EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
|
In
this discussion and analysis, we describe our compensation philosophy and program for our named executive officers ("named executive officers") whose compensation is set forth in
the Summary Compensation Table and other compensation tables included in this proxy statement. For the year ended September 30, 2019, our named executive officers included the following
individuals:
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Officers
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Title
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John W. Lindsay
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President and Chief Executive Officer
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Mark W. Smith
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Senior Vice President and Chief Financial Officer
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Robert L. Stauder
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Senior Vice President and Chief Engineer of Drilling Subsidiary
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Cara M. Hair
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Vice President, Corporate Services and Chief Legal and Compliance Officer
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John R. Bell
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Vice President, Offshore and International Operations of Drilling Subsidiary
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Overall Executive Compensation Philosophy
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Our Human Resources Committee (referred to in this section as the "Committee") has the responsibility for establishing, implementing and monitoring our
executive compensation program. All compensation decisions relating to our CEO, CFO and the other named executive officers are made by the Committee. For purposes of determining named executive
officer compensation, the Committee generally meets at least quarterly throughout the fiscal year to:
-
-
review and approve corporate goals and objectives with respect to named executive officer compensation,
-
-
consider trends in executive compensation,
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-
monitor the Company's compensation structure relative to peer companies,
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track the Company's progress with respect to the approved goals for the Company's Annual Short-Term Incentive Bonus and
Long-Term Incentive Equity Compensation programs, and
-
-
to perform other duties as set forth in the Committee's charter.
Following
the end of each fiscal year, the Committee meets to consider and determine bonus compensation for the completed fiscal year, salary adjustments and equity-based compensation awards. The
Committee also considers executive
compensation
plan performance objectives for the next fiscal year and recommends the same for approval by the Board. Generally, the elements of compensation and benefits provided to our named
executive officers are the same as those provided to other key employees. We do not offer employment contracts to our named executive officers.
The primary goals of our executive compensation program are to:
-
-
align the interests of our executives with those of our stockholders,
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-
ensure that we are able to attract and retain qualified executives, and
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link our executives' pay with their performance and execution of Company strategy.
We
evaluate the performance of our executives over both short-term and multi-year periods. To align the interests of our executives with those of our stockholders, our executive compensation program
is designed to place a substantial emphasis on variable compensation which is based on both the Company's stock price performance and our executives' achievement of short- and long-term corporate
goals that enhance stockholder value.
38 | 2020 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
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Executive Compensation Practices
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The table below highlights compensation practices we have implemented because we believe they drive performance, as well as practices we have not
implemented
because we do not believe they would serve our stockholders' long-term interests.
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What We Do
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What We Do Not Do
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✔
We pay our named executive officers based on their impact on the Company's achievement of its strategic goals by making a significant portion of their target
compensation performance-based and at-risk.
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✘
We do not have employment contracts with our named executive officers.
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✔
Our performance-based compensation varies based on our actual performance.
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✘
We do not reprice performance-based incentives to pay out in the event that the Company falls short of its performance goals.
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✔
The Committee engages in a multi-step target-setting process to establish the composition of our named executive officers' compensation, including reviewing market
and survey data sourced from our peer group of companies and general industry.
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✘
We do not provide tax gross-ups or compensation programs to our named executive officers that are not available to all employees.
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✔
We emphasize long-term equity incentives and utilize caps on potential payments, clawback provisions, reasonable retention strategies, and performance targets to
mitigate risk in our compensation programs.
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✘
We do not maintain compensation programs that we believe incentivize misbehavior by named executive officers or other employees of the Company.
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✔
We have modest post-employment benefits and have included double-trigger change in control provisions in all equity awards since our 2017 fiscal year.
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✘
We do not provide significant additional benefits to named executive officers that differ from those provided to all other employees.
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✔
We have stock ownership and retention guidelines intended to align management and stockholder interests.
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✘
We expressly prohibit our named executive officers, Directors and employees from hedging and pledging and from the use of margin accounts related to the Company's
stock.
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✔
The Committee retains an expert, independent compensation consulting firm for the purpose of advising on executive compensation practices.
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✘
The compensation consulting firm is not permitted to provide any other services to the Company that would compromise its ability to provide independent advice to
the Committee concerning executive compensation practices.
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The executive compensation program for our named executive officers for fiscal year 2019 consisted of the following
elements:
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Base salary;
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Annual Short-Term Incentive Bonus;
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Long-Term Incentive Equity Compensation;
-
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Retirement benefits; and
As
illustrated by the charts below, our CEO and other named executive officers have a majority of their compensation tied to elements that are designed to align their incentives with the Company's
success in achieving its financial and strategic goals.
2020 Proxy Statement | 39
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EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
Furthermore,
a majority of the compensation that is tied to Company performance is in the form of restricted stock vesting over a period of four years
and
performance share units vesting over a period of three years.
-
*
-
These
charts exclude small amounts of compensation attributable to changes in pension value and non-qualified deferred compensation.
We
believe that our executive compensation program is well-designed to achieve its primary goals. To ensure that management's interests are aligned with those of our stockholders and to motivate and
reward individual initiative and effort, a substantial portion of our named executive officers' compensation is at-risk and will vary above or below target levels commensurate with Company
performance. We emphasize performance-based compensation that rewards executives for delivering financial, operational, and strategic results that meet or exceed pre-established goals set annually by
the Committee
under
our Annual Short-Term Incentive Bonus and Long-Term Incentive Equity Compensation programs. Additionally, we further align the interests of our executives with those of stockholders and the
long-term interests of the Company through stock ownership requirements as well as grants under our Long-Term Incentive Equity Compensation program consisting of restricted shares and performance
share units. Each of these principal components of compensation for named executive officers is described in further detail below.
We
provide named executive officers and other employees with a base salary to compensate them for their services. Base salaries of named executive officers are targeted to generally fall within a
range around the median level of base salaries of similarly-situated executives of companies included in our Compensation Peer Group, as described beginning on page 49. If the base salary of any of
our named executive officers consistently falls below this range, then the Committee will consider market adjustments
to
that named executive officer's base salary. Salary levels are typically considered annually as part of our review process as well as upon a promotion. Consistent with our compensation practice for
all employees, named executive officers may receive no salary increase, a percentage salary increase based on cost of living adjustments, or greater increases as a result of market adjustments,
changes in duties or retention considerations.
PERFORMANCE-BASED COMPENSATION COMPONENTS
|
Annual Short-Term Incentive Bonus Plan
The Annual Short-Term Incentive Bonus Plan (the "STI Plan") is a cash incentive plan that provides annual non-equity incentive-based
compensation.
These
cash incentive awards are designed to reward short-term performance and achievement of strategic goals. Combined salaries and target bonus levels are intended to generally approximate the median
of the Compensation Peer Group's combined salary and annual cash bonus levels.
40 | 2020 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
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The
STI Plan is structured to be funded, in the aggregate, at an amount equal to 1% of our earnings before interest, taxes, depreciation, and amortization ("EBITDA"). This amount is allocated 40% to
the CEO and 15% is allocated to each of the other four current named executive officers. Notwithstanding the
size
of the funding pool, no bonus in excess of $5,000,000 may be paid to any named executive officer under the STI Plan. In addition, each named executive officer is assigned a threshold, target and
reach bonus award opportunity expressed as a percentage of base salary.
For
fiscal year 2019, these bonus award opportunities were set as follows and do not include the potential bonus adjustment described below:
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Threshold
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Target
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Reach
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Chief Executive Officer
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40%
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100%
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130%
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Other Named Executive Officers
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25%
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75%
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100%
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For
fiscal year 2019, each named executive officer's bonus opportunity under the STI Plan is based upon three weighted corporate performance criteria. These performance criteria and their weightings
are: earnings per share ("EPS") (35%); return on invested capital ("ROIC") (35%); and EBITDA (30%). At the beginning of each fiscal year, the Committee establishes (and recommends for approval by the
full Board) the STI Plan amounts and the allocation among the named executive officers, as well as the assignment of a threshold, target, and reach objective for each performance criterion. The target
objective is established based upon the operating and capital budget approved by the Board, which is developed from our base case financial forecast for the coming year, an analysis of our business
units, and certain assumptions about our business and operating environment. From that base case, we further develop upside and downside scenarios by adjusting the assumptions used in our financial
modeling. The Committee also considers previous years' goals and the previous years' actual achievement when evaluating the rigor of the Company's financial performance objectives.
Financial
results are compared to plan objectives in order to determine the amount of each named executive officer's bonus. If financial results fall between the threshold and target objectives or the
target and reach objectives, then bonuses are proportionately increased as a result of the threshold or target objective, as applicable, being exceeded. Notwithstanding the other provisions of the STI
Plan, the Committee has the right to reduce or eliminate any bonus due to a named executive officer based upon the Committee's evaluation of individual performance, and the Committee has the
discretion to adjust performance criteria during a fiscal year if, for example, the initially-established performance criteria are rendered unrealistic in light of circumstances beyond the control of
the Company and its management. Before applying the corporate performance criteria for fiscal year 2019, adjustments were made to the Company's results in order to account for the impact of the
impairment of excess capital spares and drilling support equipment, mark-to-market loss on the Company's securities portfolio and certain other discrete, one-time items, such as loss from discontinued
operations.
The
approved corporate performance criteria for fiscal year 2019 were:
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Threshold
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Target
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Reach
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Earnings Per Share
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$0.50
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$1.95
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$2.56
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Return on Invested Capital
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1.5%
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4.7%
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6.0%
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EBITDA
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$686,000,000
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$910,000,000
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$1,004,000,000
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The
bonus, if any, is then subject to being increased or decreased by up to 100% based on the Committee's overall assessment of our rig utilization, dayrates, market share relative to our broader U.S.
land drilling peer group, total stockholder returns relative to both the returns of our Compensation Peer Group and all companies within our broader U.S. land drilling peer group, and our performance
with
respect
to implementation of certain strategic Company initiatives that may vary from year to year (collectively, "strategic objectives"). No specific criteria or objectives are used by the Committee
when assessing performance with respect to these strategic objectives. Whether the bonus of a named executive officer is increased or decreased is primarily dependent upon the Committee's judgment
2020 Proxy Statement | 41
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EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
as
to the named executive officer's effectiveness in facilitating the achievement of the Company's strategic objectives.
Long-Term Equity Incentive Compensation
The Helmerich & Payne, Inc. 2016 Omnibus Incentive Plan (the "2016 Plan") was approved by our stockholders at the Company's 2016
Annual Meeting of Stockholders. The 2016 Plan governs all stock-based awards granted on or after March 2, 2016. Stock-based awards granted prior to March 2, 2016 are governed by either
our 2005 Long-Term Incentive Plan (the "2005 Plan") or 2010 Long-Term Incentive Plan (the "2010 Plan"). The 2016 Plan allows the Committee to design stock-based compensation programs to encourage
growth of stockholder value and allow key employees and non-employee Directors to participate in the long-term growth and profitability of the Company. Approximately 250 employees (including the named
executive officers) and non-employee Directors receive stock-based awards on an annual basis. Equity award levels are determined based on, among other things, market data, and vary among participants
based on their positions.
Under
the 2016 Plan, the Committee may grant nonqualified stock options, performance share unit awards, restricted stock awards, cash awards, stock appreciation rights and other awards to selected
employees and non-employee Directors. Also, the Committee may grant incentive stock options to selected employees under the 2016 Plan. During fiscal year 2019, the Committee only awarded performance
share units and time-vested restricted stock to participants. Prior to fiscal year 2019, the Committee awarded non-qualified stock options and time-vested restricted stock to participants.
A
total of 6,600,000 shares of common stock have been authorized for award under the 2016 Plan. With the exception of new employees or non-employee Directors, the Committee generally only approves
annual stock-based awards at its meeting after the
end
of each fiscal year. The Committee selected this time period for review of executive compensation since it coincides with executive performance reviews and allows the Committee to receive and
consider final fiscal year financial information. Newly-hired employees or newly-appointed Directors may be considered for stock-based awards at the time they join the Company. Occasional exceptions
to this policy may occur as dictated by retention considerations or market factors.
Performance Share Units
Beginning in fiscal year 2019, we replaced stock options with performance share units as a component of our executive compensation program. For grants of performance share
units in fiscal year 2019, the Committee used total stockholder return ("TSR") versus our Compensation Peer Group as the metric which will determine the number of shares that vest during the
performance period ("relative TSR"). Each performance share unit award consists of two elements, one of which is based on the Company's relative TSR over the entire three-year vesting period and the
other of which will be divided into annual tranches and determined based on the Company's one-year relative TSR for each year of the vesting period. The portion of performance share units that is
computed based on the Company's one-year relative TSR for the first and second years of the vesting period will not vest until the conclusion of the three-year term of the performance share unit
award.
We
believe that the performance share units, based upon a measurement of relative TSR, reflect the full value created for our stockholders as they measure both the Company's stock price appreciation
and dividends against those of our Compensation Peer Group. Performance share units are paid in full-value shares. In order to further protect stockholder interests, executives' award agreements
include a provision that caps awards at the target number of shares in the event the Company has a negative absolute TSR over the measurement period regardless of whether the Company's relative TSR
exceeds the median TSR of its peers.
42 | 2020 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
|
The
complete payout table for the Company's performance share units is shown below:
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The Company's TSR Percentile Ranking Relative
to the Applicable Peer Group
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The Company's
Performance Percentage /
Vested Percentage of
the Subject RSUs
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The Company's
Performance Category
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Greater than or Equal to 85th Percentile
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200%
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Maximum Performance
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Equal to 75th Percentile
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150%
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Equal to 65th Percentile
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125%
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Equal to 55th Percentile
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100%
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Target Performance
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Equal to 45th Percentile
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75%
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Equal to 35th Percentile
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50%
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Threshold Performance
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Less than 35th Percentile
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0%
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Below Threshold Performance
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Restricted Stock
There is competitive pressure in the oil and gas drilling sector to attract and retain qualified executives and employees whose knowledge and skill-set provide us with a
competitive advantage. Our experience leads us to believe that awards of restricted stock improve our employee retention and help ensure that our compensation packages remain competitive with
compensation packages offered by our peers who, from time to time, may desire or attempt to lure away our top talent. We believe that it is important to include restricted stock awards as a component
of our long-term equity incentive compensation because they help us attract and retain employees across a greater variety of economic scenarios. In the event that the Company's stock price declines
below its strike price due to exogenous factors, a stock option may not recover intrinsic value while a restricted stock award generally retains some
value
and this provides an ongoing retention incentive, even if the value is less than it was at the time of the award's grant. The value of the award remains tied to the performance of the Company's
stock and employees who receive such awards are incentivized to ensure that the Company performs well throughout the award's vesting period and for as long as they hold the vested stock. Since 2009,
the Committee has annually awarded time-vested restricted stock to the named executive officers and other key employees. Generally, all employee restricted stock awards are structured to vest at a
rate of 25% per year beginning on the first anniversary of the date of grant. During the restriction period, the participant receives quarterly payments from us equal to quarterly dividends and has
the right to vote restricted shares. Unvested restricted stock is forfeited if the participant leaves the Company and is not retirement eligible.
Pension Plans
Prior to October 1, 2003, most of the Company's full-time employees, including certain current named executive officers, participated
in our qualified Employee Retirement Plan (the "Pension Plan"). Certain named executive officers also participated in our non-qualified Supplemental Pension Plan. Effective October 1, 2003, we
revised both the Pension Plan and the Supplemental Pension Plan to close the plans to new participants and reduced benefit accruals for current participants through September 30, 2006, at which
time benefit accruals were discontinued and the plans frozen.
The
fiscal 2019 year-end present value of accumulated benefits for each of our current
named
executive officers is shown in the Pension Benefits for Fiscal Year 2019 table on page 60.
Savings Plans
Savings plans are designed to help employees, especially long-service employees, save and prepare for retirement. We sponsor a qualified and
supplemental savings plan as described below.
Our
401(k)/Thrift Plan (the "Savings Plan") is a tax-qualified savings plan pursuant to which most employees paid in U.S. dollars, including our named executive officers, are able to contribute to the
Savings Plan on a before-tax basis the lesser of up
2020 Proxy Statement | 43
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EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
to
100% of their annual compensation or the dollar limit prescribed annually by the Internal Revenue Service (the "IRS"). We match 100% of the first 5% of cash compensation that is contributed to the
Savings Plan subject to IRS annual compensation limits ($280,000 for 2019). All employee contributions are immediately vested and matching contributions are subject to a six-year graded vesting
schedule.
In
addition to the Savings Plan, our named executive officers and certain other eligible employees can participate in the Supplemental Savings Plan, which
is
a non-qualified savings plan. Pursuant to the Supplemental Savings Plan, a participant can contribute between 1% and 40% of the participant's cash compensation to the Supplemental Savings Plan on a
before-tax basis. If the participant has not received the full Company match of the first 5% of pay in the Savings Plan, then the balance of the match could be contributed to the Supplemental Savings
Plan. The Nonqualified Deferred Compensation for Fiscal Year 2019 table on page 61 contains additional Supplemental Savings Plan information for our named executive
officers.
Our
named executive officers are provided with other benefits, including perquisites and relocation benefits, that the Company and the Committee believe are reasonable. The Committee annually reviews
the levels of these benefits provided to our named executive officers. The compensation associated with these benefits is included in the "All Other Compensation" column of the Summary Compensation
Table on page 54 and a brief explanation of these benefits is shown in footnote 7 to such table. A more detailed explanation of our aircraft policy is provided below.
Company Aircraft
With the approval of the CEO, our aircraft may be used by our named executive officers and other employees for business purposes. Many of our
operations and offices are in remote locations, so our aircraft provide a more efficient use of employee time and improved flight times than are available
commercially.
Our aircraft also provide a more secure traveling environment where sensitive business issues may be discussed.
The
Chairman of our Board of Directors and our CEO are each allocated 10 hours of personal use of our aircraft annually without reimbursement to us. The time attributable to attendance at board
meetings of publicly-held companies is not counted against the 10-hour limitation. Any personal use in excess of this allotment is permitted only under extraordinary circumstances. Under extraordinary
circumstances and with the approval of the CEO, the other named executive officers are permitted personal use of our aircraft, without reimbursement to us.
For
tax purposes, imputed income is assessed to each named executive officer for his or her own or his or her guests' personal travel based upon the Standard Industrial Fare Level of such flights
during the calendar year.
Compensation Decisions for Fiscal Year 2019
|
Generally,
2019 was a challenging year for oilfield services companies. As discussed in our 2019 Form 10-K, heading into 2019, industry activity levels were too high relative to the exploration
and production companies ("E&Ps") established 2019 capital budgets. In order to meet their capital budgets, many E&Ps cut back on activity, including drilling, over the course of calendar year 2019.
Consequently, during the 2019 fiscal year, our total operating rig count fell by 41 rigs. We began fiscal year 2019 with 232 rigs in operation in our U.S. Land segment; at the close of fiscal year
2019, our active rig count in the U.S. Land segment was 194, with most of those at super-spec capacity. Rig count in
our
Offshore segment held steady during fiscal year 2019, with six of our eight offshore rigs under contract. Rig count in our International Land segment also fell slightly; we began fiscal year 2019
with 21 rigs in operation in our International Land segment and at the close of fiscal year 2019, our active rig count in the segment was 18. In light of the market conditions and negative trends in
rig activity, maintaining market share and dayrates was challenging. However, our total stockholder return relative to our Compensation Peer Group was in the 87th percentile for
the last fiscal year, the 89th percentile over the last three fiscal years, and the 95th percentile over the last five fiscal years. We accreted cash, bought back
one million shares of our
44 | 2020 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
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common
stock, and maintained our quarterly dividend of $0.71 per share of common stock. For fiscal year 2019, we also achieved the goals designated as strategic objectives by the Committee, which
contributed to producing strong financial results.
Throughout
fiscal year 2019, we served our customers well, invested in upgraded equipment and associated services with an eye toward the future, and continued to deliver value to our
stockholders.
The
Company's approved corporate performance criteria for fiscal year 2019 and the Company's achievement with respect to each metric are shown below:
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Threshold
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Target
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Reach
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Actual
Performance*
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|
Earnings Per Share
|
|
$0.50
|
|
|
$1.95
|
|
|
$2.56
|
|
|
$1.79
|
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|
Return on Invested Capital
|
|
1.5%
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|
4.7%
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6.0%
|
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|
4.5%
|
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|
EBITDA
|
|
$686,000,000
|
|
|
$910,000,000
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|
|
$1,004,000,000
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|
|
$805,000,000
|
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-
*
-
Adjusted
to eliminate the impact of impairment of excess capital spares and drilling support equipment, mark-to-market loss on the Company's securities portfolio and
certain other discrete, one-time items.
The
Committee determined that the fiscal year 2019 threshold objectives for EPS, ROIC and EBITDA were exceeded, but that the targets for each metric had not been reached. In light of the Company's
performance with respect to our three corporate performance criteria, the Committee determined that our bonus award structure would generate non-equity incentive compensation payments of 88% of base
salary for our CEO and 65% for our other named
executive
officers, which are below the target bonus percentages noted above.
In
addition, the Committee determined that our CEO and other current named executive officers had achieved favorable results with respect to certain strategic objectives. The strategic objectives that
were considered in the evaluation of whether to increase or decrease bonuses included the following:
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Strategic Objective
|
|
Key Accomplishments
|
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|
|
Design and implementation of new strategy for pricing and marketing within our U.S. Land operating segment
|
|
Instituted system for consolidating and utilizing public industry data with our proprietary data, which provides greater visibility into our performance versus our competitors and enables us to proactively forecast rig
needs by customer and region
Implemented new governance processes for pricing of our performance-driven drilling solutions
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Growth within our International Land operating segment
|
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Delivered the Company's first super-spec rigs for use outside of the United States
Developed comprehensive policies and framework for utilizing expatriate employees
Signed letters of intent to deploy two rigs in the United Arab Emirates, one rig in Bahrain and one rig in Colombia
Established framework for further international growth for drilling services and technology
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|
Design and implementation of new strategy for our Offshore operating segment
|
|
Completed evaluation of pricing framework for offshore work
Created new subsidiary to align our legal entity structure with our financial reporting segments
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2020 Proxy Statement | 45
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EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
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|
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Strategic Objective
|
|
Key Accomplishments
|
|
|
|
Continued innovation and achievement of certain benchmarks in our Helmerich & Payne Technologies operating segment
|
|
Deployed AutoSlideSM, a technology solution that fully automates the control of mud motors while sliding during the vertical, the curve, and the lateral hole sections during horizontal drilling operations, in
four major basins in the United States
Made substantial progress on the Company's path towards autonomous drilling
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Implementation of safety initiatives and achievement of certain safety goals
|
|
Improved pre-job planning tools as a means for reducing incidents with the potential for serious injuries or fatalities
Year-over-year reduction in incidents related to handling of tubulars
Year-over-year 10% increase in seatbelt usage among employees, based on the Company's internal tracking of self-reported seatbelt use
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Continued organizational health improvement
|
|
We believe that our Company's culture is an important competitive advantage and, to that end, we:
Continued our focus on communicating and implementing the Company's forward-looking strategy
Developed improved interview guides with focus on organizational health and finding employees who exhibit behaviors consistent with the Company's culture
Revised our onboarding programs to emphasize Company culture and organizational health concepts
|
|
|
|
Implementation of corporate governance and finance initiatives
|
|
Upsized our revolving credit facility from $300 million to $750 million, increasing the Company's financial resources and flexibility
Moved the Company's outstanding public debt to Helmerich & Payne, Inc. and eliminated subsidiary guarantees
Instituted new systems for financial planning across the organization and took measures to optimize working capital
Reorganized our active International Land drilling operations and our Offshore Drilling operations into separate, wholly-owned subsidiaries
|
|
|
|
46 | 2020 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
|
The
Committee also considered the Company's financial performance and achievement of strategic objectives in light of the conditions in the international energy markets and the oilfield services
sector in particular. After considering these factors, the Committee determined that the annual bonus for the CEO and the other current named executive officers, as a group, should be increased by
75%. This adjustment was intended to both recognize the achievements of the CEO and named executive officers in the face of challenging operating conditions and to ensure that the Company's short-term
incentive remains competitive with the companies in our Compensation Peer Group in light of our relative performance. After application of the 75% bonus modifier, our CEO's bonus was set at 153.9% of
base salary and the other named executive officers' bonuses were set at 113.7% of base salary. Please refer to the "Bonus" and "Non-Equity Incentive Plan Compensation" columns of the Summary
Compensation Table on page 54 for actual bonuses paid.
In
fiscal year 2019, our named executive officers were also awarded performance share units and restricted stock as shown in the Grants of Plan-Based Awards in Fiscal Year 2019 table on page 56 and in
the "Stock Awards" column of the
Summary
Compensation Table on page 54. In making these awards, the Committee applied the methodology discussed above and considered the retention effect of these awards in light of a competitive
business climate, individual and corporate performance and the value and type of equity awards made by competitors.
For
calendar year 2020, our President and CEO, Mr. Lindsay, and our Vice President of Offshore and International Operations, Mr. Bell, received base salary adjustments of 5%, our Vice
President, Corporate Services and Chief Legal and Compliance Officer, Ms. Hair, received a base salary adjustment of 8% and our other named executive officers received base salary adjustments
of 3%. By comparison, for calendar year 2019, our CEO, Mr. Lindsay, received a base salary adjustment of 4.4%, our Senior Vice President and CFO, Mr. Smith, received a base salary
adjustment of 17.6%, our Vice President, Corporate Services and Chief Legal and Compliance Officer, Ms. Hair, received a base salary adjustment of 12.2% and our other named executive officers
received base salary adjustments of 3.0%. All adjustments for both calendar years 2019 and 2020 were market-based adjustments that were evaluated and recommended by our independent compensation
consultant and approved by the Committee.
Actions Pertaining to Fiscal Year 2020 Short-Term Incentive Bonus Compensation
|
In
November 2019, the Committee approved target short-term incentive bonus compensation opportunities for each of our named executive officers for fiscal year 2020.
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
|
2019 STI
Target
%
|
|
|
2020 STI
Target
%
|
|
|
|
|
|
|
|
|
|
John Lindsay, President and Chief Executive Officer
|
|
|
100
|
%
|
|
110
|
%
|
|
|
|
|
|
|
|
|
Mark Smith, Senior Vice President and Chief Financial Officer
|
|
|
75
|
%
|
|
90
|
%
|
|
|
|
|
|
|
|
|
Robert Stauder, Senior Vice President and Chief Engineer, Drilling Subsidiary
|
|
|
75
|
%
|
|
75
|
%
|
|
|
|
|
|
|
|
|
Cara Hair, Vice President, Corporate Services and Chief Legal and Compliance Officer
|
|
|
75
|
%
|
|
75
|
%
|
|
|
|
|
|
|
|
|
John Bell, Vice President, Offshore and International Operations, Drilling Subsidiary
|
|
|
75
|
%
|
|
75
|
%
|
|
|
|
|
|
|
|
|
The
target opportunity increases for Mr. Lindsay and Mr. Smith are based on data provided by our independent compensation consultant and took into account data from our Compensation Peer
Group and the general market environment. The adjustment to Mr. Lindsay's target opportunity brought his target
opportunity
in line with the 25th percentile in our Compensation Peer Group. The adjustment to Mr. Smith's target opportunity brought his target opportunity in line with
the 50th percentile in our Compensation Peer Group.
2020 Proxy Statement | 47
Table of Contents
EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
Role of Executive Officers in Compensation
|
The
Committee annually evaluates the performance of the CEO and other named executive officers and determines their compensation in light of the objectives of our compensation program. The CEO
provides an annual assessment of his performance and the performance of the other named executive officers. The CEO, with the assistance of the Vice President, Corporate Services, provides to the
Committee data, analysis, and suggested base salary adjustments and equity compensation for the other named executive officers. This input from management is considered by the Committee when
making
its compensation decisions. The Vice President, Corporate Services also reviews the compensation consultant's annual draft of its compensation analysis (discussed below) and provides comments
for the consultant's consideration. She also attends Committee meetings and provides requested information to the Committee. Except for discussing individual performance objectives with the CEO, the
other named executive officers do not otherwise play a role in their own compensation decisions.
Role of Compensation Consultant
|
Pay
Governance, the Committee's independent compensation consultant for 2019, provided reports to the Committee throughout the year containing research, market data, survey information, and
information regarding trends and developments in executive compensation. At the Committee's request, the independent compensation consultant advises the Committee on all principal aspects of executive
compensation, including the competitiveness of program design and award values. The independent compensation consultant ordinarily provides the Committee, on an annual basis, with a final written
executive compensation analysis with respect to the named executive officers. The written analysis generally addresses, among other things, the following:
-
-
Comparison and assessment of named executive officers' compensation to our Compensation Peer Group and survey data;
-
-
Total stockholder return comparison between the Company and its peer group; and
-
-
Consultant recommendations.
The
Committee generally reviews the compensation of the named executive officers in November or December following the end of a particular fiscal year. The Committee's independent compensation
consultant is generally tasked with preparing materials to help the Committee analyze the effectiveness of the Company's compensation programs and the Company's positioning relative to
its
Compensation Peer Group. The independent compensation consultant may also be asked to prepare reports in connection with other meetings of the Committee where elements of executive compensation or
director compensation are discussed. During calendar year 2019, Pay Governance participated in four meetings and produced reports that were considered in four Committee meetings.
The
Committee's compensation consultant periodically provides the Committee with a written director compensation analysis. The Committee reviews the analysis and determines whether to recommend to our
Board any changes to the compensation program for non-employee directors. The named executive officers do not play a role in determining or recommending the amount or form of director compensation.
The
independent compensation consultant reports directly to the Committee although it may meet with management from time to time to gather information or to obtain management's perspective on
executive compensation matters. The Committee has the sole authority under its Charter to retain, at our expense, or terminate the compensation consultant at any time. In addition, the Committee may
conduct or authorize investigations of matters within its scope of responsibilities and may retain, at our expense, independent counsel or other advisors as it deems necessary.
48 | 2020 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
The
Committee has considered the independence of Pay Governance in light of SEC rules and NYSE listing standards. The Committee requested and received a letter from Pay Governance addressing its
independence, including the following factors:
-
-
other services provided to us by Pay Governance;
-
-
fees paid by us as a percentage of Pay Governance's total revenue;
-
-
policies or procedures maintained by Pay Governance that are designed to prevent a conflict of interest;
-
-
any business or personal relationships between the individual consultants involved in the engagement and a member of the Committee;
-
-
any Company stock owned by the individual consultants involved in the engagement; and
-
-
any business or personal relationships between our executive officers and Pay Governance or the individual consultants involved in the
engagement.
The
Committee discussed these considerations, including the fact that Pay Governance provides no additional services to the Company or management. The Committee concluded that there was no conflict of
interest present and that Pay Governance provided the Committee with appropriate assurances and confirmation of its independent status as the Committee's advisor.
Change of Compensation Consultant
|
During
calendar year 2019, the Committee conducted a request for proposals process and selected Willis Towers Watson as its new compensation consultant to replace Pay Governance, beginning in December
2019. This change was not as a result of any difference of opinion between the Committee and Pay
Governance,
but rather as part of a regular evaluation process intended to provide the Committee with diverse and new perspectives with respect to our executive compensation program.
Effect of Stockholder Say-on-Pay Vote on Executive Compensation Decisions
|
Our
Board and the Committee value the continued interest and feedback of our stockholders regarding our executive compensation decisions. Our stockholders vote on a say-on-pay proposal each year and
the Board and the Committee carefully review the voting results from the advisory vote on executive compensation (commonly known as a say-on-pay proposal) and other stockholder input when making
decisions concerning executive compensation. At our 2019 Annual Meeting of
Stockholders,
approximately 96% of the votes cast on the say-on-pay proposal were in favor of our named executive officers' compensation as disclosed in the proxy statement for that meeting. Based on
the very high level of support shown for our executive compensation plan in the voting results from our 2019 Annual Meeting of Stockholders, the Committee determined that no changes to our executive
compensation policies and decisions were necessary.
Determining Executive Compensation
|
In
making compensation decisions, the Committee compares each element of compensation against a peer group of publicly-traded contract drilling and oilfield service companies (collectively
"Compensation
Peer
Group") and against published survey data. The Compensation Peer Group consists of companies that are representative of the types of companies that we compete against for talent.
2020 Proxy Statement | 49
Table of Contents
EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
The
companies currently included in our Compensation Peer Group are as follows:
|
|
|
|
|
|
|
Company
|
|
Market Capitalization
(at September 30,
2019)
|
|
Enterprise Value
(at September 30,
2019)
|
|
Revenue
(TTM from
September 30, 2019)
|
|
|
|
|
|
|
|
Baker Hughes Company
|
|
$23,816,000,000
|
|
$28,934,378,000
|
|
$23,755,000,000
|
|
|
|
|
|
|
|
Diamond Offshore Drilling, Inc.
|
|
$765,580,000
|
|
$2,681,087,000
|
|
$936,790,000
|
|
|
|
|
|
|
|
Nabors Industries Ltd.
|
|
$679,666,000
|
|
$4,192,318,000
|
|
$3,111,202,000
|
|
|
|
|
|
|
|
National Oilwell Varco, Inc.
|
|
$8,181,004,000
|
|
$10,210,004,000
|
|
$8,596,000,000
|
|
|
|
|
|
|
|
Noble Corporation plc
|
|
$316,462,000
|
|
$4,276,856,000
|
|
$1,161,242,000
|
|
|
|
|
|
|
|
Oceaneering International, Inc.
|
|
$1,340,495,000
|
|
$1,968,971,000
|
|
$1,982,409,000
|
|
|
|
|
|
|
|
Patterson-UTI Energy, Inc.
|
|
$1,732,289,000
|
|
$2,566,648,000
|
|
$2,774,325,000
|
|
|
|
|
|
|
|
Precision Drilling Corp.
|
|
$334,911,000
|
|
$1,461,208,000
|
|
$1,596,029,000
|
|
|
|
|
|
|
|
Superior Energy Services, Inc.
|
|
$20,355,000
|
|
$1,148,844,000
|
|
$1,868,539,000
|
|
|
|
|
|
|
|
TechnipFMC plc
|
|
$10,778,070,000
|
|
$11,446,970,000
|
|
$13,005,300,000
|
|
|
|
|
|
|
|
Transocean Ltd.
|
|
$2,734,761,000
|
|
$10,838,761,000
|
|
$3,044,000,000
|
|
|
|
|
|
|
|
Valaris plc
|
|
$951,765,000
|
|
$7,066,065,000
|
|
$1,940,100,000
|
|
|
|
|
|
|
|
Weatherford International plc
|
|
$27,913,000
|
|
$53,913,000
|
|
$5,398,000,000
|
|
|
|
|
|
|
|
For
Comparison, the Company's comparable statistics are shown here:
|
|
|
|
|
|
|
Company
|
|
Market Capitalization
(at September 30,
2019)
|
|
Enterprise Value
(at September 30,
2019)
|
|
Revenue
(TTM from
September 30, 2019)
|
|
|
|
|
|
|
|
Helmerich & Payne, Inc.
|
|
$4,385,008,000
|
|
$4,463,461,000
|
|
$2,798,490,000
|
|
|
|
|
|
|
|
During
calendar year 2019, there were changes in our Compensation Peer Group as set forth in our 2019 Proxy Statement. Rowan Companies plc merged with Ensco plc to form Ensco
Rowan plc on April 11, 2019 (subsequently renamed Valaris plc effective July 31, 2019). Additionally, Weatherford International plc filed for Chapter 11
bankruptcy on July 1, 2019 and was delisted from the New York Stock Exchange on May 13, 2019 and Superior Energy Services, Inc. was delisted from the New York Stock Exchange on
September 26, 2019. Consequently, for the performance share units awarded in calendar year 2019, our Compensation Peer Group was reduced to the eleven companies, including Valaris plc, which
were not delisted during the year.
The
Committee also uses survey data to assist in compensation decisions, including those instances in which a named executive officer's position or duties do not match the position or duties of
Compensation Peer Group executives. This survey data includes oilfield services, energy, and general industry data. The surveys used are as follows:
-
-
Mercer Energy Sector Compensation Survey;
-
-
Pearl Meyer & Partners Drilling Management Survey; and
-
-
Willis Towers Watson Oil and Gas Compensation Survey.
The
Committee sets target total direct compensation for named executive officers to generally approximate the median level of compensation paid to similarly-situated executives of the companies
comprising the Compensation Peer Group, although in some instances there may be insufficient peer group data to provide a meaningful percentile ranking. Variations to this objective may occur as
dictated by corporate performance, experience level, internal considerations, nature of duties, market factors, and retention issues. At the time the Committee makes compensation decisions, it uses
prior fiscal year peer data and available survey data. As such, the data used by the Committee provides peer compensation comparisons on a historical basis which does not reflect the most recent year
over year increase in peer compensation. Therefore, when the Committee annually sets compensation for our named executive officers, that compensation generally lags behind the current median of peer
compensation. Similarly, the percentile ranking for total direct compensation (discussed above) could be overstated because such rankings are derived from dated peer compensation data.
50 | 2020 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
A
significant portion of total compensation is variable based on corporate performance and relative stockholder return. The Committee considers individual performance during its annual review of base
salary and equity awards. However, no specific individual performance criteria or guidelines are used by the Committee as a controlling factor in the Committee's ultimate judgment and final decision.
In deciding on the type and amount of executive compensation, the Committee focuses on both current pay and the opportunity for future compensation. The Committee does not have a specific formula for
allocating each element of pay, but instead bases the allocation on peer and survey data and the Committee's judgment.
In
fiscal year 2019, the Committee began utilizing an award mix of 50% performance share units and 50% time-based restricted stock, which the Committee believes will align the interests of executives
with stockholders, as discussed on page 42. Prior to this fiscal year, during fiscal years 2017 and 2018, the Committee utilized an award mix of 50% stock options and 50% time-based
restricted stock.
Equity
awards are calculated based on an executive's base pay and the value of our common stock. Under this methodology, for fiscal year 2019, the Committee limited the value of annual equity awards
to 500% of the CEO's base salary and 300% of the base salary of the other named executive officers. The Committee arrived at those values in the effort to approximate the median level of such
compensation paid to similarly situated executives of the companies comprising the Compensation Peer Group. To determine the actual number of performance share units awarded to a named executive
officer, the dollar value of the award is divided by the grant date fair value of a performance share unit, which is determined using a Monte Carlo simulation. The Monte Carlo simulation requires the
use of highly subjective assumptions. For additional information on the valuation assumptions, refer to note 11, "Stock-Based Compensation," to our audited financial statements for the fiscal
year ended September 30, 2019, included in the 2019 Form 10-K. Exceptions to our long-term incentive compensation policy have occurred and may occur in the future as dictated by
retention considerations and market factors.
We
are dedicated to performing with integrity and promoting accountability. We believe the Company must have the ability to recover performance-based compensation paid to executive officers and key
employees in circumstances when misconduct has resulted in or contributed to a restatement of our financial statements or damage to the Company. As a result, we have two policies addressing recoupment
of bonus and equity compensation from executive officers and certain other key employees.
The
following is a summary of those policies:
-
-
In the event the Board determines that any fraud or intentional misconduct caused or was a substantial contributing factor to a restatement of
our financials, the Board may require reimbursement of any bonus compensation paid to an executive officer or certain other key employees to the extent the bonus paid exceeded what would have been
2020 Proxy Statement | 51
Table of Contents
EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
Executive Officer and Director Stock Ownership Guidelines
|
Because
the Board believes in linking the interests of management and stockholders, the Board has adopted stock ownership guidelines for our named executive officers. Our Executive Stock Ownership
Guidelines specify a number of shares that our named executive officers must accumulate and hold within five years of the later of the adoption of the guidelines or the appointment of the individual
as a named executive officer. The CEO is required to own shares having a value of five times base salary, and the other named executive officers are required to own shares having a value of two times
base salary.
The
Board has adopted a similar policy applicable to Directors that requires ownership of shares having a value equal to two times annual compensation.
Trading, Hedging and Pledging Policies
|
Our
Insider Trading Policy prohibits all directors, officers and employees from engaging in short-term (i.e., short-swing trading) or speculative transactions involving Company stock. Our
Insider Trading Policy prohibits the purchase or sale of puts, calls, options and other derivative securities based on Company stock. Our Insider Trading Policy also prohibits short sales, margin
accounts, hedging transactions, pledging of Company stock as collateral and, with the exception of Rule 10b5-1 trading plans as noted below, standing orders placed with brokers to sell or
purchase Company stock.
Our
Insider Trading Policy prohibits our directors, officers and employees from purchasing or selling Company stock while in possession of material, non-public information. As such, and in addition to
our pre-clearance procedures, our directors,
executive
officers and certain other employees are prohibited from buying or selling Company stock during our earnings period (which begins on the first day of the month following the close of a
fiscal quarter and ends after the second full trading day following the release of the Company's earnings). However, we do permit our directors and employees to adopt and use Rule 10b5-1
trading plans. This allows directors and employees to sell and diversify their holdings in Company stock over a designated period by adopting pre-arranged stock trading plans at a time when they are
not aware of material non-public information concerning the Company, and thereafter sell shares of Company stock in accordance with the terms of their stock trading plans without regard to whether or
not they are in possession of material non-public information about the Company at the time of the sale.
Deductibility of Executive Compensation
|
In
connection with making decisions on executive compensation, the Committee has previously taken into consideration the provisions of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), which limited the deductibility by the Company for federal income tax purposes of certain categories of annual compensation in excess of $1 million paid to certain
executive officers. The exemption from the Section 162(m) deduction limit for performance-based compensation was repealed by the Tax Cuts and Jobs Act, which was enacted on December 22,
2017, effective for taxable years beginning after December 31, 2017, such that compensation paid to our named executive officers in
excess
of $1.0 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. The repeal means that even
performance-based compensation will be subject to the deduction limit of Section 162(m). Although the performance-based exemption under Section 162(m) of the Code was repealed, the
Committee determined to retain the current structure, which was designed to qualify awards paid under the STI Plan as "performance-based compensation" for purposes of meeting the performance-based
exemption under the Code, for fiscal year 2019.
52 | 2020 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
|
Potential Payments Upon Change-in-Control or Termination
|
We
have entered into change-in-control agreements with our named executive officers and certain other key employees. These agreements are entered into in recognition of the importance to us and our
stockholders of avoiding the distraction and loss of key management personnel that may occur in connection with a rumored or actual change-in-control of the Company. These agreements contain a
"double" trigger provision whereby no benefits will be paid to an executive unless both a change-in-control has occurred and the executive's employment is terminated after a change-in-control. We
believe this arrangement appropriately balances our interests and the interests of executives since we make no payments unless a termination of employment occurs.
More
specifically, if we actually or constructively terminate a named executive officer's employment within 24 months after a change-in-control other than for cause, disability, death, or the
occurrence of a substantial
downturn, or if any of our named executive officers terminates his or her employment for good reason within 24 months after a change-in-control (as such terms are defined in the
change-in-control agreement), any unvested benefits under our Supplemental Savings Plan and Supplemental Pension Plan and any options or restricted stock granted to any of the named executive officers
will fully vest and we will be required to pay or provide:
-
-
A lump sum payment equal to two and one-half (21/2) times the current base salary and previous year's annual bonus of the CEO
and two (2) times the current base salary and previous year's annual bonus of the other named executive officers;
-
-
24 months of benefit continuation;
-
-
A prorated annual bonus payable in one lump sum;
-
-
Up to $5,000 for out-placement counseling services; and
-
-
A lump sum payment of any accrued vacation pay, any previously deferred compensation, and base salary through the termination date;
provided
that the payments and benefits will be provided only if a named executive officer executes and does not revoke a release of claims in the form attached to the change-in-control agreement. No
tax gross-ups are provided on payments made under these agreements. These agreements are automatically renewed for successive two-year periods unless terminated by us.
For
more information regarding post-termination payments that we may be required to make to named executive officers in the event of a change-in-control, see the Potential Payments Upon
Change-in-Control table on page 62.
Our
2005 Plan and 2010 Plan contain a provision whereby all stock options and restricted stock will automatically become fully vested and immediately exercisable in the event of a change-in-control,
as defined in such plans. This provision was included in all equity plans in order to be consistent with market practice at the time the plans were approved by stockholders. However, similar to our
change-in-control agreements, our 2016 Plan contains a "double trigger" provision whereby stock options, restricted stock and performance share units will vest in the event of a change-in-control and
the executive's employment is subsequently terminated. The potential value of the acceleration of vesting of stock options and restricted stock upon a change-in-control is reflected in columns 6 and 7
of the Potential Payments Upon Change-in-Control table on page 62.
OTHER TERMINATION PAYMENTS
|
The
Supplemental Pension Plan and Supplemental Savings Plan described on page 43 and quantified in the Pension Benefits for Fiscal Year 2019 and Nonqualified Deferred Compensation for Fiscal Year 2019
tables on
pages 60 and 61 provide for potential payments to named executive officers upon termination of employment for other than change-in-control.
2020 Proxy Statement | 53
Table of Contents
EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION
|
Summary Compensation Table
|
The
following table includes information concerning compensation paid to or earned by our named executive officers listed in the table for the fiscal years ended September 30,
2019, 2018 and 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
Salary(1)
($)
|
|
Bonus(2)
($)
|
|
Stock
Awards(3)
($)
|
|
Option
Awards(4)
($)
|
|
Non-Equity
Incentive
Plan
Compensation(5)
($)
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(6)
($)
|
|
All Other
Compensation(7)
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay,
|
|
|
2019
|
|
|
984,450
|
|
|
643,668
|
|
|
4,784,455
|
|
|
|
|
|
858,224
|
|
|
77,388
|
|
|
382,864
|
|
|
7,731,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief
|
|
|
2018
|
|
|
927,919
|
|
|
811,617
|
|
|
2,225,716
|
|
|
2,398,820
|
|
|
1,082,155
|
|
|
17,895
|
|
|
313,042
|
|
|
7,777,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
2017
|
|
|
904,327
|
|
|
349,823
|
|
|
1,857,527
|
|
|
2,165,637
|
|
|
699,648
|
|
|
17,582
|
|
|
236,408
|
|
|
6,230,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W. Smith(8),
|
|
|
2019
|
|
|
481,250
|
|
|
243,540
|
|
|
1,305,241
|
|
|
|
|
|
324,720
|
|
|
|
|
|
86,124
|
|
|
2,440,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
2018
|
|
|
177,083
|
|
|
214,285
|
|
|
426,147
|
|
|
426,165
|
|
|
285,715
|
|
|
|
|
|
43,765
|
|
|
1,573,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Stauder,
|
|
|
2019
|
|
|
499,712
|
|
|
240,526
|
|
|
1,472,427
|
|
|
|
|
|
320,701
|
|
|
61,706
|
|
|
124,737
|
|
|
2,719,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President
|
|
|
2018
|
|
|
475,938
|
|
|
316,940
|
|
|
684,975
|
|
|
738,220
|
|
|
422,587
|
|
|
16,461
|
|
|
109,186
|
|
|
2,764,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Engineer, Drilling Subsidiary
|
|
|
2017
|
|
|
463,838
|
|
|
130,128
|
|
|
562,990
|
|
|
656,368
|
|
|
260,258
|
|
|
80,340
|
|
|
88,268
|
|
|
2,242,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair,
|
|
|
2019
|
|
|
403,750
|
|
|
202,138
|
|
|
1,136,319
|
|
|
|
|
|
269,517
|
|
|
|
|
|
88,639
|
|
|
2,100,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President,
|
|
|
2018
|
|
|
356,563
|
|
|
244,599
|
|
|
465,395
|
|
|
501,566
|
|
|
326,132
|
|
|
|
|
|
44,204
|
|
|
1,938,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Services and
Chief Legal and Compliance Officer
|
|
|
2017
|
|
|
305,938
|
|
|
88,413
|
|
|
365,895
|
|
|
426,563
|
|
|
176,826
|
|
|
|
|
|
47,744
|
|
|
1,411,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Bell,
|
|
|
2019
|
|
|
376,510
|
|
|
184,736
|
|
|
1,130,829
|
|
|
|
|
|
246,314
|
|
|
17,214
|
|
|
93,039
|
|
|
2,048,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President,
|
|
|
2018
|
|
|
365,544
|
|
|
243,426
|
|
|
526,104
|
|
|
566,994
|
|
|
324,568
|
|
|
1,982
|
|
|
69,563
|
|
|
2,098,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offshore and
International Operations,
Drilling Subsidiary
|
|
|
2017
|
|
|
349,375
|
|
|
99,945
|
|
|
432,407
|
|
|
504,114
|
|
|
199,891
|
|
|
1,115
|
|
|
30,284
|
|
|
1,617,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amounts included in this column reflect salaries earned during fiscal years 2019, 2018 and 2017. Annual salary adjustments, if any, become effective at the
beginning of each calendar year. Thus, the salary reported above for a fiscal year is the sum of the named executive officer's salary for the last three months of a calendar year plus the first nine
months of the following calendar year.
-
(2)
-
The
amounts included in this column reflect the portion of amounts paid pursuant to our STI Plan attributable to the Committee's assessment of our achievement of
financial performance criteria in our STI Plan, rig utilization, dayrates, marketshare, stockholder returns relative to both the returns of our Compensation Peer Group and all companies within our
broader U.S. land drilling peer group, and performance with respect to certain other Company strategic initiatives. The amounts were earned in connection with our performance for the reported fiscal
year, but were paid during the first quarter of the next fiscal year.
-
(3)
-
This
column represents the aggregate grant date fair value under ASC 718 for performance share units and restricted stock awards granted during fiscal year 2019, as
well as prior fiscal years (as applicable). All grants were made pursuant to the 2016 Plan. For additional information on the valuation assumptions, refer to note 11, "Stock-Based
Compensation," to our audited financial statements for the fiscal year ended September 30, 2019, included in the 2019 Form 10-K. These amounts reflect an accounting expense and do not
correspond to the actual value that may be realized by the named executive officers.
-
(4)
-
The
amounts included in this column reflect the aggregate grant date fair value of option awards determined pursuant to ASC Topic 718. Because the amounts reflect
our accounting expense, the amounts do not correspond to the actual value that will be recognized by the named executive officers. For additional information, including valuation assumptions with
respect to the grants, refer to note 11, "Stock-Based Compensation," to our audited financial statements for the fiscal year ended September 30, 2019, included in the 2019
Form 10-K.
54 | 2020 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION TABLES AND RELATED INFORMATION
|
-
(5)
-
The
amounts included in this column reflect the portion of amounts paid under our STI Plan based on annual performance measured against pre-established objectives
whose outcome is uncertain at the time the awards are communicated to the named executive officers. The bonus award opportunities and financial measures and financial measure weightings for
determining bonus amounts for fiscal year 2019 are described in the CD&A beginning on page 38.
-
(6)
-
The
amounts included in this column reflect the aggregate change in the actuarial present value of the accumulated benefit of each named executive officer under our
Pension Plan and our Supplemental Pension Plan. The actuarial present value calculation for fiscal year 2019 for Messrs. Lindsay and Stauder, who are retirement eligible, is based on an
immediate annuity (with an assumed retirement date of September 30, 2019), whereas the present value calculation for Mr. Bell, who is not retirement eligible, is based on a deferred
annuity (with an assumed retirement age of 61). Neither Mr. Smith nor Ms. Hair are participants under either the Pension Plan or the Supplemental Pension Plan.
-
(7)
-
"All
other compensation" for fiscal year 2019 includes the following:
-
-
Our matching contribution to the Savings Plan on behalf of each named executive officer as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
$14,000
|
|
Mark W. Smith
|
|
|
$14,000
|
|
Robert L. Stauder
|
|
|
$14,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
$14,000
|
|
John R. Bell
|
|
|
$14,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
-
Our matching contribution to the nonqualified Supplemental Savings Plan for Employees of
Helmerich & Payne, Inc. on behalf of each named executive officer as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
$110,317
|
|
Mark W. Smith
|
|
|
$33,163
|
|
Robert L. Stauder
|
|
|
$39,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
$26,650
|
|
John R. Bell
|
|
|
$26,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
-
Dividends on restricted stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
$224,266
|
|
Mark W. Smith
|
|
|
$37,827
|
|
Robert L. Stauder
|
|
|
$68,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
$47,959
|
|
John R. Bell
|
|
|
$52,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
-
For John W. Lindsay, the amount reported includes $27,284 for personal use of our aircraft. The value
shown for personal use of our aircraft is the incremental cost to us of such use, which is calculated based on the variable operating costs to us per nautical mile of operation, which include fuel
costs, repairs, meals, professional services, travel expenses and licenses and fees. Fixed costs that do not change based on usage, such as the cost of aircraft, pilot salaries, insurance, rent, and
other costs, were not included. The amount reported includes deadhead flights and is reduced by any reimbursements to us. Flights for Mr. Lindsay comply with the Company's aircraft use policy
described on page 44 of the CD&A.
-
-
Our contributions toward business travel premiums, club memberships, event tickets, and personal use of
aircraft not otherwise disclosed above. The values of these personal benefits are based on the incremental aggregate cost to us and are not individually quantified because none of them individually
exceeded the greater of $25,000 or 10% of the total amount of perquisites and personal benefits for each named executive officer.
-
(8)
-
Mr. Smith
joined the Company in May 2018.
2020 Proxy Statement | 55
Table of Contents
EXECUTIVE
COMPENSATION TABLES AND RELATED INFORMATION
|
Grants of Plan-Based Awards in Fiscal Year 2019
|
As
described on pages 40 through 43 of the CD&A, we provide incentive award opportunities to executives, designed to reward both short-term and long-term business performance, and
create
a close alignment between incentive compensation and stockholders' interests. The following table provides information on non-equity incentive plan awards, performance share units and restricted stock
granted in fiscal year 2019 to each of our named executive officers. Although the grant date fair value is shown in the table for these stock awards, there can be no assurance that these values will
actually be realized during the terms of these grants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
|
|
Estimated Future Payouts
Under
Equity Incentive Plan Awards(2)
|
|
All Other
Stock Awards:
Number of
Shares of
Stock or
|
|
Grant Date
Fair Value of
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Units(3)
(#)
|
|
Awards(4)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
|
|
|
390,400
|
|
|
976,000
|
|
|
1,268,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
17,810
|
|
|
35,620
|
|
|
71,240
|
|
|
|
|
|
2,447,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,472
|
|
|
2,336,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W. Smith
|
|
|
|
|
|
125,000
|
|
|
375,000
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
4,858
|
|
|
9,717
|
|
|
19,434
|
|
|
|
|
|
667,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,496
|
|
|
637,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Stauder
|
|
|
|
|
|
123,453
|
|
|
370,359
|
|
|
493,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
5,481
|
|
|
10,962
|
|
|
21,924
|
|
|
|
|
|
753,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,840
|
|
|
719,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
|
|
|
103,750
|
|
|
311,250
|
|
|
415,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
4,230
|
|
|
8,460
|
|
|
16,920
|
|
|
|
|
|
581,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,137
|
|
|
554,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Bell
|
|
|
|
|
|
94,818
|
|
|
284,454
|
|
|
379,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
4,209
|
|
|
8,419
|
|
|
16,838
|
|
|
|
|
|
578,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,093
|
|
|
552,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amounts included in this column reflect the threshold, target, and maximum potential value of a payout for each named executive officer under our STI Plan if
certain of our financial performance objectives were achieved for the October 1, 2018 to September 30, 2019 performance period. The amounts are based on salaries in effect as of
January 1, 2019 for each named executive officer, which is the basis for determining the actual payments to be made subsequent to year-end. The potential payouts are performance-driven and,
therefore, are at risk. The possible payouts reflected in the table may be increased or decreased by an adjustment factor of up to 100% based on the Committee's assessment of corporate performance.
The financial measures, bonus opportunities, and adjustment factors for determining payout are described in the CD&A on pages 44 through 47.
-
(2)
-
The
amounts in the table above reflect the threshold, target and maximum number of shares issuable with respect to performance share units granted in December 2018.
The performance share units are settled in shares of common stock, in an amount from 0% to 200% of the number of units awarded, based on the Company's total stockholder return, compared to that of the
Compensation Peer Group, over the three-year period commencing on January 1, 2019 and ending on December 31, 2021. All grants were made pursuant to the 2016 Plan.
-
(3)
-
The
amounts included in this column reflect the number of shares of common stock subject to restricted stock awards granted in fiscal year 2019 to the named
executive officers. The awards of restricted stock vest ratably in four equal annual installments, beginning on the one-year anniversary of the grant date. Dividends are paid on the restricted stock
at the same rate applicable to other holders of our common stock.
-
(4)
-
This
column represents the grant date fair value under ASC 718 for performance share units and restricted stock awards granted during fiscal year 2019, as well as
prior fiscal years (as applicable). For additional information on the valuation assumptions, refer to note 11, "Stock-Based Compensation," to our audited financial statements for the fiscal
year ended September 30, 2019, included in the 2019 Form 10-K. These amounts reflect an accounting expense and do not correspond to the actual value that may be realized by the named
executive officers.
56 | 2020 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION TABLES AND RELATED INFORMATION
|
Outstanding Equity Awards at Fiscal Year 2019 Year-End
|
The
following table provides information on the current holdings of stock option awards and performance share unit and restricted stock awards by the named executive officers at
September 30, 2019. This table includes exercisable and unexercisable option awards and unvested performance share unit and restricted stock awards, and such awards are reflected in each row
below on an award-by-award basis. The vesting schedule for each grant that has not fully vested is shown following this table. For additional information about the option awards and stock awards, see
the description of such awards in the CD&A on pages 42 and 43.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(8)
($)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(9)
(#)
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested(8)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
12/1/2009
|
|
|
45,000
|
|
|
|
|
|
|
|
|
38.015
|
|
|
12/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/7/2010
|
|
|
21,000
|
|
|
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/6/2011
|
|
|
34,000
|
|
|
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2012
|
|
|
54,500
|
|
|
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/3/2013
|
|
|
62,500
|
|
|
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
112,000
|
|
|
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
138,750
|
|
|
46,250
|
(1)
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
4,375
|
(2)
|
|
175,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/5/2016
|
|
|
48,296
|
|
|
48,298
|
(1)
|
|
|
|
|
81.31
|
|
|
12/5/2026
|
|
|
11,423
|
(3)
|
|
457,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2017
|
|
|
46,452
|
|
|
139,359
|
(1)
|
|
|
|
|
58.43
|
|
|
12/4/2027
|
|
|
28,569
|
(4)
|
|
1,144,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,472
|
(5)
|
|
1,541,573
|
|
|
17,810
|
|
|
713,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W. Smith
|
|
|
5/1/2018
|
|
|
5,978
|
|
|
17,937
|
(6)
|
|
|
|
|
68.90
|
|
|
5/1/2028
|
|
|
4,639
|
(7)
|
|
185,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,496
|
(5)
|
|
420.575
|
|
|
4,858
|
|
|
194,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Stauder
|
|
|
12/3/2013
|
|
|
17,000
|
|
|
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
11,124
|
|
|
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
27,000
|
|
|
13,500
|
(1)
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
1,250
|
(2)
|
|
50,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/5/2016
|
|
|
14,638
|
|
|
14,638
|
(1)
|
|
|
|
|
81.31
|
|
|
12/5/2026
|
|
|
3,462
|
(3)
|
|
138,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2017
|
|
|
14,295
|
|
|
42,887
|
(1)
|
|
|
|
|
58.43
|
|
|
12/4/2027
|
|
|
8,793
|
(4)
|
|
352,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,840
|
(5)
|
|
474,429
|
|
|
5,481
|
|
|
219,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
12/6/2011
|
|
|
750
|
|
|
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
5,000
|
|
|
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
23,250
|
|
|
7,750
|
(1)
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
750
|
(2)
|
|
30,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/5/2016
|
|
|
9,512
|
|
|
9,514
|
(1)
|
|
|
|
|
81.31
|
|
|
12/5/2026
|
|
|
2,250
|
(3)
|
|
90,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2017
|
|
|
9,712
|
|
|
29,139
|
(1)
|
|
|
|
|
58.43
|
|
|
12/4/2027
|
|
|
5,974
|
(4)
|
|
239,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,137
|
(5)
|
|
366,120
|
|
|
4,230
|
|
|
169,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Bell
|
|
|
12/1/2009
|
|
|
9,000
|
|
|
|
|
|
|
|
|
38.015
|
|
|
12/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/7/2010
|
|
|
5,500
|
|
|
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/6/2011
|
|
|
6,000
|
|
|
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2012
|
|
|
10,000
|
|
|
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/3/2013
|
|
|
8,500
|
|
|
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
22,500
|
|
|
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
30,750
|
|
|
10,250
|
(1)
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
1,000
|
(2)
|
|
40,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/5/2016
|
|
|
11,242
|
|
|
11,243
|
(1)
|
|
|
|
|
81.31
|
|
|
12/5/2026
|
|
|
2,660
|
(3)
|
|
106,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2017
|
|
|
10,979
|
|
|
32,940
|
(1)
|
|
|
|
|
58.43
|
|
|
12/4/2027
|
|
|
6,753
|
(4)
|
|
270,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,093
|
(5)
|
|
364,357
|
|
|
4,209
|
|
|
168,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
remaining, unexercisable options vest as follows:
|
|
|
|
|
Grant Date
|
|
Vesting Schedule
|
|
|
|
|
|
|
|
11/30/2015
|
|
100% on 11/30/2019
|
|
|
|
|
|
|
|
12/05/2016
|
|
ratably on each of the following dates: 12/05/2019 and 12/05/2020
|
|
|
|
|
|
|
|
12/04/2017
|
|
ratably on each of the following dates: 12/04/2019, 12/04/2020 and 12/04/2021
|
|
|
|
|
|
|
|
-
(2)
-
The
unvested shares of restricted stock vest on 11/30/2019.
2020 Proxy Statement | 57
Table of Contents
EXECUTIVE
COMPENSATION TABLES AND RELATED INFORMATION
|
-
(3)
-
The
unvested shares of restricted stock vest ratably on 12/5/2019 and 12/5/2020.
-
(4)
-
The
unvested shares of restricted stock vest ratably on 12/4/2019, 12/4/2020 and 12/4/2021.
-
(5)
-
The
unvested shares of restricted stock vest ratably on 12/14/2019, 12/14/2020, 12/14/2021 and 12/14/2022.
-
(6)
-
The
remaining, unexercisable options vest ratably on each of the following dates: 5/1/2020, 5/1/2021 and 5/1/2022.
-
(7)
-
The
unvested shares of restricted stock vest ratably on 5/1/2020, 5/1/2021 and 5/1/2022.
-
(8)
-
The
aggregate market value is based on the closing market price of our common stock of $40.07 at September 30, 2019.
-
(9)
-
Unvested
threshold performance share units (including dividend equivalents accumulated thereon) vest as follows:
|
|
|
|
|
|
John W. Lindsay
|
|
17,810 performance share units cliff vest on December 31, 2021
|
|
|
|
Mark W. Smith
|
|
4,858 performance share units cliff vest on December 31, 2021
|
|
|
|
Robert L. Stauder
|
|
5,481 performance share units cliff vest on December 31, 2021
|
|
|
|
Cara M. Hair
|
|
4,230 performance share units cliff vest on December 31, 2021
|
|
|
|
John R. Bell
|
|
4,209 performance share units cliff vest on December 31, 2021
|
|
|
|
Actual
shares delivered are subject to performance conditions and therefore may vary from the threshold units reported here.
Option Exercises and Stock Vested in Fiscal Year 2019
|
The
following table provides additional information about stock option exercises and shares acquired upon the vesting of stock awards, including the value realized, during fiscal
year 2019 by the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
(#)
|
|
Value
Realized on
Exercise
($)
|
|
Number of Shares
Acquired on
Vesting
(#)
|
|
Value
Realized on
Vesting
($)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
65,000
|
|
|
2,824,800
|
|
|
22,984
|
|
|
1,392,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W. Smith
|
|
|
|
|
|
|
|
|
1,546
|
|
|
86,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Stauder
|
|
|
|
|
|
|
|
|
7,511
|
|
|
455,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
|
|
|
|
|
|
4,241
|
|
|
319,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Bell
|
|
|
13,000
|
|
|
509,470
|
|
|
5,267
|
|
|
256,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
value realized on vesting is calculated using the closing market price of our common stock on the relevant vesting dates.
Pension Benefits for Fiscal Year 2019
|
The
Pension Benefits table below sets forth the fiscal year 2019 year-end present value of accumulated benefits payable to each of our named executive officers under our Pension Plan and the
Supplemental Pension Plan. Effective October 1, 2003, we revised both the Pension Plan and the Supplemental Pension Plan to close the plans to new participants and reduced benefit accruals for
current participants through September 30, 2006, at which
time
benefit accruals were discontinued and the plans frozen.
The
pension benefit under our Pension Plan for time periods prior to October 1, 2003, is calculated pursuant to the following formula:
Compensation × 1.5% =
Annual Pension Benefit.
58 | 2020 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION
|
The
pension benefit for the period commencing October 1, 2003 through September 30, 2006 is calculated as follows:
Compensation × 0.75% =
Annual Pension Benefit.
Pension
benefits are determined based on compensation received throughout a participant's career. "Compensation" includes salary, bonus, vacation pay, sick pay, Section 401(k) elective
deferrals, and Section 125 "cafeteria plan" deferrals. The Pension Plan benefit formulas are the same for all employees. Therefore, retirement benefits for executives are calculated in the same
manner as for other employees.
A
normal retirement benefit is available under our Pension Plan if the employee retires at age 65 with at least five years of credited service or is otherwise fully vested. The "normal retirement
date" is the first day of the month coincident with or next following the later of (i) normal retirement age (age 65) and (ii) the fifth anniversary of the employee's
participation in the Pension Plan.
An
employee can take early retirement once he has reached age 55 and has completed at least 10 years of credited service. The amount of the early retirement benefit payment is reduced if the
employee retires prior to age 62 and immediately begins receiving payments. The reduction in the annual benefit amount is 6% for each year (1/2 of 1% for each month) that the employee's early
retirement benefit payments start prior to age 62. The Pension Plan provides unreduced benefits for early retirement after the employee reaches age 62 and has at least 10 years of credited
service. The benefit after age 62 is calculated the same as a benefit at age 65.
A
vested benefit is available if the employee terminates employment before early or normal retirement and has five or more years of credited service. However, the employee may elect to start receiving
a benefit as early as age 55 if he had 10 years of credited service. In this situation, the monthly amount will be less than what the employee would receive had he waited until age 65 since the
benefit will be actuarially reduced to cover a longer period of time for payment. The actuarial reduction of the early deferred vested pension is greater than the reduction for early retirement
immediately following termination of employment. However, if the employee qualified for the more favorable reduction factors at
the
time he leaves the Company, the benefit is based on those factors.
The
employee may choose among alternative forms of retirement income payment after he becomes eligible to retire on his normal retirement date or early retirement date, as the case may be. Optional
forms of payment include a single life annuity (which is an unreduced monthly pension for the rest of the employee's life), a Joint & Survivor Annuity (which is a reduced monthly pension during
the employee's lifetime with payments, depending on the employee's election, of 50%, 75%, or 100% of the monthly pension continuing to the employee's spouse for the rest of the spouse's life), a
guaranteed certain benefit option (which is a reduced monthly pension with payments guaranteed for 10 years and if the employee dies before the end of this period, his beneficiary will receive
the payments through the end of this period) or a lump-sum (a one-time only lump sum payment, based on the present value of the monthly benefits that would have been expected to be paid for the
retiree's lifetimeno survivor benefits are payable under this option).
The
Supplemental Pension Plan benefit payable to the employee is the difference between the monthly amount of our Pension Plan benefit to which the employee would have been entitled if such benefit
were computed without giving effect to the limitations on benefits imposed by application of Sections 415 and 401(a)(17) of the Code, and the monthly amount actually payable to the employee
under our Pension Plan at the applicable point in time. The benefit amount is computed as of the employee's date of termination with the Company in the form of a straight life annuity payable over the
employee's lifetime (calculated in the same manner as the Pension Plan) assuming payment was to commence at the employee's normal retirement date. The employee will be paid in the form of a lump sum
payment or an annual installment payable over a period of two to 10 years as designated by the employee. The employee's form of payment election under the Pension Plan will not affect the
payment form under the Supplemental Pension Plan. Payment under the Supplemental Pension Plan will commence within 30 days of the later of the first business day of the seventh month following
the employee's
separation from service or the age (between age 55 and 65) specified on the employee's election form. However, in the event of death, payment will be paid within 30 days of the date of
death.
2020 Proxy Statement | 59
Table of Contents
EXECUTIVE
COMPENSATION TABLES AND RELATED INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years Credited
Service
(#)
|
|
Present Value of
Accumulated
Benefit(1)
($)
|
|
Payments
During Last
Fiscal Year
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
Pension Plan
|
|
|
33
|
|
|
426,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
33
|
|
|
69,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W. Smith(2)
|
|
Pension Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Stauder
|
|
Pension Plan
|
|
|
36
|
|
|
364,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
36
|
|
|
1,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair(2)
|
|
Pension Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Bell
|
|
Pension Plan
|
|
|
22
|
|
|
61,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
actuarial present value calculation for fiscal year 2019 for Messrs. Lindsay and Stauder, who are retirement eligible, is based on an
immediate annuity (with an assumed retirement date of September 30, 2019), whereas the present value calculation for Mr. Bell, who is not retirement eligible, is based on a deferred
annuity (with an assumed retirement age of 61). The lump sum factor is based on the Pension Protection Act 2018 Mortality Table and the following tier rates: Segment 1 2.09%; Segment 2
3.00%; and Segment 3 3.61%. The lump-sum assumptions are consistent with those used at September 30, 2019. The Company's pension and the assumptions are more fully
described in the Company's 2019 Form 10-K.
Messrs.
Lindsay and Stauder are currently eligible to receive a reduced early retirement benefit upon termination of employment. Mr. Bell would be eligible to receive a
benefit any time after attaining age 55 upon his termination of employment. Depending on his age at termination, he would be eligible to receive either a reduced early retirement benefit or an
actuarially reduced early deferred vested benefit on or after age 55.
-
(2)
-
Ms. Hair
and Mr. Smith are not participants under either the Pension Plan or the Supplemental Pension Plan.
Nonqualified Deferred Compensation for Fiscal Year 2019
|
Pursuant
to our Supplemental Savings Plan, a participant can contribute between 1% and 40% of a participant's combined base salary and bonus to the Supplemental Savings Plan on a
before-tax basis. If the participant has not received the full Company match of the first 5% of pay in the qualified Savings Plan, then the balance of the match will be contributed to the Supplemental
Savings Plan. With the exception of one stable value fund, the investment fund selections are identical in both the qualified Savings Plan and the Supplemental Savings
Plan.
Unless previously distributed according to the terms of a scheduled in-service withdrawal, a participant's account will become payable at the time and in the form selected by
the participant upon the earlier to occur of a participant's separation from service, a participant's disability, a change-in-control or the participant's death. A participant may select payment in
the form of a single lump sum payment or annual installment payments payable over a period of two to 10 years.
60 | 2020 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION TABLES AND RELATED INFORMATION
|
The
following Nonqualified Deferred Compensation table summarizes the named executive officers' compensation for fiscal year 2019 under our Supplemental Savings Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
for FY 2019(1)
($)
|
|
Registrant
Contributions
for FY 2019(1)
($)
|
|
Aggregate
Earnings in
Last FY(2)
($)
|
|
Aggregate
Withdrawals /
Distributions
($)
|
|
Aggregate
Balance at
Last FYE(3)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
361,268
|
|
|
110,317
|
|
|
105,123
|
|
|
151,881
|
|
|
2,092,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W. Smith
|
|
|
47,163
|
|
|
33,163
|
|
|
632
|
|
|
|
|
|
52,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Stauder
|
|
|
53,047
|
|
|
39,047
|
|
|
(15,589
|
)
|
|
|
|
|
965,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
43,770
|
|
|
26,650
|
|
|
5,882
|
|
|
|
|
|
105,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Bell
|
|
|
32,302
|
|
|
26,328
|
|
|
(479
|
)
|
|
56,911
|
|
|
195,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amounts reflected as Registrant Contributions above are included in the Summary Compensation Table under the "All Other Compensation" column.
Executive Contributions reflected above are made monthly during the fiscal year and are based on the employee's elected deferral percentage rate. Registrant Contributions are made at the end of the
calendar year following the end of the fiscal year. These contributions are based on salary and bonus. Executive Contributions are reported as salary and bonus in the Summary Compensation Table.
-
(2)
-
These
amounts do not include any above-market earnings.
-
(3)
-
The
fiscal year-end balance reported for the Supplemental Savings Plan includes the following amounts that were previously reported in the above
Summary Compensation Table as compensation for 2017 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
$592,153
|
|
Mark W. Smith
|
|
|
$0
|
|
Robert L. Stauder
|
|
|
$167,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
$41,100
|
|
John R. Bell
|
|
|
$84,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 Proxy Statement | 61
Table of Contents
EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION
|
Potential Payments Upon Change-in-Control
|
The
following table shows potential pre-tax payments to our named executive officers under existing agreements in the event of a change-in-control, assuming a September 30, 2019 termination
date and using the closing price ($40.07) of our common stock on September 30, 2019 (the last business day of fiscal year 2019). Any payments due under the agreements are to be paid in a lump
sum within 30 days after an executive's employment termination date. In addition, in the event of a change-in-control without termination of employment, our named executive officers would be
entitled to all of the
amounts
reflected in the column captioned "Stock Options" and, with respect to restricted stock and performance share units, the amounts reflected in the column captioned "Restricted Stock" after
reducing same by the value attributed to the unvested portions of the restricted stock awards granted on December 5, 2016, December 4, 2017, May 1, 2018 and December 14,
2018 under our 2016 Plan. See footnote 7 below for additional information on restricted stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Salary and
Bonus(1)
($)
|
|
Bonus(2)
($)
|
|
Vacation
Pay(3)
($)
|
|
Continued
Benefits(4)
($)
|
|
Outplacement
Services(5)
($)
|
|
Stock
Options(6)
($)
|
|
Restricted
Stock(7)
($)
|
|
Non-qualified
Plans(8)
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
7,174,430
|
|
|
1,893,772
|
|
|
33,785
|
|
|
280,331
|
|
|
5,000
|
|
|
92,475
|
|
|
6,173,946
|
|
|
2,051,652
|
|
|
17,705,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W. Smith
|
|
|
2,000,000
|
|
|
500,000
|
|
|
21,788
|
|
|
70,949
|
|
|
5,000
|
|
|
|
|
|
1,385,180
|
|
|
52,545
|
|
|
4,035,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Stauder
|
|
|
2,466,678
|
|
|
739,527
|
|
|
20,180
|
|
|
130,152
|
|
|
5,000
|
|
|
|
|
|
1,894,069
|
|
|
1,021,308
|
|
|
6,276,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
1,971,462
|
|
|
570,731
|
|
|
32,885
|
|
|
76,064
|
|
|
5,000
|
|
|
|
|
|
1,403,692
|
|
|
123,447
|
|
|
4,183,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Bell
|
|
|
1,894,530
|
|
|
567,993
|
|
|
30,086
|
|
|
101,864
|
|
|
5,000
|
|
|
18,495
|
|
|
1,456,304
|
|
|
168,987
|
|
|
4,243,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
For
Mr. Lindsay, this amount represents a lump sum payment equal to two and one-half (21/2) times the sum of (a) base salary in effect
at the time of termination and (b) an annual bonus, derived by taking the target annual bonus applicable for the year of termination or, if greater, the amount of annual bonus most recently
paid for a year preceding the year of termination. The computation for the other named executive officers is the same except that the multiplier in the preceding formula is two (2) times.
-
(2)
-
This
amount represents an annual bonus for the fiscal year-end which coincides with the termination date of September 30, 2019. This annual bonus amount is
calculated in the manner contemplated in footnote 1 above.
-
(3)
-
This
column reflects accrued vacation pay not yet paid by us as of September 30, 2019.
-
(4)
-
This
amount represents the value of 24 months of benefit continuation following the termination of employment. Benefits included are: 18 months of
Company medical COBRA, and private medical, dental and vision insurance for six months following COBRA; basic and supplemental life insurance; long-term disability insurance; Savings Plan match; and
Supplemental Savings Plan match by us.
-
(5)
-
This
amount represents payment for outplacement counseling services if utilized by the named executive officer.
-
(6)
-
This
column represents the potential value of unvested stock options that would vest. The value in the column is derived by multiplying the number of shares
underlying the options that vested by the difference between closing market price of our common stock of $40.07 at September 30, 2019 (the last business day of fiscal year 2019), and the
exercise price of each option that vested.
-
(7)
-
This
column represents the value of unvested restricted stock awards and performance share units that would vest in connection with a change-in-control and a
termination of employment. The value on September 30, 2019 is shown at $40.07 per share, the closing price of our common stock on September 30, 2019 (the last business day of fiscal year
2019). If there was a change-in-control without a termination of employment, the column amounts would be reduced (since, beginning in fiscal year 2017, all equity award grants contain a vesting double
trigger) and the new column amounts would be as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Lindsay
|
|
|
$175,306
|
|
Mark W. Smith
|
|
|
$0
|
|
Robert L. Stauder
|
|
|
$50,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
$30,053
|
|
John R. Bell
|
|
|
$40,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(8)
-
Except
as noted in this footnote, this column reflects the value of, and payout under, the Supplemental Savings Plan and Supplemental Pension Plan. Both the
Supplemental Savings Plan and Supplemental Pension Plan are payable upon termination of employment. Only the Supplemental Savings Plan is payable upon a change-in-control (with or without
termination). The amounts reported for Ms. Hair and Messrs. Smith and Bell are solely attributable to the Supplemental Savings Plan. The amounts reported for Messrs. Lindsay and
Stauder include both the Supplemental Savings Plan and Supplemental Pension Plan.
62 | 2020 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION TABLES AND RELATED INFORMATION
|
Section 953(b)
of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") and Item 402(u) of Regulation S-K require us to disclose for the
last fiscal year (i) the median of the annual total compensation of all of our employees, except our principal executive officer, (ii) the annual total compensation of our principal
executive officer and (iii) the ratio of the amount in clause (i) to the amount in clause (ii) (the "pay ratio").
Background
We identified a new median employee for fiscal year 2019, as the median employee used for our fiscal year 2018 disclosure was promoted during fiscal year 2019 and, as a result,
the employee's compensation changed significantly for fiscal year 2019. As of September 30, 2019, the date we used for identifying the median employee and calculating the pay ratio, our
employee population consisted of 8,421 people in ten countries, including all full-time, part-time, seasonal and temporary workers of Helmerich & Payne, Inc. and its consolidated
subsidiaries. We used the last day of each month during the fiscal year for purposes of determining the foreign exchange rate to U.S. dollar for employees paid in other currencies. We excluded 236
employees based in eight non-U.S. countries (see details in the table below) under the "de minimis" exemption in Item 402(u)(4)(ii) of Regulation S-K.
|
|
|
Country
|
|
Number of Workers
Excluded
|
|
|
|
Abu Dhabi
|
|
5
|
|
|
|
Bahrain
|
|
20
|
|
|
|
Colombia
|
|
113
|
|
|
|
Ecuador
|
|
6
|
|
|
|
Equatorial Guinea
|
|
1
|
|
|
|
France
|
|
20
|
|
|
|
India
|
|
64
|
|
|
|
United Kingdom
|
|
7
|
|
|
|
We
used a consistently applied compensation measure to identify our median-paid employee from our employee population by comparing employees' total cash compensation for fiscal year 2019, consisting
of salary or wages, bonuses, matching contributions to Company savings plans and other income earned during the fiscal year. We did not annualize compensation for employees who were hired during
fiscal year 2019 and no cost-of-living adjustments were made in identifying the median employee.
Calculation
After identifying our median employee, we combined all elements of this employee's compensation for fiscal year 2019 in accordance with the requirements of
Item 402(c)(2)(x) of Regulation S-K, resulting in annual total cash compensation of $87,987 for fiscal year 2019. As reported in the "Total" column of the "Summary Compensation Table"
included in this proxy statement, our CEO's annual total compensation for fiscal year 2019 was $7,731,049. Based on this information, the pay ratio of our CEO's annual total compensation to that of
our median employee for fiscal year 2019 was approximately 87.9 to 1.
Because
the SEC rules for identifying the median employee and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies, to apply
certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio that we
have reported here. We believe that our calculated ratios are reasonable estimates calculated in a manner consistent with the pay ratio disclosure requirements.
2020 Proxy Statement | 63
Table of Contents
EXECUTIVE
COMPENSATION TABLES AND RELATED INFORMATION
|
Delinquent Section 16(a) Reports
|
Section 16(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our directors, officers, and certain beneficial owners (collectively, "Section 16
Persons") to file with the SEC and NYSE reports of beneficial ownership on Form 3 and reports of changes in ownership on Form 4 or Form 5. To our knowledge, based solely on a
review of the Section 16(a) reports filed electronically with the SEC for fiscal year 2019
and
other information, all filing requirements for the Section 16 Persons have been complied with during or with respect to fiscal year 2019, except that due to clerical oversights, Form 4s for
phantom stock units granted under our Director Plan to Mr. Robillard and Mr. Foutch were filed late on March 11, 2019 and June 7, 2019, respectively.
Summary of All Existing Equity Compensation Plans
|
The
following chart sets forth information concerning our equity compensation plans as of September 30, 2019.
EQUITY COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
|
Number of securities to
be issued upon
exercise of outstanding
options, warrants
and rights
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
|
Number of securities
remaining available for
future issuance
under equity
compensation plans
(excluding
securities reflected
in column (a))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
3,238,174
|
(1)
|
|
$60.8605
|
|
|
2,906,106
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,238,174
|
|
|
$60.8605
|
|
|
2,906,106
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Includes
the 2005 Plan, the 2010 Plan and the 2016 Plan.
-
(2)
-
We
do not maintain any equity compensation plans that have not been approved by the stockholders.
-
(3)
-
The
reported 2,906,106 shares available for future issuance pertain to our 2016 Plan approved by our stockholders at the March 2, 2016 Annual Meeting of
Stockholders. Of the 2,906,106 shares that remain available for issuance under our 2016 Plan, up to 1,453,053 shares may be awarded as restricted stock or certain other awards as contemplated under
the 2016 Plan.
64 | 2020 Proxy Statement
Table of Contents
Stockholder Proposals and Nominations
|
PROPOSALS FOR INCLUSION IN OUR 2021 PROXY MATERIALS
|
SEC
rules permit stockholders to submit proposals to be included in our proxy materials if the stockholder and the proposal satisfy the requirements specified in Rule 14a-8 under the Exchange
Act. For a stockholder proposal to be considered for inclusion in
our
proxy statement and accompanying proxy for the 2021 annual meeting, the proposal must be received by our Corporate Secretary at the address provided below on or before September 23, 2020.
DIRECTOR NOMINATIONS FOR INCLUSION IN OUR 2021 PROXY MATERIALS (PROXY ACCESS)
|
Our
proxy access by-law permits a stockholder (or a group of up to 20 stockholders) owning 3% or more of the Company's outstanding common stock continuously for at least three years to nominate and
include in the Company's proxy materials Director candidates constituting up to the greater of two individuals or 20% of the Board of Directors, if the
nominating
stockholder(s) and the nominee(s) satisfy the requirements specified in our By-laws. For the 2021 annual meeting, notice of a proxy access nomination must be received by our Corporate
Secretary at the address provided below during the period beginning August 24, 2020, and ending September 23, 2020.
OTHER PROPOSALS OR NOMINATIONS TO BE BROUGHT BEFORE OUR 2021 ANNUAL MEETING
|
Our
By-laws permit a stockholder of record to propose items of business and/or nominate Director candidates that are not intended to be included in our proxy materials if the stockholder complies with
the procedures set forth in our advance notice by-law.
For
the 2021 annual meeting, notice of such proposals or nominations must be received by our Corporate Secretary at the address provided below during the period beginning November 3, 2020, and
ending December 3, 2020.
2020 Proxy Statement | 81
Table of Contents
ADDRESS FOR SUBMISSION OF NOTICES AND ADDITIONAL INFORMATION
|
All
stockholder nominations or proposals of other items of business to be considered by stockholders at the 2021 annual meeting (whether or not intended for inclusion in our proxy materials) must be
submitted in writing to:
|
|
|
|
|
Helmerich & Payne, Inc.
Attention: Corporate Secretary
1437 South Boulder Avenue
Suite 1400
Tulsa, Oklahoma 74119
|
In
addition, both the proxy access and the advance notice provisions of our By-laws require a stockholder's notice of a nomination or other item of business to include certain information. Director
nominees must also meet certain eligibility requirements. Any stockholder considering introducing a nomination or other item of business should carefully review our By-laws.
|
|
|
|
|
By Order of the Board of Directors,
|
|
|
/s/ Debra R. Stockton
|
|
|
Debra R. Stockton
General Counsel and Corporate Secretary
|
Dated:
January 21, 2020
82 | 2020 Proxy Statement
Table of Contents
APPENDIX AHELMERICH & PAYNE, INC. 2020 OMNIBUS INCENTIVE PLAN
|
Section 1. Purpose of Plan.
|
The
name of this Plan is the Helmerich & Payne, Inc. 2020 Omnibus Incentive Plan (the "Plan"). The purposes of the Plan
are to provide an additional incentive to selected officers, employees and non-employee directors of the Company or its Affiliates whose contributions are essential to the growth and success of the
business of the Company and its Affiliates, in order to strengthen the commitment of such persons to the Company and its Affiliates, motivate such persons to faithfully and diligently perform their
responsibilities, and attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability of the Company and its Affiliates. To accomplish such
purposes, the Plan provides that the Company may grant Options, Share Appreciation Rights, Restricted Shares, Restricted Share Units, Share Bonuses, Other Share-Based Awards, Cash Awards or any
combination of the foregoing.
For
purposes of the Plan, the following terms shall be defined as set forth below:
"2016 Plan" means the Helmerich & Payne, Inc. 2016 Omnibus Incentive Plan, as amended from time to time.
"Administrator" means the Board, or, if and to the extent the Board does not administer the Plan, the Committee in accordance with Section 3
hereof.
"Affiliate" means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
"Authorized Officer" has the meaning set forth in Section 3(c) hereof.
"Award" means any Option, Share Appreciation Right, Restricted Share, Restricted Share Unit, Share Bonus, Other Share-Based Award or Cash Award granted
under the Plan.
"Award Agreement" means any written agreement, contract or other instrument or document evidencing an Award, including through electronic medium, which
shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent with the Plan.
"Base Price" has the meaning set forth in Section 8(b) hereof.
"Beneficial Owner" (or any variant thereof) has the meaning defined in Rule 13d-3 under the Exchange Act.
"Board" means the Board of Directors of the Company.
"Business Combination" has the meaning set forth in the definition of Change in Control in Section 2.
"Cash Award" means an Award granted pursuant to Section 12 hereof.
"Cause" has the meaning assigned to such term in the Award Agreement or in any individual employment or severance agreement with the Participant or, if
any such agreement does not define "Cause," Cause means termination of employment for one of the following reasons: (i) the conviction of the employee of a felony by a federal or state court of
competent jurisdiction; (ii) an act or acts of dishonesty taken by the employee and intended to result in substantial
2020 Proxy Statement | A-1
Table of Contents
APPENDIX
AHELMERICH & PAYNE, INC. 2020 OMNIBUS INCENTIVE PLAN
|
personal
enrichment of the employee at the expense of the Company; or (iii) the employee's willful failure to follow a direct, reasonable and lawful written order from his supervisor, within
the reasonable scope of the employee's duties, which failure is not cured within thirty (30) days, provided that no act or failure to act on the employee's part shall be deemed "willful" for
this purpose unless done, or omitted to be done, by the employee not in good faith and without reasonable belief that the employee's action or omission was in the best interest of the Company.
"Change in Capitalization" means any (i) merger, amalgamation, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase
or other reorganization or corporate transaction or event, (ii) special or extraordinary dividend or other extraordinary distribution (whether in the form of cash, Common Shares, or other
property), share split, reverse share split, subdivision or consolidation, (iii) combination or exchange of shares, or (iv) other change in corporate structure, which, in any such case,
the Administrator determines, in its sole discretion, affects the Common Shares such that an adjustment pursuant to Section 5 hereof is appropriate.
"Change in Control" means an event set forth in any one of the following paragraphs shall have occurred:
(i) The
acquisition after the Effective Date by any Person of Beneficial Ownership of 20% or more of either (1) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not
constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by the Company, (D) any acquisition previously approved by at least a majority of the members of the Incumbent Board
(as such term is hereinafter defined), (E) any acquisition approved by at least a majority of the members of the Incumbent Board within five business days after the Company has notice of such
acquisition, or (F) any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2), and (3) of subsection (iii) of this definition of
Change in Control; or
(ii) Individuals
who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, appointment or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding,
for purposes of this definition, 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 Board; or
(iii) Consummation
of a reorganization, share exchange, or merger (a "Business Combination"), in each case, unless, following such Business
Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 70% of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination
(including a corporation which as a result of such transaction will own the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board providing for such Business Combination, or were elected, appointed or nominated by
the Board; or
A-2 | 2020 Proxy Statement
Table of Contents
APPENDIX
AHELMERICH & PAYNE, INC. 2020 OMNIBUS INCENTIVE PLAN
|
(iv) (1)
Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company or, (2) consummation of the sale or other disposition of all or
substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 70% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be
beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20%
or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board providing for such sale or other disposition of assets of
the Company, or were elected, appointed or nominated by the Board.
Notwithstanding
the foregoing, (x) a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately
following which the holders of Common Shares immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all
or substantially all of the assets of the Company immediately following such transaction or series of transactions and (y) if all or a portion of an Award constitutes deferred compensation
under Section 409A of the Code and such Award (or portion thereof) is to be settled, distributed or paid on an accelerated basis due to a Change in Control event that is not a "change in
control event" described in Treasury Regulation Section 1.409A-3(i)(5) or successor guidance, if such settlement, distribution or payment would result in additional tax under
Section 409A of the Code, such Award (or the portion thereof) shall vest at the time of the Change in Control (provided such accelerated vesting will not result in additional tax under
Section 409A of the Code), but settlement, distribution or payment, as the case may be, shall not be accelerated.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.
"Committee" means the Human Resources Committee of the Board or such other committee or subcommittee the Board may appoint to administer the Plan.
Unless the Board determines otherwise, the Committee shall be composed entirely of individuals who meet the qualifications of (i) a "non-employee director" within the meaning of
Rule 16b-3 and (ii) any other qualifications required by the applicable stock exchange on which the Common Shares are traded. If at any time or to any extent the Board shall not
administer the Plan, then the functions of the Administrator specified in the Plan shall be exercised by the Committee. Except as otherwise provided in a Charter governing operation of the Committee
or in the Company's by-laws, as amended from time to time, any action of the Committee with respect to the administration of the plan shall be taken by a majority vote at a meeting at which a quorum
is duly constituted or unanimous written consent of the Committee's members.
"Common Shares" means the common shares, par value U.S. $0.10 per share, of the Company.
"Company" means Helmerich & Payne, Inc., a Delaware corporation (or any successor company, except as the term "Company" is used in the
definition of "Change in Control" above).
"Disability" means the Participant is unable to continue employment by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, as determined in the sole discretion of the Administrator.
"Effective Date" has the meaning set forth in Section 20 hereof.
2020 Proxy Statement | A-3
Table of Contents
APPENDIX
AHELMERICH & PAYNE, INC. 2020 OMNIBUS INCENTIVE PLAN
|
"Eligible Recipient" means an officer, employee, or non-employee director of the Company or any Affiliate of the Company who has been selected as an
eligible participant by the Administrator; provided, however, to the extent required to avoid
accelerated taxation and/or tax penalties under Section 409A of the Code, an Eligible Recipient of an Option or a Share Appreciation Right means an employee or non-employee director of the
Company or any Affiliate of the Company with respect to whom the Company is an "eligible issuer of service recipient stock" within the meaning of Section 409A of the Code; and provided,
further, that an Eligible Recipient of an ISO means an individual who is an employee of the
Company, a "parent corporation" (as such term is defined in Section 424(e) of the Code) of the Company or a "subsidiary corporation" (as such term is defined in Section 424(f) of the
Code) of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.
"Executive Officer" means an officer of the Company who is subject to the liability provisions of Section 16 of the Exchange Act.
"Exercise Price" means, with respect to any Option, the per Share price at which a holder of such Option may purchase Common Shares issuable upon the
exercise of such Option.
"Fair Market Value" of a Common Share or another security as of a particular date shall mean the fair market value as determined by the Administrator in
its sole discretion; provided, however, (i) if the Common Share or other security is admitted to trading on a national securities exchange, the
fair market value on any date shall be the closing sale price reported on such date (or if such date is not a trading day, on the last preceding date on which there was a sale of a Common Share or
other security on such exchange), or (ii) if the Common Share or other security is then traded in an over-the-counter market, the fair market value on any date shall be the average of the
closing bid and asked prices for the Common Share or other security in such over-the-counter market on such day (or, if none, for the last preceding date on which there was a sale of a Common Share or
other security in such market).
"Free Standing Right" has the meaning set forth in Section 8(a) hereof.
"Good Reason" in respect of any Change in Control has the meaning assigned to such term in the Award Agreement or in any individual employment or
severance agreement with the Participant or, if any such agreement does not define "Good Reason," means termination of employment for one of the following reasons: (i) the assignment to the
employee of any duties inconsistent in any respect with the employee's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities held immediately
prior to the Change in Control, or any other action by the Company (or successor or Affiliate) which results in a diminution in such position, compensation, benefits, authority, duties or
responsibilities; (ii) any reduction in the employee's annual base salary or annual bonus opportunity, in each case as in effect immediately prior to the Change in Control; (iii) the
employee being required to be based at any office or location that is more than 25 miles from the office or location at which the employee was based immediately prior to the Change in Control, except
for periodic travel reasonably required in the performance of the employee's responsibilities; or (iv) any reduction by more than 10% in the overall level of the employee's benefits (as in
effect immediately prior to the Change in Control) under the Company's (or its successors' or Affiliate's) group life insurance, medical, health, accident, disability, incentive, savings, and
retirement plans including all tax qualified and nonqualified plans or programs.
"Incumbent
Board" has the meaning set forth in the definition of Change in Control in Section 2.
"ISO" means an Option intended to be and designated as, and that satisfies the requirements to be, an "incentive stock option" within the meaning of
Section 422 of the Code.
"Nonqualified Stock Option\" means an Option that is not designated as an ISO or that otherwise does not satisfy the requirements to be an ISO, as such
requirements are set forth in Section 422 of the Code.
"Option" means an option to purchase Common Shares granted pursuant to Section 7 hereof. The term "Option" as used in the Plan includes the terms
"Nonqualified Stock Option" and "ISO."
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"Other Share-Based Award" means an Award granted pursuant to Section 10 hereof.
"Outstanding Company Common Stock" has the meaning set forth in the definition of Change in Control in Section 2.
"Outstanding Company Voting Securities" has the meaning set forth in the definition of Change in Control in Section 2.
"Participant" means any Eligible Recipient selected by the Administrator, pursuant to the Administrator's authority provided for in Section 3
below, to receive grants of Awards, any permitted assigns, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case may be.
"Person" has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.
"Plan" has the meaning set forth in Section 1 hereof.
"Related Right" has the meaning set forth in Section 8(a) hereof.
"Restricted Shares" means Shares granted pursuant to Section 9 hereof subject to certain restrictions that lapse at the end of a specified period
or periods.
"Restricted Share Unit" means the right, granted pursuant to Section 9 hereof, to receive the Fair Market Value of a Common Share or, in the case
of an Award denominated in cash, to receive the amount of cash per unit that is determined by the Administrator in connection with the Award.
"Retirement" means the termination of a Participant's employment and the Participant both (i) has attained age 55 and (ii) has 15 or more
continuous years of service as a full-time employee of the Company, a Subsidiary or Affiliate.
"Rule 16b-3" has the meaning set forth in Section 3(a) hereof.
"Shares" means Common Shares reserved for issuance under the Plan, as adjusted pursuant to the Plan, and any successor (pursuant to a merger,
amalgamation, consolidation or other reorganization) security.
"Share Appreciation Right" means the right to receive, upon exercise of the right, the applicable amounts as described in Section 8 hereof.
"Share Bonus" means a bonus payable in fully vested Common Shares granted pursuant to Section 11 hereof.
"Subsidiary" means, with respect to any Person, as of any date of determination, any other Person as to which such first Person owns or otherwise
controls, directly or indirectly, more than 50% of the voting shares or other similar interests or a sole general partner interest or managing member or similar interest of such other Person.
"Transfer" has the meaning set forth in Section 17 hereof.
Section 3. Administration.
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(a) The
Plan shall be administered by the Administrator and shall be administered in accordance with the requirements of Rule 16b-3 under the Exchange Act
("Rule 16b-3"), to the extent applicable.
(b) Pursuant
to the terms of the Plan, the Administrator, subject, in the case of any Committee, to any restrictions on the authority delegated to it by the Board, shall have the power
and authority, without limitation:
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(2) to
determine whether and to what extent Awards are to be granted hereunder to Participants;
(3) to
determine the number of Shares to be covered by each Award granted hereunder;
(4) to
determine the terms and conditions, not inconsistent with the terms of the Plan, of each Award granted hereunder (including (i) the restrictions applicable to Restricted
Shares or Restricted Share Units and the conditions under which restrictions applicable to such Restricted Shares or Restricted Share Units shall lapse, (ii) the performance goals and periods
applicable to Awards, (iii) the Exercise Price of each Option and the Base Price of each Share Appreciation Right, (iv) the vesting schedule applicable to each Award, (v) the
number of Shares or amount of cash or other property subject to each Award and (vi) subject to the requirements of Section 409A of the Code (to the extent applicable), any amendments to
the terms and conditions of outstanding Awards, including equitable adjustments to performance goals in recognition of unusual or non-recurring events affecting the Company or any Affiliate thereof or
the financial statements of the Company or any Affiliate thereof, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles);
(5) to
determine the terms and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Awards;
(6) to
determine the Fair Market Value in accordance with the terms of the Plan;
(7) to
determine the duration and purpose of leaves of absence which may be granted to a Participant without constituting termination of the Participant's employment or service for
purposes of Awards granted under the Plan;
(8) to
determine the impact of leaves of absence, including unpaid and un-protected leaves of absence, changes from full-time to part-time employment, partial Disability or other changes
in the employment status or service status of a Participant, on Awards, both with regard to vesting schedule and termination;
(9) to
adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable;
(10) to
prescribe, amend and rescind rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or qualifying for favorable tax
treatment under applicable foreign laws, which rules and regulations may be set forth in an appendix or appendices to the Plan; and
(11) to
construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement relating thereto), and to otherwise supervise the
administration of the Plan and to exercise all powers and authorities either specifically granted under the Plan or necessary and advisable in the administration of the Plan.
(c) To
the extent permitted by applicable law, the Board may, by resolution, authorize one or more Executive Officers (each, an "Authorized
Officer") to do one or both of the following on the same basis as (and as if the Authorized Officer for such purposes were) the Administrator: (i) designate Eligible
Recipients to receive Awards and (ii) determine the size and terms and conditions of any such Awards; provided, however, that (1) the Board shall
not delegate such responsibilities to any Executive Officer for Awards granted to an Eligible Recipient who is
an Executive Officer, a non-employee director of the Company, or a more than 10% Beneficial Owner of any class of the Company's equity securities that is registered pursuant to Section 12 of
the Exchange Act, as determined in accordance with Section 16 of the Exchange Act, and (B) the resolution providing for such authorization shall set forth the total number of Common
Shares the Authorized Officer may grant during any period, provided that no such authorization shall authorize grants of Awards during any calendar year covering Common Shares in excess of 5,000
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Shares
for any individual or 25,000 Shares in the aggregate. The Authorized Officer(s) shall report periodically to the Board or Committee regarding the nature and scope of the Awards granted pursuant
to the authority delegated.
(d) Subject
to Section 5 hereof, neither the Board nor the Committee shall have the authority to reprice or cancel and regrant any Award at a lower exercise, base or purchase price
or cancel any Award with an exercise, base or purchase price in exchange for cash, property or other Awards without first obtaining the approval of the Company's shareholders.
(e) Any
Award granted hereunder shall provide for a vesting period or performance period, as applicable, of at least one year following the date of grant. Notwithstanding the preceding
sentence, Awards representing a maximum of five percent (5%) of the Shares initially reserved for issuance under Section 4(a) hereof may be granted hereunder without any such minimum vesting
condition. Notwithstanding the provisions of this Section 3(e), the Administrator may accelerate the vesting of or waive restrictions on Awards in whole or in part in the case of a
Participant's death, Retirement, Disability or upon a Change in Control.
(f) Unless
otherwise provided in an Award Agreement: (1) if a Participant's employment with the Company, a Subsidiary or an Affiliate terminates as a result of death, Disability,
or Retirement, the Participant (or personal representative in the case of death) shall be entitled to exercise all or any part of any (i) vested ISO for a period of up to three months from such
date of termination (one year in the case of death or Disability in lieu of the three-month period), or (ii) a Share Appreciation Right or vested Option that is not an ISO during the remaining
term; (2) if a Participant's employment terminates for any other reason, the Participant shall, except where an Award is subject to a clawback or recoupment provision of applicable law or an
Award Agreement, be entitled to exercise all or any part of any vested Option or Share Appreciation Right for a period of up to three months from such date of termination. In no event shall any Option
or Share Appreciation Right be exercisable past the term established in the Award Agreement. Any vested Option or Share Appreciation Right which is not exercised before the earlier of (i) the
dates provided above or other applicable date provided in the Award Agreement or (ii) its term shall expire. Unless otherwise accelerated or where an Award Agreement or the Administrator
provides for continued vesting after termination of employment, all unvested Awards shall be forfeited upon termination of employment.
(g) All
decisions made by the Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all Persons, including the Company and the Participants. No
member of the Board or the Committee, nor any officer or employee of the Company or any Subsidiary thereof acting on behalf of the Board or the Committee, shall be personally liable for any action,
omission, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company and
of any Subsidiary thereof acting on their behalf shall, to the maximum extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, omission, determination
or interpretation.
Section 4. Shares Reserved for Issuance; Certain Limitations; Minimum Vesting.
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(a) The
maximum number of Common Shares reserved for issuance under the Plan shall be 6,000,000 shares. On and after the Effective Date, no additional Awards will be granted under the
2016 Plan.
(b) Any
Common Shares granted as Restricted Shares, Restricted Share Units, a Share Bonus or Other Share-Based Awards shall be counted against the Common Shares reserved pursuant to
Section 4(a) hereof as 2.0 Shares for each Share granted, and any Common Shares granted as Options or Share Appreciation Rights shall be counted against the Common Shares reserved pursuant to
Section 4(a) hereof as 1.0 Share for each Share granted.
(c) Notwithstanding
anything in this Plan to the contrary, no individual who is not a non-employee director will be granted Awards covering more than 250,000 Common Shares in the
aggregate during any calendar year (subject to
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adjustment
as provided by Section 5 hereof) and no such individual will be granted Cash Awards payable in the aggregate in excess of $5,000,000 during any calendar year.
(d) No
individual who is a non-employee director will be granted Awards covering more than 100,000 Common Shares in the aggregate during any calendar year (subject to adjustment as
provided by Section 5 hereof), provided that in any event the grant date fair value of Awards granted to a non-employee director shall not exceed $500,000 in the aggregate during any calendar
year.
(e) All
of the Common Shares available for issuance under the Plan may be made subject to an Award that is an ISO.
(f) Shares
issued under the Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been or may be reacquired by the Company in the open market, in
private transactions or otherwise. If any Shares subject to an Award are forfeited, cancelled, exchanged or surrendered or if an Award otherwise terminates or expires without a distribution of Shares
to the Participant, the Shares with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for Awards under
the Plan. Shares that are exchanged by a Participant or withheld by the Company as full or partial payment in connection with the exercise of any Option or Share Appreciation Right under the Plan or
the payment of any purchase price with respect to any other Award under the Plan, as well as any Shares exchanged by a Participant or withheld by the Company or any Subsidiary to satisfy the tax
withholding obligations related to any Award under the Plan, shall not again be available for subsequent Awards under the Plan, and notwithstanding that a Share Appreciation Right is settled by the
delivery of a net number of Common Shares, the full number of Common Shares underlying such Share Appreciation Right shall not be available for subsequent Awards under the Plan. Upon the exercise of
any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of Shares as to which the Award is exercised and, notwithstanding the foregoing,
such number of shares shall no longer be available for Awards under the Plan. In addition, (i) to the extent an Award is denominated in Common Shares, but paid or settled in cash, the number of
Common Shares with respect to which such payment or settlement is made shall again be available for grants of Awards pursuant to the Plan and (ii) Common Shares underlying Awards that can only
be settled in cash shall not be counted against the aggregate number of Common Shares available for Awards under the Plan.
Section 5. Equitable Adjustments.
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(a) In
the event of any Change in Capitalization, an equitable substitution or proportionate adjustment shall be made, in each case, as may be determined by the Administrator, in its sole
discretion, in (i) the aggregate number of Common Shares reserved for issuance under the Plan and the maximum number of Common Shares or cash that may be subject to Awards granted to any
Participant in any calendar year, (ii) the kind and number of securities subject to, and the Exercise Price or Base Price of, any outstanding Options and Share Appreciation Rights granted under
the Plan, and (iii) the kind, number and purchase price of Common Shares, or the amount of cash or amount or type of other property, subject to outstanding Restricted Shares, Restricted Share
Units, Share Bonuses and Other Share-Based Awards granted under the Plan; provided, however, that any
fractional shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments shall be made as may be determined by the Administrator, in its sole discretion.
(b) Without
limiting the generality of the foregoing, in connection with a Change in Capitalization, the Administrator may provide, in its sole discretion, but subject in all events to
the requirements of Section 409A of the Code, for the cancellation of any outstanding Award in exchange for payment in cash or other property having an aggregate Fair Market Value equal to the
Fair Market Value of the Common Shares, cash or other property covered by such Award, reduced by the aggregate Exercise Price or Base Price thereof, if any; provided, however, that if the Exercise Price or Base Price of any outstanding Award is equal to or
greater than the Fair Market Value of the Common Shares, cash or other property
covered by such Award, the Administrator may cancel such Award without the payment of any consideration to the Participant.
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(c) With
respect to ISOs, any adjustment pursuant to this Section 5 shall be made in accordance with the provisions of Section 424(h) of the Code and any regulations or
guidance promulgated thereunder. No adjustment pursuant to this Section 5 shall cause any Award which is or becomes subject to Section 409A of the Code to fail to comply with the
requirements of Section 409A of the Code.
(d) The
determinations made by the Administrator, pursuant to this Section 5 shall be final, binding and conclusive.
The
Participants under the Plan shall be selected from time to time by the Administrator, in its sole discretion, from those individuals who qualify as Eligible Recipients.
(a) General. Each Participant who is granted an Option shall enter into an Award Agreement with the Company, containing such
terms and conditions as the Administrator shall determine, in its sole discretion, which Award Agreement shall set forth, among other things, the Exercise Price of the Option, the term of the Option,
the provisions regarding exercisability of the Option, and whether the Option is intended to be an ISO or a Nonqualified Stock Option (and in the event the Award Agreement has no such designation, the
Option shall be a Nonqualified Stock Option). The provisions of each Option need not be the same with respect to each Participant. More than one Option may be granted to the same Participant and be
outstanding concurrently hereunder. Options granted under the Plan shall be subject to the terms and conditions set forth in this Section 7 and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable and set forth in the applicable Award Agreement. No Option granted hereunder shall be an ISO unless
it is designated as such in the applicable Award Agreement and satisfies the applicable requirements set forth in Section 422 of the Code.
(b) Exercise Price. The Exercise Price of Shares purchasable under an Option shall be determined by the Administrator in its
sole discretion at the time of grant, but, in no event shall the exercise price of an Option be less than one hundred percent (100%) of the Fair Market Value of the related Common Shares on the date
of grant.
(c) Option Term. The maximum term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more
than ten (10) years after the date such Option is granted. Each Option's term is subject to earlier expiration pursuant to the applicable provisions in the Plan and the Award Agreement.
(d) Exercisability. Each Option shall be exercisable at such time or times and subject to such terms and conditions, including
the attainment of performance goals, as shall be determined by the Administrator in the applicable Award Agreement. The Administrator may also provide that any Option shall be exercisable only in
installments. Notwithstanding anything to the contrary contained herein, an Option may not be exercised for a fraction of a share.
(e) Method of Exercise. Options may be exercised in whole or in part by giving written notice of exercise to the Company
specifying the number of whole Shares to be purchased, accompanied by payment in full of the aggregate Exercise Price of the Shares so purchased in cash or its equivalent, as determined by the
Administrator. As determined by the Administrator, in its sole discretion, with respect to any Option or category of Options, payment in whole or in part may also be made (i) by means of
consideration received under any cashless exercise procedure approved by the Administrator (including the withholding of Shares otherwise issuable upon exercise), (ii) in the form of
unrestricted Shares already owned by the Participant which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be
exercised, (iii) any other form of consideration approved by the Administrator and permitted by applicable law or (iv) any combination of the foregoing.
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(f) ISOs. The terms and conditions of ISOs granted hereunder shall be subject to the provisions of Section 422 of the
Code and the terms, conditions, limitations and administrative procedures established by the Administrator from time to time in accordance with the Plan.
(i) ISO Grants to 10% Shareholders. Notwithstanding anything to the contrary in the Plan, if an ISO is granted to a
Participant who owns shares representing more than ten percent (10%) of the voting power of all classes of shares of the Company, its "parent corporation" (as such term is defined in
Section 424(e) of the Code) or a Subsidiary of the Company, the term of the ISO shall not exceed five (5) years from the time of grant of such ISO and the Exercise Price shall be at
least one hundred and ten percent (110%) of the Fair Market Value of the Shares on the date of grant.
(ii) $100,000 Per Year Limitation For ISOs. To the extent the aggregate Fair Market Value (determined on the date of grant) of
the Shares for which ISOs are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) exceeds $100,000, such excess ISOs shall be treated as
Nonqualified Stock Options.
(iii) Disqualifying Dispositions. Each Participant awarded an ISO under the Plan shall notify the Company in writing
immediately after the date the Participant makes a "disqualifying disposition" of any Share acquired pursuant to the exercise of such ISO. A "disqualifying disposition" is any disposition (including
any sale) of such Shares before the later of (i) two (2) years after the date of grant of the ISO and (ii) one year after the date the Participant acquired the Shares by
exercising the ISO. The Company may, if determined by the Administrator and in accordance with procedures established by it, retain possession of any Shares acquired pursuant to the exercise of an ISO
as agent for the applicable Participant until the end of the period described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such Shares.
(g) Rights as Shareholder. A Participant shall have no rights to dividends, dividend equivalents or distributions or any other
rights of a shareholder with respect to the Shares subject to an Option until the Participant has given written notice of the exercise thereof, has paid in full for such Shares and has satisfied the
requirements of Section 16 hereof.
(h) Termination of Employment or Service. Subject to Section 3(f) hereof, in the event of the termination of employment
or service with the Company and all Affiliates thereof of a Participant who has been granted one or more Options, such Options shall be exercisable at such time or times and subject to such terms and
conditions as set forth in the Award Agreement.
Section 8. Share Appreciation Rights.
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(a) General. Share Appreciation Rights may be granted either alone ("Free Standing
Rights") or in conjunction with all or part of any Option granted under the Plan ("Related Rights"). Related Rights may be
granted either at or after the time of the grant of such Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Share Appreciation Rights
shall be made, the number of Shares to be awarded, the Base Price, and all other conditions of Share Appreciation Rights. Notwithstanding the foregoing, no Related Right may be granted for more Shares
than are subject to the Option to which it relates. The provisions of Share Appreciation Rights need not be the same with respect to each Participant. Share Appreciation Rights granted under the Plan
shall be subject to the following terms and conditions set forth in this Section 8 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable, as set forth in the applicable Award Agreement.
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(b) Base Price. Each Share Appreciation Right shall be granted with a base price that is not less than one hundred percent
(100%) of the Fair Market Value of the related Common Shares on the date of grant (such amount, the "Base Price").
(c) Awards; Rights as Shareholder. A Participant shall have no rights to dividends, dividend equivalents or distributions or
any other rights of a shareholder with respect to the Common Shares, if any, subject to a Share Appreciation Right until the Participant has given written notice of the exercise thereof and has
satisfied the requirements of Section 16 hereof.
(d) Exercisability.
(1) Share
Appreciation Rights that are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator
in the applicable Award Agreement (which may include achievement of performance goals).
(2) Share
Appreciation Rights that are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in
accordance with the provisions of Section 7 hereof and this Section 8 of the Plan.
(e) Consideration Upon Exercise.
(1) Upon
the exercise of a Free Standing Right, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to (i) the excess of the
Fair Market Value of a Common Share as of the date of exercise over the Base Price per share specified in the Free Standing Right, multiplied by (ii) the number of Shares in respect of which
the Free Standing Right is being exercised.
(2) A
Related Right may be exercised by a Participant by surrendering the applicable portion of the related Option. Upon such exercise and surrender, the Participant shall be entitled to
receive up to, but not more than, that number of Shares equal in value to (i) the excess of the Fair Market Value of a Common Share as of the date of exercise over the Exercise Price specified
in the related Option, multiplied by (ii) the number of Shares in respect of which the Related Right is being exercised. Options which have been so surrendered, in whole or in part, shall no
longer be exercisable to the extent the Related Rights have been so exercised.
(3) Notwithstanding
the foregoing, the Administrator may determine to settle the exercise of a Share Appreciation Right in cash (or in any combination of Shares and cash).
(f) Termination of Employment or Service. Subject to Section 3(e) hereof:
(1) In
the event of the termination of employment or service with the Company and all Affiliates thereof of a Participant who has been granted one or more Free Standing Rights, such
rights shall be exercisable at such time or times and subject to such terms and conditions as set forth in the Award Agreement; and
(2) In
the event of the termination of employment or service with the Company and all Affiliates thereof of a Participant who has been granted one or more Related Rights, such rights
shall be exercisable at such time or times and subject to such terms and conditions as set forth in the related Options.
(g) Term.
(1) The
term of each Free Standing Right shall be fixed by the Administrator, but no Free Standing Right shall be exercisable more than ten (10) years after the date such right is
granted.
(2) The
term of each Related Right shall be the term of the Option to which it relates, but no Related Right shall be exercisable more than ten (10) years after the date such right
is granted.
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Section 9. Restricted Shares and Restricted Share Units.
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(a) General. Restricted Shares and Restricted Share Units may be issued either alone or in addition to other awards granted
under the Plan. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, Restricted Shares or Restricted Share Units shall be made; the number of Shares to be
awarded; the price, if any, to be paid by the Participant for the acquisition of Restricted Shares or Restricted Share Units; the period of time prior to which Restricted Shares or Restricted Share
Units become vested and free of restrictions on Transfer (the "Restricted Period"); the performance goals (if any) upon whose attainment the Restricted
Period shall lapse in part or full; and all other conditions of the Restricted Shares and Restricted Share Units. If the restrictions, performance goals and/or conditions established by the
Administrator are not attained, a Participant shall forfeit his or her Restricted Shares or Restricted Share Units, in accordance with the terms of the grant. The provisions of Restricted Shares or
Restricted Share Units need not be the same with respect to each Participant.
(b) Awards and Certificates.
(1) Except
as otherwise provided in Section 9(b)(3) hereof, (i) each Participant who is granted an Award of Restricted Shares may, in the Company's sole discretion, be
issued a share certificate in respect of such Restricted Shares; and (ii) any such certificate so issued shall be registered in the name of the Participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to any such Award. The Company may require that the share certificates, if any, evidencing Restricted Shares granted hereunder be held
in the custody of the Company until the restrictions thereon shall have lapsed, and that, as a condition of any award of Restricted Shares, the Participant shall have delivered a share transfer form,
endorsed in blank, relating to the Shares covered by such award. Certificates for unrestricted Common Shares may, in the Company's sole discretion, be delivered to the Participant only after the
Restricted Period has expired without forfeiture in respect of such Restricted Shares.
(2) Subject
to Section 9(e) below, with respect to Restricted Share Units, at the expiration of the Restricted Period, share certificates in respect of the Common Shares underlying
such Restricted Share Units may, in the Company's sole discretion, be delivered to the Participant, or his or her legal representative, in a number equal to the number of Common Shares underlying the
Award of Restricted Share Units.
(3) Notwithstanding
anything in the Plan to the contrary, any Restricted Shares or Restricted Share Units (at the expiration of the Restricted Period) may, in the Company's sole
discretion, be issued in uncertificated form.
(4) Further,
notwithstanding anything in the Plan to the contrary, with respect to Restricted Share Units, at the expiration of the Restricted Period, Shares shall promptly be issued to
the Participant, unless otherwise deferred in accordance with procedures established by the Company in accordance with Section 409A of the Code, and such issuance shall in any event be made no
later than March 15th of the calendar year following the year of vesting or within such other period as is required to avoid accelerated taxation and/or tax penalties under
Section 409A of the Code.
(c) Restrictions and Conditions. The Restricted Shares and Restricted Share Units granted pursuant to this Section 9
shall be subject to any restrictions or conditions as determined by the Administrator at the time of grant or, subject to Section 409A of the Code where applicable, thereafter. Except as
provided in the applicable Award Agreement, the Participant shall generally have the rights of a shareholder of the Company with respect to Restricted Shares during the Restricted Period, including
the right to vote such shares and to receive any dividends declared with respect to such shares. The Participant shall generally not have the rights of a shareholder with respect to Common Shares
subject to Restricted Share Units during the Restricted Period; provided, however, that, subject to
Section 409A of the Code, an amount equal to any dividends declared during the Restricted Period with respect to the number of Common Shares covered by Restricted Share Units may, to the extent
set forth in an Award Agreement, be provided to the Participant at the time (and to the extent) that Common Shares in respect of the related Restricted Share Units are delivered to the Participant.
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(d) Termination of Employment or Service. Subject to Section 3(f) hereof, the rights of Participants granted Restricted
Shares or Restricted Share Units upon termination of employment or service with the Company and all Affiliates thereof for any reason during the Restricted Period shall be set forth in the Award
Agreement.
(e) Form of Settlement. The Administrator reserves the right in its sole discretion to provide (either at or after the grant
thereof) that any Restricted Share Unit represents the right to receive the amount of cash per unit that is determined by the Administrator in connection with the Award.
Section 10. Other Share-Based Awards.
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Other
forms of Awards valued in whole or in part by reference to, or otherwise based on, Common Shares, including dividend equivalents, may be granted either alone or in addition to other Awards
(other than in connection with Options or Share Appreciation Rights) under the Plan. Any dividend or dividend equivalent awarded hereunder shall be subject to the same restrictions, conditions and
risks of forfeiture as the underlying Awards. Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine the individuals to whom and the time or times
at which such Other Share-Based Awards shall be granted, the number of Common Shares to be granted pursuant to such Other Share-Based Awards, or the manner in which such Other Share-Based Awards shall
be settled (e.g., in Common Shares, cash or other property), or the conditions to the vesting and/or payment or settlement of such Other Share-Based Awards (which may include achievement of
performance goals) and all other terms and conditions of such Other Share-Based Awards.
Section 11. Share Bonuses.
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In
the event that the Administrator grants a Share Bonus, the Shares constituting such Share Bonus shall, as determined by the Administrator, be evidenced in uncertificated form or
by a book entry record or a certificate issued in the name of the Participant to whom such grant was made and delivered to such Participant as soon as practicable after the date on which such Share
Bonus is payable.
The
Administrator may grant Awards that are payable solely in cash, as deemed by the Administrator to be consistent with the purposes of the Plan, and such Cash Awards shall be
subject to the terms, conditions, restrictions and limitations determined by the Administrator, in its sole discretion, from time to time. Cash Awards may be granted with value and payment contingent
upon the achievement of performance goals.
Section 13. Change in Control Provisions.
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Unless
otherwise determined by the Administrator and evidenced in an Award Agreement and subject to Section 3(e) hereof, in the event that (a) a Change in Control
occurs and (b) either (x) an outstanding Award is not assumed or substituted in connection therewith or (y) an outstanding Award is assumed or substituted in connection therewith
and the Participant's employment or service is terminated by the Company, its successor or an Affiliate thereof without Cause or by the Participant for Good Reason (if applicable) on or after the
effective date of the Change in Control but prior to twenty-four (24) months following the Change in Control, then:
(a) any
unvested or unexercisable portion of any Award carrying a right to exercise shall become fully vested and exercisable; and
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(b) the
restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to an Award granted under the Plan shall lapse and such Awards shall be deemed fully
vested and any performance conditions imposed with respect to such Awards shall be deemed to be fully achieved.
If
the Administrator determines in its sole discretion pursuant to Section 3(e) hereof to accelerate the vesting of Options and/or Share Appreciation Rights in connection with a Change in
Control, the Administrator shall also have discretion in connection with such action to provide that all Options and/or Share Appreciation Rights outstanding immediately prior to such Change in
Control shall expire on the effective date of such Change in Control.
For
purposes of this Section 13, an outstanding Award shall be considered to be assumed or substituted for if, following the Change in Control, the Award remains subject to the same terms and
conditions that were applicable to the Award immediately prior to the Change in Control except that, if the Award related to Shares, the Award instead confers the right to receive common stock of the
acquiring entity (or such other security or entity as may be determined by the Administrator, in its sole discretion, pursuant to Section 5 hereof).
Section 14. Amendment and Termination.
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The
Board may amend, alter or terminate the Plan at any time, but no amendment, alteration, or termination shall be made that would impair the rights of a Participant under any Award
theretofore granted without such Participant's consent. Unless the Board determines otherwise, the Board shall obtain approval of the Company's shareholders for any amendment to the Plan that would
require such approval in order to satisfy any rules of the stock exchange on which the Common Shares are traded or other applicable law. The Administrator may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Section 5 of the Plan and the immediately preceding sentence, no such amendment shall impair the rights of any Participant without his
or her consent.
Section 15. Unfunded Status of Plan.
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The
Plan is intended to constitute an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a general creditor of the Company.
Section 16. Withholding Taxes.
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Each
Participant shall, no later than the date as of which the value of an Award first becomes includible in the gross income of such Participant for purposes of applicable taxes,
pay to the Company, or make arrangements satisfactory to the Company regarding payment of, an amount in respect of such taxes up to the maximum statutory rates in the Participant's applicable
jurisdiction with respect to the Award, as determined by the Company. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Participant. Whenever cash is to be paid pursuant to an Award, the
Company shall have the right to deduct therefrom an amount sufficient to satisfy any applicable withholding tax requirements related thereto as determined by the Company. Whenever Shares or property
other than cash are to be delivered pursuant to an Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any related taxes
to be withheld and applied to the tax obligations as determined by the Company; provided, however, that, with the approval of the Administrator, a
Participant may satisfy the foregoing requirement by either (i) electing to have the Company withhold from delivery of Shares or other property, as applicable, or (ii) by delivering
already owned unrestricted Common Shares, in each case, having a value equal to the applicable taxes to be withheld and applied to the tax obligations as determined by the Company (with any fractional
share amounts resulting therefrom settled in cash). Such withheld or already owned and unrestricted Common Shares shall be valued at their Fair Market Value on the date on
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which
the amount of tax to be withheld is determined. Such an election may be made with respect to all or any portion of the Shares to be delivered pursuant to an award. The Company may also use any
other method of obtaining the necessary payment or proceeds, as permitted by law, to satisfy its withholding obligation with respect to any Award as determined by the Company.
Section 17. Transfer of Awards.
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No
purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a
security interest in or lien on, any Award or any agreement or commitment to do any of the foregoing (each, a "Transfer") by any holder thereof will be
valid, except as otherwise expressly provided in an Award Agreement or with the prior written consent of the Administrator, which consent may be granted or withheld in the sole discretion of the
Administrator. Any other purported Transfer of an Award or any economic benefit or interest therein shall be null and void ab initio, and shall not create any obligation or liability of the Company,
and any Person purportedly acquiring any Award or any economic benefit or interest therein transferred in violation of this Section 17 shall not be entitled to be recognized as a holder of any
Common Shares or other property underlying such Award. Unless otherwise determined by the Administrator, an Option may be exercised, during the lifetime of the Participant, only by the Participant or,
during any period during which the Participant is under a legal disability, by the Participant's guardian or legal representative.
Section 18. Continued Employment or Service.
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Neither
the adoption of the Plan nor the grant of an Award hereunder shall confer upon any Eligible Recipient any right to continued employment or service with the Company or any
Subsidiary or any Affiliate thereof, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary or Affiliate thereof to terminate the employment or service
of any of its Eligible Recipients at any time.
Section 19. Effective Date.
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The
Plan was adopted by the Board on December 13, 2019 and shall become effective on the date that it is approved by the Company's shareholders
("Effective Date").
Section 20. Term of Plan.
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The
Plan will terminate on December 13, 2029, the tenth anniversary of the Board's adoption of the Plan. No Awards shall be granted pursuant to the Plan on or after such date,
but Awards theretofore granted may extend beyond that date.
Section 21. Securities Matters and Regulations.
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(a) Notwithstanding
anything herein to the contrary, the obligation of the Company to sell or deliver Common Shares with respect to any Award granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable federal and state securities laws and Delaware law, and the obtaining of all such approvals by governmental agencies as may be
deemed necessary or appropriate by the Administrator in its sole discretion. The Administrator may require, as a condition of the issuance and delivery of certificates evidencing Common Shares
pursuant to the terms hereof, that the recipient of such shares make such agreements and representations, and that such certificates bear such legends, as the Administrator, in its sole discretion,
deems necessary or advisable.
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(b) Each
Award is subject to the requirement that, if at any time the Administrator determines that the listing, registration or qualification of Common Shares issuable pursuant to the
Plan is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the grant of an Award or the issuance of Common Shares, no such Award shall be granted or payment made or Common Shares issued, in whole or in part, unless such listing, registration,
qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Administrator.
(c) In
the event that the disposition of Common Shares acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act of 1933, as amended,
and is not otherwise exempt from such registration, such Common Shares shall be restricted against transfer to the extent required by the Securities Act of 1933, as amended, or regulations thereunder,
and the Administrator may require a Participant receiving Common Shares pursuant to the Plan, as a condition precedent to receipt of such Common Shares, to represent to the Company in writing that the
Common Shares acquired by such Participant is acquired for investment only and not with a view to distribution.
Section 22. Notification of Election Under Section 83(b) of the Code.
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If
any Participant shall, in connection with the acquisition of Common Shares under the Plan, make the election permitted under Section 83(b) of the Code, such Participant shall notify the
Company of such election within ten (10) days after filing notice of the election with the Internal Revenue Service.
Section 23. No Fractional Shares.
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No
fractional Common Shares shall be issued or delivered pursuant to the Plan. The Administrator shall determine whether cash, other Awards, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
A
Participant may file with the Administrator a written designation of a beneficiary on such form as may be prescribed by the Administrator and may, from time to time, amend or
revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator of the Participant's estate shall be deemed to be the Participant's beneficiary.
Section 25. Paperless Administration.
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In
the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a
system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated
system.
Section 26. Severability.
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If
any provision of the Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid or unenforceable
provision had not been included in the Plan.
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Notwithstanding
any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation, stock exchange listing requirement or Company Award
Agreement or policy, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any Award
Agreement or policy adopted by the Company pursuant to any such law, government regulation, stock exchange listing requirement or otherwise).
Section 28. Section 409A of the Code.
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The
Plan as well as payments and benefits under the Plan are intended to be exempt from, or to the extent subject thereto, to comply with Section 409A of the Code, and,
accordingly, to the maximum extent permitted, the Plan shall be interpreted in accordance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid
accelerated taxation and/or tax penalties under Section 409A of the Code, the Participant shall not be considered to have terminated employment or service with the Company for purposes of the
Plan and no payment shall be due to the Participant under the Plan or any Award until the Participant would be considered to have incurred a "separation from service" from the Company and its
Affiliates within the meaning of Section 409A of the Code. Any payments described in the Plan that are due within the "short term deferral period" as defined in Section 409A of the Code
shall not be treated as deferred compensation unless applicable law requires otherwise. Notwithstanding anything to the contrary in the Plan, to the extent that any Awards (or any other amounts
payable under any plan, program or arrangement of the Company or any of its Affiliates) are payable upon a separation from service and such payment would result in the imposition of any individual tax
and penalty interest charges imposed under Section 409A of the Code, the settlement and payment of such awards (or other amounts) shall instead be made on the first business day after the date
that is six (6) months following such separation from service (or upon death, if earlier). Each amount to be paid or benefit to be provided under this Plan shall be construed as a separate
identified payment for purposes of Section 409A of the Code. The Company makes no representation that any or all of the payments or benefits described in this Plan will be exempt from or comply
with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment. The Participant shall be solely responsible for the payment
of any taxes and penalties incurred under Section 409A.
Section 29. Governing Law.
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The
Plan and all determinations made and actions taken pursuant thereto shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect
to the principles of conflicts of law of such state.
Section 30. Titles and Headings.
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The
titles and headings of the sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or
headings, shall control.
Section 31. Interpretation.
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Unless
the context of the Plan otherwise requires, words using the singular or plural number also include the plural or singular number, respectively; derivative forms of defined
terms will have correlative meanings; the terms "hereof," "herein" and "hereunder" and derivative or similar words refer to this entire Plan; the term "Section" refers to the specified Section of this
Plan and references to "paragraphs" or "clauses" shall be to separate paragraphs or clauses of the
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Section
or subsection in which the reference occurs; the words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation"; and the word "or" shall be
disjunctive but not exclusive.
The
obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the
Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.
Section 33. Relationship to other Benefits.
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No
payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare, or other
benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.
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OUR 100-YEAR LEGACY
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H&P is the leading U.S. unconventional driller, and our drilling experience spans the globe. Our company currently owns and operates land rigs across North America, South America and the Middle East, with offshore
rigs in the Gulf of Mexico.
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Our people drive our success. H&P is dedicated to providing opportunities and a work environment that is both personally and professionally rewarding. It's the reason many of our employees remain with us
throughout their career.
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A century of achievement, a reputation of excellence. Since 1920, Helmerich & Payne has
been the industry's most trusted partner in drilling productivity and reliability.
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Helmerich & Payne, Inc.
1437 South Boulder Avenue
Tulsa, Oklahoma 74119
hpinc.com
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VIEW MATERIALS & VOTE w SCAN TO HELMERICH & PAYNE, INC. 1437 S. BOULDER AVENUE SUITE 1400 TULSA, OK 74119-3623 VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on March 2, 2020 for shares held directly and by 11:59 P.M. Eastern Time on February 27, 2020 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time on March 2, 2020 for shares held directly and by 11:59 P.M. Eastern Time on February 27, 2020 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. **If you vote by Internet or telephone, you do not need to mail back the attached proxy card. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E88125-P31657 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. HELMERICH & PAYNE, INC. The Board of Directors recommends you vote FOR the following: For Against Abstain 1. Election of Directors ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Delaney M. Bellinger The Board of Directors recommends you vote FOR proposals 2, 3 and 4. For Against Abstain 1b. Kevin G. Cramton ! ! ! ! ! ! ! ! ! 1c. Randy A. Foutch 2. Ratification of Ernst & Young LLP as auditors for 2020. 1d. Hans Helmerich 3. Advisory vote on executive compensation. 4. Approval of a new LTI plan ("The 2020 Omnibus Incentive Plan"). 1e. John W. Lindsay 1f. José R. Mas NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 1g. Thomas A. Petrie 1h. Donald F. Robillard, Jr. 1i. Edward B. Rust, Jr. 1j. Mary M. VanDeWeghe ! 1k. John D. Zeglis For address change/comments, mark here. (see reverse for instructions) Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E88126-P31657 HELMERICH & PAYNE, INC. Annual Meeting of Stockholders This proxy is solicited by and on behalf of the Board of Directors The undersigned hereby appoints as his/her proxies, with powers of substitution and revocation, Hans Helmerich, John W. Lindsay, and Cara M. Hair, and each of them (the "Proxies"), to vote all shares of Helmerich & Payne, Inc., which the undersigned would be entitled to vote at the Annual Meeting of Stockholders of Helmerich & Payne, Inc., to be held at Boulder Towers, H&P Conference Center, 11th Floor, 1437 South Boulder Avenue, Tulsa, Oklahoma, on Tuesday, March 3, 2020, at 12:00 noon, Tulsa time, and all adjournments thereof. THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR THE ELECTION OF THE FULL SLATE OF DIRECTORS AND FOR PROPOSALS 2, 3 AND 4. IF ANY OTHER MATTER SHOULD PROPERLY BE BROUGHT BEFORE THE MEETING, THE PERSONS NAMED AS PROXIES WILL VOTE ON SUCH MATTERS IN ACCORDANCE WITH THEIR BEST JUDGMENT. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side Address changes/comments: