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 16, 2004
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., Houston Time, on Thursday, February 12, 2004, 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, 2003 will
be entitled to notice of and to vote at the Annual Meeting.
Shareholders are cordially invited to attend the meeting in person. Those
who will not attend are requested to sign and promptly mail the enclosed proxy
for which a stamped return envelope is provided.
By Order of the Board of Directors
/s/ James M. Holland
JAMES M. HOLLAND, Secretary
ANNUAL MEETING OF SHAREHOLDERS
ATWOOD OCEANICS, INC.
---------------
PROXY STATEMENT
---------------
January 16, 2004
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,
2003 will be entitled to vote at the Annual Meeting of Shareholders to be held
February 12, 2004 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 January 16, 2004.
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, 2003, 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 13,852,301
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
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, 2003 (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) ------- 3,000,000 21.66%
1437 South Boulder Avenue
Tulsa, Oklahoma 74119
T. Rowe Price Associates, Inc. (2)--------------- 1,378,900 9.95%
100 E. Pratt Street
Baltimore, Maryland 21202
Select Equity Group, Inc. (3)-------------------- 968,300 6.99%
Select Offshore Advisors, LLC (3)
George S. Loening (3)
380 Lafayette Street, 6th Floor
New York, New York 10003
Artisan Partners LP (4)-------------------------- 726,400 5.24%
1000 North Water Street
Milwaukee, Wisconsin 53202
-------------------
(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 3,000,000 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. 2 to Schedule 13G dated February 14,
2003 filed with the SEC by T. Rowe Price. According to the Schedule 13G,
T. Rowe Price has sole voting power with respect to 351,200
shares and sole dispositive power with respect to 1,347,500 shares
of our Common Stock. We do not have any information on voting
or dispositive power with respect to 31,400 shares of our Common
Stock acquired by T. Rowe Price subsequent to the filing of Schedule 13G
dated February 14, 2003. T. Rowe Price has disclaimed beneficial
ownership of our Common Stock.
(3) The information set forth above concerning shares of Common Stock
beneficially owned by Select Equity Group, Inc. ("Select"), Select
Offshore Advisors, LLC ("Select Offshore") and George S. Loening
("Loening"), collectively referred to as "Select Group", was obtained
from a report dated January 5, 2004 prepared by Zacks for us and
Schedule 13G filed June 25, 2003 filed with the SEC by Select Group.
According to the aforementioned Schedule 13G, at the time of the filing,
Loening is controlling shareholder of Select and Select Offshore. At
the time of the filing of the Schedule 13G, the Select Group
beneficially owned 740,900 shares of our Common Stock. At the time of
the filing of the Schedule 13G, Select had sole voting and sole
disposition power with respect to 329,800 shares of our Common Stock.
At the time of the filing of the Schedule 13G, Select Offshore had
sole voting and sole disposition power with respect to
411,100 shares of our Common Stock. At the time of the filing of the
Schedule 13G, Loening had sole voting and sole disposition power with
respect to 740,900 shares of our Common Stock. We do not have any
information with respect to 227,400 shares of our Common Stock acquired
by Select Group subsequently to the filing of Schedule 13G on
June 25, 2003.
(4) The information set forth above concerning shares of Common Stock
beneficially owned by Artisan Partners LP ("Artisan") was obtained from
a report dated January 5, 2004 prepared by Zacks for us. Based upon
reports prepared by Zacks, Artisan became a stockholder owning more
than five percent (5%) of our outstanding Common Stock some time
during the second half of 2002. The Company has not received any
material from Artisan in connection with SEC filings and thus, does
not have any information on voting or dispositive power that Artisan
may have with respect to any shares of our Common Stock.
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, 2003 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 300 (1)
Robert W. Burgess 2,500 (2) (1)
George S. Dotson 500 (2) (1)
Hans Helmerich 500 (2) (3) (1)
William J. Morrissey 900 (2) (1)
John R. Irwin 88,450 (4) (1)
James M. Holland 51,284 (5) (1)
Glen P. Kelley 55,300 (6) (1)
All directors and executive officers
as a group (8 persons) 199,734 (7) 1.44%
------------
(1) Less than 1%.
(2) Includes 500 shares which may be acquired upon exercise of options.
(3) See Note (1) on page 3 for more information.
(4) Includes 88,250 shares which may be acquired upon the exercise of
options.
(5) Includes 49,150 shares which may be acquired upon the exercise of
options.
(6) Includes 55,000 shares which may be acquired upon the exercise of
options.
(7) Includes 194,670 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, 2003 are indicated opposite his name.
Date of
First
Name Offices Held Election Age
---- ------------ -------- ---
John R. Irwin President and Chief March 58
Executive Officer 1993
James M. Holland Senior Vice President October 58
and Secretary 1988
Glen P. Kelley Vice President - October 55
Contracts and 1988
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.
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.
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 56
2003 2005
Robert W. Burgess Director September February 62
1990 2005
George S. Dotson Director February February 63
1988 2005
Hans Helmerich Director February February 45
1989 2005
John R. Irwin Director, November February 58
President 1992 2005
and Chief
Executive
Officer
William J. Morrissey Director November February 76
1969 2005
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
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, which as a result of its ownership of our Common Stock through its
subsidiary H&PIDC, may be deemed an affiliate of the Company. He also serves as
a director of Varco International, Inc. However, the Board of Directors has
determined that H&P and H&PIDC do not meet the definition of an affiliate
under the new recently adopted (revised) New York Stock Exchange listing
standards.
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, which as a result
of its ownership of our Common Stock through its subsidiary H&PIDC, may be
deemed an affiliate of the Company. However, the Board of Directors has
determined that H&P and H&PIDC do not meet the definition of an affiliate
under the new recently adopted (revised) New York Stock Exchange listing
standards.
Mr. Irwin has been employed by us in various executive capacities for the
last twenty-five (25) years; of which, the last eleven 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. Mr. Burgess is the "Financial Expert"
member of the Audit Committee. 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 seven (7) meetings during
fiscal year 2003, 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. 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 2003, there were two (2) meetings of the
Compensation Committee. The Nominating & Corporate Governance Committee composed
of Ms. Beck and Messrs. Burgess, Dotson, Hans Helmerich and Morrissey is to
assist the 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 two (2) meeting during fiscal year 2003.
The Nominating & Corporate Governance Committee charter requires
independence under the New York Stock Exchange Listing Standards. Mssrs. Dotson
and Helmerich are not "independent" as defined by Section 303.01(B)(2)(a) and
(3) of the New York Stock Exchange's listing standards in effect during fiscal
year 2003 due to their key employment positions with H&P and its wholly-owned
subsidiary, H&PIDC. H&P and H&PIDC may be deemed to be affiliates of the Company
under those listing standards. However, the Board has made a determination that
under the new recently adopted (revised) New York Stock Exchange listing
standards, H&P and H&PIDC do not meet the definition of affiliates. Therefore,
under the revised current listing standards, Mssrs. Dotson and Helmerich are
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. The Company does not have a
specific process for communications between shareholders and the Nominating &
Corporate Governance Committee.
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 Company plans to post the
charter of the Nominating & Corporate Governance Committee on its website,
www.atwd.com, but has not yet done so. A copy of the Nominating & Corporate
Governance Committee Charter is attached as Appendix A of this Proxy Statement.
Five (5) meetings of the Board of Directors were held during fiscal year
2003, 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. 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. The Company does not have a specific process for
communications between shareholders and the Board of Directors as it has not had
sufficient past interest from shareholders in such communications to warrant
implementation of policies and procedures in that year.
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 the new recently adopted (revised) New York Stock
Exchange listing standards, H&P and H&PIDC do not meet the definition of
affiliates. Therefore, under the revised current listing standards, Mr. Dotson
is 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 Company plans to post the charter of the
Compensation Committee on its website, www.atwd.com, but has not yet done so. A
copy of the Compensation Committee Charter is attached as appendix B of this
Proxy Statement.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
ATWOOD OCEANICS, INC. (A)
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
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 2003, we considered
the Company's overall historical performance and its future objectives.
Shareholders equity was significantly enhanced during fiscal years 1998 through
2002 due to the Company's revenues, cash flows and net profit for the period
being at their highest levels in its history. Based on the Company's performance
in fiscal year 2002, we awarded bonuses (ranging from $60,000 to $140,000) in
December 2002 to our executive officers and granted salary increases effective
for fiscal year 2003 to the officers ranging between 5% to 8%.
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
2002, Mr. Irwin was awarded a $140,000 bonus paid in fiscal year 2003 and his
salary for fiscal year 2003 was increased approximately 5.5%.
In addition, the Committee in December 2002 awarded Mr. Irwin stock options
to purchase 10,000 shares of stock, once again based on the Company's
performance in fiscal year 2002. 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, 2003
A. 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 of 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 of
control, Messrs. Holland and Kelley shall remain in the employee 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
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.
Compensation Committee Interlocks and Insider Participation
No member of our Compensation Committee of the Board of Directors was,
during the 2002-2003 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 that Messrs. Dotson and Helmerich are executive
officers of H & P, with whom we were a joint venture partner until we sold our
interest to H & P in May 2003 as more fully described in "Related Transactions"
on page 14 and which may be considered to be an affiliate based upon its
ownership of our Common Stock.
During the Company's 2002-2003 fiscal year, no executive officer 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.
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 2003 355,251 140,000 --- 10,000 57,083
President and Chief 2002 337,002 115,000 --- 25,000 50,255
Executive Officer 2001 321,246 85,000 --- 40,000 47,180
James M. Holland 2003 203,508 60,000 --- --- 29,988
Senior Vice President 2002 194,088 50,000 --- 15,000 26,219
and Secretary 2001 185,196 40,000 --- 24,000 24,330
Glen P. Kelley 2003 196,068 60,000 --- --- 28,473
Vice President - Contracts 2002 182,040 50,000 --- 15,000 24,862
and Administration 2001 171,036 40,000 --- 24,000 22,762
(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
contribution plan and insurance premiums
----------------- ----------------------
$ $
Mr. Irwin 2003 49,525 7,558
2002 45,200 5,055
2001 42,125 5,055
Mr. Holland 2003 26,351 3,637
2002 24,409 1,810
2001 22,520 1,810
Mr. Kelley 2003 25,607 2,866
2002 23,204 1,658
2001 21,104 1,658
OPTION GRANTS TABLE
Individual Grants Made in Fiscal Year 2003
---------------------------------------------------------------------
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%($)
---- --------- ------------ -------------- ---------- -------- -------
Irwin 10,000 (B) 100% 30.06 12/03/2012 189,100 479,300
Holland --- --- --- --- --- ---
Kelley --- --- --- --- --- --
_________
(A) The options were granted for a term of ten (10) years, subject to earlier
termination in certain events related to termination of employment.
Twenty-five percent (25%) of such options become exercisable at each
of one (1) year, two (2) years, three (3) years and four (4) years,
respectively, from the date of grant. Subject to certain conditions, the
exercise price may be paid by delivery of already owned shares, and tax
withholding obligations related to exercise may be paid by offset of underlying
shares.
(B) These options were granted on December 4, 2002 pursuant to the
Company's 2001 Stock Incentive Plan.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE TABLE
Number of
Securities
Underlying
Shares Acquired Unexercised Value of Unexercised
on Exercise during Value Options at In-the-Money Options
Name Fiscal 2003 Realized Sept. 30, 2003 at Sept. 30, 2003 (A)
---- ----------- -------- -------------- ---------------------
($) ($) ($) ($)
Exercisable/ Exercisable/
Unexercisable Unexercisable
------------- -------------
Irwin --- --- 78,250/66,250 165,970/0
Holland --- --- 44,650/33,750 89,540/0
Kelley --- --- 50,750/33,250 124,220/0
----
(A) Calculated based upon the September 30, 2003 fair market value of
$23.99 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.
AUDIT COMMITTEE REPORT
In accordance with the SEC audit committees communication requirements
under Item 306 of Regulation S-K, the following information is presented to
inform shareholders of the Audit Committee's oversight with respect to financial
reporting.
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 or their freedom from any other relationship, which would interfere with
their independent judgment. While we believe that all of the members of the
Audit Committee meet the Audit Committee Charter requirements of independence,
Mr. Dotson is not "independent" as defined by Section 303.01(B) (2) (a) and (3)
of the New York Stock Exchange's listing standards in effect during fiscal year
2003 due to his key employment positions with H&P and its wholly-owned
subsidiary, H&PIDC. H&P and H&PIDC may be deemed to be affiliates of the Company
under those listing standards. However, the Board has made a determination that
under Rule 10A-3 of the Exchange Act and the recently adopted (revised) New York
Stock Exchange listing standards, H&P and H&PIDC do not meet the definitions of
affiliates. Therefore, under the current revised listing standards, 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 Company
plans to put the Audit Committee Charter on its website www.atwd.com, but has
not yet done so. A copy of the Audit Committee Charter is attached as Appendix C
of this Proxy Statement.
Report of the Audit Committee of the Board of Directors of ATWOOD OCEANICS, INC.
To: 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 ("PWC"), the Company's independent auditors, is
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted audit standards
(GAAS) 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 seven (7) times during fiscal
year 2003. The Audit Committee also met regularly 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, including in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2003, 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 and any unadjusted
differences noted 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 auditors 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 auditors 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 auditors. Additionally, we
o Reviewed the scope of an overall plan for the annual audit and the
internal audit program;
o Reviewed 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, 2003 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 29, 2003
FISCAL YEAR 2003 AUDIT FIRM FEE SUMMARY
During fiscal years 2003 and 2002, PricewaterhouseCoopers LLP provided
service in the following categories and amounts.
Fiscal Year
-------------------------
2003 2002
---------- --------
Audit Fees $ 289,100 $ 71,000
Audit-Related Fees (A) $ 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 as well as
consultation concerning internal controls and internal audit procedures.
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 9/30/98 9/30/99 9/29/00 9/28/01 09/30/02 09/30/03
---------------- ------- ------- ------- ------- --------- --------
ATWOOD OCEANICS, INC. 100.0 146.8 200.3 124.9 140.5 115.3
CRSP Index for NYSE/AMEX/NASDAQ
Stock Markets (U.S. Companies)
Self-Determined Peer Group
100.0 127.2 150.5 106.9 88.4 111.9
100.0 128.7 241.9 113.5 117.8 124.4
Constituents of the Self-Determined Peer Group (weighted according to
market capitalization):
Diamond Offshore Drilling, Inc. GlobalSanteFe Corporation Rowan Companies, Inc.
ENSCO International, Inc. Noble Corporation Transocean, Inc.
* Assumes $100 invested on September 30, 1998; 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, 2002 through September 30, 2003, all filing requirements applicable to our
officers, directors and greater than ten-percent (10%) beneficial owners were
complied with.
RELATED TRANSACTIONS
Upon being awarded a term contract in August 1994, we entered into a joint
venture agreement with H&P (which through its wholly-owned subsidiary, H&PIDC,
owns 21.66% of our Common Stock and may be deemed to be an affiliate of the
Company) for the design, construction and operation of RIG-200, a platform rig.
The rig has not worked since June 1999 and was retired during 2002. We and H&P
each had a 50% interest in the joint venture. We invested approximately $12
million in that project. In May 2003, we sold our 50% interest in the dismantled
RIG-200 to H&PIDC at its net book value of $500,000. After considering the
current market for similar rigs, Mr. Irwin decided it was in the Company's best
interest to make the sale based upon the net book value. The Company did not
recognize a gain or a loss as a result of the sale of RIG-200. Two (2) of our
directors at December 31, 2003, Messrs. Helmerich and Dotson, are directors and
executive officers of H&P and H&PIDC.
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 2003 an annual retainer fee of $10,000 plus
$2,500 per meeting for attendance at regular Board meetings, and $250 per
meeting for attendance at meetings of the Audit and Compensation Committees.
Each of our non-employee directors was also awarded 2,000 nonqualified stock
options in March 2003 pursuant to our 2001 Stock Incentive Plan. These options
have an exercise price of $27.32, 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 PUBLIC ACCOUNTANTS
From 1970 to May 14, 2002, the independent public accounting firm Arthur
Andersen LLP served as our auditor. On May 14, 2002, the Company dismissed
Arthur Andersen LLP as its independent public accountants and appointed
PricewaterhouseCoopers LLP ("PWC") as its new independent accountants. The
change in accountants was recommended by the Audit Committee and approved by the
Board of Directors. Arthur Andersen's report on our consolidated financial
statement for each of the years ended September 30, 2001 and 2000 did not
contain any adverse opinion or disclaim of opinion, nor were they qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
years ended September 30, 2001 and 2000, and the subsequent interim period
through May 14, 2002, there were no disagreements between us and Arthur Andersen
on any matter of accounting principles or practices, financial statement,
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to Arthur Andersen's satisfaction, would have caused them to make reference to
the subject matter of the disagreement in connection with their report. None of
the reportable events described in Item 304(a)(1)(v) of Regulation S-K occurred
during the years ended September 30, 2001 and 2000 or during the subsequent
interim period through May 14, 2002. PWC audited the Company's financial
statements for the years ended September 30, 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, 2005 must be received by the Company no later than September 18, 2004
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 December 2, 2004, 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, 2003 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
John R. Irwin, President
Houston, Texas
January 16, 2004
APPENDIX A
ATWOOD OCEANICS, INC.
CHARTER OF THE
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
OF THE
BOARD OF DIRECTORS
Purpose and General Responsibilities
The function of the Nominating and Corporate Governance Committee
("Committee") is to assist the Board of Directors ("Board") regarding the
appropriate size and composition of the Board, monitoring and making
recommendations regarding the Board's and management's performance, and
assisting the Board in establishing governance guidelines.
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 Recommending the appropriate size of the Board and criteria for the
selection of candidates to serve on the Board;
o Identifying individuals qualified to become Board members consistent
with criteria approved by the Board, and selecting, or recommending
that the Board select, the director nominees for the next annual
meeting of shareholders;
o Developing and recommending to the Board a set of corporate governance
principles applicable to the Company to be set forth in the Board's
Guidelines on Significant Corporate Governance Issues;
o Monitoring compliance with the Board's Guidelines on Significant Corporate
Governance Issues; and
o Administering the Board's annual self-evaluation process and sharing the
results thereof with the Board for discussion and deliberation.
Membership and Organization
The Committee shall have a Chairman appointed by 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. Initially, the Committee
shall consist of all members of the Board, excluding employee directors. The
Board may add additional members to the Committee or remove members in its sole
discretion. No member of the Committee shall have a relationship to the Company
that may interfere with the exercise of their independent judgment, as such
independence is defined by New York Stock Exchange Listing Standards. The
Committee may delegate its authority to a subcommittee or subcommittees,
provided the subcommittee is composed entirely of independent directors and has
a published charter.
The Committee shall promptly inform the Board of the actions taken or
issues discussed at its meetings. This will generally take place at the Board
meeting following a Committee meeting.
3. Meeting Attendance and Minutes
The Committee shall meet at such times as the Chairman of the Committee
shall designate and notice of such meetings shall be given to Committee members,
in accordance with the manner set forth in the bylaws of the Company 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
Nominating and Governance Committee Charter
The Committee shall review this Charter periodically for adequacy and recommend
to the Board any necessary changes.
Corporate Governance Guidelines
The Committee shall be responsible for the implementation of, and
monitoring compliance with, the Guidelines on Significant Corporate Governance
Issues adopted by the Board and shall make recommendations to the Board
regarding any non-compliance with, or alteration of, the Guidelines as the
Committee in its experience deems appropriate.
Size and Composition of the Board
The Committee shall make recommendations regarding the size of the Board.
The Committee shall also develop and recommend to the Board criteria for the
selection of individuals to be considered as candidates for election to the
Board. The Committee shall recommend to the Board slates of nominees for
election to the Board at annual meetings of shareholders of the Company.
Selection of Directors
The Committee shall receive suggestions concerning possible candidates for
election to the Board, including all self-nominations and third-party
nominations. The Committee shall review and evaluate the qualifications of all
individuals identified as possible candidates for director and recommend to the
Board individuals for election as directors. This function shall include, but
not be limited to, making recommendations regarding:
Individuals for vacancies occurring from time to time, including vacancies
resulting from an increase in the size of the Board; and The slates of directors
proposed on behalf of management at annual meetings of shareholders.
In choosing directorial candidates, the Committee should evaluate 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 and investment communities; and
qualities relating to the use of human resources such as developing management
talent and creating an effective organization.
Chief Executive Officer and Chairman of the Board Succession
The Committee shall advise the Board concerning candidates for the
positions of Chief Executive Officer and Chairman of the Board, if applicable,
and conduct such investigation of such candidates as the Committee may deem
appropriate. The Chairman of the Committee shall chair any executive session of
the Board called for the purpose of discussing Chief Executive Officer or
Chairman of the Board succession issues.
Officer Nomination and Ratification
The Committee shall advise the Board concerning possible candidates for
such positions as Chairman and Vice Chairman of the Board, if applicable,
President, Chief Financial Officer, Vice Presidents, Secretary, Treasurer, and
such other officers of the Company as the Committee deems appropriate. To
fulfill these responsibilities, the Committee may conduct such investigations as
the Committee shall deem appropriate.
Annual Board Evaluation
The Committee shall administer the annual self-evaluation by the Board,
share the evaluation results with the full Board and lead Board discussions and
analysis thereof.
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 any
search firm used to identify candidates.
6. Performance Review
The performance of the Committee shall be evaluated annually by the Board.
The Nominating and Corporate Governance Committee's responsibilities and
powers as delegated by the Board of Directors are set forth in this Charter. The
Committee relies to a significant extent on information and advice provided by
management and independent advisors. Whenever the Committee takes an action, it
exercises its independent judgment on an informed basis that the action is in
the best interests of the Company and its shareholders.
APPENDIX B
ATWOOD OCEANICS, INC.
CHARTER OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
1. Purpose and General Responsibilities
The function of the Compensation Committee ("Committee") is to assist the
Board of Directors ("Board") in fulfilling its oversight responsibilities
regarding the compensation of directors, officers, and employees of 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 for all employees
of the Company;
o Recommending to the Board the compensation of directors who are not
officers 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 Producing a Compensation Committee report on executive compensation
as required by the Securities and Exchange Commission ("SEC") to be
included in the Company's annual proxy statement or annual report on Form
10-K filed with the SEC; and
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 option
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.
2. Membership and Organization
The Committee shall have a Chairman appointed by 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. No
member of the Committee shall have a relationship to the Company that may
interfere with the exercise of their independent judgment, as such independence
is defined by New York Stock Exchange Listing Standards. The members of the
Committee shall be "non-employee directors" as that term is defined under the
Securities and Exchange Commission Rule 16b-3 and "outside directors" as that
term is defined for the purposes of the Internal Revenue Code, section 162(m).
The Committee may delegate its authority to a subcommittee or
subcommittees, provided that the subcommittee is composed entirely of
independent directors and has a published charter.
The Committee shall promptly inform the Board of the actions taken or
issues discussed at its meetings. This will generally take place at the Board
meeting following a Committee meeting.
3. Meeting Attendance and Minutes
The Committee shall meet at such times as the Chairman of the Committee
shall designate and notice of such meetings shall be given to Committee members
in accordance with the manner set forth in the bylaws of the Company 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).
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.
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 outside
directors.
Stock Option Plans
The Committee shall administer the Company's stock option 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.
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 Compensation Committee's responsibilities and powers as delegated by
the Board of Directors are set forth in this Charter. The Committee relies to a
significant extent on information and advice provided by management and
independent advisors. Whenever the Committee takes an action, it exercises its
independent judgment on an informed basis that the action is in the best
interests of the Company and its shareholders.
APPENDIX C
ATWOOD OCEANICS, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
1. Purpose and General Responsibilities
The function of the Audit Committee ("Committee") is to assist the Board of
Directors ("Board") in fulfilling its oversight responsibilities regarding the
(i) reporting practices of the Company and the quality and integrity of
financial reports of the Company; (ii) the Company's compliance with legal and
regulatory requirements; (iii) review of the independent auditor's
qualifications and independence and (iv) review of the performance of the
internal audit function and the independent auditors. Further, the Committee
shall assist the Board regarding its duty to accurately, completely and fairly
present the Company's financial condition and operations to its shareholders and
the investment community. In so doing, it is the responsibility of the Committee
to maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the Company.
The policies and procedures of the Committee in carrying out its
responsibilities should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the accounting
and reporting practices of the Company are in accordance with all requirements
and are of the highest quality.
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 Selection and oversight of independent auditors;
o Meeting with the independent auditors and financial management of the
Company to review the scope of the audit for the current year and the
audit procedures to be utilized, and at the conclusion thereof, reviewing
the results of such audit, including any comments or recommendations of
the independent auditors;
o Reviewing with the independent auditors and financial and accounting
personnel, the adequacy and effectiveness of the accounting and financial
controls of the Company;
o Reviewing reports from the independent auditor regarding the auditor's
independence and any disagreements with management on financial,
accounting, or reporting matters;
o Monitoring the integrity and effectiveness of the Company's Disclosure
Controls;
o Discussing with the officers of the Company all relevant information
with respect to the Committee's preparation of the Disclosure Statements
and the Committee's evaluation of the effectiveness of the Company's
Disclosure Controls and preparing the Audit Committee report related
thereto which is required to be included in the Company's annual proxy
statement;
o Monitoring the filing of periodic reports; and
o Investigating any matter brought to its attention within the scope of its
duties.
The Committee has no authority with respect to the granting of options to
directors eligible to receive stock options under already existing stock option
plans. The authority of the Committee with respect to any future stock option
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.
2. Membership and Organization
The Committee shall have a Chairman appointed by the Board. The members of
the Committee shall be financially literate, as that term is defined from time
to time by the New York Stock Exchange Listing Standards and as determined by
the Board in its business judgment. At least one member of the Committee must
have accounting or related financial management expertise, as the Board
interprets such qualification in its business judgment. 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 three members. No member of the Committee
shall have a relationship to the Company that may interfere with the exercise of
their independent judgment, as such independence is defined by New York Stock
Exchange Listing Standards. The members of the Committee shall be "non-employee
directors" as that term is defined under the Securities and Exchange Commission
("SEC") Rule 16b-3.
Each member of the Committee must be financially literate, as such
qualification in interpreted by the Board in its business judgment, or must
become financially literate within a reasonable period of time after his or her
appointment to the Committee. At least one member of the Committee shall in the
judgment of the Board be an Audit Committee Financial Expert as defined by the
SEC.
The Committee may delegate its authority to a subcommittee or
subcommittees.
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 (not less than four per year) 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 bylaws
of the Company 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
Audit Committee Charter
The Committee shall review this Charter periodically for adequacy and
recommend to the Board any necessary changes.
Selection of Independent Auditors
The Committee shall be solely responsible for the selection of independent
auditors to audit the financial statements of the Company and its subsidiaries.
The Committee has the sole authority to approve all audit engagement agreements
and terms.
In connection with its continual assessment of the independence of the
outside auditor, the Committee shall pre-approve the retention of the outside
auditor for any significant non-audit service and any fee for such service.
Review of Financial Controls
The Committee shall review with the independent auditors and financial and
accounting personnel the adequacy and effectiveness of the accounting and
financial controls of the Company, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where new or
more detailed controls or procedures are desirable. The Committee shall receive
and review reports from financial management on the status of implementation of
recommendations to improve internal controls. The review should include a
discussion of the responsibilities, budget and staffing of the Company's
internal audit function. Particular emphasis should be given to the adequacy of
such internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper.
Review of Financial Statements and Accounting Principles
The Committee shall review with management and the independent auditors at
the completion of the annual examination:
the Company's annual financial statements and related footnotes; review the
Company's disclosures in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's periodic reports; the
independent accountant's audit of the financial statements and report thereon;
any major issues regarding, or significant changes in, accounting principles or
financial statement presentations; any special audit steps adopted in light of
material control deficiencies; significant financial reporting issues and
judgments made in connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on the financial
statements; 1 the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements; any serious
difficulties or disputes with management encountered during the course of the
audit; discuss policies with respect to risk assessment and risk management; and
discuss earnings press releases, as well as financial information and earnings
guidance provided to analysts and rating agencies.
The Committee shall inquire as to whether the independent auditors are
satisfied with the disclosure and content of the financial statements to be
presented to the shareholders. The Committee shall also inquire as to the
auditor's view of the quality of the Company's accounting principles employed,
including any principles employed which are deemed minority practices.
Disclosure and Periodic Reports
The Committee shall review reports (made at least annually) from the
independent auditor regarding the (i) the firm's internal quality-control
procedures; (ii) auditor's independence (setting forth all relationships between
the auditor and the Company); and (iii) any material issues raised by the most
recent internal quality control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried out by
the firm, and any steps taken to deal with any such issues.
The Committee shall also review any disagreements with management on
financial, accounting or reporting matters, and discuss such reports with the
auditor, and if so determined by the Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the auditor or
satisfactory resolution of any disagreements on financial, accounting, or
reporting matters
The committee shall report, including any recommendations of the Committee,
required by the rules of the SEC to be included in the Company's annual proxy
statement.
Independence from Management
The Committee shall ensure that the independent auditor has sufficient
opportunity to meet with the members of the Committee without the members of
management present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the Company's financial and accounting
personnel and the cooperation that the independent auditors received during the
course of the audit.
The Committee shall also separately, periodically meet with management and
internal auditors or other personnel responsible for internal audit functions.
Interim Financial Report
The Committee shall review the interim financial report before it is filed
with the SEC or other regulators.
No Duty to Conduct Audits
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Committee to conduct investigations or to resolve disagreements, if any,
between management and the independent auditor.
Financial Human Resources
The Committee shall review accounting and financial human resources and
succession planning with the Company and shall report its findings to the
Nominating and Corporate Governance Committee for its review.
The Committee shall set clear hiring policies for employees or former
employees of independent auditors.
Code of Ethics for the Chief Executive Officer and Senior Financial Officers
The Committee shall review and revise, as necessary, the Company's Code of
Ethics for the Chief Executive Officer and Senior Financial Officers.
Disclosure Controls
The Committee shall design and establish controls and other procedures
(which may include procedures currently used by the Company) that are designed
to ensure that (i) information required by the Company to be disclosed to the
SEC and other written information that the Company will disclose to the
investment community is recorded, processed, summarized and reported accurately
and on a timely basis and (ii) information is accumulated and communicated to
management as appropriate to allow timely decisions regarding such required
disclosure ("Disclosure Controls").
Disclosure Statements
The Committee shall review and supervise the preparation of the Company's
(i) periodic and current reports, proxy statements, information statements,
registration statements and any other information filed with the SEC, (ii) press
releases containing financial information, earnings information, information
about material acquisitions or dispositions and other information material to
the Company's shareholders, and (iii) correspondence containing financial
information broadly disseminated to shareholders (collectively, the "Disclosure
Statements") and disclosure policies for financial information displayed on the
Company's corporate/investor relations Web site.
Annual and Quarterly Reports
The Committee shall evaluate the effectiveness of the Company's Disclosure
Controls within 90 days prior to the filing of the Company's Annual Report on
Form 10-K and as reasonably practical prior to each Quarterly Report on Form
10-Q (collectively, the "periodic reports"). The Committee shall provide a
certification to the appropriate officers prior to filing with the SEC of each
periodic report as to (i) the Committee's compliance with its policies and
procedures and proper performance of the responsibilities which have been
assigned to it and (ii) the Committee's conclusions resulting from its
evaluation of the effectiveness of the Disclosure Controls.
Additional Areas of Review
The Committee may participate in other areas of review as designated by the
Board, including, but not limited to, the following:
Senior Officer Expenses - At least annually (or more frequently as circumstances
require), the Committee shall review the expenses of the senior officers of the
Company.
Transactions with Management - The Committee shall review past or proposed
transactions between the Company, members of management, directors and
associates of directors.
Information Technology - The Committee shall receive an annual report on the
adequacy of the Company's computerized information system controls and related
security.
Income Tax Matters - At least annually (or more frequently as circumstances
require), the Committee shall receive a report from the Company's Chief
Financial Officer regarding certain income tax matters, including the status of
income tax reserves and governmental tax audits.
Derivative Securities - At least annually (or more frequently as circumstances
require), the Committee shall receive a report from the Company's Chief
Financial Officer on the Company's use of derivative securities, if any.
Whistleblower Program
The Committee shall review all complaints made in accordance with the
Company's Policy on Reporting and Investigating Known or Suspected Improper
Activities (Whistleblower Policy) and Policy for Protection of Whistleblowers
from Retaliation and Guidelines for Reviewing Retaliation Complaints
(Whistleblower Protection Policy). The Committee will comply and carry out all
duties assigned to it pursuant to the Whistleblower Policy and Whistleblower
Protection Policy.
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.
6. Performance Review
The performance of the Committee shall be evaluated annually by the Board.
The Audit 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. 447179.3/SPH/10282/0102/011304
PROXY
ATWOOD OCEANICS, INC.
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 12, 2004
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, 2003, at the Annual
Meeting of Shareholders to be held on February 12, 2004 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.
________________________, 2004 _________________________________________
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.