BRNC Bronco Drilling Company, Inc. (MM)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.   )

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Bronco Drilling Company, Inc.

(Name of Registrant as Specified In Its Charter)

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TABLE OF CONTENTS

 

16217 N. May Avenue
Edmond, Oklahoma 73013

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On November 17, 2008

 

Dear Stockholder:

 

Notice is hereby given that the 2008 annual meeting of stockholders of Bronco Drilling Company, Inc., which we refer to as we, Bronco or the company, will be held on November 17, 2008 at 10:00 a.m. Central Time at the Simmons Center, 800 Chisholm Trail Parkway, Duncan, Oklahoma 73533. During the annual meeting, we will address the following items of business:

 

(1) the election of five directors; and

 

(2) such other business as may properly come before the annual meeting or any adjournments or postponements thereof.

 

Accompanying this notice is the proxy statement, which provides information about our board of directors and management team, and further describes the business we will conduct at the meeting. This notice and proxy statement are first being mailed to stockholders on or about October 9, 2008. Enclosed for your information is our Annual Report on Form 10-K, including the first amendment thereto, for the year ended December 31, 2007.

 

Only stockholders of record as of the close of business on October 6, 2008 will be entitled to notice of, and to vote at, the annual meeting. We sincerely hope you will be able to attend the meeting. Whether or not you plan to attend, it is important that your shares be represented and voted at the meeting, and, therefore, we urge you to complete, sign, date and return the enclosed proxy card in the envelope provided for this purpose. If you have previously submitted a proxy and attend the annual meeting in person, you may revoke the proxy and vote in person on all matters submitted at the annual meeting.

 

Sincerely yours,

 

 

Zachary M. Graves

Secretary

 

Edmond, Oklahoma

October 6, 2008

BRONCO DRILLING COMPANY, INC.

16217 N. May Avenue

Edmond, Oklahoma 73013

 

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

NOVEMBER 17, 2008

 

GENERAL INFORMATION

 

Solicitation and Revocability of Proxies

 

The board of directors of Bronco Drilling Company, Inc. is soliciting proxies in connection with our 2008 annual meeting of stockholders and any adjournments or postponements thereof to be held on November 17, 2008 at 10:00 a.m. at the Simmons Center, 800 Chisholm Trail Parkway, Duncan, Oklahoma 73533. The approximate date on which this proxy statement and the enclosed proxy card, notice of meeting, Annual Report on Form 10-K, and the first amendment thereto, are first being mailed to stockholders of record is October 9, 2008.

 

If the accompanying proxy card is duly executed and returned, the shares of our common stock represented thereby will be voted in accordance with our board’s recommendations set forth in this proxy statement and, where the stockholder makes a specification, will be voted in accordance with such specification. You may revoke your proxy and change your vote at any time before the proxy has been exercised at the annual meeting. If you are a registered holder, your proxy can be revoked in several ways: (1) by timely delivery of a written revocation delivered to the corporate secretary; (2) by submitting another valid proxy bearing a later date; or (3) by attending the meeting in person and giving the inspector of election notice that you intend to vote your shares in person. If your shares are held in street name by a broker, you must contact your broker in order to revoke your proxy, but generally, you may change your vote by submitting new voting instructions to your broker, trustee or nominee, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the meeting and voting in person.

 

Shares Outstanding and Voting Rights

 

As of October 3, 2008, 26,809,751 shares of our common stock, par value $0.01 per share, were outstanding. The common stock constitutes our only class of voting securities. Only stockholders of record as of the close of business on the record date of October 6, 2008 are entitled to receive notice of, and to vote at, the annual meeting. Holders of our common stock are entitled to one vote for each share so held. Holders of our common stock do not have cumulative voting rights with respect to the election of directors. We will have a list of stockholders available for inspection for at least ten days prior to the annual meeting at our principal executive offices and at the annual meeting.

 

Quorum and Required Vote

 

Quorum.   Unless a quorum is present at our annual meeting, no action may be taken at the meeting except the adjournment thereof until a later time. The presence, in person or by proxy, of holders of a majority of the voting power of all outstanding shares of common stock entitled to vote at the annual meeting are necessary to constitute a quorum. Shares that are represented at the annual meeting but abstain from voting on any or all matters and “broker non-votes” (shares held by brokers or nominees for which they have no discretionary power to vote on a particular matter and have received no instructions from the beneficial owners or persons entitled to vote) will be counted as shares present and entitled to vote in determining the presence or absence of a quorum. The inspector of elections appointed for the annual meeting will determine the number of shares of our common stock present at the meeting, determine the validity of proxies and ballots, determine whether or not a quorum is present, and count all votes and ballots.

 

Required Vote.   If a quorum is obtained, directors are elected by a plurality of the votes cast by stockholders present, in person or by proxy, at the annual meeting and entitled to vote. This means that the five nominees will be

elected if they receive more affirmative votes than any other nominees. Votes marked “For” Proposal One will be counted in favor of all nominees, except to the extent the proxy withholds authority to vote for a specified nominee. Votes “Withheld” from a nominee also have no effect on the vote since a plurality of the votes cast at the annual meeting is required for the election of each nominee. Stockholders may not abstain from voting with respect to the election of directors. Because the election of directors is a routine matter for which specific instructions from beneficial owners will not be required, no “broker non-votes” will arise in the context of Proposal One.

 

QUESTIONS AND ANSWERS ABOUT
THE MEETING AND VOTING

 

 

The proxy process is the means by which corporate stockholders can exercise their rights to vote for the election of directors and other corporate proposals. A proxy is your legal designation of another person to vote the stock you own. The people that you designate to vote your shares are called proxies. Zachary M. Graves and David C. Treadwell have been designated as proxies for the annual meeting. The term “proxy” also refers to the written document or “proxy card” that you sign to authorize those persons to vote your shares.

 

By executing the proxy card, you authorize the above-named individuals to act as your proxies to vote your shares in the manner that you specify. The proxy voting mechanism is vitally important to us. In order for us to obtain the necessary stockholder approval of proposals, a “quorum” of stockholders must be represented at the meeting. The presence, in person or by proxy, of holders of a majority of the voting power of all outstanding shares of common stock entitled to vote at our annual meeting are necessary to constitute a quorum at the annual meeting. Since few stockholders can spend the time or money to attend stockholder meetings in person, voting by proxy is necessary to obtain a quorum and complete the stockholder vote.

 

 

The proxy statement is a disclosure document in which we furnish you with important information to assist you in deciding whether to authorize the proxies to vote on your behalf.

 

 

We are holding the annual meeting to elect directors. Our nominating and corporate governance committee nominated and recommended the director nominees to our board. Our board unanimously approved such recommendation. If any other matters requiring a stockholder vote properly come before the meeting, those stockholders present at the meeting and the proxies who have been appointed by our stockholders will vote as they think appropriate.

 

 

If your shares are registered in your name with our transfer agent, Computershare Trust Company, N.A., you are a stockholder of record with respect to those shares. As a stockholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote in person at the meeting.

 

If you are the beneficial owner of shares and they are held in the name of your broker, bank or other nominee, then your shares are held in “street name.” Your broker, bank or other nominee, as the record holder of your shares, is required to vote those shares in accordance with your instructions. If you beneficially own shares in street name, these proxy materials are being forwarded to you together with a voting instruction card on behalf of your broker, bank or other nominee. As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote and you are also invited to attend the annual meeting. Your broker, bank or nominee has enclosed or provided voting instructions for you to use in directing the broker, bank or other nominee how to vote your shares. Since a beneficial owner in street name is not the stockholder of record, you may not vote these shares in person at the

meeting unless you obtain a “legal proxy” from the broker, bank or other nominee that holds your shares, giving you the right to vote the shares at the meeting.

 

 

The record date for the annual meeting is October 6, 2008. The record date is established by our board as required by Delaware law. Owners of record of our common stock at the close of business on the record date are entitled to receive notice of the meeting and vote at the meeting and any adjournments or postponements of the meeting.

 

 

By mail by sending in the written proxy card:   If your shares are registered directly in your name as the holder of record, you may vote your shares by marking, signing, dating and mailing the proxy card in the postage paid envelope that we have provided. All stockholders of record on the record date can vote by this written proxy card. If your shares are held in street name, you must vote by giving instructions to your bank, broker or nominee. Only your broker, bank or other nominee can give a proxy with respect to your shares. You should receive a proxy card from your bank or broker, which you must return to have your shares voted. If you have not received a proxy card from your bank or broker, you may contact it directly to provide it with instructions on how you wish to vote.

 

In person:   If you are a registered stockholder and attend the annual meeting, you may deliver your completed and signed proxy card in person. If your shares are held in street name, and you wish to vote in person at the annual meeting, you will need to obtain a legal proxy form from your broker or bank that holds your shares of record and you must bring that document to the annual meeting.

 

 

The effect of not voting depends on how you own your shares. If you own shares as a registered holder, rather than through a broker or nominee, your unvoted shares will not be represented at the meeting and will not count toward the quorum requirement. Assuming a quorum is obtained, your unvoted shares will not affect whether the proposal is approved or rejected. If you own shares through a broker or nominee and do not vote, your broker or nominee may represent your shares at the meeting for purposes of obtaining a quorum. As described in the answer to the following question, if you do not provide your broker or nominee voting instruction, your broker or nominee may or may not vote your shares, depending upon the proposal.

 

 

If you own your shares through a broker or nominee and you do not vote, your broker or nominee may vote your shares in its discretion on some “routine matters.” However, with respect to other proposals, your broker or nominee may not vote your shares for you. With respect to non-routine proposals, the aggregate number of unvoted shares is reported as broker non-votes. Broker non-vote shares are counted toward the quorum requirement. Proposal One, which relates to the election of directors set forth in this proxy statement, is a routine matter on which brokers or nominees will be permitted to vote unvoted shares. As a result, broker non-votes will not arise in the context of Proposal One. Stockholders may not abstain from voting on Proposal One.

 

 

You may revoke your proxy and change your vote at any time before the proxy has been exercised at the annual meeting. If you are a registered holder, your proxy can be revoked in several ways: (1) by timely delivery of a written revocation delivered to the corporate secretary; (2) by submitting another valid proxy bearing a later date; or (3) by attending the meeting in person and giving the inspector of election notice that you intend to vote your shares in person. If your shares are held in street name by a broker or nominee, you must contact your broker or nominee in order to revoke your proxy, but generally, you may change your vote by submitting new voting instructions to your broker or nominee, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the meeting and voting in person.

 

We have retained a representative of Computershare Trust Company, N.A. to serve as an independent tabulator to receive and tabulate the proxies and as an independent inspector of election to certify the results.

 

 

We do not intend to retain a soliciting firm to assist in soliciting proxies. We use our transfer agent, their agents, and brokers to distribute all the proxy materials to our stockholders. We will pay them a fee and reimburse any expenses they incur in making the distribution. Our directors, officers and employees may solicit proxies in person, by mail, telephone, facsimile transmission or electronically. No additional compensation will be paid to such directors, officers and employees for soliciting proxies.

 

 

With regard to the election of directors, you may cast your vote in favor of or withhold your vote for each nominee. In accordance with our bylaws and Delaware law, the nominees who receive a plurality of the votes cast by stockholders present, in person or by proxy, at the annual meeting and entitled to vote, up to the number of directors to be elected, will be elected as directors. The five nominees for director receiving the highest number of affirmative votes will be elected. Stockholders may not cumulate votes in the election of directors. Votes marked “FOR” all nominees will be counted in favor of all nominees, except to the extent the proxy withholds authority to vote for a specified nominee. Votes that are withheld will be excluded entirely from the vote and will have no effect. An abstention may not be specified with respect to the election of the nominees. Broker non-votes, which occur if a broker or other nominee attending the meeting in person or submitting a proxy does not have discretionary authority and has not received voting instructions from the beneficial owners with respect to a particular item, will not arise in the context of the election of the nominees because the election of directors is a routine matter for which specific instructions from beneficial owners is not required. Unless otherwise instructed or unless authority to vote is withheld, the enclosed proxy will be voted for the election of each of the nominees.

 

OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR EACH OF THE NOMINEES.

 

 

We are furnishing with this proxy statement a copy of our 2007 Annual Report on Form 10-K, and the first amendment thereto, which includes our financial statements. Stockholders may request a copy of our 2007 Annual Report on Form 10-K, and the first amendment thereto, at no charge by sending a written request to Zachary M. Graves, Secretary, Bronco Drilling Company, Inc., at 16217 N. May Avenue, Edmond, Oklahoma 73013.

 

We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, or the SEC. You may read any materials we file with the SEC free of charge at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Copies of all or any part of these documents may be obtained from such office upon the payment of the fees prescribed by the SEC. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is www.sec.gov . This proxy statement and our 2007 Annual Report on Form 10-K, including all exhibits thereto and amendments thereof, have been filed electronically with the SEC. Our web site is www.broncodrill.com . No information from this web site is incorporated by reference herein. You may also obtain copies of our annual, quarterly and current reports, proxy statements and certain other information filed with the SEC, as well as amendments thereto, free of charge from our web site. These documents are posted to our web site as soon as reasonably practicable after we have filed or furnished these documents with the SEC. We also post our audit committee charter, compensation

committee charter and nominating and corporate governance committee charter, as well as our code of conduct on our web site. These documents are available free of charge to any stockholder upon request.

 

 

Stockholder proposals requested to be included in our proxy statement for our 2009 annual meeting must be in writing and received by us before December 28, 2008, provided that proposals are submitted by eligible stockholders who have complied with the relevant regulations of the SEC regarding stockholder proposals and our bylaws. A copy of our bylaws is available from our corporate secretary upon written request. Proposals should be directed to our corporate secretary at the address listed above.

 

PROPOSAL ONE — ELECTION OF DIRECTORS

 

Our Amended and Restated Certificate of Incorporation provides that our board consists of one class of directors. All current directors’ terms expire at the annual meeting. Our board has nominated each of the current directors for re-election. All directors elected at the annual meeting will be elected to hold office until the next annual meeting and until their respective successors are duly elected and qualified. Information on each of our nominees is given below.

 

We have no reason to believe that any of the director nominees will be unable or unwilling for good cause to serve if elected; however, if any director nominee becomes unavailable or unwilling for good cause to serve before the election, your proxy card authorizes us to vote for a replacement nominee if the board names one.

 

Required Vote and Recommendation

 

With regard to the election of directors, you may cast your vote in favor of or withhold your vote for each nominee. In accordance with our bylaws and Delaware law, the nominees who receive a plurality of the votes cast by stockholders present, in person or by proxy, at the annual meeting and entitled to vote, up to the number of directors to be elected, will be elected as directors. The five nominees for director receiving the highest number of affirmative votes will be elected. Stockholders may not cumulate votes in the election of directors. Votes marked “FOR” all nominees will be counted in favor of all nominees, except to the extent the proxy withholds authority to vote for a specified nominee. Votes that are withheld will be excluded entirely from the vote and will have no effect. An abstention may not be specified with respect to the election of the nominees. Broker non-votes, which occur if a broker or other nominee attending the meeting in person or submitting a proxy does not have discretionary authority and has not received voting instructions from the beneficial owners with respect to a particular item, will not arise in the context of the election of the nominees because the election of directors is a routine matter for which specific instructions from beneficial owners is not required. Unless otherwise instructed or unless authority to vote is withheld, the enclosed proxy will be voted for the election of each of the nominees.

 

Directors and Nominees

 

The following table sets forth the name, age and position of each of our directors.

 

 

 

 

D. Frank Harrison has served as the Chairman of our Board of Directors since August 2007, and Chief Executive Officer and a director of our company since May 2005. From 2002 until joining our Company, Mr. Harrison served as an agent for the purchase and sale of oil and gas properties for entities controlled by Wexford Capital LLC. From 1999 to 2002, Mr. Harrison served as President of Harding & Shelton, Inc., a privately held oil and natural gas exploration, drilling and development firm. He graduated from Oklahoma State University with a Bachelor of Science degree in Sociology.

 

Dr. Gary C. Hill has served as a director of our company since August 2006. Dr. Hill has served as the Chief of Surgery Service and Chief of Staff at Edmond Medical Center. He also has served as the President of the Edmond Medical Center Hospital Board. Dr. Hill served as the Chief of Surgery Service and Chief of Staff at St. Joseph’s Regional Hospital in Ponca City, Oklahoma. Dr. Hill is a graduate of Oklahoma State University, where he received his Bachelor of Arts in Humanities, and the University of Oklahoma Health Sciences Center. He served both his Surgery Internship and Residency in Otolaryngology, Head and Neck Surgery at the University of Texas Health Science Center, Parkland Hospital in Dallas before performing his Plastic and Reconstructive Surgery Residency at the University of Kansas Health Sciences Center in Kansas City. Dr. Hill is a native of Altus, Oklahoma.

 

David W. House has served as a director of our company since September 2008. Mr. House served as the President of Primary Natural Resources, Inc. from 2004 to 2008, and as the Chief Financial Officer of Primary Natural Resources, Inc. from 2000 until being appointed its President. From 1996 to 2000, Mr. House served as Senior Vice President of El Paso Corporation’s Mid-Continent Gas Group. From 1979 to 1996, Mr. House served in various positions with Samson Resources Company, including Vice President of Administration and President of Premier Gas Company, a wholly owned subsidiary of Samson Resources Company. Mr. House previously served as an auditor with Arthur Young & Co., received a Bachelor of Science degree in Accounting from Harding University and is a licensed Certified Public Accountant.

 

David L. Houston has served as a director of our company since May 2005. Since 1991, Mr. Houston has been the principal financial advisor of Houston Financial, a firm that offers life and disability insurance, compensation and benefits plans and estate planning. He currently serves on the board of directors of Gulfport Energy Corporation and the board of directors and executive committee of Deaconess Hospital, located in Oklahoma City, Oklahoma. Mr. Houston is the former chair of the Oklahoma State Ethics Commission and the Oklahoma League of Savings Institutions. Prior to 1991, Mr. Houston was President and Chief Executive Officer of Equity Bank for Savings, F.A., an Oklahoma-based savings bank. He received a Bachelor of Science degree in Business from Oklahoma State University and a graduate degree in Banking from Louisiana State University.

 

William R. Snipes has served as a director of our company since February 2006. Mr. Snipes has served as the owner and President of Snipes Insurance Agency, Inc., an independent insurance agency concentrating in property and liability insurance, since 1991. From 1981 to 1991, Mr. Snipes was the owner and President of William R. Snipes, CPA, Inc., a public accounting firm concentrating in financial accounting and tax services. He received a Bachelor of Science degree and a Masters degree in Accounting from Oklahoma State University and is a licensed Certified Public Accountant.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR EACH DIRECTOR NOMINEE
FOR THE BOARD OF DIRECTORS.

 

 

CORPORATE GOVERNANCE

 

Board of Directors and Committees

 

We are managed under the direction of our board. Our directors generally serve one-year terms from the time of their election until the next annual meeting of stockholders or until their successors are duly elected and qualified. The size of our board is set at five members, and we currently have five directors including three directors who qualify as independent under NASDAQ listing standards. Our board held five meetings in 2007. In addition to the five meetings, our board adopted resolutions by unanimous written consent. Each of our directors attended at least 97% of the aggregate of the total number of meetings held by our board and meetings of committees of our board on which such director served during 2007.

 

Until the consummation of a public offering by our largest stockholder in March 2006, we were considered to be controlled by Wexford Capital LLC under NASDAQ listing standards and were eligible for exemptions from provisions of these rules requiring that (1) a majority of the board be independent directors, (2) nominating and corporate governance and compensation committees be composed entirely of independent directors and (3) we adopt written charters addressing specified matters. We had elected to take advantage of these exemptions and in 2006, our board of directors had only one standing committee, the audit committee. In March 2006, we ceased to be a controlled company within the meaning of these rules. Accordingly, we were required to comply with these provisions after the specified transition periods and, effective as of March 25, 2007, our board of directors established the compensation committee and the nominating and corporate governance committee. As a result, our board of directors currently has three standing committees, the audit committee, the compensation committee and the nominating and corporate governance committee, each of which is further described below.

 

Audit Committee

 

We currently maintain an audit committee. The audit committee of our board of directors is composed of Messrs. Snipes (chair), Hill and Houston. Our board of directors has determined that each current member of the audit committee is independent for purposes of serving on such committee under NASDAQ listing standards and applicable federal law. Our board of directors has also determined that each current member of the audit committee is financially literate under NASDAQ listing standards and that Messrs. Houston and Snipes each qualify as an “audit committee financial expert,” as such term is defined in Item 407(d) of Regulation S-K. We believe that the composition and functioning of our audit committee complies with all applicable requirements of the Sarbanes-Oxley Act of 2002, as well as NASDAQ listing standards and SEC rules and regulations. The audit committee held five meetings in 2007.

 

The audit committee’s functions include the following:

 

 

A more detailed description of the specific functions and responsibilities of the audit committee is set forth in our Audit Committee Charter, access to which may be obtained as set forth under the heading “Corporate Governance Policies and Charters” , below. During 2007, the audit committee held five meetings.

 

Compensation Committee

 

The compensation committee of our board of directors, which was established effective as of March 25, 2007, is composed of Messrs. Snipes (chair) and Houston. Our board of directors has determined that each current member of the compensation committee is independent for purposes of serving on such committee under the NASDAQ listing standards. Our board of directors has also determined that each current member of the compensation committee is an “outside director” in accordance with Section 162(m) of the Internal Revenue Code and a “non-employee director” in accordance with Rule 16b-3 of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

 

Effective as of March 25, 2007, our board of directors adopted the compensation committee charter, setting forth, among other things, the specific duties, powers and authority of the compensation committee. The compensation committee’s functions include the following:

 

 

A more detailed description of the specific functions and responsibilities of the compensation committee is set forth in our Compensation Committee Charter, access to which may be obtained as set forth under the heading “Corporate Governance Policies and Charters” , below.

 

Nominating and Corporate Governance Committee

 

The nominating and corporate governance committee of our board of directors, which was established effective as of March 25, 2007, is composed of Messrs. Snipes (chair), Hill and Houston. Our board of directors has determined that each current member of the nominating and corporate governance committee is independent for purposes of serving on such committee under the NASDAQ listing standards.

 

Effective as of March 25, 2007, our board of directors adopted the nominating and corporate governance committee charter, setting forth, among other things, the specific duties, powers and authority of the nominating and corporate governance committee. The nominating and corporate governance committee’s functions include the following:

 

 

 

Prior to the formation of our nominating and corporate governance committee, these functions were performed by our full board of directors. A more detailed description of the specific functions and responsibilities of the nominating and corporate governance committee is set forth in our Nominating and Corporate Governance Committee Charter, access to which may be obtained as set forth under the heading “Corporate Governance Policies and Charters” , below.

 

Pursuant to our bylaws, our board of directors may, from time to time, establish other committees to facilitate the management of our business and operations.

 

Code of Conduct

 

Our Code of Business Conduct and Ethics is designed to help directors and employees resolve ethical issues and to help us conduct our business in accordance with all applicable laws, rules and regulations and with the highest ethical standards. Our Code of Business Conduct and Ethics applies to all directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and all other executive officers. We also expect that any consultants we retain to abide by our Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics sets forth our policies with respect to public disclosure of Company conflicts of interest, corporate opportunities, fair dealing, confidentiality, equal employment opportunity and harassment, protection and proper use of our assts and employee complaint procedures. Access to our Code of Business Conduct and Ethics may be obtained as set forth under the heading “Corporate Governance Policies and Charters” , below. Any amendments to, or a waiver from, a provision of our Code of Business Conduct and Ethics that is applicable to our principal executive officer, principal financial officer, principal accounting officer or controller (or persons performing similar functions) and is required to be disclosed by the relevant rules and regulations of the SEC will be posted on our website.

 

Corporate Governance Policies and Charters

 

Current copies of the following materials related to our corporate governance policies and practices are available publicly on our web site at www.broncodrill.com under the caption “Investor Relations — Corporate Governance”:

 

 

Copies may also be obtained, free of charge, by writing to our corporate secretary, Zachary M. Graves, at Bronco Drilling Company, Inc., 16217 N. May Avenue, Edmond, Oklahoma 73013.

 

Identifying and Evaluating Nominees for Directors

 

Our nominating and corporate governance committee develops criteria for the selection of directors, including procedures for reviewing potential nominees proposed by stockholders. The committee reviews the desired experience, mix of skills and other qualities to assure appropriate board of directors’ composition, taking into account the current directors and the specific needs of our company and our board. The committee also reviews and monitors the size and composition of our board of directors and its committees to ensure that the requisite number of directors are “independent directors,” “non-employee directors” and “outside directors” within the meaning of any

rules and laws applicable to our company. In addition to our board’s size, the committee assesses whether any vacancies on the board are expected due to retirement or otherwise. In the event that vacancies are anticipated or otherwise arise, the committee will consider various potential candidates. The committee utilizes a variety of methods for identifying and evaluating nominees for directors. Candidates may come to the attention of our board through current board members, professional search firms, stockholders or other persons. These candidates will be evaluated at regular or special meetings of the nominating and corporate governance committee and may be considered at any point during the year.

 

The committee will consider stockholder nominations for board candidates upon written submission of such recommendation to our corporate secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, such nominee’s written consent to serving as a director if elected and being named in the proxy statement and certain information regarding the status of the stockholder submitting the recommendation, all in the manner required by our bylaws and the applicable rules and regulations promulgated under the Exchange Act. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by the committee at a regular or special meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to the nominating and corporate governance committee.

 

The committee may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating such nominations, the committee will seek to achieve a balance of knowledge, experience and capability on our board. The committee uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current committee members, board members, professional search firms and other persons. After completing its evaluation, the committee approves the final slate of nominees and recommends to the board of directors that such director candidates be submitted for election at the annual meeting.

 

Our nominating and corporate governance committee approved the director nominees submitted for election at this annual meeting. Prior to the formation of our nominating and corporate governance committee, these functions were performed by our full board of directors.

 

Communications with our Board of Directors

 

Individuals may communicate with our board of directors or individual directors by writing to our corporate secretary at Bronco Drilling Company, Inc., 16217 N. May Avenue, Edmond, Oklahoma 73013. The corporate secretary will review all such correspondence and forward to the board a summary of all such correspondence and copies of all correspondence that, in the opinion of the corporate secretary, relates to the functions of our board of directors or committees thereof or that the corporate secretary otherwise determines requires their attention. Directors may review a log of all such correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the chairman of the audit committee and handled in accordance with the audit committee’s procedures established with respect to such matters.

 

Executive Sessions

 

Executive sessions of non-management directors are held at certain board meetings. Any non-management director can request that an additional executive session be scheduled. At each such meeting, one of the non-management directors is selected by the others to be the presiding director at that meeting.

 

Policy on Attendance by Board Members at the Annual Meeting

 

Our board has not adopted a policy on attendance by board members at our annual meeting of stockholders. Mr. Harrison attended our 2007 annual meeting of stockholders held on June 3, 2007.

 

REPORT OF AUDIT COMMITTEE

 

This statement is being provided to inform stockholders of the audit committee’s oversight with respect to our financial reporting.

 

The audit committee has reviewed and discussed the audited financial statements as of and for the year ended December 31, 2007 (the “Audited Financial Statements”) and footnotes thereto with management and our independent auditors. In addition, the audit committee discussed with the independent auditors the matters required to be disclosed by Statement of Auditing Standards No. 61, “Communications with Audit Committees” as amended a by Statement of Accounting Standards No. 90, “Audit Committee Communications.” The audit committee discussed with our auditors the independence of such auditors from our management, including a review of audits and non-audit fees, and received written disclosures concerning the auditors’ independence required to be made by our auditors by the Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees.” The audit committee has also discussed with our management and the independent auditors such other matters and received such assurance from them, as the audit committee deemed appropriate.

 

Management is responsible for the preparation and presentation of the audited financial statements, the establishment and maintenance of our disclosure controls and procedures and the establishment, maintenance and evaluation of the effectiveness of our internal controls over financial reporting. The independent auditors are responsible for performing an independent audit of our financial statements in accordance with GAAP and issuing a report thereon and auditing the effectiveness of our internal controls and management’s assessment of the effectiveness of such internal controls. The audit committee’s responsibility is to monitor and oversee this process.

 

Based on the foregoing review and discussions with management and the independent auditors, and relying thereon, we have recommended to the company and the board the inclusion of the Audited Financial Statements in the company’s Annual Report on Form 10-K for the year ended December 31, 2007 for filing with the SEC.

 

Respectfully submitted,

 

AUDIT COMMITTEE

 

William R. Snipes, Chairman

Gary C. Hill

David L. Houston

 

INDEPENDENT AUDITORS

 

Grant Thornton LLP served as our independent auditor for fiscal 2007 and 2006. Aggregate fees billed to us by Grant Thornton LLP for 2007 and 2006 were as follows:

 

 

 

 

It is our audit committee’s policy to pre-approve all audit, audit related and permissible non-audit services rendered to us by our independent auditor. Consistent with such policy, all of the fees listed above that we incurred

for services rendered by Grant Thornton LLP in fiscal 2006 and 2007 were pre-approved by our audit committee. Non-audit services that received pre-approval in 2006 and 2007 include tax preparation, tax consultation and advice. The audit committee has considered whether the provisions of the non-audit services in 2007 is compatible with maintaining the independent auditors’ independence and concluded that the payment of such fees would not prohibit Grant Thornton LLP from maintaining its independence.

 

Grant Thornton LLP has been selected by the audit committee as our independent auditors for the fiscal year ending December 31, 2008. Representatives of Grant Thornton LLP will be present at the annual meeting and will be available to make statements and respond to questions from our stockholders.

 

EXECUTIVE OFFICERS

 

The following table sets forth certain information with respect to our executive officers, other than Mr. Harrison, whose information is set forth above under the caption “Directors.”

 

 

Mark Dubberstein has served as our President since June 2007. He served as our General Counsel from January 2006 to June 2007. Prior to joining our company, Mr. Dubberstein was in private legal practice for twenty-five years, most recently as the senior member of Dubberstein, Heinen & Morris PC in Oklahoma City. His previous experience includes serving as Mid-Continent Counsel at Sohio Petroleum Company in Dallas. He received a Juris Doctorate from the University of Oklahoma College of Law and a Bachelor of Arts degree in English from Oklahoma State University.

 

Zachary M. Graves has served as our Chief Financial Officer, Secretary and Treasurer since April 2005. He served previously as our Controller and the Controller of Gulfport Energy Corporation from April 2003 to March 2005. Prior to joining our company, Mr. Graves served as an accountant with KPMG LLP from 2000 to 2003. He received a Bachelor of Business Administration degree in Accounting from the University of Oklahoma and is a licensed Certified Public Accountant.

 

Steven R. Starke has served as our Chief Accounting Officer since June 2007. Mr. Starke served previously as our Controller from May 2005 to June 2007. Prior to joining our company, Mr. Starke served as an accountant with Grant Thornton LLP in Oklahoma City from January 2000 to May 2005. He received a Bachelor of Business Administration degree in Accounting and Management Information Systems from the University of Oklahoma and is a licensed Certified Public Accountant.

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Overview of Compensation Program

 

The compensation committee of our board of directors, which we refer to as the Committee, was established by our board of directors effective as of March 25, 2007. Until that date, we relied on the “controlled company” exemption from the requirement to have a compensation committee and the applicable transition rules, in each case as provided by NASDAQ listing standards.

 

The Committee is composed entirely of independent directors and has the responsibility for establishing, implementing and monitoring our compensation programs. The Committee annually reviews and recommends to our board of directors the compensation and benefits for our executive officers, administers our equity incentive plans, and assists with the establishment of general policies relating to compensation and benefits for all our employees. The Committee ensures that the total compensation paid to our officers is fair, reasonable and competitive. Generally, the types of compensation and benefits provided to our executive officers are similar to those provided to our other officers and employees. We do not have compensation plans that are solely for executive officers. Prior to the formation of the Committee, all compensation programs, including those for our named

executive officers, were administered by our board of directors and all functions of the Committee described below were performed by our board of directors.

 

Compensation Philosophy and Objectives

 

The objectives of our compensation programs are to attract and retain key executives, align the interests of our executives with those of our stockholders and motivate and reward individual performance and contributions. The key elements of our compensation program are salary, annual bonus and long-term incentive compensation. We use these elements to meet our compensation objectives as follows:

 

 

Compensation Benchmarking

 

To ensure our compensation is competitive, the Committee considers the competitive market for talent and compensation levels provided by comparable companies and seeks to minimize significant differences that could negatively impact our ability to attract and retain exceptional executive officers. In December 2007, the Committee, with the assistance of an external compensation consultant, Equilar, Inc., reviewed the compensation practices at peer companies with which we compete for business and/or talent. Equilar, Inc. was retained to provide a competitive market pay analysis, which included total compensation measurement services, proxy data studies, board of directors pay studies and market trends. The Committee chose the companies listed below to serve as the peer group for its review because those companies, in the Committee’s opinion, consisted of direct competitors, similar sized companies within the energy industry, and Oklahoma-based energy companies with which we compete for talent.

 

 

 

After completing its review and taking into consideration salary increases for certain named executive officers described under “Base Salary” below, the Committee determined that 2007 compensation for our executive officers was appropriate and competitive with similarly situated companies, and, therefore, decided to make no changes to our compensation structure or policies. The Committee plans to retain Equilar, Inc. or another compensation consultant during 2008 to provide further analysis of our compensation structure and philosophy.

 

Role of Executive Officers

 

In 2007, our board of directors, and then, upon its formation, the Committee, made all compensation decisions for our Chief Executive Officer and, after receiving input from the Chief Executive Officer, all other named executive officers of the Company. Our board of directors and the Committee reviewed the performance of our Chief Executive Officer, and following such review, determined to maintain the compensation of our Chief Executive Officer pursuant to his employment agreement, which is described in more detail below. The board of directors and the Committee, together with our Chief Executive Officer, reviewed the performance of our other named executive officers, and our Chief Executive Officer made compensation recommendations to the board of directors and the Committee with respect to our other named executive officers. No other executive officers were present at the time of such discussions. The board and the Committee considered such recommendations when making its final compensation decision for all named executive officers other than our Chief Executive Officer.

 

Base Salary

 

Prior to the establishment of the Committee, our board of directors annually reviewed the base salaries of our named executive officers. Since its establishment, the Committee has reviewed the base salaries of our named executive officers and, with respect to future salary determinations, will be reviewed by the Committee on an annual basis. Our board of directors, and then, upon its formation the Committee, considered various factors, including with regard to the position of the named executive officer, the compensation of executive officers of companies within the peer group described above, the performance of such executive officer, increases in responsibilities and recommendations of our Chief Executive Officer with respect to base salaries of other named executive officers.

 

Each of our named executive officer’s annual base salary is set forth in his respective employment agreement discussed in more detail below. The annual base salary may be increased, but not decreased, at the discretion of the board of directors or the Committee. Based on the considerations described above, in August 2006, our board of directors established the annual base salary for Mr. Harrison at $450,000. The Committee decided to maintain such base salary for Mr. Harrison in 2007. Based on the considerations described above, Mr. Dubberstein’s annual base salary was increased to $325,000 in April 2007, Mr. Graves’ annual base salary was increased to $325,000 in July 2007 and Mr. Bartlett’s annual base salary was increased to $225,000 in August 2007. See “Summary Compensation Table” below. The terms of each executive’s employment agreement are discussed in more detail under the heading “Employment Agreements” below.

 

Bonus

 

Under the terms of his employment agreement, our Chief Executive Officer is eligible to receive an annual bonus in an amount not less than 66.7% of his annual base salary. Our board of directors determined to pay such bonus to our Chief Executive Officer, so that the aggregate cash component of his compensation, consisting of his base salary and bonus, will be comparable to similarly situated executives of our competitors. In 2007, our other named executive officers were eligible to receive an annual bonus if recommended by the Chief Executive Officer and approved by the Committee in its discretion. Our Chief Executive Officer, President, Chief Financial Officer, former Senior Vice President of Rig Operations and Chief Accounting Officer received bonuses of $300,000, $100,000, $100,000, $25,000 and $20,000, respectively. These bonuses were based on various factors, including our

profitability, growth, market share and safety record achieved in 2007. Further details regarding 2007 bonuses for our Chief Executive Officer and other named executive officers are set forth under the heading “Summary Compensation Table” below.

 

Long-Term Incentive Compensation

 

2007 Awards.   In February 2007, the board approved restricted stock awards of 25,000 shares to each of our President, Chief Financial Officer and former Senior Vice President of Rig Operations, and 5,000 shares to our Chief Accounting Officer, under our 2006 Stock Incentive Plan described in more detail below. One-third of these shares of restricted stock vested on January 1, 2008, and the remaining shares vest in two equal annual installments on January 1, 2009 and 2010, subject to earlier vesting or forfeiture in certain circumstances. These awards were made in the discretion of our board of directors to help incentivize these executive officers. In May 2007, pursuant to our offer to exchange options for restricted stock as described in detail below, we issued shares of our restricted stock to our Chief Executive Officer, President, Chief Financial Officer, former Senior Vice President of Rig Operations and Chief Accounting Officer under our 2006 Stock Incentive Plan. One-half of these shares of restricted stock vested on January 1, 2008, and the remaining shares vest on January 1, 2009, subject to earlier vesting or forfeiture in certain circumstances.

 

2008 Awards.   In January 2008, the Committee approved restricted stock awards of 50,000 shares to our Chief Executive Officer, 33,333 shares to our President, 48,333 shares to our Chief Financial Officer, 28,333 shares to our former Senior Vice President of Rig Operations, 10,042 shares to our Chief Accounting Officer and 5,000 shares to each of Messrs. Hill, Snipes and Houston under our 2006 Stock Incentive Plan described in more detail below. These shares of restricted stock vest in two equal annual installments beginning on February 25, 2009, subject to earlier vesting or forfeiture in certain circumstances. These awards were made in the discretion of the Committee to help incentivize these directors and executive officers by maintaining a comparable amount of unvested shares of restricted stock as they had prior to recent vestings.

 

Long-Term Incentive Policy.   Although in the past we awarded both options and restricted stock as part of our long-term incentive compensation program, our board of directors and the Committee believe that restricted stock awards are an essential component of our compensation strategy, and we intend to continue offering such awards in the future. Further, we anticipate that any equity awards granted to our directors and executive officers during the remainder of 2008 will be in the form of restricted stock. The Committee may also determine to issue other forms of stock-based awards to our named executive officers or other eligible participants under our 2006 Stock Incentive Plan or other equity incentive plans in effect at that time. Our current equity incentive plans are described below under the headings “2006 Stock Incentive Plan” and “2005 Stock Incentive Plan.”

 

Offer to Exchange Options for Restricted Stock Awards.   As a company, we are committed to director, employee and consultant ownership of our capital stock because it helps us attract and retain highly qualified directors, employees and consultants. In light of the foregoing, our board of directors authorized, and on April 20, 2007, we commenced, an offer, which we refer to as the Exchange Offer, to exchange options granted on or after August 16, 2005 to purchase shares of our common stock that were outstanding under our 2005 Stock Incentive Plan and our 2006 Stock Incentive Plan and held by certain of our directors, employees, including our named executive officers, and consultants for restricted stock awards consisting of the right to receive restricted common stock upon the terms and subject to the conditions of the Exchange Offer and the related letter to eligible holders. The purpose of the Exchange Offer was to provide an incentive to eligible holders, including our directors and named executive officers, for their continued efforts and dedication. Although we were not required to make the Exchange Offer, we believed that eligible holders’ options no longer provided the incentives originally intended. Many of such holders had stock options with exercise prices significantly above our then, current and recent trading prices. This exchange program was offered on a voluntary basis to allow eligible holders, including our directors and named executive officers, to choose whether to keep their eligible options at their current exercise prices, or to exchange those options for restricted stock awards.

 

Under the terms of the Exchange Offer, one restricted stock award was granted for every two shares of common stock underlying the eligible options that were accepted for exchange and cancelled. Each restricted stock award granted gave the holder thereof the right to receive one share of restricted common stock, subject to certain vesting

requirements. Until the restricted stock awards have vested, they remain subject to restrictions on transfer and to forfeiture if the employment or service, as may be applicable, terminates.

 

One-half of the restricted shares of our common stock underlying the restricted stock awards granted pursuant to the Exchange Offer vested on January 1, 2008, and the remaining shares vest on January 1, 2009, subject to earlier vesting or forfeiture in certain circumstances. Vesting will only occur, however, if the eligible holder remains a director, employee or consultant of ours or one of our affiliates through the respective vesting dates. Even though certain of the eligible options subject to the Exchange Offer were partially-vested or fully-vested, the restricted stock awards received in the Exchange Offer were not immediately vested and were subject to the new vesting periods.

 

If there is a change of control of the Company as defined in our 2006 Stock Incentive Plan, the vesting for any restricted shares granted in the Exchange Offer that have not yet vested will be accelerated to immediately prior to the date of the change of control, provided the eligible holder has remained a director, employee or consultant of ours or one of our affiliates through the date of such change of control.

 

All eligible holders elected to participate in the Exchange Offer and the Exchange Offer was consummated on May 21, 2007. Pursuant to the exchange offer, we accepted for cancellation eligible options to purchase 729,000 shares of our common stock tendered by directors, employees and consultants eligible to participate in the Exchange Offer. Subject to the terms and conditions of the Exchange Offer, we granted one restricted stock award in exchange for every two shares of common stock underlying the eligible options tendered by eligible directors, employees and consultants in the Exchange Offer.

 

Perquisites and Other Personal

 

Our company provides our named executive officers with a limited number of perquisites or other personal benefits, primarily consisting of company vehicles and club memberships, that we believe help provide a competitive package of compensation and benefits. The value of these benefits is disclosed in the 2007 Summary Compensation Table.

 

Broad-Based Employee Benefits

 

401(k) Plan.   We have a defined contribution retirement plan in which certain of our named executive officers currently participate. The retirement plan is a tax qualified 401(k) plan that covers all U.S. employees including the named executive officers. Under the plan, we match 100% of employees’ contributions up to 5% of eligible compensation, up to a maximum in 2007 of $15,000, or $20,000 if age 50 or over. Employee and employer contributions vest immediately.

 

Our named executive officers are eligible to participate in all of our other employee benefit plans which include medical, dental, group life, disability and accidental death and dismemberment insurance, in each case on the same basis as all other employees.

 

Employment Agreements

 

We believe that employment agreements are critical to the attraction and retention of our key executive officers; therefore, the Company is a party to employment agreements with each of its executive officers. Employment agreements with Messrs. Harrison, Dubberstein and Graves were each entered into effective as of August 8, 2006, as amended effective as of August 2, 2007. An employment agreement was entered into with Mr. Bartlett effective as of August 2, 2007, and was terminated effective as of September 10, 2008. An employment agreement was entered into with Mr. Starke, effective as of August 3, 2007. As used in this section, all references to an individual’s employment agreement will describe the agreement as amended, if applicable. Each employment agreement has a three-year term, subject to automatic extensions for one additional year so that the remaining term will be not less than two nor more than three years. Annual base salaries are currently $450,000 per year for Mr. Harrison, $325,000 per year for Mr. Dubberstein, $325,000 per year for Mr. Graves, and $150,000 per year for Mr. Starke. In each case, the base salary is subject to review by the Committee at least annually. Mr. Harrison is eligible to receive an annual bonus in an amount not less than 66.7% of his annual base salary and

Messrs. Dubberstein, Graves and Starke are eligible to receive an annual bonus as established by the board of directors or the Committee. If we terminate an employment agreement without cause, the executive officer is entitled to severance pay in an amount equal to: (1) the base salary earned and unpaid through the date of such termination plus the executive officer’s base salary for the remainder of the term of his agreement; provided, however, that such amount may not be less than twice the base salary in effect on the date of the termination, plus (2) the greater of any target bonus for the year of termination or the average of the two immediately preceding years’ annual incentive bonuses; plus (3) any vacation pay accrued through the date of the termination. In addition, for a period of the greater of 24 months after such termination or the remainder of the term of the executive officer’s agreement, the Company will continue to provide the executive officer (and his family, as applicable) with medical, dental and life insurance and other similar benefits.

 

We believe that the executive’s performance generally may be hampered by distraction, uncertainty and other activities in the event of an actual or threatened change of control event. To reduce such adverse effects and encourage fair treatment of our executive officers in connection with any such change of control event, the above-referenced employment agreements include change of control protections. If within two years following a change of control the Company terminates the employment of any such executive officer with or without cause or such executive officer resigns with or without cause or good reason, such executive officer would be entitled to a severance payment, payable in a lump sum in cash following such executive officer’s termination, in an amount equal to three times the sum of (1) his highest paid annual base salary, plus (2) the bonus calculated as discussed below, plus any applicable gross-up payment. We believe that the double trigger requiring both (1) the termination with or without cause or resignation with or without cause or good reason and (2) a change of control event is appropriate to provide fair treatment of these named executive officers without creating a windfall.

 

For Messrs. Harrison, Dubberstein and Graves, the bonus paid upon qualifying termination in the event of a change of control will be calculated based on the average of the last three years’ annual bonuses or such lesser number of years as such executive may have been employed. For Mr. Starke, the bonus payable to him upon qualifying termination in the event of a change of control will be the greater of any target bonus for the year of termination or the highest bonus paid to him during his employment with the Company.

 

The employment agreements also provide that in the event of a termination of the executive officer’s employment (1) by the Company without cause, (2) by the executive officer for good reason or (3) in connection with a change of control, (a) all units, stock options, incentive stock options, performance shares, stock appreciation rights and restricted stock held by such executive officer immediately prior to such termination will immediately become 100% vested and (b) the executive officer’s right to exercise any previously unexercised options will not terminate until the latest date on which such option would expire but for the executive officer’s termination of employment.

 

As defined in the employment agreements, “change of control” occurs in the event any individual, entity or group acquires beneficial ownership of 40% or more of either (a) the then outstanding shares of Company common stock or (b) the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors, provided that any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company will not constitute a “change of control.” In addition, a change of control occurs when the individuals who, as of the date of these employment agreements, constitute the Company’s board of directors (the “incumbent board”) cease for any reason to constitute at least a majority of the board of directors. Any individual becoming a director subsequent to the date of these employment agreements whose election, or nomination for election by our stockholders, is approved by a vote of at least a majority of the directors then comprising the incumbent board will be considered a member of the incumbent board as of the date thereof, but any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the incumbent board will not be deemed a member of the incumbent board as of the date of these employment agreements. In addition, a change of control will occur upon the consummation of certain specified business combinations and upon the approval by our stockholders of a complete liquidation or dissolution of the Company.

The employment agreements also provide that in the event of termination upon the disability of the executive officer, the Company will pay him his base salary in effect on the date of termination through the remaining term of the employment agreement, but in any event through the expiration date. The payment of such amounts will be made during the remaining term of the employment agreements in installments consistent with the Company’s normal payroll practices; provided, however, that if the named executive officer is a “specified employee” as defined in regulations under Section 409A of the Internal Revenue Code, such payments will commence on the first payroll payment date that is more than six months following the termination date and the first payment will include any amounts that would have otherwise been payable during the six-months period. Notwithstanding the foregoing, the amounts payable to the executive officer in the event of termination upon disability will be reduced by any benefits payable under any of the Company’s disability plans to such executive officer. If the executive officer dies during the term of his employment agreement, his employment will be terminated on such date and his estate will be entitled to receive his base salary for a period of twelve months after the effective date of such termination any other benefits accrued through the effective date of such termination.

 

In addition, in the event it is determined that any payment or distribution by the Company or its subsidiaries or affiliates to or for the benefit of the executive officer (whether paid or payable or distributed or distributable pursuant to the terms of his employment agreement or otherwise) is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code or any interest or penalties related to such excise tax, the executive officer will be entitled to receive an additional gross-up payment from the Company. The gross-up payment will be equal to the amount such that after payment by the executive officer of all taxes (including the excise tax, income taxes, interest and penalties imposed with respect to such taxes) on the gross-up payment, the executive officer will retain an amount of the gross-up payment equal to the excise tax imposed on the payment or distribution to or for the benefit of such executive officer.

 

The agreements also provide that each executive officer may not, during the term of his employment with the Company and for a period extending one year from the date of the termination of his employment with the Company, disclose any confidential information regarding the Company or use any such confidential information for any purpose other than the performance of his employment with the Company. Each executive officer is also prohibited, during the term of his employment with the Company and for a period of six months following the termination of his employment with the Company for any reason other than without cause or in connection with a change of control, from soliciting, inducing, enticing or attempting to entice any employee, contractor, customer, vendor or subcontractor to terminate or breach any relationship with the Company or any of its subsidiaries or affiliates.

 

Further details regarding potential payments to these named executive officers upon termination or following a change of control event are set forth below under the heading “Potential Payments upon Termination or Change-in-Control.”

 

Other Change of Control Arrangements

 

To promote retention of executives, restricted stock grants contain “change of control” provisions, which trigger full vesting upon a change of control. We believe that these acceleration provisions are generally consistent with our competitors’ change of control protections offered to their similarly situated officers. Potential payments to our Chief Executive Officer and other named executive officers upon termination or following a change of control event are set forth under the heading “Potential Payments upon Termination or Change-in-Control.”

 

Deductibility of Executive Compensation

 

Section 162(m) of the Internal Revenue Code limits the deductibility for federal income tax purposes of executive compensation paid to the Chief Executive Officer and the four other most highly compensated officers of a public company to $1,000,000 per year, but contains an exception for certain performance-based compensation. Our policy is to periodically review and consider whether particular compensation and incentive payments to our executives will be deductible for federal income tax purposes. We intend, to the extent feasible and when we believe it is in the best interests of our Company and our stockholders, to attempt to qualify executive compensation as tax deductible where it does not adversely affect the development and execution of our compensation plans.

Compensation Committee Report

 

The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Committee authorized, approved and recommended the inclusion of the Compensation Discussion and Analysis in our annual report on Form 10-K.

 

The foregoing report is provided by the following directors, who constitute the Committee.

 

COMPENSATION COMMITTEE

 

William R. Snipes, Chairman

David L. Houston

 

COMPENSATION TABLES

 

Summary Compensation Table

 

The following table sets forth certain information with respect to the total compensation earned by our named executive officers during the years ended December 31, 2007 and 2006.

 

 

 

 

Grants of Plan-Based Awards

 

The following table contains information with respect to the named executive officers concerning grants of plan-based awards during 2007.

 

 

 

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table contains information with respect to the named executive officers concerning outstanding equity awards at December 31, 2007.

 

 

 

 

Option Exercises and Stock Vested

 

The following table contains information with respect to the named executive officers concerning option exercises and stock vested in fiscal 2007.

 

 

Nonqualified Deferred Compensation

 

We do not currently have in place any nonqualified deferred compensation arrangements.

 

Pension Benefits

 

We do not currently offer any pension benefits.

 

Potential Payments upon Termination or Change-in-Control

 

The following table sets forth the potential payments due to our named executive officers assuming the executive’s employment was terminated by us without cause or by the executive for good reason or in the event of a change-in-control at December 31, 2007. The termination events, including those upon change of control, triggering payments or other benefits to our named executive officers are described under the headings “Employment Agreements” below.

 

Termination Following a Change of Control

 

 

 

 

Termination Without Cause

 

 

 

 

Termination Upon Death

 

In the event of the death of our Chief Executive Officer, President, Chief Financial Officer or Chief Accounting Officer, the executive’s beneficiary will receive the named executives’ base salary for a period of 12 months and any benefits accrued through the date of death. At December 31, 2007, the base salary of our (1) Chief Executive Officer was $450,000, (2) President was $325,000, (3) Chief Financial Officer was $325,000, and (4) Chief Accounting Officer was $125,000.

 

Termination Upon Disability

 

In the event of the disability of our Executive Officer, President, Chief Financial Officer or Chief Accounting Officer, the executive will continue to receive his base salary through the remaining term of the contract. Had the event occurred at December 31, 2007, our Chief Executive Officer would be entitled to $1,200,000, our President would be entitled to $866,667, our Chief Financial Officer would be entitled to $866,667, and our Chief Accounting Officer would be entitled to $333,333 over the remaining term of the contracts.

 

Director Compensation

 

The following table contains information with respect to 2007 compensation of our directors who served in such capacity during that year, except that the 2007 compensation of those directors who are also our named executive officers is disclosed in the Summary Compensation Table above.

 

Director’s Compensation Table for the Fiscal Year Ended December 31, 2007

 

 

 

 

 

Non-employee directors are paid a monthly retainer of $1,000 and a per meeting attendance fee of $500 and are reimbursed for all ordinary and necessary expenses incurred in the conduct of our business. Historically, our non-employee directors received grants of options to purchase 20,000 shares of our common stock under our 2006 Stock Incentive Plan. In January 2008, the Committee approved restricted stock awards of 5,000 shares to each of Messrs. Hill, Snipes and Houston under our 2006 Stock Incentive Plan. These shares of restricted stock vest in two equal annual installments beginning on February 25, 2009, subject to earlier vesting or forfeiture in certain circumstances. These awards were made in the discretion of the Committee to help incentivize these directors by maintaining a comparable amount of unvested shares of restricted stock as they had prior to recent vestings. We anticipate that in the future our non-employee directors will receive restricted stock awards, rather than options, in such amounts that will be determined by the Committee in its discretion. Members of our board of directors who are also officers or employees of our company, including our named executive officers, do not receive any additional compensation for their services as directors.

 

2006 Stock Incentive Plan

 

Our board of directors and a majority of our stockholders approved our 2006 Stock Incentive Plan, which we refer to as the 2006 Plan, effective April 20, 2006. No further awards will be made under our 2005 Stock Incentive Plan discussed below. The purpose of the 2006 Plan is to provide a means by which eligible recipients of awards may be given an opportunity to benefit from increases in value of our common stock through the granting of one or more of the following awards: (1) incentive stock options, (2) nonstatutory stock options, (3) restricted awards, (4) performance awards and (5) stock appreciation rights.

 

The purpose of the plan is to enable our company, and any of its affiliates, to attract and retain the services of the types of employees, consultants and directors who will contribute to our long range success and to provide incentives that are linked directly to increases in share value that will inure to the benefit of our stockholders.

 

Eligible award recipients are employees, consultants and directors of our company and its affiliates. Incentive stock options may be granted only to our employees. Awards other than incentive stock options may be granted to employees, consultants and directors. The shares that may be issued pursuant to awards consist of our authorized but unissued common stock, and the maximum aggregate amount of such common stock that may be issued upon exercise of all awards under the plan, including incentive stock options, may not exceed 2,500,000 shares, subject to adjustment to reflect certain corporate transactions or changes in our capital structure.

 

In February 2007, we granted 25,000 shares of restricted stock to each of Messrs. Dubberstein, Graves and Bartlett, and 5,000 shares of restricted stock to Mr. Starke. In May 2007, pursuant to the terms of the Exchange Offer, we granted (1) 100,000 shares of restricted stock to Mr. Harrison, (2) 50,000 shares of restricted stock to Mr. Dubberstein, (3) 80,000 shares of restricted stock to Mr. Graves, (4) 40,000 shares of restricted stock to Mr. Bartlett, (5) 16,750 shares to Mr. Starke, and (6) 10,000 shares of restricted stock to each of Messrs. Hill, Houston and Snipes. All of these shares were issued in exchange for options to purchase shares of our common stock as described above under the heading “Offer to Exchange Options for Restricted Stock Awards.” In January 2008, we granted restricted stock awards of (1) 50,000 shares to Mr. Harrison, (2) 33,333 shares to Mr. Dubberstein, (3) 48,333 shares to Mr. Graves, (4) 28,333 shares to Mr. Bartlett, and (5) 10,042 shares to Mr. Starke. As of October 3, 2008, no options to purchase shares of our common stock were outstanding and 463,680 shares of restricted common stock were outstanding under our 2006 Plan. There were 1,698,578 shares available for future grants under our 2006 Plan as of October 3, 2008.

2005 Stock Incentive Plan

 

Our 2005 Stock Incentive Plan, which we refer to as the 2005 Plan, was adopted on July 20, 2005 and amended on November 16, 2005. The purpose of the 2005 Plan was to enable us, and any of our affiliates, to attract and retain the services of the types of employees, consultants and directors who would contribute to our long-range success and to provide incentives which were linked directly to increases in share value which will inure to the benefit of our stockholders. The 2005 Plan provided a means by which eligible recipients of awards may be given an opportunity to benefit from increases in value of our common stock through the granting of incentive stock options and nonstatutory stock options. Eligible award recipients under the 2005 Plan were our and our affiliates’ employees, consultants and directors. Incentive stock options under the 2005 Plan could be granted only to employees. Awards other than incentive stock options under the 2005 Plan could be granted to employees, consultants and directors. The shares that may be issued upon exercise of the options are from authorized but unissued common stock, and the maximum aggregate amount of such common stock which may be issued upon exercise of all awards under the plan, including incentive stock options, could not exceed 1,000,000 shares, subject to adjustment to reflect certain corporate transactions or changes in our capital structure. Under the 2005 Plan, employee stock options generally became exercisable in equal monthly installments over a three-year period, and all options generally expire ten years after the date of grant. As a result of the Exchange Offer and the forfeiture of certain options, all options granted pursuant to the 2005 Plan have been cancelled. No further awards will be made under this plan.

 

Liability Insurance and Indemnification Agreements

 

We have obtained liability insurance for our current directors and officers. We have also entered into contractual indemnification arrangements with our directors and executive officers under which we have agreed, in certain circumstances, to compensate them for costs and liabilities incurred in actions brought against them while acting as directors or executive officers of our company.

 

Compensation Committee Interlocks and Insider Participation

 

We currently maintain a compensation committee. The Committee was established by our board of directors effective as of March 25, 2007. The Committee is composed of Messrs. Snipes (chair) and Houston.

 

No member of the Committee is or was during the fiscal year ended December 31, 2007 an officer or employee of us or any of our subsidiaries or had any relationship requiring disclosure pursuant to Item 404 of Regulation S-K. None of our executive officers served as a director or member of the Committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the Committee or as one of our directors.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

Equity Compensation Plan Information

 

The following table provides information as of December 31, 2007 with respect to shares of our common stock that may be issued under our equity compensation plans as of December 31, 2007.

 

 

 

Security Ownership of Certain Beneficial Owners and Management

 

The following tables set forth as of October 3, 2008 (unless otherwise specified) the number and percentage of shares of our common stock beneficially owned by (1) each person known by us to beneficially own more than 5% of the outstanding shares off our common stock, and (2) each of our directors, each of our named executive officers and all of our directors and named executive officers as a group.

 

Beneficial ownership is determined in accordance with the rules of the SEC. Beneficial ownership is based upon the most recent Forms 3, 4 and 5 and Schedules 13D and 13G filings with the SEC and reports made directly to us. In computing the number of shares of our common stock beneficially owned by a person and the beneficial ownership percentage of that person, shares of our common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of October 3, 2008 are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Percentage of beneficial ownership of our common stock is based upon 26,809,751 shares of our common stock outstanding as of October 3, 2008. To our knowledge, except as set forth in the footnotes to this table, the beneficial owners named in the table below have sole voting and investment power with respect to all shares of capital stock held by them.

 

Principal Stockholders

 

 

 

 

Directors and Named Executive Officers

 

 

 

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires executive officers and directors, and persons beneficially owning more than 10% of our stock to file initial reports of ownership and reports of changes in ownership with the SEC and with us. Based solely on a review of the reports sent to us and written representations from the executive officers and directors, we believe that all Section 16(a) filing requirements for the year ended December 31, 2007 applicable to our directors, executive officers and greater than 10% beneficial owners were satisfied.

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Review and Approval of Related Party Transactions

 

It is our policy that all employees and directors, as well as their family members, must avoid any activity that is or has the appearance of conflicting with our business interest. This policy is included in our Code of Business Conduct and Ethics posted on our website. Each director and executive officer is instructed to always inform the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only our board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of our Code of Business Conduct and Ethics for our executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest.

 

Under the audit committee charter, the audit committee of our board of directors is responsible for reviewing and monitoring compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, our board of directors, and pursuant to its charter, our audit committee, reviews and approves all relationships and transactions in which we and our directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. Our board of directors and our audit committee will approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, our best interests, as they determine in the good faith exercise of their discretion.

 

Lease of Space

 

The Company has entered into five noncancelable operating leases with Grace Properties, LLC, which we refer to as Grace Properties, that have expirations of July 31, 2011. Grace Properties is owned by Kim Snell, President of Eagle Well Service, Inc. (d/b/a Bronco Energy Services), which we refer to as Bronco Energy, a wholly owned subsidiary of the Company. Related rent expense was approximately $130,000 for the year ended December 31, 2007.

 

Drilling Services

 

On January 26, 2006, we entered into a term contract with Windsor Energy Group, LLC, which we refer to as Windsor, a company controlled by an affiliate of Wexford Capital LLC, which we refer to as Wexford. Under this agreement, we agreed to provide Windsor a drilling rig for a period of two years. At the time this contract was entered into, we were an affiliate of Wexford. During 2007, we received $2.6 million from Windsor under this contract.

Consulting Agreement with Michael O. Thompson

 

Effective February 28, 2006, Michael O. Thompson resigned from his positions as a member of our board of directors. In connection with his resignation, we entered into a consulting agreement with Mr. Thompson under which Mr. Thompson has agreed to provide us with consulting services for a period of approximately 30 months. Although Mr. Thompson will not receive any additional compensation for providing these services to us, stock options granted previously to him under the 2005 Plan were allowed to continue to vest in accordance with their terms. Pursuant to the Exchange Offer, these options were cancelled and Mr. Thompson was issued 10,000 shares of restricted stock, of which, one-half vested on January 1, 2008, and the remaining shares will vest on January 1, 2009, subject to earlier vesting or forfeiture in certain circumstances. The consulting agreement with Mr. Thompson was approved by our board of directors, including the approval of the three independent directors comprising our audit committee.

 

Purchase of Workover Rigs

 

In September 2007, Bronco Energy acquired three workover rigs and related equipment from Diamondback Energy Services, LLC, an entity controlled by Wexford, for $3,000,000 on an arm’s length basis. At the time of such transaction, Wexford was not an affiliate of ours.

 

ADDITIONAL INFORMATION

 

Stockholders Sharing a Common Address

 

If you and other residents at your mailing address own common stock in street name, your broker or bank may have sent you a notice that your household will receive only one annual report and proxy statement for each company in which you hold stock through that broker or bank. Nevertheless, each stockholder will receive a separate proxy card. This practice, known as “householding,” is designed to reduce our printing and postage costs. If you did not respond that you did not want to participate in householding, the broker or bank will assume that you have consented, and will send one copy of our annual report and proxy statement to your address. You may revoke your consent to householding by contacting your broker, if you hold common stock in street name, or our corporate secretary, if you are the registered holder of the common stock. The revocation of your consent to householding will be effective 30 days following its receipt. Upon written or oral request to our corporate secretary at the address or telephone number provided above, we will deliver promptly a separate copy of this proxy statement to a stockholder at a shared address to which a single copy of this proxy statement was delivered. By written or oral request to the same address (i) a stockholder may direct a notification to us that the stockholder wishes to receive a separate annual report or proxy statement in the future or (ii) stockholders who are sharing an address and who are receiving delivery of multiple copies of our annual reports or proxy statements can request delivery of only a single copy of these documents to their shared address.

 

Incorporation by Reference

 

The material under the headings “Report of Audit Committee” and “Compensation Committee Report on Executive Compensation” and the disclosure regarding independence of the members of the audit committee, compensation committee and nominating and corporate governance committee shall not be deemed to be “filed” with the SEC nor deemed incorporated into any future filing with the SEC, except to the extent that we specifically incorporate it by reference into the filing.

 

OTHER MATTERS

 

Our board knows of no other business that will be presented at the annual meeting. If any other business is properly brought before the annual meeting, proxies received will be voted in respect thereof in accordance with the recommendation of our board. Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy.

QUESTIONS?

 

If you have questions or need more information about the annual meeting, write to:

 

Bronco Drilling Company, Inc.
16217 N. May Avenue
Edmond, Oklahoma 73013
Attention: Zachary M. Graves, Secretary

 

By order of the Board of Directors

 

D. Frank Harrison
Chairman and Chief Executive Officer

 

October 6, 2008
Edmond, Oklahoma

		BRONCO DRILLING COMPANY, INC.
								C123456789
			000004					000000000.000000 ext           000000000.000000 ext
		MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6						000000000.000000 ext           000000000.000000 ext 000000000.000000 ext           000000000.000000 ext
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.			x

Annual Meeting Proxy Card

▼ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.   ▼

A   Election of Directors — The Board of Directors recommends a vote FOR all the nominees listed.

1.

Nominees:

For

Withhold

For

Withhold

For

Withhold

+

01 - D. Frank Harrison

o

o

02 - Gary C. Hill

o

o

03 - David W. House

o

o

04 - David L. Houston

o

o

05 - William R. Snipes

o

o

In their discretion, the Proxies are authorized to consider and act upon any other matter which may properly come before the meeting or any adjournment thereof.

B    Non-Voting Items

Change of Address — Please print new address below.

C		Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below

Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title.

Date (mm/dd/yyyy) — Please print date below.		Signature 1 — Please keep signature within the box.		Signature 2 — Please keep signature within the box.
/       /

n		C 1234567890            JNT  5 0 A V          0 1 9 6 1 9 1	MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND	+

Proxy — Bronco Drilling Company, Inc.

You are cordially invited to attend the Annual Meeting of Stockholders

To be held on November 17, 2008, at
10:00 a.m. Central Time, at
The Simmons Center, 800 Chisholm Trail Parkway, Duncan, Oklahoma 73533.

 

▼ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼

Proxy — Bronco Drilling Company, Inc.

Proxy Solicited on Behalf of the Board of Directors for the 2008 Annual Meeting of Stockholders

THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO THE PROPOSAL ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN ITEM 1. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY.

Bronco Drilling Company, Inc. (MM) (NASDAQ:BRNC)
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Bronco Drilling Company, Inc. (MM) (NASDAQ:BRNC)
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