1. Director Qualifications
The Board of Directors (the "Board") of Parker Drilling Company (the "Company") will have a majority of directors who meet the criteria for independence
required by the New York Stock Exchange (the "NYSE") and the Securities Exchange Act of 1934, as amended (the "SEC Act"). The Corporate Governance
Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of new Board members as well as the
composition of the Board as a whole. This assessment will include members' qualifications as independent in accordance with the NYSE and the SEC Act, as
well as consideration of diversity, age, skills and experience in the context of the needs of the Board. Candidates for nominees for directorship may be
made by any member of the Board and by any shareholder and referred to the Corporate Governance Committee for review in accordance with its charter and
these principles. The invitation to become a Board nominee should be extended on behalf of the Board by the Chairman of the Board.
It is the sense of the Board that the appropriate size of the Board is between 7-11 members. However, the Board would be willing to increase or decrease
the size if circumstances warrant such action based on the recommendation of the Corporate Governance Committee.
When a director's principal occupation or business associations changes substantially during his or her tenure as a director, the Corporate Governance
Committee shall review the continued appropriateness of Board membership under the circumstances and make its recommendations to the Board. It is not the
sense of the Board that in every instance a director who retires or changes the occupation or business associations he or she held when they became a Board
member should necessarily leave the Board.
Directors and officers should consult with the Chairman of the Board and the Chairman of the Corporate Governance Committee in advance of accepting an
invitation to serve on another public company board.
The Board does not believe it should establish term limits. While term limits could help insure that there are fresh ideas and viewpoints available to the
Board, they hold the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into
the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole. As an alternative to term limits, the Corporate
Governance Committee will review each director's qualifications, suitability and willingness to serve on the Board annually, and each director will have
the opportunity to confirm his or her desire to continue as a member of the Board.
2. Director Responsibilities
It is the general policy of the Company that all major decisions be considered by the Board as a whole. The basic responsibility of the directors is to
exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its shareholders and to perform their
duties of loyalty and care. In discharging that obligation, directors should be entitled to rely on the honesty and integrity of the Company's senior
executives and its outside advisors and auditors. The directors shall also be entitled to have the Company purchase reasonable directors' and officers'
liability insurance on their behalf, thereby providing them indemnification to the fullest extent permitted by law and the Company's charter, by-laws and
any indemnification agreements, and exculpation as provided by state law and the Company's charter.
Directors are expected, to the extent reasonably practicable, to attend Board meetings and meetings of committees on which they serve, and to spend the time
needed and meet as frequently as necessary to properly discharge their responsibilities. Directors are also encouraged to attend the annual meeting of
shareholders. Information and data that are important to the Board's understanding of the business to be conducted at a Board or committee meeting should
generally be distributed in writing to the directors before the meeting, and directors should review these materials in advance of the meeting.
With respect to the separation of the offices of Chairman and Chief Executive Officer ("CEO"), the Board has determined that this issue is part of the
succession planning process and that it is in the best interests of the Company for the Board to make a determination when it elects a new chief executive
The Chairman and CEO will establish the agenda for each Board meeting with the understanding that the items necessary for the Board to perform its advisory
and monitoring functions be brought to it periodically for review and/or approval. The Board will review the Company's long-term strategic plans and the
principal issues that the Company will face in the future during at least one Board meeting each year. Each Board member is free to suggest the inclusion
of items on the agenda. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting.
The non-employee directors will meet in executive session on a regular basis four times a year and the independent directors shall meet separately at least
one time per year. Each year the directors will appoint a Presiding Director who will preside at these meetings and be disclosed in the annual proxy statement
as required by the NYSE. Any contract with present or former directors or officers of the Company shall be approved by the Corporate Governance Committee
regardless of quantitative materiality.
The Chairman and CEO are responsible for establishing effective communications with the Company's shareholders, customers, company associates, communities,
suppliers, creditors, governments and corporate partners. It is the Company's policy that management speaks for the Company. Individual Board members may,
from time to time, meet or otherwise communicate with various constituencies that are involved with the Company. But it is expected that Board members would
do this with the knowledge of management and, absent unusual circumstances or as contemplated by the committee charters, only at the request of management.
3. Board Committees
The Board will have at all times an Audit Committee, a Compensation Committee and a Corporate Governance Committee. All of the members of these committees
will be independent directors under the criteria established by the NYSE and the SEC Act. Committee members will be appointed by the Board upon recommendation
of the Corporate Governance Committee.
Each committee will have its own charter. The charters will set forth the purposes, goals and responsibilities of the committees as well as qualifications
for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board.
The charters will also provide that each committee will annually evaluate its performance.
The chairman of each committee, in consultation with the committee members, will determine the frequency and length of the committee meetings consistent with
any requirements set forth in the committee's charter. The chairman of each committee, in consultation with the appropriate members of the committee and
management, will develop the committee's agenda. At the beginning of the year each committee will establish a schedule of agenda subjects to be discussed
during the year (to the degree these can be foreseen). The schedule for each committee will be furnished to all directors.
The Board and each committee have the power to hire independent legal, financial or other advisors as it may deem necessary, without consulting or obtaining
the approval of any officer of the Company in advance.
The Board may, from time to time, establish or maintain additional committees as necessary or appropriate.
4. Director Access to Officers and Employees
Directors have full and free access to officers and employees of the Company. Any meetings or contacts that a director wishes to initiate may be arranged
through the CEO or the Corporate Secretary or directly by the director. The directors will use their judgment to ensure that any such contact is not
disruptive to the business operations of the Company and will, to the extent not inappropriate, copy the CEO on any written communications between a
director and an officer or employee of the Company.
The Board welcomes regular attendance at each Board meeting of senior officers of the Company. If the CEO wishes to have additional Company personnel attend
on a regular basis, this suggestion should be brought to the Board for approval.
5. Director Compensation
The form and amount of non-employee director compensation will be annually reviewed and recommended by the Corporate Governance Committee and approved by
the Board. The Corporate Governance Committee will consider that directors' independence may be jeopardized if director compensation and perquisites exceed
6. Director Orientation and Continuing Education
All new directors shall be provided with a director orientation packet that describes the various operations of the Company, the officers and their respective
duties and other information to adequately inform the director of the nature of the Company's business. The Company will make members of the Company's
management available to new Board members and existing Board members at corporate headquarters in order to receive presentations by senior management to
familiarize the directors with the Company's strategic plans, its significant financial, accounting and risk management issues, its compliance programs,
its Code of Corporate Conduct, its principal officers and its internal and independent auditors.
Board members are encouraged to attend conferences and other programs that will increase their knowledge of board functions and duties as well as other
board responsibilities. The Company will reimburse each Board member for attending one conference or program each year.
It is the sense of the Board that off-site Board retreats may be beneficial from time to time to address strategic planning and other critical decisions to
be made by the Board.
7. CEO Evaluation and Management Succession
The Compensation Committee is responsible for setting annual and long-term performance goals for the CEO and will conduct an annual review of the CEO's
performance against such goals, as set forth in its charter. The Compensation Committee shall meet annually with the CEO to receive his or her recommendations
concerning such goals. Both the goals and the evaluation are then submitted for consideration by the Board at an executive session.
The Compensation Committee should make an annual report to the Board on succession planning, which shall include its recommendations on development of potential
candidates so that the Company is adequately prepared in the event that a successor is needed. The entire Board will work with the Compensation Committee to
evaluate development plans for potential successors to the CEO. The CEO should at all times make available his or her recommendations and evaluations of
potential successors, along with a review of any development plans recommended for such individuals.
8. Annual Performance Evaluation
The Board will conduct an annual self-evaluation to determine whether the Board and each committee are functioning effectively. The Corporate Governance Committee
will receive comments from all directors and report annually to the Board with an assessment of the Board's performance. The assessment will focus on the
Board's contribution to the Company and specifically focus on areas in which the Board or management believes that the Board could improve.
9. Reporting of Accounting/Auditing and Other Irregularities; Communications with the Board
Anyone who has a concern about the Company's accounting, internal accounting controls or auditing matters or other irregularities, may communicate that concern
directly to the Company's Internal Audit department or its General Counsel, or to a third party hotline established by the Company for this purpose, the contact
information for each to be provided on the Company's Web site. Such communications may be confidential and/or anonymous. Concerns relating to accounting, internal
controls or auditing shall be reviewed by the Internal Audit department and/or General Counsel and, if credible and if confirmed would warrant remedial or
disciplinary action, will be reported to the Audit Committee and addressed by the Company in the same way as other concerns, including the retention of outside
advisors or counsel to investigate or advise on such concerns.
Anyone, including shareholders of the Company, may communicate with the Board or the non-employee directors about officer conduct or other concerns or matters by
submitting such concerns or matters in writing to the Presiding Director at the special address published on the Company's Web site. Such communications may be
confidential and/or anonymous. The concerns or matters will be reviewed by the Presiding Director pursuant to the criteria approved by a majority of the non-employee
directors. Any matter which falls within the criteria approved by the non-employee directors shall be presented to the Audit Committee or the Board and addressed
in the same way as other concerns, including the retention of outside advisors or counsel to investigate or advise on such matters or concerns.
The Company's policies prohibit any retaliation or taking any adverse action against anyone for raising or helping to resolve reports of misconduct or ethical
violations whether reported the the Company or to a governmental agency.
10. Director and Officer Stock Ownership Guidelines
The Board of Directors (the “Board”) of Parker Drilling Company (the “Company”) believes that all non-employee directors and executive officers should own and hold common stock of the Company to further align their interests and actions with the interests of the Company's stockholders and further promote the Company’s commitment to sound corporate governance. Therefore, the Board has adopted the following guidelines (the “Stock Ownership Guidelines”).
The Company's Stock Ownership Guidelines apply to all non-employee directors (each a "Non-Employee Director") and executive officers (each a "Covered Executive"), whether now existing in office or later appointed or elected. The phrase, "Covered Person," includes Non-Employee Directors and Covered Executives.
B. Qualifying Shares for Stock Ownership Guidelines
Shares of stock that count toward satisfaction of the Stock Ownership Guidelines ("Qualifying Shares") include:
- Shares owned outright by the Covered Person;
- Shares representing net after tax proceeds (using a 25% tax rate) of unvested restricted stock units;
- Shares held in the Company's Stock Bonus Plan; and
- Shares held in a partnership or in a trust for the benefit of such Covered Person or his or her spouse and/or minor children.
Stock options (whether or not vested), performance units and shares in which the Covered Person has publicly disclaimed a beneficial interest are NOT included as Qualifying Shares for Stock Ownership Guidelines purposes.
C. Stock Ownership Guidelines
Achievement of Required Market Value for Non-Employee Directors
The Company's Stock Ownership Guidelines require each Non-Employee Director to achieve ownership of a number of Qualifying Shares with a market value equal to a multiple of five (5) times the Non-Employee Director's annual cash retainer (in effect upon the later of December 31 of the preceding year or the date he or she first becomes a Non-Employee Director). The market value of the Qualifying Shares each Non-Employee Director is required to own or hold shall be referred to as the Non-Employee Director's "Required Market Value."
The Corporate Governance Committee will review and re-calculate a Non-Employee Director's Required Market Value as a result of a change in annual cash retainer. Subject to the following, once established, a Non-Employee Director's Required Market Value will not change as a result of any fluctuations in the market price of the Company's common stock.
Non-Employee Directors are required to achieve ownership of a number of Qualifying Shares meeting the Required Market Value within the later of five (5) years from December 31, 2009 or five (5) years after first becoming a Non-Employee Director. If a Non-Employee Director's Required Market Value increases because of an increase in annual cash retainer, a three (3) year period to achieve share ownership meeting any incremental increase in the applicable Required Market Value begins with the effective date of the increase in annual cash retainer, but such Non-Employee Director must still meet the Stock Ownership Guidelines applicable to his or her prior annual cash retainer amount within the original five-year period.
Achievement of Required Market Value for Covered Executives
The Company's Stock Ownership Guidelines require each Covered Executive to achieve ownership of a number of Qualifying Shares with a market value equal to a multiple of the Covered Executive's annual base salary (in effect upon the later of December 31, 2009 or the date he or she first becomes a Covered Executive). The market value of the Qualifying Shares each Covered Executive of the Company is required to own or hold (the Covered Executive's "Required Market Value") is as follows:
- executive vice presidents and higher: a multiple of five (5) times the officer's annual base salary;
- senior vice presidents: a multiple of three (3) times the officer's annual base salary;
- vice presidents: a multiple of two (2) times the officer's annual base salary; and
- all other executive officers: a multiple of one (1) times the officer's annual base salary.
The Corporate Governance Committee will review and re-calculate a Covered Executive's Required Market Value as a result of a change in office that increases the multiple of annual base salary the Covered Executive must own or hold. Otherwise, once established, a Covered Executive's Required Market Value will not change as a result of any fluctuations in annual base salary or the market price of the Company's common stock.
Covered Executives are required to achieve ownership of a number of Qualifying Shares meeting the Required Market Value within the later of five (5) years from December 31, 2009 or five (5) years after first becoming a Covered Executive. If the multiple of annual base salary for a Covered Executive increases because of a change in office, then a three (3) year period to achieve share ownership meeting any incremental increase in the applicable Required Market Value begins with the date of the change in office, but such Covered Executive must still meet the Stock Ownership Guidelines applicable to his or her prior position within the original five-year period.
D. Failure to Timely Achieve Required Market Value
Failure to meet or, in unique circumstances, to show sustained progress toward meeting the ownership requirement, will result in a requirement to retain all shares of common stock in the Company obtained through the vesting or exercise of equity grants until the ownership requirement is met. Additionally, the Covered Person may be subject to a reduction in future long-term incentive equity grants and/or payment of future annual and/or long term cash incentive payouts in the form of stock
E. Ownership of Required Share Level for Covered Persons
Periodically but not less than twice per year, the Corporate Governance Committee shall make a determination as to whether a Covered Person owned or held sufficient Qualifying Shares to meet the Required Market Value based on the closing price of the Company’s common stock as reported on the New York Stock Exchange on a date determined by the Corporate Governance Committee (the “Determination Date”). Once a Covered Person's Qualifying Shares satisfy his or her Required Market Value (the "Achievement Date"), the Covered Person must maintain ownership of the number of Qualifying Shares held on the Achievement Date (the “Required Share Level”) for so long as he or she remains a Covered Person. The Covered Person's Required Share Level will not increase except in connection with a change in the Covered Person's Required Market Value as set forth in C. above.
In the event of a stock split, reverse stock split, stock dividend or other similar change in the Company's outstanding capital stock, the Corporate Governance Committee will evaluate whether to adjust the Required Market Value and/or Required Share Level for any Covered Person.
There may be instances where these Stock Ownership Guidelines would place a severe hardship on a Covered Person, as determined in the sole discretion of the Corporate Governance Committee. In such instances, the Corporate Governance Committee will have the authority, but not the obligation, to make the final decision as to developing an alternative approach for such Covered Person that reflects both the intention of these Stock Ownership Guidelines and the personal circumstances of the affected Covered Person.
The Corporate Governance Committee shall be responsible for monitoring the application of these Stock Ownership Guidelines. This policy supersedes any previous policy of the Company concerning stock ownership guidelines. In the event of any conflict or inconsistency between this policy and any other materials previously distributed by the Company, this policy shall govern.