with the minutes of the proceedings of the Committee. As
necessary or desirable, the Chairman of the Committee may require that any members of
management be present at meetings of the Committee. Members of the Committee may
participate in a meeting through the use of conference telephone or similar communications
equipment, so long as all members participating in such meeting can hear one another, and
such participation shall constitute presence in person at such meeting.
The Committee shall report to
the Board periodically or as required by the nature of its duties on all of its activities
and shall make such recommendations to the Board as the Committee decides are
appropriate.
|
4.
|
Responsibilities and Duties
|
Compensation Committee
Charter
The Committee shall review
this Charter periodically for adequacy and recommend to the Board any necessary
changes.
Chief Executive Officer
Performance and Compensation
The Compensation Committee
shall conduct annual reviews of the performance of the Company's Chief Executive Officer
and fix his or her compensation as a Committee or together with the other independent
directors (as directed by the Board). In determining the long-term incentive component of
the Chief Executive Officer’s compensation, the Committee shall consider the
Company’s performance and relative shareholder return, the value of similar incentive
awards to chief executive officers at comparable companies, and the awards given to the
Chief Executive Officer in past years.
Employee and Management
Compensation
The Committee shall review the
Company's salaried and management compensation practices, including the methodologies for
setting employee and officer salaries, and shall fix the salary and other compensation of
all officers of the Company other than the Chief Executive Officer.
Compensation Plans and
Programs
The Committee shall approve,
and recommend standards for, the Company's compensation programs and plans, including, but
not limited to, the Company's various incentive compensation, retirement, and other benefit
plans.
Director
Compensation
The Committee shall recommend
to the Board the compensation for non-employee directors.
Stock Incentive
Plans
The Committee shall administer
the Company's stock incentive plans in accordance with the responsibilities assigned to the
Committee under any and all such plans.
Insurance for Directors and
Officers
The Committee shall review
appropriate insurance coverage for directors and officers of the Company.
CD&A
The Committee shall consider
and analyze the matters to be discussed in the CD&A to be included in the
Company’s annual proxy or information statement or annual report on Form 10-K filed
with the SEC. The Committee shall oversee the drafting of the CD&A; and review and
discuss the CD&A with Company management.
The Committee shall produce a
Compensation Committee report on executive compensation as required by the SEC to be
included in the Company’s annual proxy or information statement or annual report on
Form 10-K filed with the SEC. The report shall specifically state whether the committee has
reviewed and discussed the CD&A with Company management and whether the committee has
recommended that the CD&A be included in the Company’s annual proxy or
information statement or annual report on Form 10-K filed with the SEC.
The Committee shall have the
authority, at the expense of the Company, to retain such independent consulting, legal and
other advisors as it shall deem appropriate, without management approval. The Committee
shall have the sole authority to retain, terminate, and approve the fees and retention
terms of compensation consultants.
The performance of the
Committee shall be evaluated annually by the Board.
The Committee's
responsibilities and powers as delegated by the Board of Directors are set forth in this
Charter. The Committee relies to a significant extent on information and advice provided by
management and independent advisors. Whenever the Committee takes an action, it exercises
its independent judgment on an informed basis that the action is in the best interests of
the Company and its shareholders.
APPENDIX B
ATWOOD OCEANICS, INC.
200
7
LONG-TERM INCENTIVE PLAN
ARTICLE
I
PURPOSE
SECTION 1.1 Purpose
.
This 2007 Long-Term Incentive
Plan (the “Plan”) is established by Atwood Oceanics, Inc., a Texas corporation
(the “Company”) to create incentives which are designed to motivate
Participants to put forth maximum effort toward the success and growth of the Company and
to enable the Company to attract and retain experienced individuals who by their position,
ability and diligence are able to make important contributions to the Company’s
success. Toward these objectives, the Plan provides for the grant of Options, Restricted
Stock Awards, SARs and Performance Units to Eligible Employees and the grant of
Nonqualified Stock Options, Restricted Stock Awards, SARs and Performance Units to Eligible
Directors, subject to the conditions set forth in the Plan.
SECTION 1.2 Establishment.
The Plan is effective as of December 7,
2006 and for a period of ten years thereafter. The Plan shall continue in effect after such
ten-year period until all matters relating to the payment of Awards and administration of
the Plan have been settled.
The Plan is subject to the approval by the holders of a
majority of the outstanding shares of Common Stock present, or represented, and entitled to
vote at a meeting called for such purpose, which approval must occur within the period
ending twelve months after the date the Plan is adopted by the Board. No Awards under the
Plan may be granted prior to receipt of shareholder approval.
SECTION 1.3 Shares Subject to the Plan
.
Subject to the
limitations set forth in the Plan, Awards may be made under this Plan for a total of
2,000,000 shares of Common Stock. Any shares granted as Restricted Stock Awards or as SARs
or Performance Units settled in shares of Common Stock shall be counted against this limit
as 1.7 shares for each share granted. Any shares issued pursuant to Options shall be
counted against this limit as one share for each issuable share. Provided further, that a
maximum of 1,000,000 shares of the total authorized under this Section 1.3 may be granted
as Incentive Stock Options. The limitations of this Section 1.3 shall be subject to the
adjustment provisions of Article IX.
ARTICLE II
DEFINITIONS
SECTION 2.1 “Account”
means the recordkeeping
account established by the Company to which will be credited an Award of Performance Units
to a Participant.
SECTION 2.2 “Affiliated Entity”
means any person with
whom Company would be considered a single employer under section 414(b) or 414(c) of the
Code, if sections 414(b) and 414(c) of the Code used an “at least 50 percent”
ownership test instead of an “at least 80 percent” ownership test.
SECTION 2.3 “Award”
means, individually or
collectively, any Option, Restricted Stock Award, SAR or Performance Unit granted under the
Plan to an Eligible Employee by the Committee or any Nonqualified Stock Option, Performance
Unit, SAR or Restricted Stock Award granted under the Plan to an Eligible Director by the
Committee.
SECTION 2.4 “Award Agreement”
means any written
instrument that establishes the terms, conditions, restrictions, and/or limitations
applicable to an Award in addition to those established by this Plan and by the
Committee’s exercise of its administrative powers.
SECTION 2.5 “Board”
means the Board of Directors
of the Company
.
SECTION 2.6 “Change of Control Event”
means each
of the following:
(i) The acquisition after the Effective Date of this Plan by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (1) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (2) the combined voting
power of the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company, (D) any acquisition previously
approved by at least a majority of the members of the Incumbent Board (as such term is
hereinafter defined), (E) any acquisition approved by at least a majority of the members of
the Incumbent Board within five business days after the Company has notice of such
acquisition, or (F) any acquisition by any corporation pursuant to a transaction which
complies with clauses (1), (2), and (3) of subsection (iii) of this Section 2.6;
or
(ii) Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director subsequent to the
date hereof whose election, appointment or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for purposes of this definition, any such individual
whose initial assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board;
or
(iii) Approval by the shareholders of the Company of a reorganization, share
exchange, merger (a “Business Combination”), in each case, unless, following
such Business Combination, (1) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business Combination will
beneficially own, directly or indirectly, more than 70% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction will own the Company
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation resulting from
such Business Combination) will beneficially own, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed prior to
the Business Combination, and (3) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination or were elected, appointed or nominated
by the Board; or
(iv) Approval by the shareholders of the Company of (1) a complete
liquidation or dissolution of the Company or, (2) the sale or other disposition of all or
substantially all of the assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, (A) more than 70% of, respectively, the
then outstanding shares of common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors will be beneficially
owned, directly or indirectly, by any Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation), except to the extent that such Person
owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities prior to the sale or disposition, and (C) at least a majority of the members of
the board of directors of such corporation were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board, providing for
such sale or other disposition of assets of the Company or were elected, appointed or
nominated by the Board.
SECTION 2.7
“Code”
means the Internal Revenue Code of
1986, as amended. References in the Plan to any section of the Code shall be deemed to
include any amendments or successor provisions to such section and any regulations under
such section.
SECTION 2.8 "
Committee”
means the Compensation Committee of the Board.
SECTION 2.9 “Common Stock”
means the common stock, par
value $1.00 per share, of the Company, and after substitution, such other stock as shall be
substituted therefore as provided in Article IX.
SECTION
2.10
“Date of Grant”
means the date on which the
grant of an Award is authorized by the Committee or such later date as may be specified by
the Committee in such authorization.
SECTION
2.11
“Disability”
means the Participant is unable
to continue employment by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months. For purposes of this Plan, the determination
of Disability shall be made in the sole and absolute discretion of the
Committee.
SECTION
2.12
“Eligible Employee”
means any employee of the
Company, a Subsidiary, or an Affiliated Entity as approved by the Committee.
SECTION 2.13 “Eligible Director”
means any member
of the Board who is not an employee of the Company, a Subsidiary or an Affiliated
Entity.
SECTION
2.14
“Exchange Act”
means the Securities Exchange
Act of 1934, as amended.
SECTION
2.15
“Fair Market Value”
means (i) during such time as
the Common Stock is listed upon the New York Stock Exchange or other exchanges, the closing
price of the Common Stock as reported by such stock exchange or exchanges on the day for
which such value is to be determined, or, if no sale of the Common Stock shall have been
made on any such stock exchange that day, on the next preceding day on which there was a
sale of such Common Stock, or (ii) during any such time as the Common Stock is not listed
upon an established stock exchange, the mean between dealer “bid” and
“ask” prices of the Common Stock in the over-the-counter market on the day for
which such value is to be determined, as reported by the National Association of Securities
Dealers, Inc.
SECTION 2.16 “Incentive Stock Option”
means an
Option within the meaning of Section 422 of the Code. Provided however, that no Option will
be an Incentive Stock Option unless, at all times beginning with the Option’s Date of
Grant and ending with the day three months before the date of exercise of the Option, the
Participant is an employee of either the Company or of an Affiliated Entity that is a
parent or subsidiary of the Company using an “at least 50 percent” ownership
test.
SECTION
2.17
“Nonqualified Stock Option”
means an
Option which is not an Incentive Stock Option.
SECTION
2.18
“Option”
means an Award granted under
Article V of the Plan and includes both Nonqualified Stock Options and Incentive Stock
Options to purchase shares of Common Stock.
SECTION
2.19
“Participant”
means an Eligible Employee
or Eligible Director to whom an Award has been granted by the Committee under the
Plan.
SECTION
2.20
“Performance Units”
means those monetary units
that may be granted to Eligible Employees or Eligible Directors pursuant to Article VIII
hereof.
SECTION
2.21
“Plan”
means the Atwood Oceanics, Inc. 2007
Long-Term Incentive Plan.
SECTION 2.22 “Restricted Stock Award”
means an Award
granted to an Eligible Employee or Eligible Director under Article VI of the
Plan.
SECTION
2.23
“Retirement”
means the voluntary
termination of an Eligible Employee’s employment with the Company, a Subsidiary or an
Affiliated Entity on or after such Eligible Employee reaches 62 years of age.
SECTION
2.24
“SEC”
means the United States
Securities and Exchange Commission.
SECTION
2.25
"SAR”
means a stock appreciation right
granted to an Eligible Employee or Eligible Director under Article VII of the
Plan.
SECTION
2.26
“Subsidiary”
shall have the
same meaning set forth in Section 424 of the Code.
ARTICLE
III
ADMINISTRATION
SECTION 3.1 Administration of the Plan by the Committee
.
The
Committee shall administer the Plan. Committee members shall be appointed or removed as set
forth in the Committee’s Charter. The Committee shall hold meetings regarding the
Plan at such times and places as it may determine. Except as may otherwise be set forth in
the Committee’s Charter, a majority of the members of the Committee shall constitute
a quorum, and the acts of a majority of the members present at any meeting at which a
quorum is present or acts reduced to or approved in writing by a majority of the members of
the Committee shall be the valid acts of the Committee.
All
members of the Committee shall be independent as required by the rules and regulations of
the SEC and the New York Stock Exchange Listing Standards and as determined by the Board in
its business judgment. No member of the Committee shall have a relationship to the Company
that may interfere with the exercise of their independent judgment, as determined in
accordance with the rules and regulations of the SEC and the New York Stock Exchange
Listing Standards. The members of the Committee shall be "non-employee directors" as that
term is defined under the SEC Rule 16b-3 and "outside directors" as that term is defined
for the purposes of the Internal Revenue Code, section 162(m).
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
|
(a)
|
Select Eligible Employees and Eligible Directors to participate in the
Plan.
|
|
(b)
|
Determine the time or times when Awards will be made to Eligible Employees or
Eligible Directors.
|
|
(c)
|
Determine the form of an Award, whether an Incentive Stock Option, Nonqualified
Stock Option, Restricted Stock Award, SAR or Performance Unit, the number of
shares of Common Stock or Performance Units subject to the Award, the amount
and all the terms, conditions (including performance requirements),
restrictions and/or limitations, if any, of an Award, including the time and
conditions of exercise or vesting, and the terms of any Award Agreement.
|
|
(d)
|
Determine whether Awards will be granted singly or in combination.
|
|
(e)
|
Accelerate the vesting, exercise or payment of an Award or the performance
period of an Award except as provided in Section 10.2.
|
|
(f)
|
Take any and all other action it deems necessary or advisable for the proper
operation or administration of the Plan.
|
SECTION 3.2 Committee to Make Rules and Interpret Plan
.
The Committee in its
sole discretion shall have the authority, subject to the provisions of the Plan, to
establish, adopt, or revise such rules and regulations and to make all such determinations
relating to the Plan, as it may deem necessary or advisable for the administration of the
Plan. The Committee’s interpretation of the Plan or any Awards and all decisions and
determinations by the Committee with respect to the Plan shall be final, binding, and
conclusive on all parties.
ARTICLE IV
GRANT OF AWARDS
SECTION 4.1 Grant of Awards
.
Awards granted under this Plan
shall be subject to the following conditions:
|
(a)
|
Subject to Article IX, the aggregate number of shares of Common Stock made
subject to the grant of Options and/or SARs to any Eligible Employee in any
calendar year may not exceed 300,000.
|
|
(b)
|
Subject to Article IX, the aggregate number of shares of Common
Stock made subject to the grant of Restricted Stock Awards and or
Performance Unit Awards to any Eligible Employee in any calendar year may not
exceed 150,000.
|
|
(c)
|
Any shares of Common Stock related to Awards which terminate by expiration,
forfeiture or cancellation without the issuance of shares of Common Stock,
shall be available again for grant under the Plan and shall not be counted
against the shares authorized under Section 1.3. Shares of Common Stock which
are tendered in payment of an Option, tendered or withheld in payment of taxes
or repurchased using Option proceeds, shall not be added back to the shares
authorized under Section 1.3.
|
|
(d)
|
Common Stock delivered by the Company in payment of an Award under the Plan may
be authorized and unissued Common Stock or Common Stock held in the treasury of
the Company.
|
|
(e)
|
The Committee shall, in its sole discretion, determine the manner in which
fractional shares arising under this Plan shall be treated.
|
|
(f)
|
Separate certificates or a book-entry registration representing Common Stock
shall be delivered to a Participant upon the exercise of any Option.
|
|
(g)
|
The Committee shall be prohibited from canceling, reissuing or modifying Awards
if such action will have the effect of repricing the Participant’s
Award.
|
|
(h)
|
Subject to Article IX, the aggregate number of shares of Common Stock made
subject to the grant of Nonqualified Stock Options and/or SARs to any
individual Eligible Director in any calendar year may not exceed 100,000.
|
|
(i)
|
Subject to Article IX, in no event shall more than 50,000 shares of Restricted
Stock Awards and/or Performance Unit Awards be awarded to any individual
Eligible Director in any calendar year.
|
|
(j)
|
The maximum term of any Award shall be ten years.
|
ARTICLE V
STOCK OPTIONS
SECTION 5.1 Grant of Options
.
The Committee may, from
time to time, subject to the provisions of the Plan and such other terms and conditions as
it may determine, grant Options to Eligible Employees. These Options may be Incentive Stock
Options or Nonqualified Stock Options, or a combination of both. The Committee may, subject
to the provisions of the Plan and such other terms and conditions as it may determine,
grant Nonqualified Stock Options to Eligible Directors. Each grant of an Option shall be
evidenced by an Award Agreement executed by the Company and the Participant, and shall
contain such terms and conditions and be in such form as the Committee may from time to
time approve, subject to the requirements of Section 5.2.
SECTION 5.2 Conditions of Options. Each Option so granted shall be
subject to the following conditions:
|
(a)
|
Exercise Price
.
As limited by Section 5.2(e) below, each Option
shall state the exercise price which shall be set by the Committee at the Date
of Grant; provided, however, no Option shall be granted at an exercise price
which is less than the Fair Market Value of the Common Stock on the Date of
Grant.
|
|
(b)
|
Form of Payment.
The exercise price of an Option may be paid (i) in
cash or by check, bank draft or money order payable to the order of the
Company; (ii) by tendering shares of Common Stock having a Fair Market Value on
the date of payment equal to the amount of the exercise price, but only to the
extent such exercise of an Option would not result in an adverse accounting
charge to the Company for financial accounting purposes with respect to the
shares used to pay the exercise price unless otherwise determined by the
Committee; or (iii) a combination of the foregoing. In addition to the
foregoing, the Committee may permit an Option granted under the Plan to be
exercised by a broker-dealer acting on behalf of a Participant through
procedures approved by the Committee.
|
|
(c)
|
Exercise of Options.
Options granted under the Plan shall be
exercisable, in whole or in such installments and at such times, and shall
expire at such time, as shall be provided by the Committee in the Award
Agreement. Exercise of an Option shall be by written notice to the Secretary of
the Company at least two business days in advance of such exercise stating the
election to exercise in the form and manner determined by the Committee. Every
share of Common Stock acquired through the exercise of an Option shall be
deemed to be fully paid at the time of exercise and payment of the exercise
price and applicable withholding taxes.
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(d)
|
Other Terms and Conditions.
Among other conditions that may be imposed
by the Committee, if deemed appropriate, are those relating to (i) the period
or periods and the conditions of exercisability of any Option; (ii) the minimum
periods during which Participants must be employed by the Company, its
Subsidiaries, or an Affiliated Entity, or must hold Options before they may be
exercised; (iii) the minimum periods during which shares acquired upon exercise
must be held before sale or transfer shall be permitted; (iv) conditions under
which such Options or shares may be subject to forfeiture; (v) the frequency of
exercise or the minimum or maximum number of shares that may be acquired at any
one time; (vi) the achievement by the Company of specified performance
criteria; and (vii) non-compete and protection of business matters.
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|
(e)
|
Special Restrictions Relating to Incentive Stock Options.
Options
issued in the form of Incentive Stock Options shall only be granted to Eligible
Employees of the Company or a Subsidiary, and not to Eligible Employees of an
Affiliated Entity unless such entity shall be considered as a
“disregarded entity” under the Code and shall not be distinguished
for federal tax purposes from the Company or the applicable Subsidiary.
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|
(f)
|
Application of Funds.
The proceeds received by the Company from the
sale of Common Stock pursuant to Options will be used for general corporate
purposes.
|
|
(g)
|
Shareholder Rights.
No Participant shall have a right as a shareholder
with respect to any share of Common Stock subject to an Option prior to
purchase of such shares of Common Stock by exercise of the Option.
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ARTICLE
VI
RESTRICTED STOCK AWARDS
SECTION 6.1 Grant of Restricted Stock Awards
.
The Committee may, from time to
time, subject to the provisions of the Plan and such other terms and conditions as it may
determine, grant a Restricted Stock Award to any Eligible Employee or Eligible Director.
Restricted Stock Awards shall be awarded in such number and at such times during the term
of the Plan as the Committee shall determine. Each Restricted Stock Award may be evidenced
in such manner as the Committee deems appropriate, including, without limitation, a
book-entry registration or issuance of a stock certificate or certificates, and by an Award
Agreement setting forth the terms of such Restricted Stock Award.
SECTION 6.2 Conditions of Restricted Stock Awards. The grant of a
Restricted Stock Award shall be subject to the following:
i) Restrictions.
The holder of a Restricted
Stock Award may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose
of the shares of Common Stock represented by the Restricted Stock Award during the
applicable Restriction Period (as defined herein). The Committee shall impose such
other restrictions and conditions on any shares of Common Stock covered by a Restricted
Stock Award as it may deem advisable including, without limitation, restrictions under
applicable Federal or state securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice of such restrictions. The
“Restriction Period” for any shares of Common Stock covered by a Restricted
Stock Award granted to any Eligible Director is three years. The “Restriction
Period” for any shares of Common Stock covered by a Restricted Stock Award
granted to any Eligible Employee is determined by any employment, service and/or
performance requirements relating to such Restricted Stock Award.
ii) Eligible Directors.
In regard to a grant of a Restricted
Stock Award to any Eligible Director, the shares of Common Stock covered by such
Restricted Stock Award shall immediately vest, but shall be subject to a three year
Restriction Period, subject to early termination upon the occurrence of a Change of
Control Event under Section 10.5
iii) Eligible Employees.
In regard to a grant of a
Restricted Stock Award to any Eligible Employee, the Committee shall determine the
employment, service and/or performance requirements which shall apply to the shares of
Common Stock covered by such Restricted Stock Award. Unless (i) vesting requirements
are based upon specified performance goals and measures set forth in the Award
Agreement at the time of the Award that require at least a twelve-month performance
period, (ii) vesting is accelerated upon the occurrence of a Change of Control Event
under Section 10.5 or by the Committee as provided in Section 10.2 or (iii) the shares
of Restricted Stock are issued in lieu of cash compensation, the shares shall vest over
a minimum three-year period, with all shares vesting on or after the third annual
anniversary date of the Award. In addition to any time vesting conditions determined by
the Committee, Restricted Stock Awards may be subject to the achievement by the Company
of some or all of the operational, financial or stock performance criteria more
specifically listed in Exhibit A attached, as set forth in the Award and determined by
the Committee.
iv)
General.
At
the end of the Restriction Period and, in regard to a Restricted Stock Award granted to
any Eligible Employee assuming the fulfillment of any other specified vesting
conditions, the restrictions imposed by the Committee shall lapse with respect to the
shares of Common Stock covered by the Restricted Stock Award or portion
thereof.
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(b)
|
Rights as Shareholders
.
During any Restriction Period, the
Committee may, in its discretion, grant to the holder of a Restricted Stock
Award all or any of the rights of a shareholder with respect to the shares,
including, but not by way of limitation, the right to vote such shares and to
receive dividends and to purchase securities pursuant to that certain Rights
Agreement by and between the Company and Continental Stock Transfer & Trust
Company (as Rights Agent) dated October 18, 2002, as the same may be amended,
modified or supplement from time to time. If any dividends or other
distributions are paid in shares of Common Stock, all such shares shall be
subject to the same restrictions on transferability as the shares of Restricted
Stock with respect to which they were paid.
|
ARTICLE
VII
STOCK APPRECIATION RIGHTS
SECTION 7.1 Grant of SARs
.
The Committee may from time
to time, in its sole discretion, subject to the provisions of the Plan and subject to other
terms and conditions as the Committee may determine, grant a SAR to any Eligible Employee
or Eligible Director. SARs may be granted in tandem with an Option, in which event, the
Participant has the right to elect to exercise either the SAR or the Option. Upon the
Participant’s election to exercise one of these Awards, the other tandem award is
automatically terminated. SARs may also be granted as an independent Award separate from an
Option. Each grant of a SAR shall be evidenced by an Award Agreement executed by the
Company and the Participant and shall contain such terms and conditions and be in such form
as the Committee may from time to time approve, subject to the requirements of the Plan.
The exercise price of the SAR shall not be less than the Fair Market Value of a share of
Common Stock on the Date of Grant of the SAR.
SECTION 7.2 Exercise and Payment.
SARs granted under the Plan shall
be exercisable in whole or in installments and at such times as shall be provided by the
Committee in the Award Agreement and may be conditioned upon the Company’s
achievement of some or all of the operational, financial or stock performance criteria more
specifically listed in Exhibit A attached, as set forth in the Award Agreement and
determined by the Committee. Exercise of a SAR shall be by written notice to the Secretary
of the Company at least two business days in advance of such exercise. The amount payable
with respect to each SAR shall be equal in value to the excess, if any, of the Fair Market
Value of a share of Common Stock on the exercise date over the exercise price of the SAR.
Payment of amounts attributable to a SAR shall be made in shares of Common Stock or cash as
established by the Committee in the Award Agreement
.
SECTION 7.3 General.
In the event a SAR is granted in tandem
with an Incentive Stock Option, the Committee shall subject the SAR to restrictions
necessary to ensure satisfaction of the requirements under Section 422 of the Code. In the
case of a SAR granted in tandem with an Incentive Stock Option to an Eligible Employee who
owns more than 10% of the combined voting power of the Company or its Subsidiaries on the
date of such grant, the amount payable with respect to each SAR shall be equal in value to
the applicable percentage of the excess, if any, of the Fair Market Value of a share of
Common Stock on the exercise date over the exercise price of the SAR, which exercise price
shall not be less than 110% of the Fair Market Value of a share of Common Stock on the date
the SAR is granted.
ARTICLE VIII
PERFORMANCE UNITS
SECTION 8.1 Grant of Awards
.
The Committee
may, from time to time, subject to the provisions of the Plan and such other terms and
conditions as it may determine, grant Performance Units to Eligible Employees and Eligible
Directors. Each Award of Performance Units shall be evidenced by an Award Agreement
executed by the Company and the Participant, and shall contain such terms and conditions
and be in such form as the Committee may from time to time approve, subject to the
requirements of Section 8.2.
SECTION 8.2 Conditions of Awards.
Each Award of Performance Units shall be
subject to the following conditions:
|
(a)
|
Establishment of Award Terms
.
Each Award shall state the target,
maximum and minimum value of each Performance Unit payable upon the achievement
of performance goals.
|
|
(b)
|
Achievement of Performance Goals.
The Committee shall establish
performance targets for each Award for a period of no less than a year based
upon the Company’s achievement of some or all of the operational,
financial or stock performance criteria more specifically listed in Exhibit A
attached, as determined by the Committee. The Committee shall also establish
such other terms and conditions as it deems appropriate to such Award. The
Award may be paid out in cash or Common Stock as established by the Committee
in the Award Agreement.
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ARTICLE
IX
STOCK ADJUSTMENTS
In the event that the shares of Common Stock, as constituted on the
effective date of the Plan, shall be changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization, reclassification, stock
split, spin-off, combination of shares or otherwise), or if the number of such shares of
Common Stock shall be increased through the payment of a stock dividend, or a dividend on
the shares of Common Stock, or if rights or warrants to purchase securities of the Company
shall be issued to holders of all outstanding Common Stock, then there shall be substituted
for or added to each share available under and subject to the Plan, and each share
theretofore appropriated under the Plan, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be so changed or for
which each such share shall be exchanged or to which each such share shall be entitled, as
the case may be, on a fair and equivalent basis in accordance with the applicable
provisions of Section 424 of the Code; provided, however, with respect to Options, in no
such event will such adjustment result in a modification of any Option as defined in
Section 424(h) of the Code. In the event there shall be any other change in the number or
kind of the outstanding shares of Common Stock, or any stock or other securities into which
the Common Stock shall have been changed or for which it shall have been exchanged, then if
the Committee shall, in its sole discretion, determine that such change equitably requires
an adjustment in the shares available under and subject to the Plan, or in any Award,
theretofore granted, such adjustments shall be made in accordance with such determination,
except that no adjustment of the number of shares of Common Stock available under the Plan
or to which any Award relates that would otherwise be required shall be made unless and
until such adjustment either by itself or with other adjustments not previously made would
require an increase or decrease of at least 1% in the number of shares of Common Stock
available under the Plan or to which any Award relates immediately prior to the making of
such adjustment (the “Minimum Adjustment”). Any adjustment representing a
change of less than such minimum amount shall be carried forward and made as soon as such
adjustment together with other adjustments required by this Article IX and not previously
made would result in a Minimum Adjustment. Notwithstanding the foregoing, any adjustment
required by this Article IX which otherwise would not result in a Minimum Adjustment shall
be made with respect to shares of Common Stock relating to any Award immediately prior to
exercise, payment or settlement of such Award. No fractional shares of Common Stock or
units of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by rounding
downward to the nearest whole share.
ARTICLE X
GENERAL
SECTION 10.1 Amendment or Termination of Plan
.
The Board may alter, suspend
or terminate the Plan at any time. In addition, the Board may, from time to time, amend the
Plan in any manner, but may not without shareholder approval adopt any amendment which
would (i) increase the aggregate number of shares of Common Stock available under the Plan
(except by operation of Article IX), (ii) materially modify the requirements as to
eligibility for participation in the Plan, or (iii) materially increase the benefits to
Participants provided by the Plan.
SECTION 10.2 Termination of Employment; Termination of Service.
i)
|
Eligible
Employees.
If an Eligible
Employee’s employment with the Company, a Subsidiary or an Affiliated
Entity terminates as a result of death, Disability or Retirement, the Eligible
Employee (or personal representative in the case of death) shall be entitled to
exercise all or any part of any (a) vested Incentive Stock Option for a period
of up to three months from such date of termination (one year in the case of
death or Disability (as defined above) in lieu of the three-month period), or
(b) vested Nonqualified Stock Option or SAR during the remaining term. If an
Eligible Employee’s employment terminates for any other reason, the
Eligible Employee shall be entitled to exercise all or any part of any vested
Option or SAR for a period of up to three months from such date of
termination.
|
ii)
|
Eligible
Directors.
If an Eligible
Director’s service with the Company, a Subsidiary or an Affiliated Entity
terminates, the Eligible Director (or personal representative in the case of
death) shall be entitled to exercise all or any part of any Nonqualified Stock
Options or SARs which are otherwise exercisable on his date of termination of
service during the remaining term of such Award.
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iii)
|
General.
The Committee
may, in its discretion, accelerate the vesting of any Option or SAR in the case
of termination of employment or service of an Eligible Employee or Eligible
Director for any reason, including death, Retirement, Disability, or
resignation, as the case may be. In no event shall any Option or SAR be
exercisable past the term established in the Award Agreement. Any vested Option
or SAR which is not exercised before the earlier of the dates provided above or
its term, shall expire.
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|
(b)
|
Restricted Stock Awards.
The Committee may, in its discretion, (i)
accelerate the vesting of a Restricted Stock Award in the case of death or
Disability of an Eligible Employee or (ii) provide for early termination of any
Restriction Period in the case of death, Retirement, or resignation of an
Eligible Director. In the case of Retirement of an Eligible Employee, the
vesting of a Restricted Stock Award shall be accelerated as follows: (x) no
acceleration in the case of Retirement within a period less than one year
subsequent to the Date of Grant, (y) acceleration of vesting of one-third (1/3)
of the shares included in the Restricted Stock Award in the case of Retirement
within a period greater than one year, but less than two years subsequent to
the Date of Grant, and (z) acceleration of vesting of two-thirds (2/3) of the
shares included in the Restricted Stock Award in the case of Retirement within
a period greater than two years, but less than three years subsequent to the
Date of Grant.
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|
(c)
|
General.
Unless otherwise accelerated pursuant to the terms of the
relevant Award Agreement or by the Committee as set forth herein, all unvested
Awards shall be forfeited upon termination of employment of the Eligible
Employee or termination of service of the Eligible Director
.
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SECTION 10.3 Limited Transferability — Options
.
The Committee
may, in its discretion, authorize all or a portion of the Nonqualified Stock Options
granted under this Plan to be on terms which permit transfer by the Participant to (i) the
ex-spouse of the Participant pursuant to the terms of a domestic relations order, (ii) the
spouse, children or grandchildren of the Participant (“Immediate Family
Members”), (iii) a trust or trusts for the exclusive benefit of such Immediate Family
Members, or (iv) a partnership or limited liability company in which such Immediate Family
Members are the only partners or members. In addition there may be no consideration for any
such transfer. The Award Agreement pursuant to which such Nonqualified Stock Options are
granted must expressly provide for transferability in a manner consistent with this
paragraph. Subsequent transfers of transferred Nonqualified Stock Options shall be
prohibited except as set forth below in this Section 10.3. Following transfer, any such
Nonqualified Stock Options shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that for purposes of Section 10.2
hereof the term “Participant” shall be deemed to refer to the transferee. The
events of termination of employment of Section 10.2 hereof shall continue to be applied
with respect to the original Participant, following which the Nonqualified Stock Options
shall be exercisable by the transferee only to the extent, and for the periods specified in
Section 10.2 hereof. No transfer pursuant to this Section 10.3 shall be effective to bind
the Company unless the Company shall have been furnished with written notice of such
transfer together with such other documents regarding the transfer as the Committee shall
request. With the exception of a transfer in compliance with the foregoing provisions of
this Section 10.3, all other types of Awards authorized under this Plan shall be
transferable only by will or the laws of descent and distribution and, for the avoidance of
doubt, for no consideration; however, no such transfer shall be effective to bind the
Company unless the Committee has been furnished with written notice of such transfer and an
authenticated copy of the will and/or such other evidence as the Committee may deem
necessary to establish the validity of the transfer and the acceptance by the transferee of
the terms and conditions of such Award.
SECTION 10.4 Withholding Taxes.
Unless otherwise paid by the Participant, the
Company, its Subsidiaries or any of its Affiliated Entities shall be entitled to deduct
from any payment under the Plan, regardless of the form of such payment, the amount of all
applicable income and employment taxes required by law to be withheld with respect to such
payment or may require the Participant to pay to it such tax prior to and as a condition of
the making of such payment. In accordance with any applicable administrative guidelines it
establishes, the Committee may allow a Participant to pay the amount of taxes required by
law to be withheld from an Award by (i) directing the Company to withhold from any payment
of the Award a number of shares of Common Stock having a Fair Market Value on the date of
payment equal to the amount of the required withholding taxes or (ii) delivering to the
Company previously owned shares of Common Stock having a Fair Market Value on the date of
payment equal to the amount of the required withholding taxes. However, any payment made by
the Participant pursuant to either of the foregoing clauses (i) or (ii) shall not be
permitted if it would result in an adverse accounting charge with respect to such shares
used to pay such taxes unless otherwise approved by the Committee.
SECTION 10.5 Change of Control.
Notwithstanding any other provision in this
Plan to the contrary, Awards granted under the Plan to any Eligible Employee or Eligible
Director shall be immediately vested, fully earned and exercisable upon the occurrence of a
Change of Control Event and any Restriction Period shall terminate immediately.
SECTION 10.6 Amendments to Awards.
Subject to the limitations of the Plan,
the Committee may at any time unilaterally amend the terms of any Award Agreement, whether
or not presently exercisable or vested, to the extent it deems appropriate; provided,
however, that no amendment shall be allowed which has the effect of repricing an Award, and
amendments which are adverse to the Participant shall require the Participant’s
consent.
SECTION 10.7 Regulatory Approval and Listings.
The Company shall use its
best efforts to file with the Securities and Exchange Commission as soon as practicable
following approval by the shareholders of the Company of the Plan as provided in Section
1.2 of the Plan, and keep continuously effectively, a Registration Statement on Form S-8
with respect to shares of Common Stock subject to Awards hereunder. Notwithstanding
anything contained in this Plan to the contrary, the Company shall have no obligation to
issue shares of Common Stock under this Plan prior to:
|
(a)
|
the obtaining of any approval from, or satisfaction of any waiting period or
other condition imposed by, any governmental agency which the Committee shall,
in its sole discretion, determine to be necessary or advisable;
|
|
(b)
|
the admission of such shares to listing on the stock exchange on which the
Common Stock may be listed; and
|
|
(c)
|
the completion of any registration or other qualification of such shares under
any state or Federal law or ruling of any governmental body which the Committee
shall, in its sole discretion, determine to be necessary or advisable.
|
SECTION 10. 8 Right to Continued Employment
.
Participation in the Plan
shall not give any Eligible Employee any right to remain in the employ of the Company, any
Subsidiary, or any Affiliated Entity. The Company or, in the case of employment with a
Subsidiary or an Affiliated Entity, the Subsidiary or Affiliated Entity reserves the right
to terminate any Eligible Employee at any time. Further, the adoption of this Plan shall
not be deemed to give any Eligible Employee or any other individual any right to be
selected as a Participant or to be granted an Award.
SECTION 10.9 Reliance on Reports.
Each member of the Committee and each
member of the Board shall be fully justified in relying or acting in good faith upon any
report made by the independent public accountants of the Company and its Subsidiaries and
upon any other information furnished in connection with the Plan by any person or persons
other than himself or herself. In no event shall any person who is or shall have been a
member of the Committee or of the Board be liable for any determination made or other
action taken or any omission to act in reliance upon any such report or information or for
any action taken, including the furnishing of information, or failure to act, if in good
faith.
SECTION 10.10 Construction.
Masculine pronouns and other words of masculine gender
shall refer to both men and women. The titles and headings of the sections in the Plan are
for the convenience of reference only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings, shall control.
SECTION 10.11 Governing Law.
The Plan shall be governed by and construed in
accordance with the laws of the State of Texas except as superseded by applicable Federal
law.
SECTION 10.12 Other Laws.
The Committee may refuse to issue or
transfer any shares of Common Stock or other consideration under an Award if, acting in its
sole discretion, it determines that the issuance or transfer of such shares or such other
consideration might violate any applicable law or regulation or entitle the Company to
recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the
Company by a Participant, other holder or beneficiary in connection with the exercise of
such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary.
SECTION 10.13 No Trust or Fund Created.
Neither the Plan nor an Award shall
create or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other person. To the extent that
a Participant acquires the right to receive payments from the Company pursuant to an Award,
such right shall be no greater than the right of any general unsecured creditor of the
Company.
Appendix C
AMENDMENT
No. 1
TO
Atwood
Oceanics
, INC.
2007 Long-Term INCENTIVE
PLAN
The Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan (the
“Plan”) is amended as follows:
|
1.
|
Article VI, Section 6.2(a)(i) of the Plan
is hereby amended by deleting the third sentence in its entirety and
substituting in its place and stead the following:
|
“The “Restriction
Period” for any shares of Common Stock covered by a Restricted Stock Award granted to
any Eligible Director shall be at least thirteen (13) months as set forth in the Award
Agreement for the Restricted Stock Award, subject to early termination as provided in
Section 10.2 and Section 10.5 hereof.”
|
2.
|
Article VI, Section 6.2(a)(ii) of the Plan
is hereby amended by deleting the provision in its entirety and substituting in
its place and stead the following:
|
“Eligible
Directors.
In regard to a grant of a
Restricted Stock Award to any Eligible Director, the shares of Common Stock covered by such
Restricted Stock Award shall vest in accordance with the Award Agreement for the Restricted
Stock Award, but the vesting period shall be at least thirteen (13) months, subject to
early termination as provided in Section 10.2 and Section 10.5
hereof.”
|
3.
|
Article VI, Section 6.2 of the Plan is
hereby amended by adding the following provision as new Section
6.2(c):
|
“(c) Ability
of Participants to Defer Delivery of
Shares
. The Committee may, in its
discretion, to the extent provided in any separate Company deferred compensation plan,
allow a Participant to (i) elect to defer the delivery of shares of Common Stock
included in a Restricted Stock Award and (ii) if such deferred delivery is elected,
further elect, before the deferred delivery date, to receive payment in the form of
either (x) Common Stock or (y) cash in an amount equal to the value of the deferred
shares at the deferred delivery date.”
|
4.
|
Article X, Section 10.2(b) of the Plan is
hereby amended by deleting the first sentence in its entirety and substituting
in its place and stead the following:
|
“The Committee may, in its
discretion, (i) accelerate the vesting of a Restricted Stock Award in the case of death or
Disability of an Eligible Employee or (ii) accelerate the vesting of a Restricted Stock
Award or provide for early termination of any Restriction Period in the case of death,
Retirement, or resignation of an Eligible Director.”
Appendix
D
AMENDMENT
No. 1
TO
Amended and Restated
CERTIFICATE OF FORMATION
OF
Atwood
Oceanics
, INC.
The Amended and Restated Certificate of Formation of Atwood Oceanics, Inc., a Texas company
(the “Company”), filed February 10, 2006 (the “Certificate of
Formation”), is hereby amended as of February __, 2007, as follows:
Article IV, of the Certificate of Formation is hereby deleted in its entirety, and the
following provision is substituted in its place and stead:
ARTICLE IV.
|
A.
|
AUTHORIZED AMOUNT OF CAPITAL STOCK
|
The aggregate number of shares which the Company shall have authority to issue is
ninety-one million (91,000,000) shares of capital stock, of which ninety million
(90,000,000) shares shall be common stock (the "Common Shares") each with a par value of
$1.00 per share, and of which one million (1,000,000) shares, each without par value, shall
be preferred stock (the "Preferred Shares").
I, the Secretary of Atwood Oceanics, Inc., by signing this document, certify that this
document contains a true and correct copy of an amendment to the Certificate of Formation
adopted by unanimous written consent of the Board of Directors of Atwood Oceanics, Inc. on
December __, 2007, and approved by the shareholders of Atwood Oceanics, Inc. on February
__, 2008.
________________________
James
M. Holland, Secretary
Atwood Oceanics (NYSE:ATW)
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