UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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[PARKER DRILLING COMPANY LOGO]
Proxy Statement
March 21, 2002
LETTER TO STOCKHOLDERS
MARCH 21, 2002
DEAR FELLOW SHAREHOLDERS:
We are pleased to offer you this invitation to attend our 2001 Annual Meeting of
Stockholders. The meeting will be held on Thursday, April 25, 2002, at 10:00
a.m. Central Time, at the Westlake Club, 570 Westlake Park Boulevard, Houston,
Texas.
At the meeting we will:
o elect three directors for three-year terms,
o approve PricewaterhouseCoopers LLP as our independent accountants for
2002, and
o conduct any other business properly coming before the meeting.
We also will report on our performance in 2001 and answer your questions. You
will have the opportunity to meet the directors and officers of the company as
well as our independent accountants.
We are pleased to announce that in July 2001, our board appointed Dr. Robert M.
Gates a director. Dr. Gates, former director of the Central Intelligence Agency,
has extensive knowledge about Russia, Kazakhstan and other areas in which the
Company has significant operations. As we continue to expand our presence in the
countries of the former Soviet Union, Dr. Gates' insight will be extremely
valuable.
We are also pleased to announce that in December 2001, our board appointed Mr.
John W. Gibson as a director. Mr. Gibson, currently president and CEO of
Landmark Graphics, has extensive experience in the oil and gas industry. Mr.
Gibson will bring significant guidance and leadership to our company based on
his extensive knowledge of the industry.
In November 2001, we announced the appointment of Mr. Robert F. Nash as senior
vice president and chief operating officer to fill the vacancy created by the
retirement of Mr. Linn. Robert's 26 years of service in the oil and gas
industry, including a variety of senior management positions with Halliburton
Energy Services, will prove beneficial to the Company.
In July 2001, Mr. James W. Linn, executive vice president and chief operating
officer and board member, announced his retirement as an officer from the
Company after 28 years of exemplary service. Although the Company will miss
Jim's day-to-day involvement with our people and customers, we will retain the
benefit of his considerable experience through his board service.
Again this year, all stockholders will be able to vote on the Internet. Last
year, a significant number of our stockholders took advantage of Internet
voting. We encourage you to vote on the Internet. It is a simple process and the
least expensive way for us to process your vote.
We look forward to seeing you at the meeting. If you cannot attend the meeting,
please log on to our Web site at www.parkerdrilling.com as we will be posting a
summary of the meeting shortly thereafter.
Sincerely,
/s/ ROBERT L. PARKER /s/ ROBERT L. PARKER JR.
Robert L. Parker Robert L. Parker Jr.
Chairman of the Board President and Chief Executive Officer
1
TABLE OF CONTENTS
PAGE
NOTICE OF 2001 ANNUAL MEETING............................... 3
PROXY STATEMENT............................................. 4
QUESTIONS AND ANSWERS....................................... 5
PROPOSALS TO VOTE ON........................................ 9
THE BOARD OF DIRECTORS...................................... 10
BOARD AND COMMITTEE MEETINGS................................ 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. 14
DIRECTOR COMPENSATION....................................... 15
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF
MANAGEMENT................................................ 16
PERFORMANCE GRAPH........................................... 18
EXECUTIVE COMPENSATION...................................... 19
COMPENSATION TABLE....................................... 19
OPTIONS GRANTS........................................... 21
OPTIONS EXERCISED........................................ 22
COMPENSATION COMMITTEE REPORT............................... 24
AUDIT COMMITTEE REPORT...................................... 27
OTHER INFORMATION........................................... 29
RELATED TRANSACTIONS..................................... 29
SEVERANCE COMPENSATION AND CONSULTING AGREEMENTS......... 30
OTHER SEVERANCE ARRANGEMENTS............................. 30
INDEMNIFICATION.......................................... 30
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING............. 30
COST OF PROXY SOLICITATION............................... 30
REQUIREMENTS FOR SUBMISSION OF SHAREHOLDER PROPOSALS AND
NOMINATION OF DIRECTORS................................ 31
2
NOTICE OF 2001 ANNUAL MEETING
The 2001 Annual Meeting of Stockholders of Parker Drilling Company will be held
on Thursday, April 25, 2002, at 10:00 a.m. Central Time, at the Westlake Club,
570 Westlake Park Boulevard, Houston, Texas, to conduct the following items of
business:
o elect three directors to three-year terms,
o approve PricewaterhouseCoopers LLP as independent accountants for the
year 2002, and
o conduct any other business properly coming before the meeting.
Stockholders who owned shares of our stock at the close of business on March 8,
2002, are entitled to attend and vote at the meeting. A complete list of these
stockholders will be available at our office prior to the meeting.
By Order of the Board of Directors,
/s/ RONALD C. POTTER
Ronald C. Potter
Corporate Secretary
3
PROXY STATEMENT
If you are a stockholder of Parker Drilling Company as of the close of business
on March 8, 2002, you have a right to vote on certain matters affecting the
Company. This proxy statement discusses the proposals you are voting on this
year. Please read this proxy statement carefully because it contains important
information for you to consider when deciding how to vote. Your vote is
important.
In this proxy statement, we refer to Parker Drilling Company as the "Company."
We also refer to this proxy statement, the proxy card and our 2001 Annual Report
as the "proxy materials."
The board of directors is sending proxy materials to you and all other
stockholders on or about March 21, 2002. The board is asking you to vote your
shares by completing and returning the proxy card or otherwise submitting your
vote in a manner described later in this proxy statement under "Questions and
Answers -- How Do I Vote?"
4
QUESTIONS AND ANSWERS
Q: WHO CAN VOTE AT THE ANNUAL MEETING?
A: Stockholders who owned Company common stock on March 8, 2002, may attend and
vote at the annual meeting. Each share is entitled to one vote. There were
92,238,473 shares of Company common stock outstanding on March 8, 2002.
Q: WHAT IS IN THIS PROXY STATEMENT?
A: This proxy statement describes the proposals on which we would like you, as a
stockholder, to vote. It also gives you information on the proposals, as well as
other information, so that you can make an informed decision.
Q: WHAT IS THE PROXY CARD?
A: The proxy card enables you to appoint Robert L. Parker and Robert L. Parker
Jr. as your representatives at the annual meeting. By completing and returning
the proxy card, you are authorizing Robert L. Parker and Robert L. Parker Jr. to
vote your shares at the meeting as you have instructed them on the proxy card.
This way, your shares will be voted whether or not you attend the meeting. Even
if you plan to attend the meeting, it is a good idea to complete and return your
proxy card before the meeting date just in case your plans change.
Alternatively, you may vote by telephone or on the Internet, as described in
"How Do I Vote."
Q: WHAT AM I VOTING ON?
A: We are asking you to vote on:
o the election of three directors for a term of three years, and
o the approval of PricewaterhouseCoopers LLP as the Company's independent
accountants for the year 2002.
Q: HOW DO I VOTE?
A: YOU MAY VOTE BY MAIL.
You do this by completing and signing your proxy card and mailing it in the
enclosed, prepaid and addressed envelope. If you mark your voting instructions
on the proxy card, your shares will be voted:
o as you instruct, and
o according to the best judgment of Robert L. Parker and Robert L. Parker Jr. if
a proposal comes up for a vote at the meeting that is not on the proxy card.
If you do not mark your voting instructions on the proxy card, your shares will
be voted:
o for the three named nominees for directors,
o for the approval of PricewaterhouseCoopers LLP as the Company's independent
accountants for year 2002, and
o according to the best judgment of Robert L. Parker and Robert L. Parker Jr. if
a proposal comes up for a vote at the meeting that is not on the proxy card.
YOU MAY VOTE BY TELEPHONE.
You do this by following the "Vote by Telephone" instructions that came with
your proxy statement. If you vote by telephone, you do not have to mail in your
proxy card.
YOU MAY VOTE ON THE INTERNET.
You do this by following the "Vote by Internet" instructions that came with your
proxy statement. If you vote on the Internet, you do not have to mail in your
proxy card.
5
QUESTIONS AND ANSWERS
YOU MAY VOTE IN PERSON AT THE MEETING.
We will distribute written ballots to anyone who wants to vote in person at the
meeting; however, if you hold your shares in street name, you must request a
proxy from your stockbroker in order to vote at the meeting. Holding shares in
"street name" means you hold them through a brokerage firm, bank or other
nominee, and therefore the shares are not held in your individual name.
Q: HOW DO I VOTE MY STOCK BONUS PLAN (401(K)) SHARES?
A: The proxy card you receive from our transfer agent will include your shares
held under the Parker Drilling Company Stock Bonus Plan (401(k)). By completing
and returning your proxy card, you provide voting instructions:
o to the transfer agent for shares you hold in your individual name at Wells
Fargo Bank Minnesota, N.A., and
o to the Stock Bonus Plan's purchasing agent for shares you hold through the
plan.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
A: It means that you have multiple accounts at the transfer agent or with
stockbrokers. Please complete and return all proxy cards to ensure that all your
shares are voted.
Unless you need multiple accounts for specific purposes, it may be less
confusing if you consolidate as many of your transfer agent or brokerage
accounts as possible under the same name or address.
If you would like to combine various household accounts into one for purposes of
proxy solicitation, please call our stock transfer agent, at (800) 468-9716, and
instruct the shareowner services representative to do so.
Q: WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?
A: You may revoke your proxy and change your vote by:
o signing another proxy card with a later date and returning it before the polls
close at the meeting,
o voting by telephone or on the Internet before 12:00 p.m. Central Time, on
April 24, 2002, (your latest telephone or Internet vote is counted), or
o voting at the meeting.
Q: WILL MY SHARES BE VOTED IF I DO NOT RETURN MY PROXY?
A: If your shares are held in street name, your brokerage firm, under certain
circumstances, may vote your shares.
Brokerage firms have authority under New York Stock Exchange rules to vote
customers' unvoted shares on some "routine" matters. The New York Stock Exchange
has determined that the election of directors and approval of independent
accountants described later under "Proposals To Be Voted On" are considered
routine matters. If you do not give a proxy to vote your shares, your brokerage
firm may either:
o vote your shares on routine matters, or
o leave your shares unvoted.
6
QUESTIONS AND ANSWERS
When a brokerage firm votes its customers' unvoted shares on routine matters,
these shares are counted to determine if a quorum exists to conduct business at
the meeting. A brokerage firm cannot vote customers' unvoted shares on
non-routine matters. These shares are considered not entitled to vote on
non-routine matters, rather than as a vote against the matters.
We encourage you to provide instructions to your brokerage firm by giving your
proxy. This ensures that your shares will be voted at the meeting.
You may have granted your stockbroker discretionary voting authority over your
account.
Your stockbroker may be able to vote your shares depending on the terms of the
agreement you have with your stockbroker.
A purchasing agent under a retirement plan may be able to vote a participant's
unvoted shares. If you are a participant in the Stock Bonus Plan (401(k)), the
Plan's purchasing agent, under certain circumstances, can vote your shares.
Q: HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A: To hold the meeting and conduct business, a majority of the Company's
outstanding shares as of March 8, 2002, must be present at the meeting. This is
called a quorum.
Shares are counted as present at the meeting if the stockholder either:
o is present and votes in person at the meeting, or
o has properly submitted a proxy (including voting by telephone or over the
Internet).
Q: HOW MANY VOTES MUST THE NOMINEES HAVE TO BE ELECTED AS DIRECTORS?
A: The three nominees receiving the highest number of votes for election will be
elected as directors. This number is called a plurality of the votes cast.
Q: HOW MANY VOTES MUST PRICEWATERHOUSECOOPERS LLP RECEIVE TO BE APPROVED AS
INDEPENDENT ACCOUNTANTS?
A: PricewaterhouseCoopers LLP will be approved if a majority of the shares
present at the meeting in person or by proxy vote for approval.
Q: WHAT HAPPENS IF A NOMINEE IS UNABLE TO STAND FOR ELECTION?
A: The board may reduce the number of directors or select a substitute nominee.
In the latter case, if you have completed and returned your proxy, Robert L.
Parker and Robert L. Parker Jr. can vote your shares for a substitute nominee.
They cannot vote for more than three nominees.
Q: HOW ARE VOTES COUNTED?
A: You may vote either "for" each director nominee or withhold your vote from
any one or all of the nominees.
You may vote "for" or "against" the proposal to approve PricewaterhouseCoopers
LLP as independent accountants or abstain from voting on this proposal. If you
abstain from voting, it will have the
7
QUESTIONS AND ANSWERS
same effect as a vote "against" this proposal.
If you give your proxy without voting instructions, your shares will be counted
as a vote for each director nominee and for the proposal to approve
PricewaterhouseCoopers LLP as independent accountants for 2002.
Voting results are tabulated and certified by our transfer agent, Wells Fargo
Bank Minnesota, N.A.
Q: IS MY VOTE KEPT CONFIDENTIAL?
A: Proxies, ballots and voting tabulations identifying stockholders are kept
confidential and will not be disclosed except as may be necessary to meet legal
requirements.
Q: HOW DO I FIND THE VOTING RESULTS OF THE MEETING?
A: We will announce voting results at the meeting. We will publish these results
in our quarterly report on Form 10-Q for the second quarter of 2002 which will
be available on our Web site at www.parkerdrilling.com. We will file that report
with the Securities and Exchange Commission (SEC). You can get a copy by
contacting our Investor Relations Department at (281) 406-2212 or the SEC at
(202) 942-8090 for the location of the nearest public reference room. You can
also get a copy on the Internet through the SEC's electronic data system, called
EDGAR, at www.sec.gov or under SEC filing in the Investor Relations section of
the Company's Web site.
8
PROPOSALS TO VOTE ON
1. ELECTION OF DIRECTORS
Nominees for directors this year are Robert L. Parker, Robert L. Parker Jr. and
Simon G. Kukes. These three directors currently comprise Class III of the three
classes of directors.
Each nominee is currently a director of the Company and has consented to serve a
three-year term. Each of the three directors has previously stood for election,
with the exception of Mr. Kukes who was appointed by the board in July 2000.
THE BOARD RECOMMENDS A VOTE FOR THESE NOMINEES.
2. APPROVAL OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS OF THE
COMPANY FOR 2002
We are asking the stockholders to approve PricewaterhouseCoopers LLP ("PWC") as
independent accountants for the Company for 2002. The board of directors, upon
recommendation of the Audit Committee, has unanimously selected PWC as
independent accountants for 2002, subject to approval of the stockholders. A
representative of PWC will attend the Annual Meeting, will have the opportunity
to make a statement if he or she desires to do so and will be available to
answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PWC AS INDEPENDENT
ACCOUNTANTS FOR 2002.
OTHER BUSINESS
The board of directors knows of no other business to be considered at the
meeting; however, if:
o other matters are properly presented at the meeting, or for any adjournment or
postponement of the meeting, and
o you have properly submitted your proxy,
then Robert L. Parker and Robert L. Parker Jr. will, with your proxy, vote your
shares on those matters according to their best judgment.
9
THE BOARD OF DIRECTORS
NOMINEES FOR DIRECTOR (CLASS III) -- WITH TERM OF OFFICE EXPIRING AT THE 2004
ANNUAL MEETING OF STOCKHOLDERS
ROBERT L. PARKER
DIRECTOR SINCE 1969
Mr. Parker, age 78, chairman of the board since 1991, also served as president
and chief executive officer of the Company from 1954 until October 1991. He also
serves on the board of directors of Clayton Williams Energy, Inc., BOK Financial
Corporation, and Wells Fargo Bank Texas, Kerrville, N.A.. He is the father of
Robert L. Parker Jr.
ROBERT L. PARKER JR.
DIRECTOR SINCE 1973
Mr. Parker Jr., age 53, is president and chief executive officer, having joined
the Company in 1973. He was elected president and chief operating officer in
1977 and chief executive officer in December 1991. He previously was elected a
vice president in 1973 and executive vice president in 1976. Mr. Parker Jr. is
on the board of directors of the University of Texas Engineering Foundation
Advisory Council, the University of Texas Development Board and the
International Association of Drilling Contractors. He is the son of Robert L.
Parker.
SIMON G. KUKES
DIRECTOR SINCE JULY 2000
Mr. Kukes, age 55, joined the Company's board in July 2000. He serves as
president and chief executive officer of Moscow-based Tyumen Oil Company, one of
the world's top 15 private oil companies. He also serves as advisor to the
Foreign Policy Association. Mr. Kukes graduated cum laude from Moscow Chemical
Technical Institute in 1969 and gained his doctorate in kinetic chemical
processes in 1973. From 1979 to 1998, he held top management positions with
Phillips Petroleum and Amoco Oil.
10
THE BOARD OF DIRECTORS
CONTINUING DIRECTORS (CLASS I) -- WITH TERM OF OFFICE EXPIRING AT THE 2002
ANNUAL MEETING OF SHAREHOLDERS
DAVID L. FIST
DIRECTOR SINCE 1986
Mr. Fist, age 70, is a member of the law firm of Rosenstein, Fist & Ringold,
Tulsa, Oklahoma, having been associated with the firm since 1955. He serves as a
director of Peoples State Bank.
JAMES W. LINN
DIRECTOR SINCE 1986
Mr. Linn, age 56, served as executive vice president and chief operating officer
of Parker Drilling from 1991 to 2001. He joined Parker in 1973 and served in
various leadership positions in the company's international and U.S. operations
departments. He retired as an officer of the Company in July 2001. Mr. Linn is
also a director of Sarkeys Energy Center at the University of Oklahoma, a
director of the International Association of Drilling Contractors (IADC), a
member of the Oklahoma and Tulsa County Bar Associations, and a member of the
Advisory Board to the Mewbourne School of Petroleum and Geological Engineering
at the University of Oklahoma.
R. RUDOLPH REINFRANK
DIRECTOR SINCE 1993
Since January 1, 1997, Mr. Reinfrank, age 46, is a co-founder and managing
general partner of Clarity Partners. Prior to the formation of Clarity Partners,
Mr. Reinfrank co-founded Rader Reinfrank & Co., LLC, Beverly Hills, California.
From May 1993 through December 1996, Mr. Reinfrank was a managing director of
the Davis Companies.
JOHN W. GIBSON
DIRECTOR SINCE DECEMBER 2001
Since May 2000 Mr. Gibson, age 44, has served as president and CEO of Landmark
Graphics. Previously he served as the company's chief operating officer,
executive vice president of Landmark's Integrated Products groups, and president
and vice president of Landmark's Zycor Division. He began his career in the oil
and gas industry as an exploration geophysicist for Gulf Oil Company. Following
the acquisition of Gulf by Chevron, he became manager of geophysical and
geological subsurface imaging for Chevron's Oil Field Research Company.
11
THE BOARD OF DIRECTORS
CONTINUING DIRECTORS (CLASS II) -- WITH TERM OF OFFICE EXPIRING AT THE 2003
ANNUAL MEETING OF STOCKHOLDERS
BERNARD DUROC-DANNER
DIRECTOR SINCE 1996
Mr. Duroc-Danner, age 48, is chairman, president and chief executive officer of
Weatherford International, Inc., having held these positions since May, 1998.
For the previous five years he held the positions of president, chief executive
officer and director of Energy Ventures, Inc. ("EVI"). Weatherford
International, Inc. is an international manufacturer and supplier of oilfield
equipment. Mr. Duroc-Danner is also chairman of Grant Prideco and a director of
Caldive International and Universal Compression.
JAMES E. BARNES
DIRECTOR SINCE 1998
Mr. Barnes, age 68, previously served as chairman, president and chief executive
officer of MAPCO Inc., a diverse Fortune 500 energy company, which merged in
1998 with The Williams Companies. Mr. Barnes also serves on the boards of
Stillwell Financial, Inc. (formerly known as Kansas City Southern Industries,
Inc.), BOK Financial Corp. and SBC Communications Inc.
ROBERT M. GATES
DIRECTOR SINCE JULY 2001
Dr. Gates, age 58, is a former director of the Central Intelligence Agency,
which he joined in 1966. From 1991 to 1993 he served as director of central
intelligence. From 1999 to 2001, he served as Dean of the George Bush School of
Government and Public Service at Texas A&M University. Dr. Gates is a member of
the board of trustees of The Fidelity Funds and a member of the board of
directors of TRW, Inc., and NACCO Industries. He serves as senior adviser or
consultant to several major international firms, and is a trustee of the Charles
Stark Draper Laboratory in Boston and the Forum for International Policy. He is
on the national executive board of the Boy Scouts of America and president of
the National Eagle Scout Association.
NUMBER OF DIRECTORS AND TERMS
The Company currently has ten directors. Each current director was elected by
the stockholders except for Mr. Kukes, who was appointed by the board in July
2000 and is standing for election this year, Mr. Gates, who was appointed by the
board in July 2001 and will stand for election as a Class II Director at the
2003 Annual Meeting and Mr. Gibson, who was appointed by the board in December
2001 and will stand for election at the 2002 Annual Meeting as a Class I
Director. The remaining seven directors will continue to serve the terms
described in their biographies above.
Our directors serve staggered terms. This is accomplished as follows:
o each director who is elected at an annual meeting of stockholders serves a
three-year term,
o the directors are divided into three classes,
o the classes are as nearly equal in number as possible, and
o the term of each class begins on a staggered schedule.
12
BOARD AND COMMITTEE MEETINGS
During 2001, the board of directors held four regular meetings and one
telephonic meeting. Each director attended or participated in all meetings of
the board and applicable committee meetings during 2001, with the exception of
Mr. Kukes, who was absent from three board meetings; Mr. Duroc-Danner, who was
absent from two board meetings and one Audit Committee meeting; and Mr.
Reinfrank who was absent from one board meeting. The following table describes
the board's committees. The board does not have a nominating committee or a
committee serving a similar function.
NUMBER OF
NAME OF COMMITTEE FUNCTIONS OF THE MEETINGS
AND MEMBERS COMMITTEE IN 2001
---------------------------------------------------------------------
AUDIT o reviews with management and Four (4)
independent accountants the
James E. Barnes* quarterly and year-end financial
R. Rudolph Reinfrank** statements and material changes
Bernard Duroc-Danner** in accounting principles or
Robert M. Gates** practices
o reviews reports of independent
accountants and internal auditors
o reviews recommendations about
internal controls
o recommends selection of
independent accountants to the
board
(Refer to the Audit Committee
report on page 27.)
---------------------------------------------------------------------
COMPENSATION o determines the compensation of Four (4)
the chief executive officer
R. Rudolph Reinfrank* o reviews and approves:
David L. Fist o compensation philosophy of
James E. Barnes** officers and key employees
John W. Gibson** o programs for annual and
long-term compensation
o reviews and approves the
granting of options under stock
plans and bonus awards under
incentive compensation plans
(Refer to the Compensation
Committee report on page 24.)
* Chairperson
** Messrs. Reinfrank and Duroc-Danner were appointed to the Audit Committee and
Mr. Barnes was appointed to the Compensation Committee on April 25, 2001.
Dr. Gates was appointed to the Audit Committee and Mr. Gibson was appointed
to the Compensation Committee on January 23, 2002.
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2001:
o none of the members of the Compensation Committee was an officer (or former
officer) or employee of the Company or any of its subsidiaries;
o none of the members of the Compensation Committee entered into (or agreed to
enter into) any transaction or series of transactions with the Company or any of
its subsidiaries in which the amount involved exceeds $60,000;
o none of the Company's executive officers served on the compensation committee
(or another board committee with similar functions or, if there was no committee
like that, the entire board of directors) of another entity where one of that
entity's executive officers served on the Company's Compensation Committee;
o none of the Company's executive officers was a director of another entity
where one of that entity's executive officers served on the Company's
Compensation Committee; and
o none of the Company's executive officers served on the compensation committee
(or another board committee with similar functions or, if there was no committee
like that, the entire board of directors) of another entity where one of that
entity's executive officers served as a director on the Company's board.
14
DIRECTOR COMPENSATION
We pay directors who are also officers of the Company $2,000 for each board
meeting.
In 2001, compensation for non-employee directors included the following:
o an annual retainer of $7,000
o $2,000 for each board meeting
o $1,000 for each committee meeting
o expenses of attending board and committee meetings
Non-employee directors may participate in the 1997 Parker Drilling Company Stock
Plan. Under this Plan non-employee directors are granted stock options at the
direction of the Compensation Committee. In 2001, non-employee directors
received the following stock options:
o Robert M. Gates -- 15,000 options
o John W. Gibson -- 15,000 options
Effective as of the board meeting on October 25, 2001, the fees paid to non-
employee and employee directors were increased to $3,000 for each board meeting
and to $2,000 for each committee meeting. Effective as of the board meeting on
April 25, 2002, the annual retainer to be paid to non-employee directors will
increase to $10,000.
At the January 30, 2002, meeting of the Compensation Committee, the award of
5,000 stock options to each non-employee director was approved. The stock
options have a $3.50 strike price and expire on January 30, 2009. The last time
stock options were granted to non-employee directors was July 1999 at which time
15,000 options were awarded to each non-employee director.
15
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning beneficial ownership of
the Company's common stock as of January 31, 2002, by (a) all persons known by
the Company to be beneficial owners of more than five percent (5%) of such
stock, (b) each director and nominee for director of the Company, (c) each of
the executive officers of the Company named in the Executive Compensation table,
and (d) all directors and executive officers as a group. Unless otherwise noted,
the persons named below have sole voting and investment power with respect to
such shares.
AMOUNT AND NATURE OF SHARES BENEFICIALLY OWNED
SHARES RIGHT OTHER PERCENT OF
OWNED TO ACQUIRE STOCK OUTSTANDING
NAME (1) (2) (3) SHARES(4)
--------------------------------------------------------------------------------------
MELLON FINANCIAL CORPORATION 7,824,878(5) -- -- 8.49%
CITIGROUP INC. 6,847,992(6) -- -- 7.40%
DIMENSIONAL FUND ADVISORS 5,087,500(7) -- -- 5.52%
ROBERT L. PARKER 3,905,389(8) 522,500 22,500 4.80%
ROBERT L. PARKER JR. 235,497(9) 938,500 22,500 1.26%
JAMES W. LINN 171,120 514,250 3,750 *
JAMES J. DAVIS 100,540(10) 478,500 22,250 *
ROBERT F. NASH -- 18,750 56,250 *
THOMAS L. WINGERTER 44,141(11) 239,500 22,500 *
W. KIRK BRASSFIELD 4,170 90,000 15,000 *
R. RUDOLPH REINFRANK 4,000 68,250 3,750 *
DAVID L. FIST 600 68,250 3,750 *
BERNARD DUROC-DANNER -- 58,250 3,750 *
JAMES E. BARNES 30,000(12) 23,250 3,750 *
SIMON G. KUKES -- 16,250 3,750 *
ROBERT M. GATES 2,000 5,000 15,000 *
JOHN W. GIBSON -- 5,000 15,000 *
DIRECTORS AND EXECUTIVE OFFICERS AS
A GROUP (14 PERSONS) 4,497,457 3,046,250 213,500 7.92%
--------------------------------------------------------------------------------------
* Less than 1%
16
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
(1) Includes shares:
o for which the person has sole voting and investment power, or
o for which the person has shared voting and investment power with
his/her spouse
o that are held in the Parker Drilling Company Stock Bonus Plan.
Excludes shares that may be acquired through stock option exercises.
(2) Shares that can be acquired through stock option exercises within 60 days
of the date of the proxy.
(3) Shares subject to a vesting schedule, forfeiture risk and other
restrictions.
(4) Shares of common stock which are not outstanding but which could be
acquired by a person upon exercise of an option within 60 days of the Proxy
Statement, are deemed outstanding for the purpose of computing the
percentage of outstanding shares beneficially owned by such person. Such
shares, however, are not deemed to be outstanding for the purpose of
computing the percentage of outstanding shares beneficially owned by any
other person.
(5) Based on information obtained from Schedule 13G filed by Mellon Financial
dated January 23, 2002.
(6) Based on information obtained from Schedule 13G filed by Citigroup, Inc.,
dated February 4, 2002.
(7) Based on information obtained from Schedule 13G filed by Dimensional Fund
Advisors as of January 30, 2002.
(8) Includes 67,200 shares owned by Mr. Parker's spouse, as to which shares Mr.
Parker disclaims any beneficial ownership and has no voting control and
3,796,045 shares held by the Robert L. Parker Trust, over which Mr. Parker
has sole voting control and shared dispositive power.
(9) Includes 5,760 shares held as trustee for Mr. Parker Jr.'s nieces, as to
which he disclaims any beneficial ownership.
(10) Includes 77,200 shares held by Mr. Davis' spouse in a trust over which she
is trustee only.
(11) Includes 3,200 shares held in Mr. Wingerter's daughter's name as part of
UTMA and Education Trust account.
(12) All shares are held by the James E. Barnes Revocable Trust.
17
PERFORMANCE GRAPH
The following performance graph compares cumulative total stockholder returns on
the Company's common stock compared to the Philadelphia Oil Service Index (OSX)
and a Peer Group Index consisting of Nabors Industries, Rowan Companies, Inc.,
Noble Drilling Corp., Helmerich & Payne and Pride International, Inc.,
calculated at the end of each fiscal year, December 31, 1998, through December
31, 2001. The composition of companies that comprise the Peer Group Index was
increased based on the diversification of the Company during 2000 to enable
comparisons with peer companies whose operations and business most closely
resemble that of the Company. Due to the discontinuation of the S&P Oil and Gas
Drilling Index as of December 31, 2001, coupled with the fact that this index
only represented four companies, management decided to replace this index with
the OSX this year. The OSX, which began February 24, 1997, is comprised of 15
companies involved in various aspects of the oil and gas service industry. The
graph assumes $100 was invested on December 31, 1997, in the company's common
stock and in each of the referenced indices and assumes reinvestment of
dividends.
PERFORMANCE DATA
[Perf Graph]
97 98 99 00 01
Parker Drilling 100.00 26.17 26.15 41.54 30.28
Philadelphia Oil Service Index 100.00 45.06 75.16 109.10 76.19
Peer Group (HP, NBR, NE, RDC,
PDE) 100.00 33.76 65.50 106.57 73.29
18
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for services
rendered in all capacities to the Company by the chief executive officer, the
four next most highly compensated executive officers of the Company and Mr. Linn
who retired in July 2001 (collectively, the "Named Executive Officers"), for the
years ended December 31, 2001, 2000 and 1999.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($) ($)(2) ($) SARS(#) ($)
------------------------------------------------------------------------------------------------------------
Robert L. Parker Jr. 2001 507,096 200,000 45,000 194,321(3)(9)
PRESIDENT AND 2000 493,000 142,500 -- 10,703
CHIEF EXECUTIVE 1999 497,500 162,925 150,000 18,147
OFFICER
Robert L. Parker 2001 462,000 175,000 122,615 45,000 206,800(4)
CHAIRMAN 2000 468,000 142,500 139,406 123,222
1999 472,500 154,350 154,720 100,000 329,441
James W. Linn 2001 169,077 140,000 -- 1,007,345(5)(9)
EXECUTIVE VICE 2000 318,000 66,400 -- 9,470
PRESIDENT AND 1999 314,500 89,000 16,290
CHIEF OPERATING OFFICER
(retired July 2001)
James J. Davis 2001 265,014 125,000 45,000 92,458(6)(9)
SR. VICE PRESIDENT- 2000 220,000 -- 8,887
FINANCE AND CHIEF 1999 209,000 50,000 89,000 17,163
FINANCIAL OFFICER
Thomas L. Wingerter 2001 200,184 137,118 45,000 6,059(7)(9)
VICE PRESIDENT - 2000 170,000 30,000 -- 6,722
OPERATIONS 1999 156,577 57,850 50,000 7,050
W. Kirk Brassfield 2001 155,877 66,420 30,000 71,203(8)(9)
VICE PRESIDENT AND 2000 130,800 -- 5,292
CORPORATE 1999 117,800 30,000 25,000 5,210
CONTROLLER
19
EXECUTIVE COMPENSATION
(1) For each of the employed directors, includes director's fees of $12,000
for 2001 and $18,000 for each of the years 2000 and 1999.
(2) No compensation was received by the Named Executive Officers which
requires disclosure in this column except for Mr. Parker whose Other Annual
Compensation in 2001 includes $57,393 for tax preparation and $59,445 for
salaries to employees who work jointly for the Company and the Robert L. Parker
Trust.
(3) Mr. Parker Jr.'s All Other Compensation for 2001 is comprised of
Company matching contributions to its 401(k) plan of $6,800, $717 representing
the full dollar value of the term portion of a Company-paid premium for split
dollar life insurance policy and $3,270 representing the present value of the
benefit of the non-term portion of that premium. Also included in All Other
Compensation are Company-reimbursed moving expenses of $160,198 to move Mr.
Parker Jr. from Tulsa to Houston.
(4) Mr. Parker's All Other Compensation for 2001 is comprised of Company
matching contributions to its 401(k) plan of $6,800, $30,813 representing the
full dollar value of the term portion of a Company-paid premium for a split
dollar life insurance policy and $169,187 representing the full-dollar value of
the non-term portion of that premium. See caption "Related Transactions" on page
29.
(5) Mr. Linn's All Other Compensation for 2001 is comprised of Company
matching contributions to its 401(k) plan of $6,800, $537 representing the full
dollar value of the term portion of a Company-paid premium for a split dollar
life insurance policy and $2,293 representing the present value of the benefit
of the non-term portion of that premium. Also included in All Other Compensation
is a $1 million lump sum severance payment to Mr. Linn the details of which can
be found under "Other Severance Arrangements" on page 30.
(6) Mr. Davis' All Other Compensation for 2001 is comprised of Company
matching contributions to its 401(k) plan of $6,800, $477 representing the full
dollar value of the term portion of a Company-paid premium for a split dollar
life insurance policy and $1,834 representing the present value of the benefit
of the non-term portion of that premium. Also included in All Other Compensation
are Company-reimbursed moving expenses of $85,181 to move Mr. Davis from Tulsa
to Houston.
(7) Mr. Wingerter's All Other Compensation for 2001 is comprised of Company
matching contributions to its 401(k) plan of $5,737, $322 representing the full
dollar value of the term portion of a Company-paid premium for a split dollar
life insurance policy and $1,647 representing the present value of the benefit
of the non-term portion of that premium.
(8) Mr. Brassfield's All Other Compensation for 2001 is comprised of
Company matching contributions to its 401(k) plan of $5,708, $290 representing
the full dollar value of the term portion of a Company-paid premium for a split
dollar life insurance policy and $1,725 representing the present value of the
benefit of the non-term portion of that premium. Also included in All Other
Compensation are Company-reimbursed moving expenses of $65,205 to move Mr.
Brassfield from Tulsa to Houston.
(9) The present value of the benefit of the non-term portion of the split
dollar life insurance policies was determined by calculating the present value
of interest at risk on future premiums to be paid by the Company, assuming an
interest credit rate of 8% plus the present value of past premiums paid by the
Company, assuming an interest credit rate of 8%.
20
EXECUTIVE COMPENSATION
OPTION/SAR GRANTS IN 2001 TO EMPLOYEES
The following options were granted to employees in 2001:
------------------------------------------------------------------
NUMBER OF OPTIONS
GRANTED IN 2001
UNDER 1997 STOCK PLAN
------------------------------------------------------------------
NAME EXERCISABLE(1) UNEXERCISABLE
------------------------------------------------------------------
NAMED EXECUTIVE OFFICERS/(FROM 105,000(2) 105,000(2)
SUMMARY COMPENSATION TABLE)
EXECUTIVE OFFICER GROUP 18,750(3) 56,250(3)
NON-EXECUTIVE OFFICERS 82,500(2) 82,500(2)
EMPLOYEE GROUP 498,750(2) 521,250(2)
------------------------------------------------------------------
(1) Shares that can be acquired through stock option exercises within 60
days of the date of this Proxy.
(2) 25% of the grants to officers and employees under the 1997 stock plan
vest at the time of grant, and 25% vest on the anniversary date of the grants in
the next three years.
(3) Mr. Nash was granted 75,000 options on November 26, 2001, 25% of which
vested on November 26, 2001, and 25% will vest on November 26, 2002, 2003 and
2004.
21
EXECUTIVE COMPENSATION
AGGREGATED OPTION/SAR EXERCISES IN 2001 AND YEAR-END 2001 OPTION/SAR VALUES
The following table provides information on the options granted to the Executive
Officers named in the Executive Compensation Table and the potential realizable
value of those grants (on a pre-tax basis) determined in accordance with SEC
rules. The information in this table shows how much the named executive officers
may eventually realize in future dollars under two hypothetical situations: if
the stock gains 5% or 10% in value per year compounded over the six-year life of
the options. These are assumed rates of appreciation and not intended to
forecast future appreciation of the Company's common stock.
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(B)
--------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION GRANT DATE
NAME GRANTED(#) 2001(A) SHARE($/S) DATE 5%($) 10%($) VALUE($)(C)
--------------------------------------------------------------------------------------------------------------
ROBERT L. PARKER 45,000 3.2% $5.35 4/3/08 88,200 94,500 82,350
ROBERT L. PARKER JR. 45,000 3.2% $5.35 4/3/08 88,200 94,500 82,350
JAMES J. DAVIS 45,000 3.2% $5.35 4/3/08 88,200 94,500 82,350
THOMAS L. WINGERTER 45,000 3.2% $5.35 4/3/08 88,200 94,500 82,350
W. KIRK BRASSFIELD 30,000 2.1% $5.35 4/3/08 58,800 63,000 54,900
(a) Based on the total number of options granted to employees in 2001 under the
1997 Stock Plan.
(b) Calculated over a six-year period, which is equal to the maximum term of the
options.
(c) Calculated using the Black-Scholes option pricing model, based on the
Company's current dividend policy, volatility based on stock price data over the
six years preceding the option grants (56.0%) and a risk-free interest rate
(4.40%), which equaled, at the time of the option grants, the yield on U.S.
Treasury Strips with a time to maturity that approximates the six-year estimated
average life of the options. The result is a Black-Scholes option value of $1.83
per share. The Company does not believe the values estimated by this model, or
any other model, necessarily will be indicative of the values to be realized by
an executive.
22
EXECUTIVE COMPENSATION
OPTION/SAR GRANTS IN 2001 TO DIRECTORS
Upon their appointment to the board of directors, the following stock option
grants were made to Dr. Gates and Mr. Gibson:
--------------------------------------------------------------------------------
NUMBER OF OPTIONS GRANTED IN
2001 UNDER 1997 STOCK PLAN
--------------------------------------------------------------
NAME EXERCISABLE NON-EXERCISABLE
--------------------------------------------------------------
ROBERT M. GATES 5,000 10,000
JOHN W. GIBSON 5,000 10,000
-------------------------------
AGGREGATED YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS/SARS AT THE-MONEY OPTIONS/ SARS AT
DECEMBER 31, 2001 DECEMBER 31, 2001 (1)
------------------------------------------------------------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------------------------------------------------------------------
ROBERT L. PARKER JR. 889,749 71,251(2) $ 56,531 $ 18,844
ROBERT L. PARKER 486,249 58,751(3) $ 37,687 $ 12,563
JAMES W. LINN 490,749 22,251(4) $ 33,541 $ 11,181
JAMES J. DAVIS 444,999 56,001(5) $ 33,541 $ 11,181
THOMAS L. WINGERTER 215,749 46,251(6) $ 18,843 $ 6,282
W. KIRK BRASSFIELD 66,249 38,751(7) $ 9,241 $ 3,141
(1) The value per option is calculated by subtracting the exercise price of each
option ($4.50 for previous awards under the 1994 Plan and $8.875 for all awards
in 1997 under the 1994 and the 1997 Plans and $10.8125 for awards in 1998 under
the 1997 Plan, $3.1875 for awards in 1999 under the 1997 Plan and $5.35 for
awards in 2001 under the 1997 Plan) from the $3.69 closing price of the
Company's common stock on the New York Stock Exchange on December 31, 2001.
(2) 48,751 vest in 2002, 11,250 vest in 2003 and 11,250 vest in 2004
(3) 36,251 vest in 2002, 11,250 vest in 2003 and 11,250 vest in 2004
(4) 22,251 vest in 2002
(5) 33,501 vest in 2002, 11,250 vest in 2003 and 11,250 vest in 2004
(6) 23,751 vest in 2002, 11,250 vest in 2003 and 11,250 vest in 2004
(7) 23,751 vest in 2002, 7,500 vest in 2003 and 7,500 vest in 2004
23
COMPENSATION COMMITTEE REPORT
In this section we describe our executive compensation policies and practices,
including the compensation we pay our chief executive officer, the next four
highly compensated officers and other key employees.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 2001, the Compensation Committee of the Company's board of directors
consisted of R. Rudolph Reinfrank and David L. Fist. At regular meetings of the
board of directors of the Company on April 25, 2001, and January 23, 2002, Mr.
James E. Barnes and Mr. John W. Gibson, respectively, were appointed to the
committee. No member of our committee is or has been an employee of the Company
or any of its subsidiaries. Each member qualifies as a "non-employee director"
under Rules 16b-3 of the Securities Exchange Act of 1934 and as an "outside
director" under Section 162(m) of the Internal Revenue Code.
Our committee has overall responsibility for the Company's compensation policies
for executive officers, other officers and key employees. Our committee's
functions include:
o determining the compensation of the chief executive officer, Robert L. Parker
Jr.
o on recommendation of the chief executive officer, reviewing and approving the
other executive officers', other officers' and key employees' compensation,
including salary, payments under the annual incentive bonus compensation plan,
and
o recommending the granting of awards to the board under the Company's stock
plans.
Our committee is providing the following report on the Company's compensation
policies, the relationship of the Company's performance to such compensation
policies and the chief executive officer's compensation.
COMPENSATION POLICIES
The Company's compensation policies for executive and non-executive officers and
key employees are designed to address a number of objectives, including
rewarding financial performance and rewarding the achievement of returns for
stockholders. The Company's policies rely primarily on two principles:
o First, a significant portion of the compensation should be in the form of
stock and stock-based incentives, and
o Second, a large portion of cash compensation should be dependent upon meeting
stated financial objectives.
When establishing salaries, bonus levels and stock-based awards, our committee
considers the job functions, responsibilities and performance during the past
year, and the amounts of compensation paid to officers and key employees in
similar positions of comparable companies, based on periodic reviews of data
obtained from independent consultants. Our committee reviews companies whose
size, type of business, assets, and rates of growth are similar to the
Company's.
24
COMPENSATION COMMITTEE REPORT
Our committee also makes discretionary and subjective determinations of
appropriate compensation amounts to take into account the Company's philosophy
of compensating individuals for the success they achieve in managing specific
functions or their performance in extraordinary circumstances, such as
leadership during difficult market conditions, corporate reorganizations, etc.
In the case of officers and key employees other than Mr. Parker Jr., the
committee places great weight on the recommendation of Mr. Parker Jr.
THE VALUE OF EQUITY
A basic premise of the Company's compensation policy is that significant equity
participation creates a vital long-term partnership between management and other
stockholders. Through the Company's Stock Plan, the value of equity ownership is
extended to officers and other employees of the Company in a broad-based manner.
ANNUAL BASE SALARY
The committee believes that base salary plays a major role in attracting,
motivating and retaining effective officers and key employees. Our committee
reviews base salaries and salary increases of officers and key employees
annually in light of the average levels paid by other companies it reviews.
Additional salary increases were given to certain officers and key employees
during 2001 as an inducement to relocate to Houston. In light of current
oilfield service conditions, management decided to not grant salary increases at
January 1, 2002, to the Company's officers and those who report directly to
them. The Committee concurred with this decision.
VARIABLE COMPENSATION
The Incentive Compensation Plan ("ICP") covers all officers and key employees
and is used as the basis to pay bonuses each year based on the achievement of
certain financial and operating objectives. For incentive bonuses to be earned,
certain threshold levels of performance must be met. Up to two times employees'
base bonuses can be earned if specified higher levels of performance are
achieved. The ICP formulas are based on the following measurement factors which
are weighted as to importance:
o EBITDA (earnings before interest, taxes, depreciation and amortization)
o rig utilization
o days sales outstanding on trade accounts receivable
o inventory levels
o overall return on assets
STOCK PLAN
The Company has two Stock Plans that allow the board to award stock options and
stock grants to officers and key employees. The 1997 Plan is established as a
broad-based plan under the current guidelines of the New York Stock Exchange.
Grants during 2001 are noted in the preceding tables.
At the January 30, 2002, meeting of the Compensation Committee, the award of
5,000 stock options to each
25
COMPENSATION COMMITTEE REPORT
non-employee director was approved. The stock options have a $3.50 strike price
and expire on January 30, 2009.
CHIEF EXECUTIVE OFFICER
Robert L. Parker Jr. receives a base salary of $522,500. Mr. Parker's base
salary was not increased at January 1, 2002, in accordance with management's
decision to not grant salary increases to the Company's officers and those that
report directly to them due to current oilfield service industry conditions. Mr.
Parker's annual bonus is based on the ICP provisions discussed above under
"Variable Compensation." Our committee believes that Mr. Parker Jr.'s leadership
is a key to our success.
Specifically:
o Mr. Parker Jr. has provided leadership and vision in connection with the
strategic direction of the Company,
o Mr. Parker Jr.'s reputation in the industry is an integral part of the success
of the Company,
o Mr. Parker Jr.'s guidance has been critical to the Company during periods of
depressed market conditions and corporate reorganization.
The amount of Mr. Parker Jr.'s bonus based on performance for 2001 was $200,000,
which amount was paid on February 13, 2002. On April 3, 2001, Mr. Parker Jr. was
awarded options to purchase 45,000 shares of the Company's stock at a price of
$5.35 per share. This award was made concurrently with awards of stock options
to officers and other key personnel of the Company.
TAX LAW LIMITS ON EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code limits tax deductions for certain
executive compensation over $1 million. Certain types of compensation are
deductible only if performance criteria are specified in detail, and
stockholders have approved the compensation arrangements. The committee has not
yet adopted a formal policy with respect to qualifying compensation paid to its
executive officers for an exemption from this limitation on deductibility
imposed by this section. The committee anticipates that all compensation paid to
its executive officers during 2001 will qualify for deductibility because no
executive's compensation is expected to exceed the dollar limitations of such
provision.
Respectively submitted,
Mr. R. Rudolph Reinfrank, Chairman
Mr. James E. Barnes
Mr. David L. Fist
Mr. John W. Gibson
26
AUDIT COMMITTEE REPORT
In this section we describe the composition and functions of the Audit Committee
as provided by the Charter and the rules and regulations of the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange ("NYSE"). At the
board of directors meeting, on January 23, 2002, the board appointed Dr. Robert
Gates to the Audit Committee. At the same meeting, in compliance with the
foregoing regulations, the board reviewed the composition of the Audit Committee
and determined that:
(i) each member satisfies the requirements for "independence",
(ii) each member possesses the requisite "financial literacy", and
(iii) at least one member possesses the required "financial expertise".
At a previous meeting on October 25, 2001, the board of directors reviewed the
Charter of the Audit Committee and determined that it was in compliance with
applicable SEC and NYSE regulations. The Company included the Audit Committee
Charter as an exhibit to the 2001 Proxy Statement last year. There have been no
changes to the Charter since that time.
AUDIT COMMITTEE REPORT
The role of the audit committee is to assist the board of directors in its
oversight of the Company's financial reporting process, system of internal
controls, audit processes and compliance with laws, regulations and Company
policies. In this capacity, the Audit Committee operates under a Charter which
sets forth the duties and responsibilities of the Audit Committee. The Audit
Committee reviewed the Charter at its meeting on July 25, 2001, and made no
changes to it.
Management of the Company is responsible for the preparation, presentation and
integrity of the Company's financial statements, the Company's accounting and
financial reporting principles and its system of internal controls. The
independent accountants are responsible for auditing the Company's financial
statements and expressing an opinion as to their conformity with generally
accepted accounting principles. The Audit Committee's responsibility is to
monitor and review these processes. The members of the Audit Committee are not
professionally engaged in the practice of auditing or accounting. We have relied
without independent verification on the information provided to us and the
representations made by management and the independent accountants. Our
oversight does not provide us with an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or internal controls, or that the Company's financial statements are
presented in conformance with generally accepted accounting principles.
In the performance of its oversight function, the Audit Committee addressed the
following specific matters:
o We reviewed quarterly 10-Qs and the year-end financial statements for the year
2001 and discussed them with management and the independent accountants,
27
AUDIT COMMITTEE REPORT
o We discussed with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61,
o We received the written disclosures from the independent accountants required
by Independence Standards Board Standard No. 1,
AUDIT FEES FOR 2001
o We discussed with the independent accountants matters relevant to the planning
and implementation of their audit of the Company's financial statements,
o We reviewed the fees paid to the independent accountants,
PricewaterhouseCoopers LLP ("PWC"), for (1) performing the audit of the
Company's financial statements, (2) designing and implementing any financial
information systems, and (3) any non-audit services performed during the year,
e.g. internal audit and tax preparation services. These fees are set out
immediately following this report.
Based upon the reports and discussions described in this report, and subject to
the limitations on the role and responsibilities of the Audit Committee referred
to above and in the Charter, we hereby recommend to the board of directors that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001, to be filed with the SEC, and
that they be included in the Company's Annual Report to Stockholders for the
year 2001.
Respectfully submitted,
James E. Barnes, Chairman
R. Rudolph Reinfrank
Bernard Duroc-Danner
Robert M. Gates
AUDIT FEES PAID IN 2001
During 2001, the Company paid PWC $1,055,693 for audit and other services, as
follows:
Audit: $340,490
Financial Systems Design and
Implementation: None
Non-Audit Services: $715,203
Approximately $390,000 of the non-audit services in 2001 was for internal audit
services with the remaining fees for tax consulting and compliance services. As
of July 31, 2002, the Company will no longer retain PWC for internal audit
services, and as a result the Company will perform this function internally.
28
OTHER INFORMATION
RELATED TRANSACTIONS
Since 1975 when the stockholders approved a Stock Purchase Agreement between the
Company and the Robert L. Parker Trust, the Company and Robert L. Parker have
entered into various life insurance arrangements on the life of Robert L.
Parker. To insure the lives of Mr. and Mrs. Robert L. Parker for $15,200,000 and
Mr. Robert L. Parker for $8,000,000, the Company is currently paying $570,490 in
annual premiums. Annual premiums funded by the Company will be reimbursed from
the proceeds of the policies, plus interest beginning in March 2003 at a
one-year treasury bill rate. The Company may use, at its option, up to
$7,000,000 of such proceeds to purchase Parker Drilling Company stock from the
Robert L. Parker Trust at a discounted price. Robert L. Parker Jr., chief
executive officer of the Company and son of Robert L. Parker, will receive one
third of the net proceeds of these policies as a beneficiary.
* * *
As part of building business relationships and fostering closer ties to clients,
the Company traditionally hosts customers in a variety of activities such as
sporting events and other outdoor activities, coupled with industry-related
conferences.
Robert L. Parker, chairman of the Company, through the Robert L. Parker Sr.
Family Limited Partnership (the "Limited Partnership") owns a 2,987 acre ranch
near Kerrville, Texas, ("Cypress Springs Ranch") which the Limited Partnership
makes available to the Company for customer retreats and forums and meetings for
world-wide company management. The Cypress Springs Ranch provides lodging,
conference facilities, sporting and other outdoor activities in conjunction with
marketing and business purposes.
These information meetings facilitate in-depth discussions among oil company
customers and company operations personnel on all phases of the industry. Robert
L. Parker has a 50 percent general partnership interest and a 46.5 percent
limited partnership interest in the Limited Partnership. The Limited Partnership
also owns a 4,982 acre cattle ranch near Mazie, Oklahoma ("Mazie Ranch"), 40
miles from the regional office in Tulsa, Oklahoma. The Mazie Ranch is also used
by the Company for outdoor activities by customers and is available to employees
for outdoor activities and other family recreation. There is an understanding
between the Company and the Limited Partnership that the Cypress Springs Ranch
and the Mazie Ranch shall be available for Company use without limitation. In
consideration for the availability and use of these facilities, the Company pays
only the portion of the ranch operating expenses based on the Company's actual
use of said facilities. The total amount of these operating expenses paid by the
Company in fiscal year 2001 was $185,950.
Additionally, the Company uses a 1,380 acre ranch ("Camp Verde Ranch") owned by
Robert L. Parker Jr., which is near the Cypress Springs Ranch. The Camp Verde
Ranch is used to provide additional facilities and lodging for business
functions at Cypress Springs Ranch, for which the Company pays only that portion
of the ranch operating expenses based on the actual use of these facilities. The
total amount of
29
OTHER INFORMATION
these operating expenses paid by the Company in fiscal 2001 was $30,025.
Mr. Robert L. Parker Jr. incurred tax liability of $163,092 on January 5, 1998,
in connection with the vesting of restricted stock granted to him in 1995 by the
Company pursuant to the Company's 1991 Stock Grant Plan. As is customary the
Company paid the estimated taxes on said stock grant pursuant to an agreement
that Mr. Parker Jr. would repay said amounts to the Company. At the present time
Mr. Parker Jr. is indebted to the Company in the amount of $163,092.
SEVERANCE COMPENSATION AND CONSULTING AGREEMENTS
Each officer named in the Summary Compensation Table and four additional
officers have entered into Severance Compensation and Consulting Agreements (the
"Agreements") with the Company. Each Agreement has a six-year term but is
automatically extended on a year-to-year basis thereafter unless terminated or
unless a change in control occurs, in which case the Agreements will remain in
effect until no more benefits are payable thereunder.
Subsequent to the execution of the Agreements, there have been no events of
change in control that would trigger the payment of any benefits under the
Agreements in the event of the termination of employment of the signatories
thereto.
OTHER SEVERANCE ARRANGEMENTS
In connection with the retirement of Mr. James W. Linn, executive vice president
and chief operating officer, on July 15, 2001, Mr. Linn entered into a Waiver,
Release and Confidentiality Agreement of same date pursuant to which Mr. Linn
was paid a $1 million lump sum severance payment, granted the right to receive
continuing medical coverage under Parker's health plan until age 65 and was
allowed to retain all stock options previously awarded, which options shall
continue to vest and otherwise be subject to their respective award agreements.
Mr. Linn also agreed to a no compete/no hire provision for a period of 18
months.
INDEMNIFICATION
We indemnify our directors and officers to the fullest extent permitted, which
is also required by our Bylaws so that they will serve free from undue concern
that they will not be indemnified. It is our policy to have signed agreements
with our directors contractually obligating us to provide this indemnification
to them.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that during 2001, all filings with the SEC by its officers,
directors and ten percent stockholders complied with requirements for reporting
ownership and changes in ownership of Company common stock under Section 16(a)
of the Securities Exchange Act of 1934.
COST OF PROXY SOLICITATION
The Company is paying for and distributing proxies. As part of this process, the
Company reimburses brokers, nominees, fiduciaries, and other custodians
reasonable fees and expenses in forwarding proxy materials to stockholders. The
Company is using Georgeson Shareholder Communications, Inc. as its
30
OTHER INFORMATION
proxy solicitor to whom it is paying a fee of $7,000 plus expenses. Employees of
the Company may also solicit proxies through the mail, telephone or other means.
Employees do not receive additional compensation for soliciting proxies.
REQUIREMENTS AND DEADLINES FOR SUBMISSION OF SHAREHOLDER PROPOSALS AND
NOMINATION FOR DIRECTORS
Under our Bylaws, certain procedures are provided which a shareholder must
follow to nominate persons for election as directors or to introduce an item of
business at an annual meeting of shareholders. These procedures provide that
nominations for director nominees and/or an item of business to be introduced at
an annual meeting of shareholders must be submitted in writing to the Corporate
Secretary of the Company at 1401 Enclave Parkway, Suite 600, Houston, Texas
77077. The nomination or proposed item of business must be received no later
than 90 days and no more than 120 days in advance of an annual meeting. The 2002
Annual Meeting is tentatively scheduled for April 30, 2003.
For any other annual or special meeting, the nomination or item of business must
be received by the tenth day following the date of public disclosure of the date
of meeting.
The board is not aware of any matters that are expected to come before the
Annual Meeting other than those referred to in this Proxy Statement. If any
other matter should come before the Annual Meeting, the persons named in the
accompanying proxy intend to vote the proxies in accordance with their best
judgment, including consideration of the recommendations of management.
The chairman of the meeting may refuse to allow the transaction of any business
not presented beforehand, or to acknowledge the nomination of any person not
made, in compliance with the foregoing procedures. Under the rules of the SEC,
shareholder proposals intended to be presented at the Company's 2002 Annual
Meeting of Shareholders must be received by the Corporate Secretary, at our
principal executive offices not less than 90 nor more than 120 days before our
2002 Annual Meeting, tentatively scheduled for April 30, 2003.
If you have questions or need more information about the annual meeting, write
to:
Parker Drilling Company
Corporate Secretary
1401 Enclave Parkway, Ste. 600
Houston, Texas 77077
or call us at (281) 406-2000.
Whether or not you plan to attend the Meeting, please vote by telephone or
Internet or mark, sign, date and promptly return the enclosed proxy in the
enclosed envelope. The toll free number to vote by telephone is at no cost to
you. No postage is required for mailing in the United States.
By order of the board of directors,
/s/ RONALD C. POTTER
Ronald C. Potter
Corporate Secretary
Tulsa, Oklahoma
March 21, 2002
31
ANNUAL REPORT
The Company has provided to each person whose proxy is being solicited a copy of
its 2001 Annual Report to Stockholders. The Company will provide without charge
to each person who requests, a copy of the Company's annual report on Form 10-K
(including the financial statements and financial schedules thereto) required to
be filed with the Securities and Exchange Commission for the year ended December
31, 2001. Such requests should be directed to Mr. Randy Burkhalter, Investor
Relations Department, Parker Drilling Company, 1401 Enclave Parkway, Suite 600,
Houston, Texas 77077.
Stockholders are invited to keep current on the Company's news releases and
other developments throughout the year by way of the Internet. The address for
the Parker Drilling Company Web site is http://www.parkerdrilling.com.
PARKER DRILLING COMPANY
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, APRIL 25, 2002
10:00 A.M.
THE WESTLAKE CLUB
570 WESTLAKE PARK BOULEVARD
HOUSTON, TEXAS
--------------------------------------------------------------------------------
[PARKER DRILLING LOGO]
PARKER DRILLING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXY
--------------------------------------------------------------------------------
The undersigned appoints ROBERT L. PARKER and ROBERT L. PARKER JR., or either of
them, as Proxies, with the power of substitution, and authorizes them to
represent the undersigned at the annual meeting of stockholders to be held April
25, 2002, or any adjournment thereof, and to vote all the shares of common stock
of Parker Drilling Company held of record by the undersigned on March 8, 2002,
as designated on the reverse side.
This Proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED IN
FAVOR OF THE PROPOSALS IN EACH SUCH CASE.
See reverse side for voting instructions.
------------------------------
COMPANY #
CONTROL #
------------------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12:00 p.m. on April 24, 2002.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
o Follow the simple instructions the Voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/pkd/ - QUICK *** EASY *** IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week,
until 12:00 p.m. on April 24, 2002.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create
an electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
provided or return it to Parker Drilling Company, c/o Shareowner Services(SM),
P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
Please detach here
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2.
1. Election of directors -- director nominees:
01 Robert L. Parker Vote FOR Vote WITHHELD
02 Robert L. Parker Jr. all nominees from all nominees
03 Simon G. Kukes
(Instructions: To withhold authority to vote for ------------------------
any individual nominee, write the number(s) of the
nominee(s) in the box to the right.) ------------------------
2. PROPOSAL TO RATIFY the selection of PricewaterhouseCoopers LLP as
independent accountants for the year 2002.
For Against Abstain
3. IN THEIR DISCRETION, the Proxies are authorized to vote in their best
judgment upon such other business as may properly come before the meeting.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.
Discontinue Duplicate Mailings?
I Plan to Attend the Meeting Date --------------------------------
Address Change?
Indicate change below: -------------------------------------
-------------------------------------
Signature(s) In Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc. should
include title and authority.
THERE ARE THREE WAYS TO VOTE YOUR PROXY
Corporations should provide full name
of corporation and title of authorized
officer signing the proxy.