Exhibit 10d

2005 ROWAN COMPANIES, INC. LONG-TERM INCENTIVE PLAN
2006 PERFORMANCE SHARE AWARD AGREEMENT

 
THIS PERFORMANCE SHARE AWARD AGREEMENT (this “Agreement”) is made as of the 28th
day of April, 2006 (“Award Date”) between Rowan Companies, Inc., a Delaware
corporation (the “Company”) and ____________ (“Participant”).
 
1. Agreement to Grant Performance Shares.   Subject to the conditions described
in this Agreement and the 2005 Rowan Companies, Inc. Long-Term Incentive Plan
(the “Plan”), the Company hereby agrees to grant shares of common stock, $0.125
par value per share, of the Company (“Stock”) to Participant in consideration
for services to be performed and contingent upon the occurrence of certain
events as set forth herein. Prior to the actual issuance of such shares,
Participant shall have no rights as a shareholder pursuant to this Agreement
including but not limited to any rights to receive or accrue dividends with
respect to such shares or the right to vote such shares.

2. Definitions. For purposes of this Agreement, the following terms shall have
the following meaning:

“Average Stock Price” means the average of the closing prices for the Stock or
the common stock of each of the Peer Group Companies on each of the twenty-five
(25) trading days immediately preceding the date of the determination.
 
“Committee” means the Compensation Committee of the Board of Directors of the
Company.
 
“Peer Group Companies” means the companies listed on Appendix A attached hereto.
 
“Performance Period” means a period of three years beginning on the Award Date
and ending on the third anniversary thereof.
 
“Relative ROI Rank” means the Return on Investment of the Company and the Return
on Investment of each of the Peer Group Companies ranked in descending order.
Relative ROI Rank shall be expressed as a number from one to seven with the
number one (1) representing the highest Relative ROI Rank and seven (7) the
lowest.
 
“Relative TSR Rank” means the Total Shareholder Return of the Stock and the
Total Shareholder Return of the common stock of each of the Peer Group Companies
ranked in descending order. Relative TSR Rank shall be expressed as a number
from one to seven with the number one (1) representing the highest Relative TSR
Rank and seven (7) the lowest.
 

 

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“Return on Investment” or “ROI” means x∕y where:
 
x = the sum of operating income (loss) for each fiscal year that ends during the
Performance Period; and
 
y = the average of the net total of total assets less current liabilities as of
the beginning and end of each fiscal year that ends during the Performance
Period.
 
“Retirement” by an Employee shall have occurred if:
 
(a) in the case of an Employee who is an employee of Rowan Companies, Inc. or an
employee of an Employing Company, as defined in the Rowan Pension Plan (the
“Rowan Plan”), the Employee: (1) has satisfied the requirements for normal
retirement pursuant to the rules of the Rowan Plan which, in terms of age, is a
minimum of 60 and (2) has requested and received authorization from the
administrative committee appointed by the Company’s Board of Directors to
administer the Rowan Plan to commence receiving pension benefits; or
 
(b) in the case of an Employee who is an employee of LeTourneau, Inc. or an
employee of an Employing Company, as defined in the LeTourneau Pension Plan (the
“LeTourneau Plan”), the Employee: (1) has satisfied the requirements for either
normal or late retirement pursuant to the rules of the LeTourneau Plan, (2) has
requested and received authorization from the administrative committee appointed
by the Board of Directors of LeTourneau, Inc. to administer the LeTourneau Plan
to commence receiving pension benefits, and (3) would have satisfied the
requirements for normal retirement pursuant to the rules of the Rowan Plan if he
or she was an employee of Rowan Companies, Inc. or an employee of an Employing
Company under the Rowan Plan.
 
Determination of the date of termination of employment by reason of Retirement
shall be based on such evidence as the Committee may require and a determination
by the Committee of such date of termination shall be final and controlling on
all interested parties.
 
“Target Shares” means the number of shares of Stock that will be transferred to
Participant if both (i) the Relative ROI Rank of the Company is four (4) and
Return on Investment is equal to zero (0) or greater and (ii) the Relative TSR
Rank of the Stock is four (4) and Total Shareholder Return is equal to one (1)
or greater. Participant’s Target Shares shall be set forth in paragraph 3 below.
 
“Total Shareholder Return” or “TSR” means x∕y where:
 
x = the sum of (i) the difference between the Average Stock Price as of the last
trading day of the Performance Period and the Average Stock Price as of the
first day of the Performance Period; and (ii) all dividends paid on the Stock
during the Performance Period; and
 
y = the Average Stock Price as of the first day of the Performance Period.
 
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All capitalized terms not otherwise defined herein shall have the meanings set
forth in the Plan, the terms of which are incorporated herein by reference.
 
3. Determination of Performance Shares. Provided that Participant is
continuously employed by the Company throughout the Performance Period as soon
as administratively feasible, but not later than seventy-five (75) days after
the last day of the Performance Period, the Company shall transfer to
Participant a number of shares of Stock to be determined as follows:

(a) 50% of the Target Shares multiplied by the percentage shown in the following
chart that corresponds to the Relative ROI Rank.

Rowan Relative ROI Rank
1
2
3
4
5
6
7
Target Share Payout if ROI ³ 0
200%
167%
133%
100%
25%
0%
0%
Target Share Payout if ROI < 0
150%
125%
100%
75%
20%
0%
0%

(b) 50% of the Target Shares multiplied by the percentage shown in the following
chart that corresponds to the Relative TSR Rank.

Rowan Relative TSR Rank
1
2
3
4
5
6
7
Target Share Payout if TSR ³ 1
200%
167%
133%
100%
25%
0%
0%
Target Share Payout if TSR < 1
150%
125%
100%
75%
20%
0%
0%

Participant’s Target Shares = ______.

4. Retirement, Disability, Death, or Change of Control. Except as otherwise
provided below, in the event that Participant’s employment with the Company
terminates prior to the last day of the Performance Period for any reason other
than Retirement, Disability or death, this Agreement shall terminate and all
rights of Participant to receive Stock under this Agreement shall be forfeited.
In the event of Participant’s termination of employment by reason of Retirement,
Disability or death, Participant shall receive at the conclusion of the
Performance Period a prorated portion of the Target Shares based on the period
of employment during the Performance Period prior to such termination. In the
event of Participant’s termination of employment following a Change of Control
or Retirement, the Committee, in its sole discretion, may grant Stock to
Participant in an amount in excess of the amount that would be otherwise granted
to Participant; provided, however, that the maximum number of shares of Stock
awarded Participant pursuant to this Agreement shall not exceed 200% of the
Target Shares.

5. Status of Stock. The Company intends to register for issuance under the
Securities Act of 1933, as amended (the “Act”), the shares of Stock acquired
pursuant to this Agreement. In the absence of such effective registration or an
available exemption from registration under the Act, issuance of shares of Stock
pursuant to this Agreement will be delayed until registration of such shares is
effective or an exemption from registration under the Act is available. The
Company intends to use its reasonable efforts to ensure that no such delay will
occur. In the event exemption from registration under the Act is available,
Participant (or the person entitled to receive Participant’s shares in the event
of Participant’s incapacity or death), if requested by the Company to do so,
will execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require assuring compliance with applicable
securities laws. The Company shall incur no liability to Participant for failure
to register the Stock or maintain the registration.
 
Participant agrees that the shares of Stock, which Participant may acquire
pursuant to this Agreement, will not be sold or otherwise disposed of in any
manner that would constitute a violation of any applicable securities laws,
whether federal or state. Participant also agrees (i) that the certificates
representing such shares of Stock may bear such legend or legends as the
Committee deems appropriate in order to assure compliance with applicable
securities laws, (ii) that the Company may refuse to register the transfer of
the shares of Stock acquired pursuant to this Agreement on the stock transfer
records of the Company if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of such shares.

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6. Employment Relationship. For purposes of this Agreement, Participant shall be
considered to be in the employment of the Company as long as Participant remains
an Employee of either the Company, a parent or subsidiary corporation (as
defined in section 424 of the Code) of the Company, or a corporation or a parent
or subsidiary of such corporation assuming this Agreement. Any question as to
whether and when there has been a termination of such employment, and the cause
of such termination, shall be determined by the Committee in its sole
discretion, and its determination shall be final.

7. Withholding of Taxes.    The Company shall have the right to take any action
as may be necessary or appropriate to satisfy any federal, state or local tax
withholding obligations, including, but not limited to, the right to withhold
shares of Stock sufficient to pay the amount required to be withheld and to
cause such Stock to be sold and the proceeds remitted to the Company. In the
event that the proceeds of such sale shall exceed the legally required
withholding amount, the Company shall remit the difference in cash to
Participant. In the event that the proceeds of such sale are less than the
legally required withholding amount, the Company may withhold the difference
from any cash or Stock then or thereafter payable to Participant.

8. Reorganization of the Company.   The existence of this Agreement shall not
affect in any way the right or power of the Company or its stockholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business; any merger or
consolidation of the Company; any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Stock or the rights thereof;
the dissolution or liquidation of the Company; any sale or transfer of all or
any part of its assets or business; or any other corporate act or proceeding,
whether of a similar character or otherwise.

9. Recapitalization Events.   In the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving the
Company (“Recapitalization Events”), for all purposes references herein to Stock
shall mean and include all securities or other property (other than cash) that
holders of Stock of the Company are entitled to receive in respect of Stock by
reason of each successive Recapitalization Event and the number of Target Shares
and the Average Stock Price may be adjusted as deemed necessary or appropriate
in the sole discretion of the Committee to prevent enlargement or diminution in
Participant’s rights under this Agreement.
 
 
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10. Severability.   In the event that any provision of this Agreement shall be
held illegal, invalid, or unenforceable for any reason, such provision shall be
fully severable and shall not affect the remaining provisions of this Agreement,
and the Agreement shall be construed and enforced as if the illegal, invalid or
unenforceable provision had never been included herein.

11. Certain Restrictions. By executing this Agreement, Participant acknowledges
that he will enter into such written representations, warranties and agreements
and execute such documents as the Company may reasonably request in order to
comply the terms of the Plan or this Agreement, or the securities law or any
other applicable laws, rules or regulations.

12. Amendment and Termination.   In the event that the common stock of any Peer
Group Company ceases to be publicly traded during the Performance Period, the
Committee shall have the authority to substitute the common stock of any
successor in interest to the stock or assets of such Peer Group Company,
provided that the common stock of such successor is publicly traded and provided
further that such successor is determined by the Committee to be an appropriate
Peer Group Company. If the Committee substitutes the common stock of a
successor, the Total Shareholder Return of such successor common stock shall
determine its Relative TSR Rank. If the Committee determines that the common
stock of a successor cannot or should not be substituted for the common stock of
a Peer Group Company that has ceased to be publicly traded, then Relative TSR
Rank of such Peer Group Company shall be based on Total Sharehold Return of such
common stock as of the date that such common stock ceases to be publicly traded.
Except as otherwise provided in the Plan or this Agreement, no amendment or
termination of this Agreement shall be made by the Company without the written
consent of Participant.

13. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Participant.

 

 

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14. Governing Law and Venue. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas. The courts in Harris County,
Texas shall be the exclusive venue for any dispute regarding the Plan or this
Agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
its officer thereunto duly authorized, and Participant has executed this
Agreement, all as of the day and year first above written.

ROWAN COMPANIES INC.

By:_____________________________________________                            Date:___________________________    
Robert G. Croyle,
Vice Chairman and Chief Administrative Officer

PARTICIPANT:

________________________________________________                            Date:___________________________    

Address:

__________________________________________
__________________________________________
 
 

 

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Appendix A

Diamond Offshore Drilling, Inc.

ENSCO International Incorporated

GlobalSantaFe Corporation

Noble Corporation

TODCO

Transocean Inc.
 
 
 
 
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