January 12, 2005
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-1004
RE: ATWOOD OCEANICS, INC. PROXY STATEMENT
Ladies and Gentlemen:
On behalf of Atwood Oceanics, Inc. (the "Company"), and pursuant to Rule
14a-6(b) of Regulation 14A, transmittal herewith is the Definitive Proxy
Statement and form of Proxy Card, constituting all soliciting materials being
furnished to shareholders in connection with the upcoming Annual Meeting of
Stockholders of the Company. The Company anticipates that copies of the proxy
materials filed pursuant to Rule 14a-6(b) of Regulations 14A will be released to
stockholders on or about January 12, 2005.
In addition, on behalf of the Company we will forward via Federal Express
delivery not later than the date on which such report is first sent or given to
security holders seven (7) copies of the Company's Annual Report to Shareholders
which will accompany the Proxy Statement mailing to stockholders.
Thank you for your assistance.
Very truly yours,
ATWOOD OCEANICS, INC.
/s/ James M. Holland
James M. Holland
Senior Vice President
JMH/tlb
17
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 12, 2005
To the Shareholders of
ATWOOD OCEANICS, INC.:
Notice is hereby given that, pursuant to the provisions of the Amended and
Restated Bylaws 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., Central Time, on Thursday, February 10, 2005, for
the following purposes:
1. To elect six (6) members of the Board of Directors for the term of
office specified in the accompanying Proxy Statement.
2. 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 31, 2004 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
1
ANNUAL MEETING OF SHAREHOLDERS
ATWOOD OCEANICS, INC.
---------------
PROXY STATEMENT
---------------
January 12, 2005
SECURITY HOLDERS ENTITLED TO VOTE
Holders of shares of common stock, par value $1.00 per share ("Common
Stock") of Atwood Oceanics, Inc., (hereinafter sometimes referred to as "we",
"us", "our" or the "Company") of record at the close of business on December 31,
2004 will be entitled to vote at the Annual Meeting of Shareholders to be held
February 10, 2005 at 10:00 o'clock A.M., Central 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 12, 2005.
PERSONS MAKING THE SOLICITATION
This proxy is solicited on behalf of the Board of Directors of Atwood
Oceanics, Inc. In addition to solicitation by mail, we may request banks,
brokers and other custodians, nominees and fiduciaries 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 the cost will be borne by us.
VOTING SECURITIES
At the close of business on December 31, 2004, 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 15,107,826
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 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.
Each share of Common Stock entitles its owner to one vote except with
respect to the election of directors. With respect to the election of directors,
each shareholder has the right to vote in person or by proxy the number of
shares registered in his name for as many persons as there are directors to be
elected, or to cumulate such votes and give one candidate as many votes as shall
equal the number of directors to be elected multiplied by the number of his
shares, or to distribute the votes so cumulated among as many candidates as he
may desire. In the event of cumulative voting, the candidates for directors
receiving the highest number of votes, up to the number of directors to be
elected, shall be elected.
If a shareholder desires to exercise his right to cumulate votes for
directors, the laws of the State of Texas, the State in which we are
incorporated, require the shareholder to give our Secretary written notice of
such intention on or before the day preceding the meeting. Such notice should be
sent to: Atwood Oceanics, Inc., P. O. Box 218350, Houston, Texas 77218, Attn:
James M. Holland. If any shareholder gives such notice, all shareholders have
the right to use cumulative voting at the meeting. The persons appointed by the
2
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
December 31, 2004 (except as otherwise indicated). The information set forth
below, other than with respect to Helmerich & Payne International Drilling Co.
("H&PIDC"), is based on materials furnished to us in connection with Securities
and Exchange Commission ("SEC") filings by or on behalf of the shareholders
named below, as of various dates during our fiscal year and on information
provided by Zacks Investment Research, Inc. ("Zacks") in reports prepared for
us. Unless otherwise noted, each shareholder listed below has sole voting and
dispositive power with respect to the shares listed.
Name and Address Shares Owned Percent
--------------- Beneficially of Class
------------ ---------
Helmerich & Payne Intl. Drilling Co. (1) --------- 2,000,000 13.24%
1437 South Boulder Avenue
Tulsa, Oklahoma 74119
T. Rowe Price Associates, Inc. (2)----------------- 1,401,700 9.28%
100 E. Pratt Street
Baltimore, Maryland 21202
Lord Abbett & Co. (3)------------------------------ 774,249 5.13%
90 Hudson Street
Jersey City, New Jersey 07302
-------------------
(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 2,000,000
shares of our Common Stock. Mr. Helmerich has disclaimed beneficial
ownership of the Common Stock owned by H&PIDC.
(2) The information set forth above concerning shares of Common Stock
beneficially owned by T. Rowe Price Associates, Inc. ("T. Rowe Price")
was obtained from a report dated January 5, 2004 prepared by Zacks for
us and Amendment No. 4 to Schedule 13G dated October 10, 2004 filed
with the SEC by T. Rowe Price. According to the Schedule 13G, T. Rowe
Price has sole voting power with respect to 405,500 shares and sole
dispositive power with respect to 1,401,700 shares of our Common Stock.
(3) The information set forth above concerning shares of Common Stock
beneficially owned by Lord Abbett & Co. ("Abbett") was obtained from a
report dated January 5, 2005 prepared by Zacks for us. Based upon
reports prepared by Zacks, Abbett became a stockholder owning more than
five percent (5%) of our outstanding Common Stock some time during the
second half of 2004. The Company has not received any information from
Abbett in connection with its stock ownership or SEC filings relating
to its holdings and thus, does not have any information on voting or
dispositive power that Abbett may have with respect to any shares of
our Common Stock.
3
COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the amount of Common Stock beneficially
owned as of the close of business on December 31, 2004 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 Owned Percent
Executive Officer or Group Beneficially of Class
-------------------------- ------------ --------
Deborah A. Beck 800 (2) (1)
Robert W. Burgess 4,000 (3) (1)
George S. Dotson 2,000 (3) (1)
Hans Helmerich 2,000 (3)(4) (1)
William J. Morrissey 2,400 (3) (1)
John R. Irwin 120,950 (5) (1)
James M. Holland 68,284 (6) (1)
Glen P. Kelley 67,050 (7) (1)
All directors and executive officers as a group (8 persons) 267,484 (8) 1.77%
------------
(1) Less than 1%.
(2) Includes 500 shares which may be acquired upon exercise of options. (3)
Includes 2,000 shares which may be acquired upon the exercise of options. (4)
See Note (1) under Principle Shareholders on page 3 for more information.
(5) Includes 120,750 shares which may be acquired upon the exercise of options.
(6) Includes 66,150 shares which may be acquired upon the exercise of options.
(7) Includes 66,750 shares which may be acquired upon the exercise of options.
(8) Includes 256,150 shares which may be acquired upon the exercise of options.
EXECUTIVE OFFICERS
Set forth below are our executive officers. The office held, date of
first election to that office and the age of each officer as of the close of
business on December 31, 2004 are indicated opposite his name.
Date of
First
Name Offices Held Election Age
---------------- ------------- -------- ---
John R. Irwin President and Chief March 59
Executive Officer 1993
James M. Holland Senior Vice President October 59
and Secretary 1988
Glen P. Kelley Senior Vice President - December 56
Marketing and 2004
Administration
No family relationship exists between any of the above executive
officers. All of our officers serve at the pleasure of the Board of Directors
and may be removed at any time with or without cause.
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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, six (6) Directors (leaving one position vacant) are to be
elected for terms of one year each. Although our Amended and Restated Bylaws
provide that the Board of Directors consists of seven (7) persons, we have not
yet identified a suitable nominee to fill the vacancy. Accordingly, only six (6)
persons are nominated for election as directors, and shares may not be voted for
a greater number of persons than the number of nominees named.
The persons named in the enclosed form of proxy (James M. Holland and Glen
P. Kelley) have advised that they will vote all shares represented by proxies
for the election of the six (6) nominees for director listed below, unless
authority to so vote is withheld by the shareholder. Such persons will have the
discretion to cumulate the votes of the shares represented by proxy, although
the exercise of such discretion is not expected. If any of the nominees listed
below becomes unavailable for any reason, the shares represented by the proxies
will be voted for the election of such person, if any, as may be designated by
the Board of Directors.
Present Served as
Position a Director
with the Continuously Term to
Nominees Company Since Extend to Age
-------- -------- ------------ --------- ---
Deborah A. Beck Director February February 57
2003 2006
Robert W. Burgess Director September February 63
1990 2006
George S. Dotson Director February February 64
1988 2006
Hans Helmerich Director February February 46
1989 2006
John R. Irwin Director, November February 59
President 1992 2006
and Chief
Executive
Officer
William J. Morrissey Director November February 77
1969 2006
At all times during the previous five (5) years, Ms. Beck has been employed
by the Northwestern Mutual Life Insurance Company 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. Ms. Beck served in the legal department for six
(6) years, three (3) of which she served as Assistant General Counsel.
Northwestern Mutual is a leading direct provider of individual life insurance
5
and offers insurance products, investment products and advisory services.
Ms. Beck's current role as Executive Vice President - Planning and Technology of
Northwestern Mutual entails responsibility for strategic planning, merger and
acquisition activity, information technology and project management. Ms. Beck's
division has a budget of $290 million per year and she oversees the direction of
750 employees.
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.
At all times during the previous five (5) years, Mr. Dotson has served 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 and Varco International, Inc. The Board of Directors has made a
determination that under the relevant federal securities laws and regulations
and the New York Stock Exchange listing standards, H&P and H&PIDC are not our
affiliates. Therefore, under the current New York Stock Exchange listing
standards, Mr. Dotson is not our affiliate based on his positions at H&P and
H&PIDC.
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. The Board of
Directors has made a determination that under the relevant federal securities
laws and regulations and the New York Stock Exchange Listing Standards, H&P and
H&PIDC are not our affiliates. Therefore, under the current New York Stock
Exchange listing standards, Mr. Helmerich is not our affiliate based on his
positions at H&P.
Mr. Irwin has been employed by us in various executive capacities for the
last twenty-six (26) years; of which, the last twelve years he has been
President and Chief Executive Officer.
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. Mr. Morrissey is currently
retired.
The Company has standing Audit, Compensation, Executive and Nominating &
Corporate Governance Committees. The Audit Committee members are Ms. Beck and
Messrs. Burgess, Dotson and Morrissey. The Board of Directors has made a
determination that Mr. Burgess is the "Audit Committee Financial Expert" as that
term is defined under the relevant federal securities laws and regulations. This
Committee functions to review in general terms the Company's accounting policies
and audit procedures and to supervise internal accounting controls. The Audit
Committee held nine (9) meetings during fiscal year 2004, of which five (5) 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. The
Compensation Committee members, Ms. Beck, Messrs. Burgess and Dotson, are
responsible for administration of the Company's stock option plans, and for
review and approval of all salary and bonus arrangements. During fiscal year
2004, there were eight (8) meetings of the Compensation Committee, of which five
(5) were telephone conferences. The Nominating & Corporate Governance Committee
composed of board members, Ms. Beck and Messrs. Burgess, Dotson, Helmerich and
Morrissey, is to assist the overall Board of Directors ("Board") regarding the
appropriate size and composition of the Board, as well as monitoring and making
recommendations regarding the Board's performance. The Nominating & Corporate
Governance Committee held one (1) meeting during fiscal year 2004.
The Nominating & Corporate Governance Committee charter states that each
member must be independent as required under the New York Stock Exchange Listing
Standards. The Board of Directors has made a determination that, under the
relevant federal securities laws and regulations and the New York Stock Exchange
Listing Standards, H&P and H&PIDC are not our affiliates, Mssrs. Dotson and
Helmerich are independent, and each member of this Committee is independent. 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.
The Nominating & Corporate Governance Committee will evaluate nominees 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. The charter of the Nominating &
Corporate Governance Committee is accessible on our website, www.atwd.com.
6
Five (5) meetings of the Board of Directors were held during fiscal year
2004, four of which were regularly scheduled meetings, with one (1) being a
conference call. 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-management 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-management members of the Board of Directors. 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. We have a specific process at the election of the communicating
shareholder, for communications between shareholders and either the Board of
Directors as a whole or the non-management members of the Board of Directors as
detailed on our website, www.atwd.com, along with other of our corporate
governance guidelines.
Included in our corporate governance guidelines detailed on our website is
the code of ethics applicable to our chief executive officer and our senior
financial officer. We intend to satisfy the disclosure requirement we have
adopted and which is regarding any changes in or wavier from our code of ethics
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 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" ELECTION AS
DIRECTORS OF THE PERSONS NOMINATED HEREIN.
EXECUTIVE COMPENSATION
In accordance with the SEC executive compensation disclosure requirements
under Item 402 of Regulation S-K, the following compensation tables and other
compensation information are presented to enable shareholders to better
understand the compensation of our executive officers.
The Compensation Committee is composed of three (3) non-employee 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
Charter duly adopted by the Board of Directors, which require their independence
from management of the Company or their freedom from any other relationship
which would interfere with their independent judgment. The Board of Directors
believes all members of the Compensation Committee meet this independence
requirement. Further, under relevant federal securities laws and regulations of
the New York Stock Exchange listing standards, the Board has determined that H&P
and H&PIDC are not our affiliates. That fact, as well as additional
consideration, have led the Board of Directors to determine that Mr. Dotson,
along with each of the other members of the Compensation Committee, is
independent of management and free of any material relationship with us and is,
consequently, independent. Following review and approval by the Compensation
Committee, all issues pertaining to executive compensation are submitted to the
full Board of Directors for approval. The charter of the Compensation Committee
is 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 the Company's executive officers and to administer the
Company's stock option plans.
Compensation Policies for Executive Officers
The Company's executive compensation policies are designed to provide
competitive levels of compensation that integrate pay with the Company's
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. The Compensation
Committee relies in large part on compensation studies for the determination of
competitive compensation. These studies include salary and bonus compensation
data from several competitor companies. Also, when the Compensation Committee
contemplates the awarding of stock options to the Company's 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
7
developed a straightforward compensation package consisting of salary,
discretionary annual bonus, and periodic awards of stock options pursuant to
shareholder - approved stock option 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 appropriate based upon
peer group reviews. Annual bonuses to executive officers are awarded based upon
corporate performance criteria, competitive considerations, and our
determination of individual performance. Awards of stock options are primarily
designed to tie a portion of each executive's 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
stockholders' interest. The value of these awards will increase or decrease
based upon the future price of the Company's stock.
In determining executive compensation for fiscal year 2004, we considered
the Company's overall historical performance and its future objectives. Due to a
decline in the Company's operating performance resulting from a downturn in the
offshore drilling market environment, no bonuses were awarded to our executive
officers in December 2003; however, we did grant salary increases effective on
January 1, 2004 to the officers ranging between 4% to 6% and awarded stock
options.
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. The compensation levels of our
executive officers are below the $1 million threshold.
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
2003 Mr. Irwin was not awarded a bonus; but was granted a salary increase
effective on January 1, 2004 of approximately 4%.
In addition, the Committee in December 2003 awarded Mr. Irwin stock options
to purchase 40,000 shares of stock. The Committee based this award on its
subjective assessment of Mr. Irwin's performance as CEO.
SUBMITTED BY THE COMPENSATION COMMITTEE
George S. Dotson, Chairman Deborah A. Beck, Member Robert W. Burgess, Member
December 31, 2004
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.
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 in control in our ownership. The Executive Agreements
state that a change in control occurs (a) in the event of 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) 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 in
control, Messrs. Holland and Kelley shall remain in the employ of the Company
following such change in 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
base salary, annual bonus; incentive, savings and retirement plan benefits,
welfare plan benefits; executive life insurance benefits; indemnification
expenses and vacation commensurate with those benefits that the executives
enjoyed prior to the change in control. The Executive Agreements each have three
(3) year terms.
8
Compensation Committee Interlocks and Insider Participation
Ms. Beck and Messrs. Burgess and Dotson, the current members of the
Compensation Committee, were the only persons who served on the Compensation
Committee during the 2004 fiscal year.
No member of our Compensation Committee of the Board of Directors was,
during the 2004 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. We jointly conducted a public offering with
H&PIDC for shares of our Common Stock as more fully described in "Related
Transaction" on page 14.
During the Company's 2004 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, and (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.
9
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)
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation (A)
--------------------------- ----- ------ ----- ------------ -------- ------------
$ $ $ (#) ($)
John R. Irwin 2004 372,150 --- --- 40,000 50,791
President and Chief 2003 355,251 140,000 --- 10,000 57,083
Executive Officer 2002 337,002 115,000 --- 25,000 50,255
James M. Holland 2004 214,008 --- --- 20,000 25,918
Senior Vice President 2003 203,508 60,000 --- --- 29,988
and Secretary 2002 194,088 50,000 --- 15,000 26,219
Glen P. Kelley 2004 208,418 --- --- 20,000 26,777
Senior Vice President - 2003 196,068 60,000 --- --- 28,473
Marketing and Administration 2002 182,040 50,000 --- 15,000 24,862
(A) The amounts shown in the "All Other Compensation" columns are derived from
the following:
Annual Company
Contribution to the defined Company paid term life and
contribution plan insurance premiums
---------------------------- --------------------------
$ $
Mr. Irwin 2004 37,215 13,576
2003 49,525 7,558
2002 45,200 5,055
Mr. Holland 2004 21,401 4,517
2003 26,351 3,637
2002 24,409 1,810
Mr. Kelley 2004 20,841 5,936
2003 25,607 2,866
2002 23,204 1,658
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OPTION GRANTS TABLE
Individual Grants Made in Fiscal Year 2004
----------------------------------------------------------------------------------------------------------------
Number of Potential Realizable Value
Securities Percentage of at Assumed Annual
Underlying Total Options Rates of Stock Price
Options Granted To Appreciation for Option Term
Granted Employees in Exercise Price Expiration
Name (A)(#) Fiscal Year ($/Share) Date 5% ($) 10%
---- ------ ----------- --------- ---- ----------
($)
Irwin 40,000(B) 22% 27.00 12/03/2013 682,400 1,721,200
Holland 20,000(B) 11% 27.00 12/03/2013 341,200 860,600
Kelley 20,000(B) 11% 27.00 12/03/2013 341,200 860,600
----------
- (A) The options were granted for a term of ten (10) years, subject to
earlier termination in certain events related to termination of employment.
Twenty-five percent (25%) of such options become exercisable at each of one (1)
year, two (2) years, three (3) years and four (4) years, respectively, from the
date of grant. Subject to certain conditions, the exercise price may be paid by
delivery of already owned shares, and tax withholding obligations related to
exercise may be paid by offset of underlying shares.
(B) These options were granted on December 4, 2003 pursuant to the
Company's 2001 Stock Incentive Plan.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE TABLE
Number of
Securities
Underlying
Shares Acquired Unexercised Value of Unexercised
on Exercise Value Options at In-the-Money Options
Name during Fiscal 2004 Realized Sept. 30, 2004 at Sept. 30, 2004 (A)
---- ------- -------- --------------- ---------------------
($) (#) (#) ($)
Exercisable/ Exercisable/
Unexercisable Unexercisable
--------------- ---------------
Irwin --- --- 100,750/83,750 1,730,206/696,113
Holland --- --- 56,650/41,750 931,316/749,808
Kelley --- --- 62,500/41,500 1,170,385/727,780
-------------
(A) Calculated based upon the September 30, 2004 fair market value of
$47.54 per share less the share price to be paid upon exercise. There is no
guarantee that options will have the indicated value if and when exercised.
11
AUDIT COMMITTEE CHARTER
The Audit Committee is composed of four (4) non-employee Directors. The
members of the Audit Committee are governed by a 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. The Board of Directors has made a determination
that all of the members of the Audit Committee meet the Audit Committee Charter
requirements of independence. Mr. Dotson has key employment positions with H&P
and its wholly-owned subsidiary, H&PIDC ; however, the Board has made a
determination that under Rule 10A-3 of the Exchange Act and the New York Stock
Exchange listing standards, H&P and H&PIDC do not meet the definition of
affiliates. Therefore, under the current listing standards and relevant federal
securities laws and regulations, the Board of Directors has made a determination
that Mr. Dotson is independent. 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 four (4) times, with an additional five (5) conference
call meetings, during fiscal year 2004. 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, 2004, 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 Independence
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
12
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 Consulted with management and PwC regarding risk management;
o Reviewed the adequacy of
certain financial policies;
o Considered PwC's quality control procedures;
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 From 10-K for the fiscal year ended September
30, 2004 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 10, 2004
FISCAL YEAR 2004 AUDIT FIRM FEE SUMMARY
During fiscal years 2004 and 2003, PwC provided services in the
following categories and amounts.
Fiscal Year
---------------------------------------
2004 2003
---------------- ------------------
Audit Fees $ 240,000 $ 289,100
Audit-Related Fees (A) $ 350,000 47,000
Tax Fees $ --- ---
All Other Fees $ --- ---
The Audit Committee approves the engagement of an accountant to render
audit or non-audit services prior to the engagement based upon a proposal by the
accountant and an estimate of fees and expected scope of engagement. The Audit
Committee has not adopted a pre-approval policy at this time, and to date, no
services have been provided under a pre-approval policy.
-----------
(A) These fees related to the audit of our employee benefit plan,
consultation concerning internal controls and internal audit testing, and a
transfer pricing study.
13
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 THE PEER GROUP OF DRILLING
COMPANIES.
GRAPH
Index Description 9/30/99 9/29/00 9/28/01 09/30/02 09/30/03 09/30/04
------- ------- ------- -------- -------- --------
ATWOOD OCEANICS, INC. 100.0 136.4 85.1 95.7 78.5 155.6
CRSP Index for
NYSE/AMEX/NASDAQ
Stock Markets
(U.S. Companies) 100.0 118.3 84.0 69.5 88.0 100.7
Self-Determined Peer Group 100.0 187.8 87.5 91.8 98.6 139.4
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.
* Assumes $100 invested on September 30, 1999; total returns assumes
dividend reinvested; fiscal year ending September 30 of each year.
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
shareholders are required by the regulation to furnish us with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, 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, 2003 through September 30, 2004, all filing requirements applicable to our
officers, directors and greater than ten-percent (10%) beneficial owners were
complied with.
RELATED TRANSACTION
We entered into a registration rights agreement with H&PIDC as of July 19
2004, pursuant to which we registered 1,000,000 shares of our Common Stock owned
by H&PIDC on Form S-3 (File No. 333-117534) with the SEC. In October of 2004,
H&PIDC and we jointly conducted a public offering of a total of 2,175,000 shares
of Common Stock of which 1,000,000 shares were sold by H&PIDC and 1,175,000
shares were sold by us. H&PIDC and we shared offering expenses pro rata, based
on the number of shares sold by each of us. Proceeds to us, net of offering
expenses, were approximately $53.7 million. We used the net proceeds to pay off
a portion of the revolving portion of our credit facility outstanding at the
time of the completion of the public offering.
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 was paid in fiscal year 2004 an annual retainer fee of $25,000 plus
$2,500 per meeting for attendance at regular Board meetings, and $1,000 per
meeting for attendance at meetings of the Audit, Compensation and Nominating &
14
Governance Committees. Each director also receives $500 for each conference
call meeting of any committee. The chairman of the Audit Committee is paid an
additional annual retention fee of $5,000. Each of our non-employee directors
was also awarded 2,000 nonqualified stock options in March 2004 pursuant to our
2001 Stock Incentive Plan. These options have an exercise price of $39.10, with
a term of ten years. Twenty-five percent (25%) of such options become
exercisable at the end of one (1) year, two (2) years, three (3) years, and four
(4) years, respectively, from the date of grant.
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PwC audited the Company's financial statements for the years ended
September 30, 2004, 2003 and 2002. 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 shareholders of the Company intended to be presented for
consideration at the Annual Meeting of Shareholders of the Company to be held in
February 2006 must be received by the Company no later than September 16, 2005
and must comply with the requirements of the proxy rules promulgated by the
Securities and Exchange Commission 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 the Company's proxy statement
and form of proxy is given to the Company after November 30, 2005, 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.
The Company will provide, without charge, upon written request of any
shareholder, a copy of its Annual Report on Form 10-K including financial
statements and financial statement schedules for the fiscal year ended September
30, 2004 as filed with the Securities and Exchange Commission. Please direct
such request to James M. Holland, Secretary, Atwood Oceanics, Inc., P. O. Box
218350, Houston, Texas 77218. Only one proxy statement and annual report are
being delivered to multiple shareholders sharing an address unless the Company
has 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 the shareholder should notify James M. Holland, the Company's 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 12, 2005
15
PROXY ATWOOD OCEANICS, INC.
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 10, 2005
|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 31, 2004, at the Annual
Meeting of Shareholders to be held on February 10, 2005 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 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.)
--------------------------------------------------------------------------------
2. 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.
Please sign exactly as name appears hereon.
________________________, 2005 _________________________________________
DATED SIGNATURE
_________________________________________
SIGNATURE IF JOINTLY HELD
NOTE: When shares are held by joint
tenants, both should sign. When signing
as attorney, as executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in
partnership name by authorized person.
Please note any change in your address
alongside the address as it appears in
the proxy.
PLEASE MARK IN BLUE OR BLACK INK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
16