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. [] 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
ATWOOD OCEANICS, INC.
15835 PARK TEN PLACE DRIVE
HOUSTON, TEXAS 77084
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Houston, Texas
January 9, 2007
To the Shareholders of
ATWOOD OCEANICS, INC.:
Notice is hereby given that, pursuant to the provisions of the Second
Amended and Restated By-laws 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
8, 2007, for the following purposes:
1. To elect seven (7) members of the Board of Directors for the term
of office specified in the accompanying Proxy Statement.
2. To approve the proposed adoption of the Atwood Oceanics, Inc.
2007 Long-Term Incentive Plan as described in the accompanying
Proxy Statement.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Shareholders of record at the close of business on December 29, 2006 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
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ANNUAL MEETING OF SHAREHOLDERS
ATWOOD OCEANICS, INC.
---------------
PROXY STATEMENT
---------------
January 9, 2007
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 29,
2006 will be entitled to vote at the Annual Meeting of Shareholders to be held
February 8, 2007 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 9, 2007.
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 29, 2006, 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 31,079,903
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 adoption of the Atwood Oceanics, Inc. 2007 Long-Term
Incentive Plan, referred to herein as 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. 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.
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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 29, 2006 based on information provided by a third
party service provider in reports prepared for us.
Name and Address Shares of Common Stock Percent
Beneficially Owned of Class
---------------------- --------
H&PIDC (1) 4,000,000 12.87%
1437 South Boulder Avenue
Tulsa, Oklahoma 74119
Columbia Wanger Asset Management, L.P. (2) 3,110,750 10.00%(2)
227 West Monroe Street, Suite 3000
Chicago, IL 60606
-------------------
(1) 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, 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.
Mr. Dotson continues to serve as a director of H&P.
(2) 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 dated January 2, 2007 prepared
by a third party service provider for us and the Schedule 13G dated
October 6, 2006 filed with the SEC by Columbia. According to the
Schedule 13G, Columbia had sole voting power with respect to
2,968,750 shares and sole dispositive power with respect to 3,110,750
shares of our Common Stock. At the time of the filing of the Schedule
13G, Columbia had shared voting power with respect to 142,000 shares
of our Common Stock. On January 9, 2007, Columbia filed a Schedule
13G with the SEC, which indicates that as of December 31, 2006,
subsequent to the record date for determination of shareholders
entitled to notice of and to vote at the meeting, Columbia has sole
voting power with respect to 3,502,950 shares, shared voting power
with respect to 142,000 shares, and sole dispositve power with
respect to 3,644,950 shares of our Common Stock, or 11.73% outstanding
shares of our Common Stock as of the record date. 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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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 29, 2006 by each of the directors,
by each of the executive officers, and by all 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, Shares of Common Stock Percent
Executive Officer or Group Beneficially Owned of Class
-------------------------- ---------------------- --------
Deborah A. Beck 8,244 (2) (1)
Robert W. Burgess 18,644 (3) (1)
George S. Dotson 14,644 (3) (1)
Hans Helmerich 14,644 (3) (4) (1)
James R. Montague 2,231 (1)
William J. Morrissey 15,444 (3) (1)
John R. Irwin 285,650 (5) (1)
James M. Holland 120,568 (6) (1)
Glen P. Kelley 153,100 (7) (1)
All directors and executive officers
as a group (9 persons) 633,169 (8) 2.04%
------------
(1) Less than 1%.
(2) Includes 6,000 shares which may be acquired upon exercise of options. (3)
Includes 13,000 shares which may be acquired upon the exercise of options. (4)
See Note (1) on page 3 under "Principal Shareholders" for more information. (5)
Includes 285,250 shares which may be acquired upon the exercise of options. (6)
Includes 116,300 shares which may be acquired upon the exercise of options. (7)
Includes 152,500 shares which may be acquired upon the exercise of options. (8)
Includes 612,050 shares which may be acquired upon the exercise of options.
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 29, 2006 are indicated opposite his name.
Date of
First
Name Offices Held Election Age
---- ------------ -------- ---
John R. Irwin President and Chief March 61
Executive Officer 1993
James M. Holland Senior Vice President October 61
and Secretary 1988
Glen P. Kelley Senior Vice President - October 58
Marketing and 1988
Administration
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. Each of our executive officers has served as one of our executive
officers during the past five (5) years.
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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 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.
ITEM 1 - ELECTION OF DIRECTORS
At the meeting, seven (7) directors are to be elected for terms of one year
each. All seven (7) director nominees are currently serving as directors and are
standing for re-election.
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 seven (7) 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.
Present Served as
Position a Director
with the Continuously Term to
Nominees Company Since Extend to Age
-------- --------- ------------ --------- ----
Deborah A. Beck Director February February 59
2003 2008
Robert W. Burgess Director September February 65
1990 2008
George S. Dotson Director February February 66
1988 2008
Hans Helmerich Director February February 48
1989 2008
John R. Irwin Director, November February 61
President 1992 2008
and Chief
Executive
Officer
James R. Montague Director June February 59
2006 2008
William J. Morrissey Director November February 79
1969 2008
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
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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. He serves as a director of
H&P.
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-eight (28) years; of which, the last thirteen (13) years he has been
President and Chief Executive Officer.
Mr. Montague is retired. 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.
Mr. Morrissey is retired. Mr. Morrissey served as director and Vice
Chairman of the Board of Directors of Marine Corporation until the end of 1987
when Marine Corporation was acquired by Banc One Corporation, Columbus, Ohio.
Board of Director Meetings and Committees
The Company has standing Audit, Compensation, Executive and Nominating &
Corporate Governance Committees. The following chart shows the Committee
membership and positions of each director:
Nominating &
Corporate
Compensation Executive Governance
Director Audit Committee Committee Committee 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 X (Chairperson) X
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
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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 2006,
of which four (4) were telephone conferences.
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 Committee members, Ms. Beck, Messrs. Burgess, Dotson and
Montague, are responsible for administration of the Company's stock incentive
plans, and for review and approval of all salary and bonus arrangements. During
fiscal year 2006, there were eight (8) meetings of the Compensation Committee,
of which five (5) were a telephone conference. Our Board of Directors has
adopted a written charter for the Compensation 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 ("Board") regarding the appropriate size and composition of
the Board, as well as monitor and make recommendations regarding the Board's
performance. The Nominating & Corporate Governance Committee held three (3)
meetings during fiscal year 2006. 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 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 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 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, and, based on that fact and other
considerations, Messrs. Dotson and Helmerich are also not our affiliates.
Our Board of Directors has determined that our President, John R. Irwin, is
not an independent director. Our independent directors are Deborah A. Beck,
Robert W. Burgess, George S. Dotson, Hans Helmerich, James R. Montague and
William J. Morrissey. 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
address of our headquarters, which is 15835 Park Ten Place Drive, Suite 200,
Houston, Texas 77084. 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
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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
2006, 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 senior 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 THE ATWOOD OCEANICS, INC. 2007 LONG-TERM
INCENTIVE PLAN
General
On December 7, 2006, our Board of Directors adopted, subject to approval of
our shareholders, the Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan, which
is referred to herein as the "2007 Plan." The 2007 Plan is effective on December
7, 2006, subject to approval of our shareholders. Awards may be made under the
2007 Plan through December 6, 2017, which is 10 years from the effective date of
the 2007 Plan. Additionally, if shareholders approve the 2007 Plan, the Board of
Directors shall terminate the Atwood Oceanics, Inc. Amended and Restated 2001
Stock Incentive Plan, which is referred to herein as the "2001 Plan", and shall
not grant any further awards under that plan.
The principal features of the 2007 Plan are summarized below. The summary
does not purport to be a complete statement of the 2007 Plan and is qualified in
its entirety by reference to the 2007 Plan, a copy of which is attached as
Appendix B to this Proxy Statement. Defined terms not defined herein have the
meaning set forth in the 2007 Plan.
Purpose
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. Currently, there are approximately 1,100
potential participants in the 2007 Plan, if approved by our shareholders.
Shares Available
Under the 2007 Plan, the Compensation Committee may award restricted stock
awards, stock options, stock appreciation rights (SARs), or performance units.
The total number of shares reserved and available for distribution pursuant to
the 2007 Plan will be 2,000,000 shares of our Common Stock (approximately 6.4%
of our outstanding Common Stock as of December 29, 2006, the
8
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. For the purpose of determining the number of
shares of Common Stock that remain available for new awards under the 2007 Plan
at any time, 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
1.7 shares for each share granted, while any shares issuable pursuant to an
Option shall be counted as one share for each issuable share. 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.
Subject to adjustment as set forth in the 2007 Plan, the aggregate number
of shares of Common Stock made subject to the grant of stock options and/or SARs
to any (1) eligible employee in any calendar year may not exceed 300,000 and (2)
any eligible director in any calendar year may not exceed 100,000. Subject to
adjustment as set forth in the 2007 Plan, the aggregate number of shares of
Common Stock subject to the grant of restricted stock awards and/or performance
units to any (1) eligible employee in any calendar year may not exceed 150,000
and (2) individual eligible director in any calendar year may not exceed 50,000.
We expect to register with the SEC the shares available for distribution
pursuant to the 2007 Plan on Form S-8 as soon as reasonably practicable after
shareholder approval of the 2007 Plan is obtained. As of January 5, 2007, the
closing price on the New York Stock Exchange of our Common Stock was $45.88 per
share.
Administration
The 2007 Plan will be administered by the Compensation Committee of the
Board of Directors, who are appointed or removed as set forth in the Committee's
Charter, a copy of which is attached as Appendix A to this Proxy Statement and
which is also 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. 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 price may be paid by the participant (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
9
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 shall
determine 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;
provided that with respect to eligible directors, restricted stock shall vest
immediately subject to a three-year restriction period. In general, restricted
stock awarded to eligible employees shall vest over a minimum three-year period,
with all such shares vesting on or after the third anniversary. The restricted
period will be set out in the award. 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.
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 Right
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.
10
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 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 Option or SAR which is 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. 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:
o no acceleration in the case of retirement within a period
less than one year subsequent to the date of grant,
o 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
o 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
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 income tax purposes, and will not result in a
deduction to 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
11
the date of exercise of 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 at the time of sale or
exchange of the shares by the eligible employee, 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. 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, long- or short-term depending on the eligible employee's
holding period of the shares after exercise of the ISO.
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 to us.
Restricted Stock. In general, a participant who receives a restricted stock
award will recognize ordinary compensation income on the difference between (a)
the fair market value of the shares of Common Stock on the date when the shares
are transferred or, if later, when they are no longer substantially nonvested
(as such term is defined in Treasury Regulations) and (b) 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 subject to a substantial risk of
forfeiture or other restriction that cause the shares to be substantially
nonvested 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 shares become
vested, 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 transfer 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
vesting of the shares, 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.
The Committee shall establish performance targets for each award intended
to qualify as performance-based under Section 162(m) of the Code. Such
performance targets shall be for a period of no less than a year based upon our
achievement of some or all of the operational, financial or stock performance
criteria set forth in Exhibit A to the 2007 Plan attached as Appendix B to this
Proxy Statement. The Committee shall also establish such other terms and
conditions as it deems appropriate to such award, which may be paid out in cash
or Common Stock as established by the Committee in the award agreement. Subject
to adjustment as set forth in the 2007 Plan, the aggregate number of shares of
Common Stock subject to the grant of restricted stock awards and/or performance
units to any (1) eligible employee in any calendar year may not exceed 150,000
and (2) individual eligible director in any calendar year may not exceed 50,000.
12
In the event of a change of control as defined in the 2007 Plan, the
deductibility of compensation associated with the accelerated vesting of awards
due to such change of control could be nondeductible under Section 280(G) of the
Code.
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
Subject to shareholder approval of the 2007 Plan and in addition to
restricted stock awards automatically granted in the first quarter of fiscal
year 2007 pursuant to our existing 2001 Plan, the Compensation Committee has
approved an award in fiscal year 2007 of restricted stock to eligible directors
(our non-employee directors) equal to the number of shares of our Common Stock
valued at $20,000 on the date of grant. Such award is expected to be made at the
first meeting of the Board of Directors subsequent to shareholder approval of
the 2007 Plan.
13
If (i) the 2007 Plan receives shareholder approval, (ii) the nominees
proposed for the Board of Directors are elected at the annual shareholders'
meeting, and (iii) each nominee who is not currently our employee does not
become our employee by the time of award, the following awards to the persons
indicated below would be made at the first meeting of the Board of Directors
subsequent to shareholder approval of the 2007 Plan:
Name and Position Number of
----------------- Dollar Shares of
Value Common Stock
------ ------------
Non-employee Directors
Deborah A. Beck -- Director, Audit Committee, Compensation Committee,
Nominating & Corporate Governance Committee $20,000 Undetermined*
Robert W. Burgess -- Director, Audit Committee, Compensation Committee,
Nominating & Corporate Governance Committee $20,000 Undetermined*
George S. Dotson -- Director, Executive Committee, Audit Committee,
Compensation Committee, Nominating & Corporate Governance Committee $20,000 Undetermined*
Hans Helmerich -- Director, Executive Committee, Nominating & Corporate
Governance Committee $20,000 Undetermined*
James R. Montague -- Director, Compensation Committee and Nominating &
Corporate Governance Committee $20,000 Undetermined*
William J. Morrissey -- Director, Audit Committee, Nominating &
Corporate Governance Committee $20,000 Undetermined*
=======
Non-employee Director Group Total $120,000 Undetermined*
* The number of shares of Common Stock included in the
restricted stock award will be dependent on the fair market
value of our Common Stock on the date of grant, and therefore
cannot be determined until that date. Based on $45.88, the
closing price of our Common Stock on January 5, 2007, each of
the above persons would receive restricted stock awards in the
amount of 436 shares of our Common Stock, for a total
automatic grant of 2,616 shares of our Common Stock if made on
that date.
All other awards under the 2007 Plan will be at the discretion of the
Compensation Committee. Therefore should the 2007 Plan receive shareholder
approval, no executive officers or directors, nor any other participant, would
be guaranteed an award other than described above.
Required Vote to Adopt the Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan
Approval to adopt 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 THE ATWOOD
OCEANICS, INC. 2007 LONG-TERM INCENTIVE PLAN.
EXECUTIVE COMPENSATION
In accordance with the SEC executive compensation disclosure requirements
under Item 402 of Regulation S-K, the compensation tables and other compensation
information included in this Proxy Statement are presented to enable
shareholders to better understand the compensation of our executive officers.
14
The Compensation Committee is composed of four (4) non-employee independent
directors. Our compensation program is administrated by the Compensation
Committee of the Board of Directors. The members of the Compensation Committee
are governed by a written Charter duly adopted by the Board of Directors, which
requires their independence 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 Compensation Committee may have a
relationship to the Company that would interfere with the exercise of his or her
independent judgment, as determined in accordance with the rules and regulations
of the SEC and the New York Stock Exchange Listing Standards. Further, the
members of the Compensation Committee are "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 Board of Directors has made a determination that each member of the
Compensation Committee is independent. 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 upon that fact and other considerations, the
Board of Directors determined that Mr. Helmerich is also not our affiliate. 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.
The Compensation Committee conducts annual reviews of our Chief Executive
Officer's performance and decides his compensation as a Committee or together
with the other independent directors (as directed by the Board of Directors).
The Compensation Committee reviews our salaried and management compensation
practices and determines the salary and other compensation of all officers other
than the Chief Executive Officer. The Compensation Committee recommends to the
Board of Directors the compensation of non-employee directors. The Compensation
Committee has the authority to retain, at the expense of the Company,
independent consulting, legal and other advisors as it deems appropriate,
without management approval. The Committee has the sole authority to retain,
terminate, and approve the fees and retention terms of compensation consultants.
Our Board of Directors has adopted recent revisions to our written
charter for the Compensation Committee to reflect recent SEC regulatory
amendments. A copy of the revised charter is attached as Appendix A to this
Proxy Statement and is also accessible on our website, www.atwd.com.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
ATWOOD OCEANICS, INC.
TO: The Board of Directors
As members of the Compensation Committee, it is our duty to review
compensation levels of our executive officers, non-employee directors and other
key personnel and to administer our stock incentive plans. The Compensation
Committee met in person three (3) times, with an additional five (5) conference
call meetings, during fiscal year 2006.
Compensation Policies for Executive Officers
Our executive compensation policies are designed to provide competitive
levels of compensation that integrate pay with performance, recognize individual
initiative and achievements, and assist us in attracting and retaining qualified
executives. The Compensation Committee relies in large part on compensation
studies for the determination of competitive compensation, as well as
discussions with professional consultants. These studies include salary and
bonus compensation data from several competitor companies. Also, when the
Compensation Committee contemplates the awarding of stock incentives to our
executives, we consider the nature and amount of stock awards made by competitor
companies to their executive officers. In order to implement these objectives,
we have developed a straightforward compensation package consisting of salary,
discretionary annual bonus, and periodic grants of stock options or awards of
restricted stock pursuant to shareholder-approved stock incentive plans. Each
element of the compensation package serves a particular purpose. Salary and
bonus are primarily designed to reward current and past performance. Base
salaries are conservatively set to recognize individual performance while
attempting to be appropriately set based upon reviews of the Company's peer
group. Annual bonuses to executive officers and other key personnel are awarded
based upon Company performance criteria, competitive considerations, and our
determination of individual performance. Grants of stock options or awards of
restricted stock are primarily designed to tie a portion of each executive's
15
compensation to long-term future performance. 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.
In determining executive compensation for fiscal year 2006, we considered
our overall historical performance as well as our future objectives. With our
operating performance in fiscal year 2006 coupled with a market environment
supporting cash flows and earnings at historic levels, bonuses were awarded to
our executive officers in December 2006 ranging from $150,000 to $370,000. The
officers were also granted salary increases of approximately 5% to be effective
on January 1, 2007 and awarded stock options and restricted stock.
Based upon our fiscal year 2005 performance, bonuses ranging from $100,000
to $250,000 were paid to our executive officers in December 2005, which fell
into fiscal year 2006. Similarly, based upon fiscal year 2005 performance, our
executive officers were granted salary increases of approximately 5% effective
January 1, 2006 and awarded stock options and restricted stock.
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. For fiscal year 2005, except for
Mr. Irwin, the compensation levels of our executive officers were below the $1
million threshold. Due to exercising stock options during fiscal year 2005, Mr.
Irwin's total compensation relating to fiscal year 2005 performance exceeded $1
million by approximately $200,000. Due to exercising stock options during fiscal
year 2006, total compensation paid in fiscal year 2006 to Mr. Irwin, Mr. Holland
and Mr. Kelley exceeded $1 million by approximately $2.3 million, $1.0 million
and $0.3 million, respectively.
Compensation Paid to the Chief Executive Officer
Mr. Irwin's compensation is determined in the same manner as described
for the other executive officers. Based on the Company's performance in fiscal
year 2006 coupled with a market environment supporting continuing improvements
in cash flows and earnings at historic levels, Mr. Irwin was awarded a bonus of
$370,000 in December 2006. He was also granted a salary increase to be effective
on January 1, 2007 of approximately 5%. The Compensation Committee in December
2006 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 Compensation
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 2005 coupled with an
improving market environment supporting continuing improvements in cash flows
and earnings at historic levels, Mr. Irwin was awarded a bonus of $250,000 in
December 2005, which fell into fiscal year 2006. Similarly, Mr. Irwin was also
granted a salary increase effective on January 1, 2006 of approximately 5%. The
Compensation Committee in December 2005 awarded Mr. Irwin stock options to
purchase 21,000 shares of Common Stock plus a restricted stock award of 14,000
shares of Common Stock. The Compensation Committee based this award on its
subjective assessment of Mr. Irwin's performance as Chief Executive Officer and
President.
SUBMITTED BY THE COMPENSATION COMMITTEE
George S. Dotson, Chairman Deborah A. Beck, Member
Robert W. Burgess, Member James R. Montague, Member
December 29, 2006
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 Compensation 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 402 of Regulation S-K.
16
EXECUTIVE AGREEMENTS
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. 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 Committee Interlocks and Insider Participation
Ms. Beck and Messrs. Burgess, Dotson and Montague, the current members of
the Compensation Committee, were the only persons who served on the Compensation
Committee during the 2006 fiscal year.
No member of our Compensation Committee of the Board of Directors was,
during the 2006 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 relationships of Messrs. Dotson and Helmerich
with H&P and H&PIDC discussed above.
During the Company's 2006 fiscal year, no executive officer of the Company
served as (i) a member of the compensation committee (or other board committee
performing equivalent functions) of another entity, one of whose executive
officers served on our Compensation Committee, (ii) a director of another
entity, one of whose executive officers served on our Compensation Committee, or
(iii) a member of the compensation committee (or other board committee
performing equivalent functions) of another entity, one of whose executive
officers served as our director.
17
COMPENSATION TABLES
The SEC compensation disclosure rules require that various compensation
information be presented in various tables as set forth below.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term
------------------- Compensation Awards
-------------------
Restricted Securities
Name and Fiscal Other Annual Stock Underlying All Other
Principal Position Year Salary Bonus Compensation Awards Options Compensation
------------------ -------- ------ ----- ------------ ----------- ---------- ------------
(A) (B) (C)
($) (#) ($)
John R. Irwin 2006 $416,448 $250,000 $--- 520,100 21,000 84,048
President and Chief 2005 396,753 125,000 --- --- 80,000 67,295
Executive Officer 2004 372,150 --- --- --- 80,000 50,791
James M. Holland 2006 243,027 100,000 --- 222,900 6,000 41,477
Senior Vice President 2005 230,358 60,000 --- --- 30,000 33,553
and Secretary 2004 214,008 --- --- --- 40,000 25,918
Glen P. Kelley 2006 237,174 100,000 --- 222,900 6,000 41,132
Senior Vice President - 2005 224,874 60,000 --- --- 30,000 33,765
Marketing and Administration 2004 208,418 --- --- --- 40,000 26,777
----------------------
(A) The amounts disclosed in this column, if any, represent the value of
restricted stock awards on the date of grant ($37.15 per share). The restricted
stock awards vest at the end of three years from the date of grant and vest
based on the passage of time and the continued employment of the named
executive.
(B) The exercise price of each option is equal to the fair market value of a
share of Common Stock on the date of grant, or $37.15, $24.615, and $13.50 on
such dates in fiscal years 2006, 2005, and 2004, respectively.
(C) The amounts shown in the "All Other Compensation" columns are derived from
the following:
Annual Company
Contribution to the Company paid term life and
defined contribution plan insurance premiums Total
---------------------------- --------------------------------- -----------
Mr. Irwin 2006 $66,644 $17,404 $84,048
2005 52,175 15,120 67,295
2004 37,215 13,576 50,791
Mr. Holland 2006 34,322 7,155 41,477
2005 29,036 4,517 33,553
2004 21,401 4,517 25,918
Mr. Kelley 2006 33,716 7,416 41,132
2005 28,487 5,278 33,765
2004 20,841 5,936 26,777
18
OPTION GRANTS TABLE
Individual Grants Made in Fiscal Year 2006
Number of Shares
of Common Stock Percentage of
Underlying Total Options
Options Granted To Potential Realizable Value
Granted (A)(#) Employees in Exercise at Assumed Annual
Fiscal Year 2006 Price Expiration Rates of Common Stock Price
Name ($/Share) Date Appreciation for Option Term
------------- ------------------ ----------------- -------------- --------------- ----------------------------------
5% ($) 10% ($)
-------------- -------------
Irwin 21,000 16% 37.15 11/30/2015 490,560 1,244,040
Holland 6,000 5% 37.15 11/30/2015 140,160 355,440
Kelley 6,000 5% 37.15 11/30/2015 140,160 355,440
----------
(A) 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.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE TABLE
Number of
Shares of
Common Stock
Shares of Common Underlying
Stock Acquired Unexercised Value of Unexercised
on Exercise during Value Options at In-the-Money Options
Name Fiscal 2006 Realized Sept. 30, 2006 at Sept. 30, 2006 (A)
----------------- ---------------------- -------------- ---------------------- ------------------------
(#) ($) (#) ($)
Exercisable/ Exercisable/
Unexercisable Unexercisable
---------------------- ------------------------
Irwin 84,000 2,582,940 240,000/121,000 6,860,150/2,644,320
Holland 64,000 1,679,100 97,300/48,500 2,819,338/1,134,307
Kelley 36,000 969,680 133,500/48,500 3,921,782/1,134,307
-------------
(A) Calculated based upon the September 30, 2006 fair market value of $44.97 per
share of Common Stock, less the exercise price of each option. There is no
guarantee that options will have the indicated value if and when exercised.
19
RESTRICTED STOCK AWARDS TABLE
Individual Awards Made in Fiscal Year 2006
Percentage
of Total
Restricted Potential Realizable
Shares Market Value at Assumed
Awarded to Value on Date of Lapse Annual Rate of
Number of Employees in Award of Common Stock Price
Restricted Shares Fiscal Year Date Restrictions Appreciation for
Name Awarded (A) (#) 2006 ($/Shares) and Vesting Restricted Share Term
------------- -------------------- -------------- ------------ ---------------- --------------------------
($) 5% ($) 10%
Irwin 14,000 14% $37.15 11/30/2008 602,140 692,440
Holland 6,000 6% $37.15 11/30/2008 258,060 296,760
Kelley 6,000 6% $37.15 11/30/2008 258,060 296,760
-----------
(A) The awards were made pursuant to our 2001 Plan 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.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER OUR EQUITY COMPENSATION PLANS
The following table provides information regarding the status of securities
authorized for issuance under our current stock incentive plans as of September
30, 2006. All of our current stock incentive plans were approved by our
shareholders and provide for the issuance of shares of our Common Stock in the
form of restricted stock awards or upon the exercise of stock options granted
under the plans. None of our current stock incentive plans provide for the
issuance of warrants or rights.
Number of shares of Common Weighted-average exercise Number of shares of Common
Stock to be issued upon price of outstanding options Stock available for future
exercise of outstanding options issuance under equity
compensation plans
(excluding securities to be
issued upon exercise of
outstanding options)
1,436,950 $19.56 755,049
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
20
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 2006. At various times during the 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, 2006, with management and PwC.
This review included a discussion of, among others:
o All critical accounting policies followed by the Company;
o 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;
o The clarity and completeness of financial disclosures;
o The adequacy of internal controls that could significantly affect the
Company's financial statements;
o Items that could be accounted for using
alternative treatments within GAAP and the treatment preferred by PwC;
o Any internal control points raised by PwC during its audit of the
Company's financial statements; and
o 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
o Reviewed the scope of an overall plan for the annual audit and the
internal audit program;
o Approved fees for all services provided by PwC;
o Reviewed the adequacy of certain financial policies;
o Considered PwC's quality control procedures;
21
o On a quarterly basis, reviewed the Company's financial results prior
to their public issuance; and
o 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, 2006 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
December 12, 2006
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 2006 AUDIT FIRM FEE SUMMARY
During fiscal years 2006 and 2005, PwC was our independent registered
public accounting firm, and it provided services in the following categories and
amounts.
Fiscal Year
---------------------------------
2006 2005
---------------- ------------
Audit Fees $ 1,273,132 $ 1,429,000
Audit-Related Fees (A) $ 20,200 $ 63,000
Tax Fees $ --- $ ---
All Other Fees (B) $ 2,000 $ 2,000
----------- -----------
Total $ 1,295,332 $ 1,494,000
=========== ===========
-----------
(A) For fiscal year 2006, these fees related to statutory audit
services provided in one of our foreign locations. For fiscal year 2005,
these fees related to consultation concerning internal controls and internal
audit procedures.
(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 2006,there were no fees for
services provided pursuant to the Audit Committee's pre-approval policy.
22
ATWOOD OCEANICS, INC. COMMON STOCK PRICE PERFORMANCE GRAPH
COMPARISON OF FIVE (5) YEAR CUMULATIVE TOTAL RETURNS* AMONG ATWOOD
OCEANICS, INC., AND THE CENTER FOR RESEARCH IN SECURITY PRICES ("CRSP") INDEX
FOR THE NYSE/AMEX/NASDAQ STOCK MARKETS, AND OUR SELF-DETERMINED PEER GROUP OF
DRILLING COMPANIES.
GRAPH
Index Description 9/28/01 09/30/02 09/30/03 09/30/04 09/29/05 09/30/06
------- -------- -------- -------- -------- --------
ATWOOD OCEANICS, INC. 100.0 112.5 92.3 182.8 323.9 345.9
CRSP Index for
NYSE/AMEX/NASDAQ
Stock Markets
(U.S. Companies) 100.0 82.8 104.8 119.9 137.3 151.5
Self-Determined Peer Group 100.0 104.8 112.6 159.2 252.2 272.9
Constituents of the Self-Determined Peer Group (weighted according to market
capitalization):
Diamond Offshore Drilling, Inc. GlobalSanteFe Corporation Rowan Companies, Inc. Transocean, Inc.
ENSCO International, Inc. Noble Corporation Pride International, Inc.
* Assumptions: (1) $100 invested on September 28, 2001; (2) dividends, if any,
were reinvested; and (3) a September 30 fiscal year end.
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, 2005 through September 30, 2006, all filing requirements applicable
to our officers, directors and greater than ten-percent (10%) beneficial owners
were complied with.
DIRECTORS' COMPENSATION
As compensation for services as a director of the Company, each director
who is not an officer and full time employee of the Company or any of its
subsidiaries, a non-employee director, was paid in fiscal year 2006 an annual
retainer fee of $25,000, plus $2,500 per meeting for attendance in person at
regular Board of Directors meetings, and $1,000 per meeting for attendance in
person at meetings of the Audit, Compensation and Nominating & Governance
Committees. The chairman of the Audit Committee received an additional $10,000
annual retainer fee, and the Chairman of the Compensation Committee received an
additional $5,000 annual retainer fee. Pursuant to our existing 2001 Plan, each
of our non-employee directors was automatically awarded restricted stock during
fiscal year 2006 equivalent to the number of shares of Common Stock valued at
$40,000 on the date of grant. Pursuant to our existing 2001 Plan, each of our
non-employee directors was also automatically awarded restricted stock during
the first quarter of fiscal year 2007 equivalent to the number of shares of
Common Stock valued at $40,000 on the date of grant. These awards vest
immediately to each eligible Director but have a three-year restriction period
on ownership transfer.
23
Subject to the approval of the proposal in Item 2 relating to the adoption
of the 2007 Plan, the Compensation Committee has approved an additional award of
restricted stock to non-employee directors in fiscal year 2007 equivalent to the
number of shares of Common Stock to be valued at $20,000 on the date of grant.
Any further awards of restricted stock under the 2007 Plan, if approved by the
shareholders, will be at the discretion of the Compensation Committee. If the
2007 Plan is approved by the shareholders, the 2001 Plan will be terminated and
no further awards made thereunder.
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PwC audited our financial statements for the years ended September 30,
2006, 2005 and 2004, and has been selected to audit our financial statements for
the year ended September 30, 2007. 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 2008 must be
received by us no later than September 11, 2007 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 November 25, 2007, 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, 2006 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 9, 2006
24
PROXY ATWOOD OCEANICS, INC.
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2007
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 Proxies, 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 29, 2006, at the Annual
Meeting of Shareholders to be held on February 8, 2007 or any adjournment
thereof:
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED
1. ELECTION OF DIRECTORS:
FOR all nominees listed
(except as marked to the contrary) 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
WILLIAM J. MORRISSEY
(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 the adoption of the Atwood Oceanics, Inc. 2007 Long-Term Incentive
Plan as described in the accompanying Proxy Statement:
FOR AGAINST ABSTAIN
--------------------------------------------------------------------------------
3. In their discretion, the Proxies 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, and FOR adoption of the Atwood Oceanics, Inc.
2007 Long-Term Incentive Plan.
Please sign exactly as name
appears hereon.
________________________, 2007 ___________________________________
DATED SIGNATURE
-----------------------------------
SIGNATURE IF JOINTLY HELD
NOTE: When shares are held
by joint tenants, both
should sign. When signing
as attorney, as executor,
25
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.
26
Appendix A
COMPENSATION COMMITTEE CHARTER
1. Purpose and General Responsibilities
The function of the Compensation 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:
o 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;
o Recommending to the Board the compensation of directors who are
not employees of the Company;
o 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
o 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
CA&A and reviewing and discussing the CD&A with Company
management.(1)
o 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.
o 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.
1
(1) For fiscal years ending on or after December 15, 2006.
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.
2
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.(2)
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.(3)
5. Advisors
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.
6. Performance Review
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.
3
(2) For fiscal years ending on or after December 15, 2006.
(3) The CD&A will be included in the report for fiscal years ending on or after
December 15, 2006.
APPENDIX B
ATWOOD OCEANICS, INC.
2007 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:
4
(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.
5
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.
6
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.
7
(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
8
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.
(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.
(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.
(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.
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:
(a) Restriction Period.
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.
9
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.
(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
10
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.
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.
11
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.
(a) Options and SARs.
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.
iii) General. The Committee may, in its discretion, accelerate the
vesting of any 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.
(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.
(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.
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
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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.
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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.
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EXHIBIT A
Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan Performance Criteria
Average dayrates
Cash flow
Debt to cash flow
Debt to EBITDA
Debt to equity ratio
Dividend growth
Dividend maintenance
Earnings (Net income, Earnings before interest, taxes, depreciation and
amortization, Earnings Per Share)
EBITDA
EBITDA to Interest
General and Administrative Expenses
Net income
Operating income
Pre-tax income
Profit returns/margins
Relative stock price performance
Return on Assets
Return on Equity
Return on invested capital
Revenues
Rig margin
Rig revenue
Safety
Stock price appreciation
Total stockholder return
Utilization