UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

SCHEDULE 14A

Filed by the Registrant þ
Filed by a Party other than the Registrant o

Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material under § 240.14a-12

Rowan Companies, Inc.

---

Payment of Filing Fee (Check the appropriate box):

 

March 15, 2006

NOTICE OF 2006 ANNUAL MEETING OF STOCKHOLDERS

Dear Stockholder:

           You are invited to attend the 2006 Annual Meeting of Stockholders of Rowan Companies, Inc. on Friday, April 28, 2006, at 9:00 a.m., Central time, in the Williams Auditorium located on Level 2 of the Williams Tower, 2800 Post Oak Boulevard, Houston, Texas.

           At the meeting, you will be asked to:

           Stockholders of record on March 1, 2006 may vote at the meeting. Each share entitles the holder to one vote. You may vote by attending the meeting in person, by completing the enclosed proxy card, or by telephone or over the internet using the instructions on the enclosed proxy card. For specific voting information, see page 1 of the enclosed proxy statement.

           Even if you plan to attend the meeting, please vote your shares by internet, telephone or proxy card. Your vote is important.

Sincerely,

ROWAN COMPANIES, INC.

2800 Post Oak Boulevard, Suite 5450

Houston, Texas 77056

(713) 621-7800

GENERAL INFORMATION

We are providing these proxy materials to you in connection with the solicitation of proxies by the Board of Directors of Rowan Companies, Inc. for the 2006 Annual Meeting of Stockholders and for any adjournment or postponement of the meeting. In this proxy statement, we refer to Rowan Companies, Inc. as “Rowan,” “the Company,” “we,” “our” or “us.”

We intend to mail this proxy statement to stockholders starting on or about March 20, 2006.

Only stockholders of record on March 1, 2006 may vote at the meeting.

If your shares are registered directly in your name, you are the holder of record of these shares and we are sending these proxy materials directly to you. As the holder of record, you have the right to give your proxy directly to us, to give your voting instructions on the internet or by telephone or to vote in person at the meeting.

If you hold your shares in a brokerage account or through a bank or other holder of record, you hold the shares in “street name,” and your broker, bank or other holder of record is sending these proxy materials to you. As a holder in street name, you have the right to direct your broker, bank or other holder of record how to vote to the extent provided in the instructions that accompany your proxy materials.

If you hold your shares indirectly in one of our 401(k) plans, you have the right to direct the trustee of that plan how to vote as described on your proxy card.

You may vote either in person at the Annual Meeting or by proxy whether or not you attend the meeting. To vote by proxy, you must either:

Giving us your proxy means you authorize the persons appointed as proxies to vote your shares at the meeting in the manner that you have indicated. You may vote for both, either or neither of our director nominees. You may vote for or against the ratification of the appointment of our independent auditors. You may also abstain from voting. If you sign and return the enclosed proxy card but do not indicate your vote, the appointed proxies will vote your shares in favor of our director nominees and for the ratification of the appointment of our independent auditors.

In addition to this mailing, Rowan employees may solicit your proxy personally, electronically or by telephone. Rowan will pay all costs of solicitation and has retained D. F. King & Co., Inc. to assist with the solicitation at an estimated cost of $8,000, plus reasonable expenses. We also reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses in sending these materials to you.

You may revoke your proxy by submitting a new proxy with a later date, including a proxy given via the internet or telephone or by notifying our Secretary by mail in writing before the meeting. If you attend the meeting in person, you may request that your previously submitted proxy not be used.

We must have a quorum to be able to carry on the business of the meeting. We will have a quorum if the holders of a majority of the shares entitled to vote are represented at the meeting, either by proxy or in person. On the record date, there were 109,975,782 shares of our common stock outstanding. Each share is entitled to one vote on the matters to be presented at the meeting.

The nominees for Class III Director who receive the most votes will be elected to fill the available seats on the Board.

Ratification of the appointment of our independent auditors requires the favorable vote of a majority of the votes cast.

Only votes cast for or against are counted in determining the voting outcome. Abstentions and broker non-votes are counted for quorum purposes, but not for voting purposes. Broker non-votes occur when a broker returns a proxy,

but does not have the authority to vote on a particular matter.

We are not aware of any other matters that are to be presented for action at the meeting. However, if any other matters properly come before the meeting, your shares will be voted in accordance with the discretion of the appointed proxies unless you indicate otherwise on your proxy card.

ELECTION OF DIRECTORS

Our Board of Directors has three classes:

Each class of directors is elected for a three-year term, and the current terms will expire on the date of our annual meeting, as follows:

Two Class III directors are to be elected at this meeting, Messrs. Frederick R. Lausen and John R. Huff. Mr. Lausen is an incumbent Class III director of the Company and Mr. Huff is a new nominee for our Board. Both candidates were nominated by the Nominating and Corporate Governance Committee of the Board of Directors, and the full Board concurred with those nominations.

Mr. C. R. Palmer, currently a Class III director, will retire from the Board effective as of the meeting date. The Board expresses its gratitude to Mr. Palmer for his valuable and devoted service as former Chairman and Chief Executive Officer and as a Director of the Company. Mr. Palmer has been given the honorary title of Chairman Emeritus for life. The vacancy from Mr. Palmer’s retirement is being filled with the nomination of Mr. Huff.

If a director nominee becomes unavailable to serve prior to the election, your proxy card authorizes us to vote for a replacement nominee if the Board names one.

The Board recommends that you vote FOR each of these two nominees.

COMMITTEES OF THE BOARD OF DIRECTORS

The table below shows the members of the committees of our Board of Directors, the principal function of each committee and how often such committees met in 2005. The charters of the Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee are available on our website at www.rowancompanies.com, together with our corporate governance guidelines and the code of business conduct and ethics (also available in print upon request of a stockholder).

The Audit Committee has those responsibilities described in the Audit Committee Report on page 10 and in the Audit Committee’s Charter attached as Appendix A.

The Nominating and Corporate Governance Committee generally identifies qualified board candidates and develops and recommends to the Board of Directors our corporate goverance principles. As described under “Director Nominations” on pages 18, the Committee will consider for election to the Board qualified nominees recommended by stockholders.

The Compensation Committee recommends to the Board of Directors the compensation to be paid to our chief executive and other officers. The Committee administers our debenture, stock option and long-term and short-term incentive plans. See the Committee’s report on pages 7-9.

The Executive Committee has the authority to exercise all of the powers of the Board in the management of the business and affairs of the Company, except for certain qualifications noted in the Company’s Bylaws.

The Health, Safety and Environment Committee reviews our performance and policies with respect to health, safety and environmental matters and makes recommendations to the Board regarding such matters.

DIRECTOR COMPENSATION AND ATTENDANCE

Depending on participation on committees and attendance at meetings, our non-employee directors receive the compensation shown below, plus reimbursement for reasonable travel expenses. Mr. McNease and Mr. Croyle are employees of the Company and receive no additional compensation for serving as directors.

In 2005, our non-employee directors earned the following aggregate cash compensation (including retainer and meeting fees):

In 2005, each non-employee director received a grant of 2,700 restricted stock units under the 2005 Rowan Companies, Inc. Long-Term Incentive Plan (the “LTIP”).

Directors are expected to meet their responsibilities by attending at least 75% of scheduled meetings of the Board and the committees on which they serve. The Board of Directors held 10 meetings in 2005 and each director attended at least nine meetings. The Board regularly meets in executive session and the presiding director is rotated among the independent directors. Directors are strongly encouraged to attend our annual meetings. All of our directors other than Mr. Lentz were able to attend our 2005 meeting.

DIRECTOR AND OFFICER STOCK OWNERSHIP

As of February 28, 2006, our directors and officers collectively owned 3,796,370 shares, or 3.5%, of our outstanding common stock, including shares that they could acquire through April 29, 2006 by the exercise of stock options or the conversion of subordinated debentures. Mr. Palmer, who owns approximately 2.1% of our common stock (including shares he could acquire through April 29, 2006) is the only director or officer who owns more than 1% of our outstanding shares.

The following table sets forth the number of shares of our stock owned by each director; the five most highly compensated executive officers of the Company (the “Named Executive Officers”) and all directors and executive officers as a group. Unless otherwise indicated, each individual has sole voting and dispositive power with respect to the shares shown below.

We believe it is important for our executives to build and maintain a significant personal investment in our common stock. In January 2006, the Board approved the following stock ownership guidelines for the top officers of the Company:

To facilitate implementation of these guidelines, an officer will be required to retain 35% of “available shares” received pursuant to equity grants (including outstanding and future restricted stock or performance awards and future stock option grants) until his or her ownership guideline is met, at which time the retention level is reduced to 15%. The retention requirement does not apply once an officer reaches 200% of the applicable ownership guideline or upon the age of 60. “Available shares” are shares remaining after payment of taxes, fees, commissions and exercise price payments.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

In accordance with its charter, the Compensation Committee of the Board of Directors consists of three directors who are elected for one-year terms. Each of the members of the Committee have been determined by the Board of Directors to be “independent” under the standards of the NYSE, are “non-employee directors” for purposes of Section 16 of the Exchange Act and are “outside directors,” as defined in Section 162(m) of the Internal Revenue Code. In 2005, the Committee members were Mr. Peacock (Chairman), Mr. Lentz and Sir Graham Hearne.

The Committee provides assistance to the Board of Directors in fulfilling its oversight responsibilities to the stockholders and specifically handles the following items:

The Committee is responsible for hiring and utilizing outside compensation consultants to provide independent assessments of the Company’s competitive markets and to assist in the review and provide a sounding board for the determination of the appropriate types and levels of compensation and benefits to the company’s executive officers. The Committee meets periodically without management and it reports periodically to the Board of Directors with its recommendations. The Committee also conducts an annual self evaluation of its performance against responsibilities outlined in the committee charter.

The Committee’s philosophy is to compensate our executives for short-term and long-term performance and to retain and motivate employees whose performance contributes to our goal of maximizing stockholder value. Our compensation policies attempt to align our executives’ interests with those of our stockholders. The Committee makes compensation decisions after reviewing recommendations prepared by the Chief Executive Officer (which do not include recommendations regarding his own compensation), with the assistance of independent compensation consultants.

The Committee considers several factors in establishing compensation for an executive officer, including:

An executive’s compensation typically consists of salary, bonus and long-term incentive compensation. The balance among these components is established annually by the Committee and is designed to recognize past performance, retain key employees and encourage future performance. When conducting its annual deliberations, the Committee reviews each component against both historical market performance statistics and recent as well as anticipated trends in compensation. The Committee currently intends to continue basing a substantial part of executive compensation on objective, performance-based criteria and total stockholder return relative to the Company’s peers. The components of executive compensation are detailed below.

Salary: The base salaries for executive officers are reviewed annually by the Committee. In its analysis, the Committee refers to competitive company information provided by compensation consultants. The Committee’s evaluation of the executive’s performance against the criteria identified above determines whether annual adjustments are made.

Short-Term Incentive Compensation: Executive officers participate in two integrated short-term incentive compensation plans: a broad-based profit sharing plan and a targeted bonus plan. Any awards under the bonus plan are only made after the profit sharing plan has been fully funded, and bonus plan awards to individual employees are first reduced by profit sharing plan payouts. The 2005 performance goals under those plans were based on the results of the Company’s drilling operations, specifically,

the percentage of EBITDA return on revenues in excess of a minimum threshold (with respect to the profit sharing plan) and EBITDA relative to budget (with respect to the bonus plan). Each participant in the bonus plan has an aggregate incentive target that is a percentage of base salary. The amount of the aggregate payment under the bonus plan could range from zero to 200% of the incentive target, depending upon the extent to which the performance goals are met or exceeded. For 2005, the aggregate amount paid under the bonus plan was 200% of the incentive target. Between 60 — 75% of any aggregate payment under the bonus plan is determined using the EBITDA goals, and the remaining 25 — 40% is discretionary.

Long-Term Incentive Compensation: Prior to 2004, long-term incentive compensation consisted of stock options, some of which were granted at a discount to market value, and in earlier years, grants of convertible debentures. In 2004, the Committee reduced the number of stock options granted and established the broad based profit sharing plan and the bonus plan described above. In 2005, based on market analysis and current tax law, the Committee approved a substantial change in our long-term incentive compensation philosophy and began using a combination of restricted stock, performance units and fair market value stock options.

In 2005, the long-term compensation value awarded to the Named Executive Officers was determined by the Committee with reference to the officer’s salary, contributions made to the Company, and certain peer compensation information provided by compensation consultants. That award was composed of 30% stock options, 40% performance shares and 30% restricted stock.

The Committee determined Mr. McNease’s compensation in accordance with the compensation principles and plans discussed in this report and the Committee’s charter, including a review of the Company’s competitive position, the Company’s response to market conditions and Mr. McNease’s significant contributions to the Company’s success.

Cash Compensation. In its April 2005 meeting, the Committee approved Mr. McNease’s 2005 base salary of $500,000 effective May 1, 2005. In granting this 11% salary increase, the Committee focused on the Company’s financial and operational performance and Mr. McNease’s contributions to the Company’s performance. The Committee also approved a target bonus of 70% of base salary with an opportunity to earn 200% of target based on corporate financial performance. In its May 2005 meeting, the Committee determined to have 30% of Mr. McNease’s 2005 bonus be discretionary, based on the performance of the Company’s manufacturing division. The Committee believes that the resulting total cash compensation (base salary plus annual bonus at target) is consistent with the market statistics for chief executive officers at similarly situated companies.

Long-term incentive compensation. In May 2005, the Committee determined that based, in part, on peer compensation information, Mr. McNease’s 2005 long-term incentive compensation award should be $1.5 million and consist of 30% stock options, 40% performance shares and 30% restricted stock. The value of the award was determined using the Black-Scholes option pricing model. The terms and conditions of those awards are the same as those for all participants in the program as described above.

Perquisites and Other Compensation. The Committee also reviewed perquisites and other compensation paid to Mr. McNease for 2005 and found them to be reasonable.

Section 162(m) of the Internal Revenue Code generally limits the deductibility of executive compensation paid to the Company’s Named Executive Officers to $1,000,000 per year for federal income tax purposes, but contains an exception for certain performance-based compensation. In making compensation decisions, the Committee considers the potential deductibility of proposed compensation to its executive officers and will continue to do so in the future. However, the Committee

may elect to approve non-deductible compensation arrangements if the Committee believes that such arrangements are in the best interests of the Company and its stockholders.

The undersigned members of the Committee have submitted this report.

The foregoing report of the Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.

AUDIT COMMITTEE REPORT

Our Audit Committee members are all independent members of the Board of Directors: William T. Fox III (Chairman), Frederick R. Lausen and P. Dexter Peacock. The Audit Committee operates under a written charter adopted by the Board of Directors, which is included in this proxy statement as Appendix A. Each of the members of the Audit Committee meets the independence requirements of the New York Stock Exchange currently in effect and is financially literate as such qualifications are interpreted by the Board of Directors in its business judgment.

The Audit Committee is responsible for monitoring the integrity of the Company’s consolidated financial statements, the annual audit and the independence and performance of the Company’s independent auditors. The Audit Committee is directly responsible for the appointment, compensation and oversight of the independent registered public accounting firm engaged to issue an audit report on the financial statements of the Company or to perform other audit, review or attest services for the Company. Management is responsible for the Company’s financial reporting process, including internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. The independent auditors are responsible for performing an audit of the Company’s consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board and for issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee the audit. However, the Audit Committee is not professionally engaged in the practice of accounting, auditing or evaluating auditor independence.

In this context, the Audit Committee held eleven meetings during 2005. The meetings were designed, among other things, to facilitate and encourage communication among the Audit Committee, management, accounting personnel, the internal auditors and the Company’s independent auditors and to perform the responsibilities required by the rules and regulations of the Securities and Exchange Commission and the New York Stock Exchange. The increase in the number of meetings from prior years was due to further work by the Company to comply with Section 404 of the Sarbanes-Oxley Act.

The Audit Committee has reviewed and discussed with the Company’s management the audited consolidated financial statements of the Company for the year ended December 31, 2005. The Audit Committee has also discussed with Deloitte & Touche LLP, the Company’s independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, regarding communication with audit committees.

The Audit Committee has also received the written disclosures and the letter from Deloitte & Touche required by Independence Standards Board No. 1 regarding independence discussions with audit committees, and the Audit Committee has discussed with Deloitte & Touche its independence.

Based on the Audit Committee’s review and discussions with management and the independent auditors, and subject to the limitations of the Audit Committee’s role and responsibilities referred to above and in the Audit Committee Charter, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 for filing with the Securities and Exchange Commission.

In addition, the Audit Committee engaged the Deloitte & Touche LLP to conduct the audit of the Company’s financial statements for fiscal year 2006.

Submitted by:

The foregoing report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.

The table below sets forth the fees paid to Deloitte & Touche LLP over the past two years. All such audit, audit-related and tax services were pre-approved by the Audit Committee, which concluded that the provision of such services by Deloitte & Touche LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee has delegated to its Chairman the authority to pre-approve audit-related and non-audit services not prohibited by law to be performed by the Company’s independent auditors and associated fees, provided that the Chairman shall report any decisions to pre-approve such audit-related and non-audit services and fees to the full Audit Committee at its next regular meeting.

Fees billed by Deloitte & Touche LLP in 2005 and 2004 were as follows:

(a) Consisted of:

RATIFICATION OF INDEPENDENT AUDITORS

The firm of Deloitte & Touche LLP has been appointed as principal auditors for the Company for the year ending December 31, 2006. We are asking you to ratify that appointment.

A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting of Stockholders on April 28, 2006 and will be offered the opportunity to make a statement if he desires to do so. He will also be available to respond to appropriate questions.

The Audit Committee recommends you vote FOR this proposal.

EXECUTIVE COMPENSATION TABLES

The following table sets forth the compensation of each of the Named Executive Officers for each of the last three years.

The following table shows grants of stock options to the Named Executives Officers in 2005 under the LTIP. Those options vest in 25% increments over a four-year period with the options being 100% exercisable on the fourth anniversary of the date of grant. Vesting may accelerate under certain circumstances. All such options were outstanding at February 28, 2006.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The table below reflects the value of stock options exercised during 2005 and the value of outstanding options at year-end 2005 for each of the Named Executive Officers.

The following table provides information about our common stock that may be issued upon the exercise of options and rights or the conversion of debentures under all of our existing equity compensation plans as of December 31, 2005.

All Rowan employees (including executive officers but excluding non-U.S. citizens) who have completed the requisite service are eligible to participate in one of two non-contributory, defined benefit pension plans. Benefits under the drilling employees’ plan generally begin at age 60 and are based upon the employee’s number of years of credited service and his average annual compensation during the highest five consecutive years of his final ten years of service. Compensation includes salary but excludes bonuses. The manufacturing employees’ plan is substantially similar to the drilling employees plan except that benefits begin at age 65 and are subject to reduction for Social Security benefits. As of January 1, 2006, Rowan had approximately 3,400 active employees eligible to participate in its pension plans.

Rowan also sponsors pension restoration plans, which essentially replace any retirement income that is lost because of Internal Revenue Code limitations on annual benefits or the compensation level on which they are based. Both pension restoration plans are unfunded and benefits thereunder are paid directly by Rowan. Currently, the plans have seven participants, including each of the Named Executive Officers other than Mr. Keller.

The following table illustrates, for representative average earnings and years of credited service levels, the maximum annual retirement benefits payable to eligible drilling employees, including each of the Named Executive Officers.

STOCK PERFORMANCE GRAPH

The line graph below compares the yearly and cumulative percentage changes in each of the Company’s Common Stock, the Standard & Poor’s Composite 500 Stock Index, and the Dow Jones U.S. Oil Equipment and Services Index, for the five-year period ended December 31, 2005.

Comparison of Five-Year Cumulative Total Return*

Rowan Common Stock, S&P 500 Index & Dow Jones U.S. Oil Equipment

and Services Index (DJO573)

(Assumes $100 Invested on December 31, 2000)

Fiscal Year Ended December 31

*Total return assumes reinvestment of dividends

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

To our knowledge, no person owned more than 5% of our outstanding shares of common stock at February 28, 2006, except as set forth in the following table.

ADDITIONAL INFORMATION

In previous years, certain officers of the Company issued promissory notes in favor of Rowan in connection with their purchases from Rowan of one or more series of Floating Rate Subordinated Convertible Debentures. The promissory notes bear interest at the same rate as the debentures, prime + .5%, and mature at various dates from 2008-2011. The promissory notes are secured by a pledge of the debentures purchased and contain provisions for set-off, effectively protecting the Company from any credit risk since the face amount of the debentures are equal to the amount of the notes. All such promissory notes pre-dated enactment of the Sarbanes-Oxley Act of 2002. The largest amounts of such promissory notes outstanding during 2005 and the amounts outstanding at December 31, 2005 were as follows:

On May 1, 2003, Mr. Palmer retired after more than 31 years as the Company’s Chief Executive Officer. The Company continues to provide Mr. Palmer with office and administrative support, estimated to cost $100,000 annually, and limited personal use of or access to certain of Rowan’s facilities and equipment, including company aircraft, which had an incremental cost to the Company in 2005, net of reimbursements, of approximately $19,000. In addition, the Company incurred approximately $532,000 of expense in 2005 related to Mr. Palmer’s participation in one of the pension restoration plans.

In March 2006, the Board of Directors approved an agreement with Mr. Palmer that commences on the 2006 Annual Meeting date, terminates on April 27, 2011 and supersedes all prior arrangements. The 2006 agreement provides that the Company will reimburse Mr. Palmer for certain expenses relating to service on two industry organizations, continue to furnish Mr. Palmer with an administrative assistant (Mr. Palmer will reimburse the Company for 60% of the assistant’s salary), and permit Mr. Palmer to use one of the Company’s aircraft on an “if available” basis up to 20 flight hours per year. Mr. Palmer will reimburse the Company for estimated variable costs of such aircraft use.

During 2005, Rowan paid Andrews Kurth LLP, its outside counsel, approximately $923,000 in legal fees, which the Company believes reflected market rates for services rendered. Such fees were approved by the Board of Directors. Mr. P. Dexter Peacock, a Class I Director of the Company, is Of Counsel to Andrews Kurth, a designation that firm uses for former partners who have retired from the active practice of law. Mr. Peacock has no role in providing legal services to the Company, and his compensation from Andrews Kurth is not directly or indirectly affected by the fees that the Company pays to Andrews Kurth.

The Company employs certain individuals who are related to current members of the Board of Directors. Mr. John R. Palmer, the Company’s Regulatory Compliance Manager, received approximately $137,000 in compensation in 2005, including wages and proceeds from the exercise of stock options. Mr. Palmer joined the Company in 1984 and is the son of C. R. Palmer, who is retiring as Class III Director as of the meeting date. Mr. Michael D. Dubose, the Company’s North Sea Area Manager, received approximately $210,000 in salary and bonuses and $116,000 in proceeds from the exercise of stock options. In addition, as part of Mr. Dubose’s expatriate package, the Company pays certain additional local expenses for Mr. Dubose and his family of approximately $80,000. Mr. Dubose joined the Company in 1978 and is the brother-in-law of D. F. McNease, the Company’s Chairman, President and Chief Executive Officer.

If a stockholder submits a proposal at this meeting, it will not be considered timely and Rowan’s appointed proxies will have and intend to exercise discretionary voting authority with respect to such proposal. Any stockholder who wishes to submit a proposal for presentation at the 2007 Annual Meeting of Stockholders and for inclusion in the proxy statement and proxy card must forward such proposal to the Secretary of the Company, at the address indicated on page 19, so that the Secretary receives it no later than November 20, 2006.

Under our Bylaws, nominations for director must be received by the Secretary of the Company at the address indicated on page 19, no later than February 27, 2007, and must otherwise comply with our Bylaws. Currently, other stockholder proposals submitted for consideration at Rowan’s 2007 Annual Meeting (but not for inclusion in the proxy statement or proxy card) must be received by the Secretary of the Company at the address indicated on page 19 no later than January 31, 2007.

If such timely notice of a stockholder proposal is given but is not accompanied by a written statement in compliance with applicable securities laws, Rowan’s appointed proxies are authorized to exercise discretionary voting authority with respect to such proposal, as described under “Other Business” on page 1 of this proxy statement, if it is presented at the 2007 Annual Meeting.

The Nominating and Corporate Governance Committee of the Board of Directors is responsible for, among other things, the selection and recommendation to the Board of Directors of nominees for election as directors.

Stockholders may nominate candidates for election as directors if they follow the procedures and comply with the deadlines specified in our Bylaws, as may be amended from time to time. Stockholders may submit in writing recommendations for consideration by the Committee to Rowan’s Corporate Secretary at the address listed under “Questions?” on page 19.

Recommendations should contain a detailed discussion of the qualifications of each recommended candidate and any other material information the stockholder wants the Committee to consider. The complete description of the requirements for stockholder nomination of director candidates is contained in the Bylaws.

Director nominees should have the highest professional and personal integrity, values and ethics, and must be committed to representing the interests of all stockholders of the Company. They must also have substantial experience at the policy-making level in business, government, technology, engineering, energy, finance, law or in other areas that are relevant to our business and operations. Director nominees must have sufficient time to carry out their duties effectively. They must have mature judgment developed through business experience and/or educational background and must meet criteria of independence and expertise that satisfy applicable New York Stock Exchange (NYSE) and legal regulations. Each individual nominee must have the potential to contribute to the effective functioning of the Board as a whole.

Evaluation of any stockholder recommendation is the responsibility of the Nominating and Corporate Governance Committee under its charter, which is posted on the Company’s website at www.rowancompanies.com. The Committee will evaluate a person recommended by a stockholder in the same manner as any other persons it considers, and reserves the right to request additional background and supporting information to evaluate any candidate nominated by a stockholder.

After reviewing the materials submitted by a stockholder, if the Committee believes that the person merits additional consideration, the Committee (or individual members) would interview the potential nominee and conduct appropriate reference checks. The Committee would then determine whether to recommend to the Board of Directors that the Board nominate and recommend election of that person at the next annual meeting.

The number of other public company boards on which a director may serve shall be subject to a case-by-case review by the Committee, in order to ensure that each director is able to devote sufficient time to perform his or her duties as a director.

We have not required the services of third parties to identify potential nominees, although we reserve the right to retain a search firm in the future, if necessary.

As of February 22, 2006, we had not received any recommendations from stockholders for potential director candidates.

At least a majority of the directors of the Company must be independent directors, in accordance with the definition of “independence” under NYSE rules, and free from any relationship that in the opinion of the Board would interfere with the exercise of independent judgment as a director of the Company. All members of the Compensation Committee, the Nominating and Corporate Governance Committee and the Audit Committee must be independent directors.

The directors that the Board has determined to be independent are: Messrs. Fox, Lausen, Lentz and Peacock, Sir Graham Hearne and Lord Moynihan. The Board has determined that these directors meet the NYSE standards for independence and are also free from any material relationships that in the opinion of the Board would interfere with their exercise of independent judgment.

Under the rules of the NYSE, the Board has adopted categorical standards to assist in making determinations of the independence of directors and nominees for director. The Board, however, considers all material relationships with each director and all facts and circumstances it deems relevant in making its independence determinations. Under these standards adopted for 2006, the Board has determined that any of the following business relationships would not on its own prevent a director from being considered by the Board to be an independent director: if the director is a consultant or advisor to, or is employed by, affiliated or associated with, a law firm, investment bank, or lender to which the Company has made payments (other than any reimbursement or repayment of principal) during any of the preceding three fiscal years that do not exceed 2% of the annual gross revenues of the other entity.

Interested parties and stockholders may communicate with the Chairs of our Nominating and Corporate Governance, Audit, and Compensation committees or

with our independent directors as a group by mail through Rowan’s Corporate Secretary at the address listed under “Questions?” below.

Communications to one or more directors will be collected and organized by our Corporate Secretary under procedures approved by our independent directors. The Corporate Secretary will forward all communications to the appropriate committee Chairman or to the identified director as soon as practicable.

The Board of Directors has determined that William T. Fox III, a Class I director and the current Audit Committee Chair, is an “audit committee financial expert”, as such term is defined in Item 401(h) of Regulation S-K promulgated by the SEC and has accounting or related financial management expertise.

All of Rowan’s directors, executive officers and any greater than ten percent stockholders are required by Section 16(a) of the Securities Exchange Act of 1934 to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Rowan common stock and to furnish the Company with copies of such reports. Based on a review of those reports and written representations that no other reports were required, we believe that all applicable Section 16(a) filing requirements were complied with during the year ended December 31, 2005, except for the inadvertent failure by each of Sir Graham Hearne, Ms. Lynda Aycock, Mr. Gregory M. Hatfield, Mr. Paul L. Kelly and Ms. Melanie Trent to make one filing on a timely basis and by Mr. David P. Russell to make two filings on a timely basis.

The Company will furnish without charge to any person whose proxy is being solicited, upon written request of such person, a copy of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as filed with the Securities and Exchange Commission, including the financial statements and any financial statement schedules thereto. The Company will furnish to any such person any exhibit described in the list accompanying the Form 10-K, upon the payment, in advance, of reasonable fees related to the Company’s furnishing such exhibit(s). All requests for copies of such report and/or exhibit(s) should be directed to Ms. Melanie M. Trent, Corporate Secretary of the Company, at the Company’s principal address shown below.

If you have any questions or need more information about the annual meeting, write to us at our principal executive offices:

AUDIT COMMITTEE CHARTER

The Audit Committee shall consist of three or more directors as determined by the Board of Directors, each of whom shall be free from any relationship that in the opinion of the Board would interfere with the exercise of independent judgment as a member of the Committee. Each member shall meet the independence and financial literacy requirements of the New York Stock Exchange. One member must have accounting or related financial management expertise, as interpreted by the Board. One or more members may be designated as an Audit Committee financial expert by the Board.

If an Audit Committee member simultaneously serves on the audit committees of more than three public companies, then in each case the Board must determine that simultaneous service on such other audit committees would not impair the effectiveness of the service of that director on the Company’s Audit Committee. The Board shall disclose any such determination in the Company’s annual proxy statement.

The members of the Committee shall be elected by the Board for a one-year term and may be re-elected for successive terms. One member of the Committee will be elected by the Board as Chairman and will be responsible for the scheduling of regular and special meetings and the functioning of the Committee.

The Audit Committee shall assist the Board in fulfilling its oversight responsibilities to the shareholders to overview (1) the integrity of the financial statements of the Company, (2) the compliance by the Company with legal and regulatory requirements, (3) the independence, qualifications and performance of the Company’s independent auditor and (4) the performance of the Company’s internal audit function. The Committee shall prepare an Audit Committee report as required to be included in the Company’s annual proxy statement under the rules of the Securities and Exchange Commission.

The Audit Committee is directly responsible for the appointment, compensation and oversight of the public accounting firm engaged to prepare or issue an audit report on the financial statements of the Company or performing other audit, review or attest services for the Company, and each such public accounting firm shall report directly to the Audit Committee. The Audit Committee shall have the sole authority to retain special legal, accounting or other consultants to advise the Committee and to approve the fees and other retention terms of these consultants.

The Audit Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention, with full power to retain outside counsel or other experts for this purpose or to otherwise carry out its duties.

In fulfilling its responsibilities to the Company’s Board of Directors and shareholders, the Audit Committee will have certain responsibilities and follow certain procedures, as described below. The timing and extent of specific steps to be taken within each such procedure is fully within the discretion of the Committee. Other responsibilities and procedures of the Audit Committee may be required from time to time by law, rules of the New York Stock Exchange, the Company’s Bylaws or the Board of Directors.

In fulfilling its responsibilities, the Audit Committee will:

Although the Audit Committee has certain responsibilities and powers, as set forth in this charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditor. Nor is it the duty of the Audit Committee to assure compliance with laws and regulations or the Company’s Policy Statement and Conflict of Interest Guide. The Audit Committee shall be entitled to rely on management and the independent auditor in fulfilling its oversight and other responsibilities under this charter.

n		1 U P X		0 0 8 0 4 7 2		+

n		1 U P X		0 0 8 0 4 7 1		+