8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 28, 2006

 

ROWAN COMPANIES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	1-5491	75-0759420
(State or other jurisdiction	(Commission file Number)	(IRS Employer
of incorporation)		Identification No.)

2800 POST OAK BOULEVARD
SUITE 5450
HOUSTON, TEXAS	77056-6127
(Address of principal executive offices)	(zip code)

(713) 621-7800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

Short-Term Incentive Compensation Award for Fiscal 2005

On March 10, 2006 and March 28, 2006, the Compensation Committee (the “Committee”) approved the bonus calculations for certain executive officers. The final determination and approval for certain of such awards was completed by the Board in its April 28, 2006 meeting. The table below reflects annual bonus awards for fiscal 2005, which were paid in cash to certain executive officers.

Name	Title	Cash Bonus
Daniel F. McNease	Chairman, President and Chief Executive Officer	$725,000
Robert G. Croyle	Vice Chairman and Chief Administrative Officer	$507,000
John L. Buvens, Jr.	Senior Vice President - Legal	$254,833
Mark A. Keller	Senior Vice President - Marketing	$249,333
Paul L. Kelly	Senior Vice President - Special Projects	$275,000
David P. Russell	Vice President - Drilling	$238,333
William H. Wells	Vice President - Finance and Treasurer	$238,533

Short-Term Incentive Compensation Award for Fiscal 2006

On April 27, 2006, the Committee established the performance goals for the Company’s officers and key employees for fiscal 2006 under two integrated short-term incentive compensation plans, a broad-based profit sharing plan (the “Profit Sharing Plan”) and a targeted bonus plan (the “Bonus Plan”). Any awards under the Bonus Plan will only be made after the Profit Sharing Plan has been fully funded, and Bonus Plan awards to individual employees are first reduced by Profit Sharing Plan payouts. On April 28, 2006, the Board of Directors approved the Profit Sharing Plan and Bonus Plan.

The 2006 short-term incentive compensation performance goals are based in part on the results of the Company’s drilling operations, specifically, the percentage of EBITDA return on revenues in excess of a minimum threshold (with respect to the Profit Sharing Plan) and relative to budget (with respect to the Bonus Plan). Each participant in the Bonus Plan has an aggregate incentive target that is a percentage of the participant’s base salary.

The amount of the aggregate payment under the Bonus Plan could range from zero to 200% of the participant’s incentive target. Payout will be determined as follows:

·   Fifty percent of target is non-discretionary, payable based on achievement of EBITDA relative to budget. Depending upon the extent to which the EBITDA performance goal is met or exceeded, a participant will receive between zero and 200% of this non-discretionary portion.

·   Fifty percent of target is subject to achievement of certain individual and/or group goals and will be determined in the discretion of the Committee. Depending upon the extent to which the goals are met or exceeded, a participant will receive between zero and 200% of 50% of this discretionary portion.

-2-

The aggregate incentive targets established under the Bonus Plan for certain of the executive officers of the Company are set forth in the table below.

Name	Title	Target Bonus as % of Base Salary
Daniel F. McNease	Chairman, President and Chief Executive Officer	75%
Robert G. Croyle	Vice Chairman and Chief Administrative Officer	65%
John L. Buvens, Jr.	Senior Vice President - Legal	55%
Mark A. Keller	Senior Vice President - Marketing	55%
David P. Russell	Vice President - Drilling	55%
William H. Wells	Vice President - Finance and Treasurer	55%

A summary of each of the Profit Sharing Plan and Bonus Plan is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Long-Term Incentive Compensation Plan for Fiscal 2006

On April 27, 2006, the Committee approved awards of stock options and restricted stock to the Company’s officers and certain key employees under the 2005 Rowan Companies, Inc. Long-Term Incentive Plan (the “LTIP”) and established performance criteria governing the potential award of additional common stock (the “Performance Shares”). On April 28, 2006, the Board of Directors approved the awards and performance criteria recommended by the Committee. All stock options awarded vest in 33% increments over a three-year service period and the option exercise price was set at the mean of the high and low per-share sales price on the New York Stock Exchange (“NYSE”) on April 27, 2006. Restricted stock awards granted to Messrs. McNease and Croyle cliff vest at the end of the third year from the dates of grant. Restricted stock granted to all other officers vest in 33% increments over a three-year service period. The awards of stock options and restricted stock made to certain of the executive officers of the Company under the LTIP are set forth in the table below.

Name	Title	Shares of Restricted Stock	Restricted Stock Value(1)	Stock Option Shares	Total Shares Underlying Awards
Daniel F. McNease	Chairman, President and Chief Executive Officer	9,880	$431,756	20,478	30,358
Robert G. Croyle	Vice Chairman and Chief Administrative Officer	5,558	$242,885	11,520	17,078
John L. Buvens, Jr.	Senior Vice President - Legal	2,889	$126,249	6,372	9,261
Mark A. Keller	Senior Vice President - Marketing	2,889	$126,249	6,372	9,261
David P. Russell	Vice President - Drilling	2,889	$126,249	6,372	9,261
William H. Wells	Vice President - Finance and Treasurer	2,838	$124,021	6,258	9,096

(1)   Amount is based upon the last reported sales price of Rowan's common stock on the NYSE on April 27, 2006.

-3-

The number of Performance Shares ultimately awarded, if any, is contingent upon the Company’s achievement of the following two metrics: (1) 50% will be determined based on total shareholder return over the three-year period ending on April 28, 2009, relative to a peer group of public companies comparable to the Company and (2) 50 % will be determined based on return on investment over the three-year period ending on April 28, 2009, relative to a peer group of public companies comparable to the Company. Performance Shares awarded to the individuals listed above can range from zero to 200% of a predetermined target, with the maximum awards as follows: McNease - 59,276 shares, Croyle - 33,344 shares, Buvens - 18,442 shares, Keller - 18,442 shares, Russell - 18,442 shares and Wells - 18,112 shares.

2006 Awards - Non-Employee Directors

On April 28, 2006, certain non-employee directors of the Company received a grant of Restricted Stock Units under the LTIP.  The units become fully vested as of the date of the Company’s next annual meeting of stockholders, but are payable in stock or cash only upon termination of service.

Name	Number of Units	Grant - Value (1)
William T. Fox	2,000	$87,400
Sir Graham Hearne	2,000	$87,400
John R. Huff	2,000	$87,400
Frederick R. Lausen	2,000	$87,400
H. E. Lentz	2,000	$87,400
Lord Moynihan	2,000	$87,400
P. Dexter Peacock	2,000	$87,400

_________________

(1)   Amount is based upon the last reported sales price of Rowan's common stock on the NYSE on April 27, 2006.

The Long-Term Plan was filed via Form 8-K on May 10, 2005 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

Exhibit
Number	Exhibit Description
10.1	2006 Short-Term Incentive Plans: Profit Sharing Plan and Bonus Plan

-4-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         ROWAN COMPANIES, INC.

                        By: ___/s/ William H. Wells___________

                   William H. Wells

                         Vice President - Finance and Treasurer

                     (Principal Financial Officer)

Dated: May 4, 2006

-5-

INDEX TO EXHIBITS

EXHIBIT DESCRIPTION

Exhibit
Number	Exhibit Description
10.1	2006 Short-Term Incentive Plans: Profit Sharing Plan and Bonus Plan

-6-

EX-10.1

Exhibit 10.1

ROWAN COMPANIES, INC.

2006 PROFIT SHARING PLAN

Who is eligible?	All previous corporate or drilling division option recipients, plus all other qualifying division office employees (approximately 330 total employees).
What is profit sharing?	Depending on the performance of the Company, a pool of funds will be established to be paid to eligible employees.

How is the pool determined?   The pool is funded based on achievement of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for the Drilling Division. If we have at least 20% EBITDA return on Drilling Division revenues (“Margin”) and the Company has a positive net income (excluding asset sales), then the pool is funded (on a sliding scale) as follows:  

% EBITDA Margin	Pool Funding
20%	1% of EBITDA
25%	2.33% of EBITDA
30%	3.66% of EBITDA
35% or more	5% of EBITDA (max pool)

How much of the pool will I receive?	Pool dollars are allocated to eligible employees in proportion to base pay. All eligible employees receive the same percentage of their base pay.
What is base pay?	Normal salary/wage compensation, including any overtime pay (excludes any bonus and/or stock option value).
What is the maximum payout possible?	The 2006 pool of funds will be capped at 20% of the base pay of all eligible employees taken together.

ROWAN COMPANIES, INC.

2006 BONUS PLAN

Who is eligible?	Executive and other officers, managers and certain key employees (approximately 80 employees).
What is my target bonus?	A percentage of your base pay depending on your salary/responsibility level. Target bonuses under the plan range from 15% to 75% of base pay.
How is payout of my bonus determined?	There are two pieces of the bonus plan: ·  Nondiscretionary portion (50% of your target): Based on achievement of Drilling EBITDA. ·  Discretionary portion (50% of your target): This portion varies by individual and will be based on your performance and achievement of your individual and group goals. The payout of this portion of your bonus will be in the discretion of the Compensation Committee of the Board of Directors.
What is the highest/lowest bonus I may receive?	Payout will be between zero and 200% of your target depending on the achievement of Drilling EBITDA and your individual/group goals. The two portions of the bonus plan are independent of each other.
What is Drilling EBITDA?	GAAP-based EBITDA from Drilling segment operations, relative to the 2006 budget approved by the Board of Directors.
How is the payout of the nondiscretionary portion calculated:	If the Company has positive net income on a consolidated basis and Drilling EBITDA of at least 75% of budget, all after profit sharing payout, then payment will be calculated (on a sliding scale) as follows:

% of Budget Drilling EBITDA	% of payout of nondiscretionary portion
75% or less	No payout
87.5 %	50% of target
100%	100% of target
112.5%	150% of target
125% or more	200% of target

How does profit sharing fit in with the bonus plan?    Any award under the bonus plan is offset by any profit sharing award you receive. Two times your target under the bonus plan is the maximum bonus you will receive in a year.  

-2-