Helmerich & Payne, Inc.
Annual Bonus Plan

Overview

Annual bonus awards are available to certain Executives to recognize and reward desired performance. Each year the Human Resources Committee (the “Committee”) approves the performance measures, and the specific financial and strategic objectives. An Executive’s bonus award opportunity is determined primarily by the individual’s position and level of responsibility.

Participation

The participants in the Plan are as follows:

Hans Helmerich,
George Dotson,
Doug Fears, and
Steve Mackey.

Bonus Award Opportunity

Participants are assigned target bonus awards expressed as percentages of base salary. These bonus awards are earned when performance objectives are achieved. The award percentages are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Threshold


 

Target


 

Reach


Hans Helmerich

 

 

40

%

 

 

80

%

 

 

120

%

George Dotson

 

 

25

%

 

 

50

%

 

 

75

%

Doug Fears

 

 

20

%

 

 

45

%

 

 

70

%

Steve Mackey

 

 

20

%

 

 

45

%

 

 

70

%

Financial Performance Objectives

The performance objectives selected align management with shareholders. When these objectives are met, shareholders will realize greater value in their Company ownership. A participant’s bonus award will be based upon three disproportionately weighted financial measures being:

 

 

 

 

 

Financial Measure


 

Weighting


Earnings Per Share

 

 

35

%

Return on Invested Capital

 

 

35

%

Operating EBITDA

 

 

30

%

 

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The Board of Directors annually approves an operating and capital budget at its September meeting. Each financial measure would be assigned threshold, target and reach numbers based upon this approved budget. Actual financial results would be compared to the budgeted numbers for each of the financial measures to determine the amount of any bonus. Based on the                      fiscal year budget, the following financial performance benchmarks have been developed for each financial measure:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year

 

 

Threshold


 

Target


 

Reach


 

Actual


Earnings Per Share

 

 

                  

 

 

 

                  

 

 

 

                  

 

 

 

                  

 

Return on Invested Capital

 

 

                  

 

 

 

                  

 

 

 

                  

 

 

 

                  

 

Operating EBITDA*

 

 

                  

 

 

 

                  

 

 

 

                  

 

 

 

                  

 

*millions

 

 

                  

 

 

 

                  

 

 

 

                  

 

 

 

                  

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

Prior

 

 

Fiscal

 

Fiscal

 

 

Year

 

Year

Assumptions


 

Target


 

Actual


Revenue Days - U.S. Land:

 

 

                  

 

 

 

                  

 

Revenue Per Day - U.S. Land:

 

 

                  

 

 

 

                  

 

U.S. Land Rig Utilization:

 

 

                  

 

 

 

                  

 

U.S. Offshore Utilization:

 

 

                  

 

 

 

                  

 

International Utilization:

 

 

                  

 

 

 

                  

 

Strategic Performance Objectives

The bonus, if any, derived from the Company’s financial performance would then be increased or decreased by the Committee pursuant to a 30% adjustment factor. Seventy-five percent of this adjustment factor is based upon the Committee’s assessment of the Company’s total shareholder return, using a three-year rolling average relative to an industry peer group. The remaining 25% of the bonus adjustment factor is based upon the Committee’s evaluation of the Company’s success in attaining higher than industry average utilization and premium day rates.

This bonus adjustment factor will be subject to a pre-determined safety performance threshold. For the                      fiscal year, in order to meet that threshold, the Company’s OSHA and DAWFC rates must be                      percent below IADC averages. If this safety performance threshold is not met, then the bonus would not be increased by the adjustment factor. The bonus would not be decreased by the adjustment factor solely for the reason that safety performance threshold was not met. However, if the adjustment factor resulted in a decrease to the bonus, then the bonus would be decreased even if the safety performance threshold is met.

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