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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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HELMERICH & PAYNE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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1437 South Boulder Avenue
Tulsa, Oklahoma 74119
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice
is hereby given that the Annual Meeting of Stockholders of Helmerich & Payne, Inc. (the "Company"), will be held at Boulder Towers, H&P Conference Center, Eleventh Floor, 1437
South Boulder Avenue, Tulsa, Oklahoma, at 12:00 noon, Tulsa time, on Wednesday, March 1, 2017, for the following purposes:
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1.
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To
elect as Directors the eight nominees named in the attached proxy statement to serve until the Annual Meeting of Stockholders in 2018.
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2.
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To
ratify the appointment of Ernst & Young LLP as our independent auditors for fiscal 2017.
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3.
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To
cast an advisory vote to approve the compensation of our executives disclosed in this proxy statement.
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4.
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To
cast an advisory vote on whether a stockholder advisory vote to approve executive compensation should occur every 1, 2 or 3 years.
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5.
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To
consider and transact any other business which properly may come before the meeting or any adjournment thereof.
In
accordance with the By-laws, the close of business on January 6, 2017, has been fixed as the record date for the determination of the stockholders entitled to notice of, and to vote at, the
meeting. The stock transfer books will not close.
The
Company is pleased to take advantage of the rules of the Securities and Exchange Commission (the "SEC") that allow issuers to furnish proxy materials to their stockholders on the Internet. The
Company believes these rules allow it to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. The Company is
mailing to most of its stockholders a Notice of Internet Availability of Proxy Materials, rather than a paper copy of the proxy statement, proxy and 2016 Annual Report to Stockholders. The notice
contains instructions on how to access the proxy materials, vote and obtain, if you so desire, a paper copy of the proxy materials.
Your vote is important! Whether or not you expect to be present at the Annual Meeting, please vote as promptly as possible so that we may be assured of a quorum to transact
business. You may vote by using the Internet or telephone, or by signing, dating and returning the proxy mailed to those who receive paper copies of this proxy statement. If you attend the Annual
Meeting, you may revoke your proxy and vote in person.
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By Order of the Board of Directors,
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Jonathan M. Cinocca
Corporate Secretary
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Tulsa, Oklahoma
January 17, 2017
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Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be held on March 1, 2017
This proxy statement and our 2016 Annual Report to Stockholders are available at
www.proxyvote.com
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1437 South Boulder Avenue
Tulsa, Oklahoma 74119
PROXY STATEMENT
General Information
As a stockholder of Helmerich & Payne, Inc., you are invited to attend the Annual Meeting of Stockholders on March 1, 2017
(the "Annual Meeting") and vote on the items of business described in this proxy statement. The proxy is being solicited by and on behalf of the Board of Directors of Helmerich &
Payne, Inc., and will be voted at the Annual Meeting. Throughout this proxy statement, Helmerich & Payne, Inc. is referred to as the "Company," "we," "our" or "us."
Important
Notice of Electronic Availability of Materials
As permitted by the rules of the SEC, we are making our 2016 Annual Report to Stockholders and this proxy statement available to stockholders
electronically via the Internet at the following website:
www.proxyvote.com
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Most stockholders will not receive printed copies
of the proxy materials unless they request them. Instead, a Notice of Internet Availability of Proxy Materials ("Notice"), which was mailed to most of our stockholders, explains how you may access and
review the proxy materials and how you may submit your proxy on the Internet. If you received the Notice, you will not receive a printed copy of the proxy materials unless you request it by following
the instructions for requesting such materials contained in the Notice. Stockholders who requested paper copies of proxy materials or previously elected to receive proxy materials electronically did
not receive the Notice and are receiving the proxy materials in the format requested. The Notice and the proxy materials are first being made available to our stockholders on or about
January 17, 2017.
Annual
Meeting Information
Our
Annual Meeting will be held at Boulder Towers, H&P Conference Center, Eleventh Floor, 1437 South Boulder Avenue, Tulsa, Oklahoma, at 12:00 noon, Tulsa time, on
Wednesday, March 1, 2017, unless adjourned or postponed. Directions to the meeting can be obtained by calling our Investor Relations department at 918-742-5531.
Attendance
If
your shares are registered directly in your name with the Company's transfer agent, you are considered a "stockholder of record". If your shares are held in a
brokerage account, by
a trustee or by another nominee, you are considered a "beneficial owner" of those shares. Only stockholders of record or beneficial owners of the Company's common shares may attend the meeting in
person. If you are a stockholder of record, you may be asked to present proof of identification, such as a driver's license. Beneficial owners must also present evidence of share ownership, such as a
recent brokerage account or bank statement. All attendees must comply with our standing rules, which will be distributed upon entrance to the Annual Meeting. Even if you plan to attend the Annual
Meeting, we recommend that you also vote by proxy as described in this proxy statement so that your vote will be counted if you later decide not to attend the Annual Meeting.
Items
of Business at Annual Meeting
The
Items of business scheduled to be voted on at the Annual Meeting are:
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Proposal 1
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The election of Directors;
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Proposal 2
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The ratification of the appointment of Ernst & Young LLP as our independent auditors for fiscal 2017;
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Proposal 3
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The advisory vote on executive compensation; and
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Proposal 4
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The advisory vote on whether a stockholder advisory vote to approve executive compensation should occur every 1, 2 or 3 years.
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We
will also consider any other business that properly comes before the Annual Meeting.
Board
Recommendation on Voting
Our
Board of Directors recommends that you vote your shares FOR the eight Director nominees identified under Proposal 1, and FOR Proposals 2 and 3. Our Board of
Directors makes no recommendation with respect to Proposal 4.
Voting
Information
Record date and quorum.
The holders of a majority of our outstanding stock entitled to vote at the Annual Meeting must be present in
person or by
proxy for the transaction of business. This is called a quorum. Abstentions and broker non-votes (discussed below) will be counted for purposes of determining the presence of a quorum at the meeting.
At the close of business on January 6, 2017, there were 108,614,238 issued and outstanding shares of our common stock, the holders of which are entitled to one vote per share on all matters. We
have no other class of securities entitled to vote at
the meeting. Only stockholders of record at the close of business on January 6, 2017, will be entitled to vote at the Annual Meeting.
Submitting voting instructions for shares held in your name (i.e., you are a stockholder of record).
You may vote your shares of
common stock
by telephone or over the Internet, which saves the Company money, or by completing, signing and returning a proxy. A properly submitted proxy will be voted in accordance with your instructions unless
you subsequently revoke your instructions. If you submit a signed proxy without indicating your vote, the person voting the proxy will vote your shares according to the Board of Director's
recommendation with respect to Proposals 1, 2 and 3 (FOR the eight Director nominees identified in this proxy statement, and FOR Proposals 2 and 3). If you do not indicate your voting preference as to
Proposal 4 when you submit a signed proxy, the shares represented by your proxy will be voted ABSTAIN with respect to Proposal 4.
Submitting voting instructions for shares held in street name (i.e., you are the beneficial owner of your shares).
If you are a
beneficial
owner of shares, follow the instructions you receive from your broker or other organization holding your shares in street name.
If you want to vote in person, you must obtain a legal
proxy from your broker and bring it to the Annual Meeting
. If you do not submit voting instructions to the organization that holds your shares, that organization may still be permitted
to vote your shares. In general, under applicable New York Stock Exchange rules, the organization that holds your shares may generally vote on routine matters. Proposal 2, the approval and appointment
of the Company's independent auditor, is a routine matter. However, absent specific instructions from beneficial owners, brokers may not vote for non-routine matters. Proposal 1, the election of
directors, Proposal 3, the advisory vote on executive compensation, and Proposal 4, the advisory vote on whether a stockholder advisory vote to approve executive compensation should occur every 1, 2
or 3 years, are non-routine matters. Therefore, there may be broker non-votes with respect to Proposals 1, 3 and 4.
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Revoking your proxy.
Any stockholder giving a proxy may revoke it at any time by submission of a later dated proxy or subsequent
Internet or
telephonic proxy. Stockholders who attend the Annual Meeting may revoke any proxy previously granted and vote in person by written ballot.
Voting Requirements.
The election of Directors will require the affirmative vote of a majority of the votes
cast by the shares of common stock voting in person or by proxy at the Annual Meeting. A majority of the votes cast means that the number of shares voted FOR a Director must exceed the number of
shares voted AGAINST that Director. Abstentions and broker non-votes will not affect the outcome of the election of Directors. Any Director who receives a greater number of votes AGAINST his or her
election than votes FOR such election shall tender his or her resignation to the Board of Directors in accordance with our Corporate Governance Guidelines. The Nominating and Corporate Governance
Committee will consider the resignation and recommend to the Board of Directors whether to accept or reject the resignation. The Board of Directors will consider all factors it deems relevant, make a
determination and publicly disclose its decision within 120 days following the date of the Annual Meeting. With regard to Proposals 2 and 3, the affirmative vote of a majority of shares of
common stock present in person or by proxy at the Annual Meeting and entitled to vote at the Annual Meeting is required for approval. A share that is a broker non-vote is not considered a share
entitled to vote on the particular matter. Therefore, even though broker non-votes are counted in determining a quorum, with respect to Proposal 3, broker non-votes are excluded from the denominator
in determining whether affirmative votes represented a majority of those present and entitled to vote at the Annual Meeting. With respect to Proposals 2 and 3, abstentions will have the effect of a
negative vote. Finally, with respect to Proposal 4, the frequency of the advisory vote on executive compensation receiving the greatest number of votes (every 1, 2 or 3 years) will be
considered the frequency recommended by stockholders. Abstentions and broker non-votes will therefore have no effect on such vote.
Each
outstanding share of our common stock will be entitled to one vote on each matter considered at the meeting. With regard to Proposal 1, election of Directors, stockholders may vote
FOR or AGAINST a Director nominee or abstain from voting on a Director nominee. The proxies executed and returned (or delivered via telephone or over the Internet) can be voted only for the named
nominees. With regard to Proposal 2, ratification of independent auditors, and Proposal 3, the advisory vote on executive compensation, a stockholder may vote FOR or AGAINST the matter or abstain from
voting on the matter. Finally, with regard to Proposal 4, the advisory vote on the frequency of the advisory vote on executive compensation, a stockholder may vote to hold any advisory vote on
executive compensation every "1 year", "2 years", or "3 years" or abstain from voting on the matter.
Vote
Tabulation and Results
Broadridge
Financial Solutions, Inc. will tabulate all votes which are received prior to the date of the Annual Meeting. We have appointed two employee
inspectors to receive Broadridge's tabulation, to tabulate all other votes, and to certify the voting results. We intend to publish final results in a Current Report on Form 8-K to be filed
with the SEC within four business days of the Annual Meeting.
Solicitation
of Proxies
The
cost of this solicitation will be paid by us. In addition, arrangements may be made with brokerage houses and other custodians, nominees, and fiduciaries to send
proxies and proxy
material to their principals. Solicitation of proxies may be made by mail, telephone, personal interviews or by other means by our officers and employees who will not receive additional compensation
for solicitation activities.
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Other
Matters
As
of this date, management knows of no business which will come before the Annual Meeting other than that set forth in the notice of the meeting. If any other matter
properly comes before the meeting, the persons named as proxies will vote on it in accordance with their best judgment.
Security Ownership of Certain Beneficial Owners
The following table sets forth those persons or groups who, to our knowledge, beneficially own more than 5% of our common stock, the number of
shares beneficially owned by each, and the percentage of outstanding stock so owned, as of December 9, 2016. At the close of business on December 9, 2016, there were 108,428,861 issued
and outstanding shares of our common stock.
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Title of Class
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Name and Address of
Beneficial Owner
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Amount and
Nature of
Beneficial
Ownership
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Percent of
Class
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Common Stock
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Capital World Investors
333 South Hope Street
Los Angeles, CA 90071
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11,505,355 (1
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10.6
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%
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Common Stock
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BlackRock, Inc.
55 East 52
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Street
New York, NY 10055
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10,895,442 (2
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10.0
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%
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Common Stock
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The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355
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9,307,570 (3
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8.6
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%
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Common Stock
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State Farm Mutual Automobile Insurance Company
One State Farm Plaza
Bloomington, Illinois 61710
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8,308,188 (4
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7.7
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%
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Common Stock
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American International Group, Inc.
175 Water Street
New York, NY 10038
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5,874,825 (5
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5.4
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%
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(1)
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This
information is based on Capital World Investors' Schedule 13G filed with the SEC on February 12, 2016. Of the shares reported as beneficially
owned, Capital World Investors has sole voting power and dispositive power over 11,505,355 shares.
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(2)
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This
information is based on BlackRock, Inc.'s Schedule 13G Amendment filed with the SEC on August 9, 2016. Of the shares reported as
beneficially owned, BlackRock, Inc. has sole voting power over 10,045,612 shares and sole dispositive power over 10,895,442 shares.
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(3)
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This
information is based on The Vanguard Group, Inc.'s Schedule 13G Amendment filed with the SEC on February 11, 2016. Of the shares reported
as beneficially owned, The Vanguard Group, Inc. has sole dispositive power over 9,099,968 shares, shared dispositive power over 207,602 shares and sole voting power over 199,052 shares.
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(4)
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This
information is based on State Farm Mutual Automobile Insurance Company's Schedule 13G Amendment filed with the SEC on February 2, 2016. Of the
shares reported as beneficially owned, State Farm Mutual Automobile Insurance Company has sole voting and dispositive power over 8,257,200 shares and shared voting and dispositive power over 50,988
shares.
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(5)
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This
information is based on American International Group, Inc.'s Schedule 13G filed with the SEC on February 11, 2016. Of the shares reported
as beneficially owned, American International Group, Inc. has shared voting and dispositive power over 5,874,825 shares.
Security Ownership of Management
The following table sets forth the total number of shares of common stock beneficially owned by each of the present Directors and nominees, our
Chief Executive Officer ("CEO") and all other executive officers named in the Summary Compensation Table, and all Directors and executive officers as a group, and the percent of the outstanding common
stock so owned by each as of December 9, 2016.
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Directors and Named Executive Officers
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Title of Class
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Amount and
Nature of
Beneficial
Ownership (1)
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Percent of
Class (2)
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Hans Helmerich
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Common Stock
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3,095,462 (3
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2.8
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%
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John W. Lindsay
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Common Stock
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570,508 (4
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John R. Bell
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Common Stock
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123,426 (5
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Juan Pablo Tardio
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Common Stock
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72,993 (6
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John D. Zeglis
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Common Stock
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75,087 (7
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Edward B. Rust, Jr.
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Common Stock
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75,062 (8
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Paula Marshall
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Common Stock
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56,899 (9
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Randy A. Foutch
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Common Stock
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47,946 (10
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Thomas A. Petrie
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Common Stock
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38,617 (11
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Robert L. Stauder
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Common Stock
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35,493 (12
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Donald F. Robillard, Jr.
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Common Stock
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34,521 (13
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Cara M. Hair
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Common Stock
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21,490 (14
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Jeffrey L. Flaherty
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Common Stock
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7,373 (15
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All Directors and Executive Officers as a Group
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Common Stock
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4,247,504 (16
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3.9
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%
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(1)
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Unless
otherwise indicated, all shares are owned directly by the named person, and he or she has sole voting and investment power with respect to such shares. Shares
owned include restricted shares over which the named person has voting but not investment power. Stock options held by the named person include options exercisable within 60 days of
December 9, 2016.
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(2)
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Percentage
calculation not included if beneficial ownership is less than one percent of class.
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(3)
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Includes
options to purchase 525,618 shares; 1,699 restricted shares; 21,309 shares fully vested under our 401(k) Plan; 27,470 shares owned by Mr. Helmerich's
wife, with respect to which he has disclaimed all beneficial ownership; 1,549,515 shares held by Mr. Helmerich as Trustee for various family trusts for which he possesses voting and investment
power; 73,550 shares held by The Helmerich Trust, an Oklahoma charitable trust, for which Mr. Helmerich is a Trustee for which he possesses voting and investment power; and 40,000 shares owned
by the Ivy League, Inc., of which he is an officer and director and possesses voting and investment power.
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(4)
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Includes
options to purchase 418,625 shares; 46,845 restricted shares; and 9,156 shares fully vested under our 401(k) Plan.
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(5)
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Includes
options to purchase 81,375 shares; 10,817 restricted shares; and 1,783 shares fully vested under our 401(k) Plan.
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(6)
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Includes
options to purchase 42,750 shares; 14,856 restricted shares; and 1,113 shares fully vested under our 401(k) Plan.
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(7)
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Includes
options to purchase 44,752 shares and 1,133 restricted shares.
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(8)
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Includes
options to purchase 44,752 shares and 1,133 restricted shares.
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(9)
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Includes
options to purchase 44,752 shares and 1,133 restricted shares.
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(10)
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Includes
options to purchase 40,253 shares and 1,133 restricted shares.
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(11)
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Includes
options to purchase 30,784 shares and 1,133 restricted shares.
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(12)
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Includes
options to purchase 12,750 shares and 14,936 restricted shares.
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(13)
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Includes
options to purchase 27,998 shares and 1,133 restricted shares.
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(14)
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Includes
options to purchase 11,000 shares and 7,750 restricted shares.
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(15)
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Shares
reported as beneficially owned are based on Mr. Flaherty's most recent Form 4 filing and forfeiture of restricted shares attributable to his
resignation on August 19, 2016.
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(16)
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Includes
options to purchase 1,325,409 shares; 103,701 restricted shares; and 33,361 shares fully vested under our 401(k) Plan.
6
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, eight Directors are to be elected for terms of one year each. All eight Directors are currently serving as Directors and
are standing for re-election. The nominees have agreed to be named in this proxy statement and have indicated a readiness to continue to serve if elected. The Nominating and Corporate Governance
Committee of our Board of Directors has determined that each of the nominees qualifies for election under its criteria for evaluation of directors and has recommended that each of the candidates be
nominated for election. If any nominee becomes unable to serve before the Annual Meeting, shares represented by proxy may be voted for a substitute designated by the Board of Directors, unless a
contrary instruction is noted on the proxy. The Board of Directors has no reason to believe that any of the nominees will become unavailable. As detailed under "Corporate
Governance Director Independence" below, the Board of Directors has affirmatively determined that each of the nominees, other than Messrs. Helmerich and Lindsay, qualifies
as "independent" as that term is defined under the rules of the New York Stock Exchange ("NYSE") and the SEC, as well as our Corporate Governance Guidelines.
The
information that follows, including principal occupation or employment for the past five or more years and a summary of each individual's experience, qualifications, attributes or
skills that have led to the conclusion that each individual should serve as a Director in light of our current business and structure, is furnished with respect to each Director nominee.
Director Nominees
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Randy A. Foutch
Mr. Foutch, age 65, has served as a Director of the Company since 2007. In 2007, Mr. Foutch founded Laredo Petroleum, Inc., a publicly traded
Mid-Continent focused oil and natural gas exploration and production company, where he serves as a director, Chairman of the Board and Chief Executive Officer. He also founded Latigo Petroleum, Inc. in 2002 and served as its President and Chief
Executive Officer until its sale to Pogo Producing Company in May 2006. In 1996, Mr. Foutch founded Lariat Petroleum, Inc. and served as its President until January 2001, when it was sold to Newfield Exploration, Inc. From 2006 to 2011,
Mr. Foutch served as a Director of Bill Barrett Corporation, a publicly traded exploration and production company. From 2013 to 2015, Mr. Foutch also served as a Director of publicly traded Cheniere Energy, Inc. Mr. Foutch also
serves on several nonprofit and private industry boards. As a result of Mr. Foutch's service as a chief executive officer and in other executive positions and as a director of several oil and gas exploration and development companies, the Board
believes that he provides valuable business, leadership and management experience and insights into many aspects of the oil, natural gas and contract drilling industries. The Board believes Mr. Foutch's background provides the necessary expertise to
serve as the Chairman of the Nominating and Corporate Governance Committee of the Board of Directors.
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Hans Helmerich
Mr. Helmerich, age 58, has served as Chairman of the Board since 2012. Mr. Helmerich has been a director of the Company since 1987. He served as Chief
Executive Officer from 1989 to 2014 and President from 1987 to 2012. Mr. Helmerich is a director of Atwood Oceanics, Inc., a publicly traded company engaged in the business of international offshore drilling, and Cimarex Energy Co., a
publicly traded energy exploration and production company. He is also a trustee of The Northwestern Mutual Life Insurance Company. He is a graduate of Dartmouth College and completed the Harvard Business School Program for Management Development. The
Board believes that Mr. Helmerich brings to the Board in-depth experience as a business executive in the contract drilling industry. For over 25 years, Mr. Helmerich provided continuity of leadership and strategic vision which resulted
in the Company's significant growth and outstanding peer performance.
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John W. Lindsay
Mr. Lindsay, age 56, has served as Chief Executive Officer since 2014 and President since 2012. He has been a Director of the Company since 2012. He also holds
the position of President of subsidiary companies. Mr. Lindsay joined the Company in 1987 and has served in various positions including Vice President, U.S. Land Operations (1997-2006) for the Company's wholly-owned drilling subsidiary
Helmerich & Payne International Drilling Co., Executive Vice President, U.S. and International Operations (2006-2010), Executive Vice President and Chief Operating Officer of the Company (2010-2012), and President and Chief Operating
Officer of the Company (2012-2014). He is a graduate of the University of Tulsa and holds a Bachelor of Science degree in Petroleum Engineering. The Board believes that Mr. Lindsay brings to the Board and the Company significant knowledge and
experience in the contract drilling industry. He provides a management representative on the Board with extensive knowledge of our day-to-day operations which facilitates the Board's oversight of management's strategy, planning and
performance.
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Paula Marshall
Ms. Marshall, age 63, has served as a Director of the Company since 2002. She has served since 1984 as the President and Chief Executive Officer of The Bama
Companies, Inc., a major bakery product manufacturing company with multiple facilities in the U.S., China and Poland. She was a Director of publicly traded BOK Financial Corporation from 2003 to 2009, and prior thereto served as a Director of
the Federal Reserve Bank of Kansas City and American Fidelity Corporation (insurance holding company). In 2001, Ms. Marshall chaired the Tulsa Chamber of Commerce. Through her company leadership expertise, business background and entrepreneurial
experience, the Board believes Ms. Marshall brings to the Board and the Company meaningful input and advice.
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Thomas A. Petrie
Mr. Petrie, age 71, has served as a Director of the Company since 2012. He is Chairman of Petrie Partners, LLC, a Denver-based investment banking firm
that offers financial advisory services to the oil and gas industry. In 1989, Mr. Petrie co-founded Petrie Parkman & Co., an energy investment banking firm, where he served as Chairman of the Board and Chief Executive Officer from
1989 to 2006. Mr. Petrie served as a Vice Chairman of Merrill Lynch following the merger of Petrie Parkman & Co. with Merrill Lynch in 2006. Mr. Petrie also served until 2012 as Vice Chairman of Bank of America following Bank
of America's acquisition of Merrill Lynch in 2009. Mr. Petrie has been an active advisor on more than $250 billion of energy related mergers and acquisitions, including many of the largest. The Board believes that Mr. Petrie's
significant financial and energy industry experience enables him to provide valuable input and guidance into many aspects of the oil and gas industry.
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Donald F. Robillard, Jr.
Mr. Robillard, age 65, has served as a Director of the Company since 2012. He has served since 2015 as Executive Vice President, Chief Financial
Officer and Chief Risk Officer of Hunt Consolidated, Inc., a private international company with interests in oil and gas exploration and production, refining, real estate development, private equity investments and land. Prior to 2015,
Mr. Robillard had served as a financial officer of Hunt Consolidated, Inc. and/or its subsidiaries since 1992. He is also a Director of Hunt Consolidated, Inc. and Hunt Oil Company. He also serves as President and Chief Executive
Officer of ES Xplore, LLC, a direct hydrocarbon indicator technology company which spun out of Hunt Consolidated, Inc. in August of 2016. He has also served as a Director of publicly traded Cheniere Energy, Inc. since September 2014
and as Chair of its Audit Committee since June 2015. Mr. Robillard is a Certified Public Accountant and an active member of Financial Executives International where he has served as a national director and chaired the Committee on Private
Company Policy. Through his service as a chief financial officer at a major corporation directing the treasury, finance, planning, insurance and accounting functions, the Board believes that Mr. Robillard brings to the Board large company
leadership, financial expertise and experience in the oil and gas industry. The Board believes that Mr. Robillard's background provides the necessary expertise to serve as the Chairman of the Audit Committee of the Board of
Directors.
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Edward B. Rust, Jr.
Mr. Rust, age 66, has served as a Director of the Company since 1997. From 1987 until his retirement in 2016, Mr. Rust served as Chairman of the Board
of State Farm Mutual Automobile Insurance Company, the largest insurer of automobiles and homes in the United States. Mr. Rust was also President of State Farm Mutual Automobile Insurance Company from 1985 to 1998 and from 2007 to 2014, as well
as Chief Executive Officer from 1985 to 2015. He has been a Director of Caterpillar, Inc. (publicly traded manufacturer of construction and mining equipment) since 2003 and a Director of S&P Global Inc., formerly known as McGraw Hill
Financial, Inc. (publicly traded global information services provider serving the financial services and business information markets), since 2001. His role as chief executive officer at a major corporation and experience as a Director of large,
publicly traded multi-national corporations enables Mr. Rust to provide significant input and guidance to the Board and the Company.
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John D. Zeglis
Mr. Zeglis, age 69, has served as a Director of the Company since 1989. From 1999 until his retirement in 2004, Mr. Zeglis served as Chief Executive Officer
and Chairman of the Board of AT&T Wireless Services, Inc. He served as President of AT&T Corporation from December 1997 to July 2001, Vice Chairman from June 1997 to November 1997, General Counsel and Senior Executive Vice President from
1996 to 1997 and Senior Vice President and General Counsel from 1986 to 1996. Mr. Zeglis is presently a Director of State Farm Mutual Automobile Insurance Corporation and The Duchossois Group. He is a former Director of Georgia-Pacific
Corporation (2001-2005), Sara Lee Corporation (1998-2000), Illinois Power Company (1992-1996) and Telstra Limited (2006-2015). Through his past service as a chief executive officer at a major corporation and service as a Director of large, publicly
traded multi-national corporations, Mr. Zeglis brings to the Board large company leadership, expertise and experience in many areas including corporate governance, and general business and financial strategic oversight. The Board believes
Mr. Zeglis provides significant insight and guidance to the Board and the Company and has the necessary expertise with respect to executive compensation matters to serve as the Chairman of the Human Resources Committee of the Board of
Directors.
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Mr. Hans
Helmerich is a Director of Atwood Oceanics, Inc. ("Atwood"), and the Company, through its wholly-owned subsidiary, owns common stock of Atwood. As a result, Atwood
may be deemed to be an affiliate of the Company.
OUR
BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE PERSONS NOMINATED BY THE BOARD.
10
CORPORATE GOVERNANCE
The Board has adopted Corporate Governance Guidelines to address significant corporate governance issues. The guidelines, as well as our Amended
and Restated Certificate of Incorporation and By-Laws, all Board committee charters, our Code of Business Conduct and Ethics, applicable to all our Directors, officers, and employees, the Code of
Ethics for Principal Executive Officer and Senior Financial Officers, the Related Person Transaction Policies and Procedures, the Foreign Corrupt Practices Act Compliance Policy, and certain Audit
Committee Practices are available on our website,
www.hpinc.com
, under the "Governance" section. The information on our website is not incorporated by reference in this
proxy statement. A printed copy of the above mentioned documents will be provided without charge upon written request to our Corporate Secretary.
Our
Corporate Governance Guidelines provide a framework for our corporate governance initiatives and cover topics such as director independence and selection and nomination of director
candidates, communication with the Board, Board committee matters, and other areas of import. Certain highlights from our Corporate Governance Guidelines, as well as other corporate governance
matters, are discussed below.
Director Independence
Our Corporate Governance Guidelines provide that a majority of the Board must meet the requirements for being an independent director under the
listing standards of the NYSE and applicable law, including the requirement that the Board affirmatively determine that the Director has no material relationship with us. To guide its determination of
whether a Director is independent, the Board has adopted the following categorical standards:
A
Director will not be independent if:
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the Director is, or has been, within the last three years, our employee, or an immediate family member is, or has been within the last three
years, our executive officer;
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the Director has received, or an immediate family member has received, during any twelve-month period within the last three years, more than
$120,000 in direct compensation from us, other than Director and committee fees and pension and other forms of deferred compensation for prior service (provided such compensation is not contingent in
any way on continued service);
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the Director is a current partner or employee of a firm that is our internal or external auditor;
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the Director has an immediate family member who is a current partner of a firm that is our internal or external auditor;
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the Director has an immediate family member who is a current employee of a firm that is our internal or external auditor and who personally
works on the Company's audit;
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the Director or an immediate family member was within the last three years a partner or employee of a firm that is our internal or external
auditor and personally worked on our audit within that time;
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the Director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company
where any of our present executive officers at the same time serves or served on that company's compensation committee; or
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the Director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or
received payments from, us for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1,000,000 or two percent (2%) of such other company's
consolidated gross revenues.
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In
addition, the following commercial and charitable relationships will not be considered material relationships that would impair a director's
independence:
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the Director (or an immediate family member of the Director) is, or during the last fiscal year has been, an affiliate or executive officer of
another company (including banks or financial institutions) to which we were indebted, or to which such other company was indebted to us, during the last or current fiscal year and the total amount of
indebtedness did not exceed two percent (2%) of the total consolidated assets of the indebted entity at the end of such fiscal year;
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the Director (or an immediate family member of the Director) is, or during the last fiscal year has been, an executive officer, director or
trustee of a charitable organization where our annual discretionary charitable contributions to the charitable organization, in the last or current fiscal year did not exceed the greater of $1,000,000
or two percent (2%) of that organization's consolidated gross revenues;
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the Director (or an immediate family member of a Director) is a member of, employed by, or of counsel to a law firm or investment banking firm
that performs services for us, provided the payments made by us to the firm during a fiscal year do not exceed two percent (2%) of the firm's gross revenues for the fiscal year, and the Director's
relationship with the firm is such that his or her compensation is not linked directly or indirectly to the amount of payments the firm receives from us; or
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a relationship arising solely from a Director's position as a director of another company that engages in a transaction with us shall not be
deemed a material relationship or transaction that would cause a Director to not be independent.
A
Director who is a member of our Audit Committee will not be independent if such Director: (i) other than in his or her capacity as a member of the Audit Committee, the Board or
any other Board committee, accepts directly or indirectly any consulting, advisory or other compensatory fee from us or any subsidiary (except for retirement benefits to the extent permitted by
applicable rules of the SEC); or (ii) is an affiliated person (as defined by the SEC) of us or any subsidiary. Similarly, in affirmatively determining the independence of any Director who will
serve on the Human Resources Committee, the Board considers all factors specifically relevant to determining whether a Director has a relationship to the Company which is material to that Director's
ability to be independent from management in connection with the duties of a Human Resources Committee member, including, but not limited to: (i) the source of compensation of such Director,
including any consulting, advisory or other compensatory fee paid by the Company to such Director; and (ii) whether such Director is affiliated with the Company, a subsidiary of the Company or
an affiliate of a subsidiary of the Company.
Generally,
relationships not addressed by the NYSE rules or otherwise described above will not cause an otherwise independent Director to be considered not independent. For relationships
that do not fall within the categories delineated above, the Directors who are otherwise independent under the guidelines will determine whether a relationship is material and, therefore, whether the
Director would be independent.
In
determining the independence of Ms. Marshall and Messrs. Foutch, Petrie, Robillard, Rust, and Zeglis, the Board of Directors considered (i) State Farm Mutual
Automobile Insurance Company's ownership of our common stock, (ii) Mr. Rust's former position as Chairman, President and Chief Executive Officer of State Farm Mutual Automobile Insurance
Company, and (iii) that Mr. Zeglis is a director of State Farm Mutual Automobile Insurance Company. The Board of Directors also considered that the Company, through its wholly owned
subsidiary, provides contract drilling services to Hunt Oil Company (of which Mr. Robillard is a director) and has in the past provided drilling services
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to
Laredo Petroleum, Inc. (of which Mr. Foutch is an officer and director). Payments made to the Company by those entities have not exceeded two percent of the consolidated gross
revenues of such entities during any applicable fiscal year.
After
applying the standards set forth above in our Corporate Governance Guidelines, the Board determined that Ms. Marshall and Messrs. Foutch, Petrie, Robillard, Rust and
Zeglis, our current, non-employee directors, had no material relationship with the Company and that each is independent under our categorical standards and the requirements of the NYSE and applicable
law. William L. Armstrong, who served as a director until his resignation on May 26, 2016, and Francis Rooney, who served as a director until his resignation on September 7, 2016, were
also independent.
Director Identification, Evaluation, and Nomination
General Principles and Procedures
. We are of the view that the continuing service of qualified incumbents promotes
stability and continuity in the boardroom, contributing to the Board's ability to work as a collective body, while giving us the benefit of familiarity and insight into our affairs that our Directors
have accumulated during their tenure. Accordingly, the process for identifying nominees shall reflect our practice of re-nominating incumbent Directors who continue to satisfy the Nominating and
Corporate Governance Committee's ("Committee") criteria for membership on the Board, whom the Committee believes continue to make important contributions to the Board, and who consent to continue
their service on the Board.
In
general, and as more fully outlined in the Corporate Governance Guidelines, in considering candidates for election at annual meetings of stockholders, the Committee
will:
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consider if the Director continues to satisfy the minimum qualifications for director candidates as set forth in the Corporate Governance
Guidelines;
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assess the performance of the Director during the preceding term; and
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determine whether there exist any special, countervailing considerations against re-nomination of the Director.
If
the Committee determines that (i) an incumbent Director consenting to re-nomination continues to be qualified and has satisfactorily performed his or her duties as Director
during the preceding term, and (ii) there exist no reasons, including considerations relating to the composition and functional needs of the Board as a whole, why in the Committee's view the
incumbent should not be re-nominated, then the Committee will, absent special circumstances, propose the incumbent Director for re-election.
The
Committee will identify and evaluate new candidates for election to the Board where there is no qualified and available incumbent, including for the purpose of filling vacancies or a
decision of the Directors to expand the size of the Board. The Committee will solicit recommendations for nominees from persons that the Committee believes are likely to be familiar with qualified
candidates. The Committee may also determine to engage a professional search firm to assist in identifying qualified candidates.
As
to each recommended candidate that the Committee believes merits consideration, the Committee will:
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cause to be assembled information concerning the background and qualifications of the candidate;
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determine if the candidate satisfies the minimum qualifications required by our Corporate Governance Guidelines;
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determine if the candidate possesses any of the specific qualities or skills that the Committee believes must be possessed by one or more
members of the Board;
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consider the contribution that the candidate can be expected to make to the overall functioning of the Board; and
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consider the extent to which the membership of the candidate on the Board will promote diversity among the Directors.
Based
on all available information and relevant considerations, the Committee will select and recommend to the Board a candidate who, in the view of the Committee, is most suited for
membership on the Board.
Stockholder Recommendations
. The Committee shall consider recommendations for the nomination of qualified Directors
submitted by holders of our shares entitled to vote generally in the election of Directors. The Committee will give consideration to these recommendations for positions on the Board where the
Committee has determined not to re-nominate a qualified incumbent Director.
For
each annual meeting of stockholders, the Committee will accept for consideration only one recommendation from any stockholder or affiliated group of stockholders. The Committee will
only consider recommendations of nominees for Director who satisfy the minimum qualifications prescribed by our Corporate Governance Guidelines.
Only
those recommendations whose submission complies with the following procedural requirements will be considered by the Committee: (1)
Stockholder
Nominations to the Committee
. The Committee will consider qualified nominees recommended by stockholders who may submit recommendations to our Corporate Secretary at our
headquarters address. To be considered by the Committee, stockholder nominations must be submitted before our fiscal year-end and must include the information listed in paragraph 2(i) and
(ii)(a), (c) and (d) below, together with a statement of the number of shares of our stock beneficially owned by the stockholder making the nomination and by any other supporting
stockholders. (2)
Stockholder Nominations at the Annual Meeting
. Our By-laws provide that any stockholder who is entitled to vote for the
election of Directors at a meeting called for such purpose may nominate persons for election to the Board. A stockholder desiring to nominate a person or persons for election to the Board must send a
timely (see 2018 Annual Meeting / Stockholder Proposals on page 50) written notice to the Corporate Secretary setting forth in reasonable detail the following: (i) as to each person whom the
stockholder proposes to nominate for election all information relating to such person that is required to be included in a proxy statement filed pursuant to the proxy rules of the SEC (including such
person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected), together with, as an appendix to the written notice, a completed and signed
written representation and agreement (executed by the Director nominee in the form provided by the Corporate Secretary upon written request) that the nominee (a) is not and will not become a
party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a Director of the
Company, will act or vote on any issue or question (a "Voting Commitment") that has not been disclosed to the Company or (B) any Voting Commitment that could limit or interfere with such
person's ability to comply, if elected as a Director of the Company, with such person's fiduciary duties under applicable law, (b) is not and will not become a party to any agreement,
arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action
as a Director that has not been disclosed to the Company, and (c) would be in compliance, if elected as a Director of the Company, and will comply with, applicable law and all applicable
publicly disclosed corporate governance, conflict of interest, corporate opportunities, confidentiality and stock ownership and trading policies and guidelines of the Company; and (ii) as to
the stockholder giving notice (a) the name and address of the stockholder making the nomination, (b) a representation that the stockholder
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is
a holder of record of our stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to present the nomination, (c) the class or series and number of
shares of our capital stock which are owned beneficially or of record by the stockholder, and (d) a description of all arrangements or understandings between the stockholder and any other
person or persons (naming such person or persons) pursuant to which the nomination is to be made by the stockholder.
Candidates
for Director who are properly recommended by our stockholders will be evaluated in the same manner as any other candidate for Director. The Committee may require the candidate
to furnish other information as the Committee may reasonably request to assist the Committee in determining the eligibility of the candidate to serve as a Director. The Committee (or the presiding
officer at any meeting of the stockholders) may disregard the purported nomination of any person not made in compliance with these procedures.
Director Qualification Standards
All persons nominated to serve as one of our Directors should possess the following minimum qualifications more fully discussed in our Corporate
Governance Guidelines. Specifically, all candidates:
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must be individuals of personal integrity and ethical character;
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should be free of conflicts of interest that would materially impair his or her judgment;
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must be able to represent fairly and equally all of our stockholders;
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must have demonstrated achievement in business, professionally, or the like;
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must have sound judgment;
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must have a general appreciation regarding major issues facing public companies of a size and operational scope similar to ours;
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must have, and be prepared to devote, adequate time to the Board and its committees; and
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must not conflict with any of our term or age limits for Directors.
The
Committee will also ensure that:
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at least a majority of the Directors serving at any time on the Board are independent, as defined under the rules of the NYSE and applicable
law;
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at least three of the Directors satisfy the financial literacy requirements required for service on the Audit Committee under the rules of the
NYSE; and
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at least some of the independent Directors have experience as senior executives of a public or substantial private company.
Our
Corporate Governance Guidelines also provide, in lieu of a formal diversity policy, that as part of the nomination process, the Committee will consider diversity in professional
background, experience,
expertise, perspective, age, gender, and ethnicity with respect to Board composition as a whole. With respect to diversity, we place particular emphasis on identifying candidates whose experiences and
talents complement and augment those of other Board members with respect to matters of importance to the Company. We attempt to balance the composition of the Board to promote comprehensive
consideration of issues. Our current Board composition achieves this through widely varying levels and types of business and industry experience among current Board members. We monitor the composition
and functioning of our Board and Committees through both an annual review of our Corporate Governance Guidelines and a self-evaluation process undertaken each year by our Directors.
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The
foregoing qualification attributes are only threshold criteria, however, and the Committee will also consider the contributions that a candidate can be expected to make to the
collective functioning of the Board based upon the totality of the candidate's credentials, experience, and expertise, the composition of the Board at the time, and other relevant circumstances.
Board Leadership Structure
The Company's By-laws provide that, in general, any two or more offices may be held by the same person, including the offices of Chairman of the
Board ("Chairman") and CEO. The Board believes that this flexibility in the allocation of the responsibilities of these two roles is beneficial and enables the Board to adapt the leadership function
to changing circumstances. Mr. Hans Helmerich currently is the Chairman of the Board of the Company. Mr. Helmerich has served as a Director since 1987 and became the Chairman in 2012. He
served as the Company's CEO from 1989 until his retirement in March 2014. He also was the President from 1987 to 2012. Mr. Helmerich, who has nearly 25 years of successful experience as
CEO and possesses in-depth knowledge of the Company, its operations and the evolving drilling and energy industry, has been responsible for the general supervision, direction and control of the
Company's business and affairs. Under Mr. Helmerich's leadership, the Company experienced steady growth in earnings and market share and became the leading land driller in the United States.
Mr. Helmerich retired from the position of CEO on March 5, 2014. Mr. Helmerich has agreed to provide consulting services to the Company for a three-year period. Mr. John W.
Lindsay is the Company's current President and succeeded Mr. Helmerich as CEO on March 5, 2014. Since joining the Company in 1987 as a drilling engineer, Mr. Lindsay has served in
various management positions. Mr. Lindsay was appointed Executive Vice President, U.S. and International Operations in 2006 for the Company's wholly-owned subsidiary, Helmerich & Payne
International Drilling Co., and became Executive Vice President and Chief Operating Officer of the Company in 2010. In 2012, Mr. Lindsay was promoted to President and Chief Operating
Officer and was appointed to the Company's Board of Directors. Mr. Lindsay brings to the Board and the Company significant leadership, knowledge and experience in the contract drilling
industry. The Board believes at this time that the interests of all stockholders will be best served by the leadership model described
above that contemplates a separated Chairman and CEO. The combined experience and knowledge of Messrs. Helmerich and Lindsay in their respective roles of Chairman and CEO will provide the Board
and the Company with continuity of leadership that has enabled the Company's success.
In
addition, the Board has demonstrated its commitment and ability to provide independent oversight and management. We believe that the most effective board structure is one that
emphasizes board independence and ensures that the board's deliberations are not dominated by management. With the exception of Messrs. Helmerich and Lindsay, our Board is composed entirely of
independent Directors. Each of our standing Board committees is comprised of only independent Directors. Further, while the Board does not currently have a lead independent Director, it appoints a
presiding, independent Director for each executive session of the Board when it meets without management. While the Board believes this practice provides for independent leadership without the need to
designate a single lead director, the Board may examine in the future whether the appointment of a lead Director would enhance the Board's effectiveness. Our Board's oversight of risk management
(discussed below) has had no effect on our leadership structure to date.
Board Meeting Attendance
There were four regularly scheduled meetings of the Board held during fiscal 2016. We require each Director to make a diligent effort to attend
all Board and Committee meetings as well as the Annual Meeting of the Stockholders. All of our then sitting Directors attended the 2016 Annual Meeting of the Stockholders. During fiscal 2016, no
incumbent Director attended fewer than 75% of the aggregate of the total number of meetings of the Board and its committees of which he or she was
16
a
member, except that Ms. Marshall attended approximately 73% of the aggregate of the total number of meetings of the Board and its committees on which she served. Ms. Marshall only
missed one quarterly meeting of the Board and committees on which she served. As such, her aggregate attendance would have been 75% but for the fact that the Human Resources Committee only held three
meetings (of which she attended two) instead of four meetings.
Board Committees
Messrs. Foutch, Robillard (Chairman) and Rust are members of the Audit Committee. The Board has adopted a written charter for the Audit
Committee. The primary functions of the Audit Committee are to assist the Board in fulfilling its independent and objective oversight responsibilities of financial reporting and internal financial and
accounting controls of the Company and to monitor the qualifications, independence, and performance of our independent registered public accounting firm. The Board has determined that
Messrs. Donald F. Robillard, Jr. and Edward B. Rust, Jr. are "audit committee financial experts" as defined by the SEC. The Board has also determined that all Audit Committee members are
"financially literate" as contemplated by the rules of the NYSE. During the fiscal year ended September 30, 2016, the Audit Committee held twelve meetings.
Ms. Marshall
and Messrs. Petrie and Zeglis (Chairman) are members of the Human Resources Committee (which functions as our compensation committee). The Board has adopted a
written charter for the Human Resources Committee. The primary functions of the Human Resources Committee are to evaluate the performance of our executive officers, to review and make decisions
regarding compensation of our executive officers and make recommendations regarding compensation of non-employee members of our Board, and to review and make recommendations or decisions regarding
incentive compensation and equity-based compensation plans. The Human Resources Committee may not delegate any of its authority to other persons or committees. During the fiscal year ended
September 30, 2016, the Human Resources Committee held three meetings.
Ms. Marshall
and Messrs.Foutch (Chairman), Petrie, Robillard, Rust, and Zeglis are members of the Nominating and Corporate Governance Committee. The Board has adopted a written
charter for the Nominating and Corporate Governance Committee. The primary functions of the Committee are to identify and to recommend to the Board the selection of Director nominees for each annual
meeting of stockholders or for any vacancies on the Board, to make recommendations to the Board regarding the adoption or amendment of corporate governance principles applicable to us, and to assist
the Board in developing and evaluating potential candidates for executive positions and generally oversee management succession planning. During the fiscal year ended September 30, 2016, the
Nominating and Corporate Governance Committee held four meetings.
The
non-management Directors, in fiscal 2016, met in executive session without management, prior to two regularly scheduled Board meetings. Mr. Armstrong was presiding Director
for all executive sessions until his retirement on May 26, 2016. Mr. Foutch now serves as presiding Director for all executive sessions.
Transactions with Related Persons, Promoters and Certain Control Persons
The Company has adopted written Related Person Transaction Policies and Procedures. The Audit Committee is responsible for applying such
policies and procedures. The Audit Committee reviews all transactions, arrangements, or relationships in which the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal
year, the Company is a participant, and any related person has or will have a direct or indirect material interest. In general, a related person is any Company executive officer, Director, or nominee
for election as a Director, any greater than 5 percent beneficial owner of our common stock, and immediate family members of any of the foregoing.
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The
Audit Committee applies the applicable policies and procedures by reviewing the material facts of all interested transactions that require the Audit Committee's approval and either
approves, ratifies or disapproves of the entry into the interested transaction, subject to the exceptions described below. Any member of the Audit Committee who is a related person with respect to a
transaction under review may not vote with respect to the approval or ratification of the transaction. In determining whether to approve or ratify an interested transaction, the Audit Committee takes
into account, among other factors it deems appropriate, the nature of the related person's interest in the interested transaction, the material terms of the interested transaction including whether
the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, the materiality of the related person's
direct or indirect interest in the interested transaction, the materiality of the interested transaction to us, the impact of the interested transaction on the related person's independence (as
defined in our Corporate Governance Guidelines and the New York Stock Exchange listing standards), and the actual or apparent conflict of interest of the related person participating in the
transaction (as contemplated under our Code of Business Conduct and Ethics). The following transactions are deemed to be pre-approved under the applicable policies and procedures: (i) Director
and executive officer compensation otherwise required to be disclosed in our proxy statement, (ii) transactions where all of our stockholders receive proportional benefits, (iii) certain
banking related services, and (iv) transactions available to our employees generally. There are no related person transactions required to be reported in this proxy statement.
Compensation Committee Interlocks and Insider Participation
During fiscal 2016, the members of our Human Resources Committee were Ms. Marshall and Messrs. Petrie and Zeglis. William L.
Armstrong was also a member of the Human Resources Committee during fiscal 2016 until his retirement on May 26, 2016. None of the Committee members has ever been an officer or employee of the
Company or any of our subsidiaries and none has an interlocking relationship requiring disclosure under applicable SEC rules. Additionally, none of the Committee members had any relationship requiring
disclosure by the Company under the SEC's rules requiring disclosure of certain relationships and related-party transactions.
Communication with the Board
The Board has established several means for employees, stockholders, and other interested persons to communicate their concerns to the Board. If
the concern relates to our financial statements, accounting practices or internal controls, the concern may be submitted in writing to the Chairperson of the Audit Committee in care of our Corporate
Secretary at our headquarters address. If the concern relates to our governance practices, business ethics, or corporate conduct, the concern may be submitted in writing to the Chairperson of the
Nominating and Corporate Governance Committee in care of our Corporate Secretary at our headquarters address. If the concern is intended for the presiding Director or the non-management or independent
Directors as a group, the concern may be submitted in writing to such presiding Director or groups in care of our Corporate Secretary at our headquarters address. If the employee, stockholder, or
other interested person is unsure as to which category his or her concern relates, he or she may submit it in writing to the Board or any one of the Directors in care of our Corporate Secretary at our
headquarters address. Our headquarters address is 1437 South Boulder Avenue, Tulsa, Oklahoma 74119.
Each
communication intended for any management or non-management or independent Director(s) or for the entire Board and received by the Corporate Secretary which is related to our
operations will be promptly forwarded to the specified party.
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The Board's Role in Risk Management
The Audit Committee reviews and discusses with management the Company's processes and policies with respect to risk assessment and risk
management, including the Company's enterprise risk management program. In addition, the Company's risk oversight process involves the Board receiving information from management on a variety of
matters, including operations, legal, regulatory, finance and strategy, as well as information regarding any material risks associated with each matter. The full Board (or the appropriate Board
committee, if the Board committee is responsible for the oversight of the matter) receives this information through updates from the appropriate members of management to enable it to understand and
monitor the Company's risk management practices. When a Board committee receives an update, the chairperson of the relevant Board committee reports on the discussion to the full Board during the Board
committee reports portion of the next Board meeting. This enables the Board and the Board committees to coordinate the risk oversight role.
Compensation Risk Assessment
Management has undertaken a review of our compensation programs and practices applicable to all employees, including executive officers, in
order to assess the risks presented by such programs and practices. Management analyzed the likelihood and magnitude of potential risks, focusing on program elements that may create risk, including
pay mix and amount, performance metrics and goals, the balance between annual and long-term incentives, the terms of equity and bonus awards, and change-in-control arrangements. The review also took
into account mitigating features associated with our compensation programs and practices which include elements such as capped payouts levels for both annual bonuses and equity grants under the
Company's stock plan, the Human Resources Committee's authority to exercise negative discretion over bonus payouts, stock ownership guidelines aligning the interests of executive officers with
stockholders, claw-back provisions contained in stock plan award and other agreements, the use of multiple performance measures, and multi-year vesting schedules for equity awards.
The
findings of the risk assessment are discussed with the Human Resources Committee and the full Board. Based on the assessment, we have determined that our compensation programs and
practices applicable to all employees, including executive officers, are aligned with the interests of stockholders, appropriately reward pay for performance, and are not reasonably likely to have a
material adverse effect on the Company.
19
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Summary
Over the course of the last two and a half years our industry experienced a severe decline in oil prices. Oil prices exceeded $100 per barrel in
July of 2014 and dropped to below $30 per barrel in January and February of 2016. This overall decline in prices caused the industry active rig count in the United States to fall to levels below those
experienced during the recession in 2009. In the second half of fiscal 2016 oil prices rebounded modestly from observed lows but generally remained below $50 per barrel. As a result, the United States
active rig count began to slowly increase again in 2016 and we similarly experienced an increase in demand and activity beginning in May of 2016. Nevertheless, at the close of fiscal 2016, the United
States active rig count remained below the number of active rigs at the bottom of the 2009 down cycle and dayrate pricing and average rig margins remained depressed.
As
a result of these difficult market conditions, we reported a net loss of $56 million ($0.54 per diluted share) from operating revenues of $1.6 billion for fiscal 2016,
our first annual loss in over 50 years. Nevertheless, during fiscal 2016, our strong balance sheet and strong liquidity position allowed us to
pay dividends of approximately $2.76 per share of common stock. In addition, our total stockholder return for fiscal 2016 ranked in the 92
nd
percentile relative to our peers
within our Compensation Peer Group (defined and discussed below). Our three year and five year total stockholder returns each ranked in the 99
th
percentile.
For
fiscal 2015, we did not pay bonuses in the midst of the industry downturn despite reporting net income of $422 million. No bonuses were paid because we did not achieve the
threshold level of performance with respect to our corporate performance criteria. However, for fiscal 2016, we did pay our CEO and other current named executive officers partial bonuses. The bonuses
paid were significantly below target level bonuses because we only achieved the threshold level of performance with respect to one of our three fiscal 2016 corporate performance criteria (discussed
below under "2016 Executive Compensation Components Bonus"). The bonuses paid are reported in both the "Bonus" and "Non-Equity Incentive Plan Compensation" columns of the Summary
Compensation Table on page 32.
In
light of prevailing industry conditions and other considerations, our CEO and other named executive officers did not receive base salary adjustments for calendar 2016. In fiscal 2016,
our CEO and other named executive officers were awarded non-qualified stock options and restricted stock as shown in the Grants of Plan-Based Awards in Fiscal 2016 table on page 34.
Compensation Process, Philosophy and Objectives
The Human Resources Committee (the "Committee") has the responsibility for establishing, implementing and monitoring our executive compensation
program. All compensation decisions relating to our CEO, Chief Financial Officer and the other executive officers identified in the Summary Compensation Table ("named executive officers") are made by
the Committee. For purposes of deciding upon named executive officer compensation, the Committee generally meets in November or December following the end of each fiscal year to consider bonus
compensation for the completed fiscal year and salary adjustments and equity-based compensation awards. During this meeting, the Committee also considers executive bonus plan performance objectives
for the next fiscal year and recommends same for approval by the Board. Generally, the types of compensation and benefits paid 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 and there are no material individual differences in compensation policies and decisions for these executives.
The
objectives of our executive compensation program are to compensate executives in a manner that advances the interests of the stockholders while ensuring that we are able to attract,
retain and
20
reward
qualified executives. To that end, we have designed our executive compensation program to reward the achievement of short- and long-term corporate goals that enhance stockholder value. The
Committee monitors both performance and compensation to ensure that we maintain our ability to attract, retain and reward qualified executives and that compensation paid to our executives remains
competitive relative to compensation paid to executives of competitor companies. Our compensation elements consist of:
-
-
Base salary;
-
-
Annual bonus;
-
-
Long-term equity incentive compensation;
-
-
Retirement benefits; and
-
-
Other benefits.
We
believe the Company should have the ability to recover compensation paid to executive officers and key employees under certain circumstances. 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
paid had the financial results been properly reported. This policy applies to all bonuses paid after September 30, 2008, which coincide with the fiscal years that are subject to the
restatement; and
-
-
If the Committee reasonably believes that a participant under our 2005, 2010, and 2016 long-term incentive plans ("Plans") has committed
certain acts of misconduct, including fraud, embezzlement, or deliberate disregard of our rules or policies, that may reasonably be expected to result in damage to us, the Committee may cancel all or
part of any outstanding award under the Plans whether or not vested or deferred. Additionally, if the misconduct occurs during a fiscal year in which there was also an exercise or receipt of an award
under the Plans, the Committee may recoup any value received from such award.
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. He 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, typically provides research, market data, and survey information each year
regarding executive compensation. At the
21
Committee's
request, Pay Governance advises the Committee on all principal aspects of executive compensation including the competitiveness of program design and award values. Pay Governance ordinarily
provides the Committee, on an annual basis, with a 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 peer group proxy and survey data;
-
-
Total shareholder return comparison between the Company and its peer group; and
-
-
Consultant recommendations.
The
Committee generally reviews the compensation of the named executive officers in late November or early December following the end of a particular fiscal year. In fiscal 2016 Pay
Governance attended two meetings and produced reports that were considered in all three 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 a compensation increase for non-employee directors. The executive officers do not play a role in determining or recommending the amount or form of director compensation.
Pay
Governance reports directly to the Committee although they 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.
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.
Effect of Stockholder Say-on-Pay Vote on Executive Compensation Decisions
The Committee has reviewed the voting results from the advisory vote on executive compensation (commonly known as a say-on-pay proposal)
conducted at our 2016 annual meeting of stockholders. At
22
this
meeting, approximately 97% 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. The
Committee determined that, given the very high level of support, no changes to our executive compensation policies and decisions were necessary based on the voting results from our 2016 annual meeting
of stockholders.
Our
stockholders vote on a say-on-pay proposal each year. In the event there is any significant vote against the compensation of our named executive officers as disclosed in the proxy
statement, the Committee will consider the concerns of the stockholders in future executive compensation decisions.
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. The Compensation Peer Group disclosed in our 2016 proxy statement was as follows:
|
|
|
|
|
Diamond Offshore Drilling,
Inc.
|
|
Noble
Corporation
|
|
Cameron International
Corporation
|
|
Nabors
Industries Ltd.
|
|
Rowan Companies,
Inc.
|
|
ENSCO
International Inc.
|
|
Transocean Ltd.
|
|
Patterson-UTI Energy,
Inc.
|
|
Oceaneering
International
|
|
Precision Drilling
Corp.
|
|
FMC Technologies,
Inc.
|
|
Superior Energy
Services
|
The
total stockholder return percentiles discussed above under the section captioned "Summary" were calculated based on the above Compensation Peer Group data (excluding Cameron
International Corporation which merged with another entity in 2016).
During
fiscal 2016, Pay Governance conducted an independent review of our Compensation Peer Group and recommended the deletion and addition of certain companies. The Committee gave
consideration to the report of Pay Governance and decided to revise the Compensation Peer Group so that market references better reflect comparable companies viewed as competitors for business and
talent and who have similar revenue and market capitalization profiles. The companies included in our new Compensation Peer Group for fiscal 2017 are as follows:
|
|
|
|
|
Diamond Offshore Drilling,
Inc.
|
|
Noble
Corporation
|
|
Baker Hughes
Incorporated
|
|
Nabors
Industries Ltd.
|
|
Rowan
Companies plc
|
|
ENSCO plc
|
|
Transocean Ltd.
|
|
Patterson-UTI Energy,
Inc.
|
|
Oceaneering International,
Inc.
|
|
Precision Drilling
Corp.
|
|
Weatherford
International plc
|
|
Superior Energy Services,
Inc.
|
|
National Oilwell Varco,
Inc.
|
|
|
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;
-
-
Frost Oilfield Manufacturing & Services Industry Executive Compensation Survey;
-
-
Pearl Meyer & Partners Drilling Management Survey; and
23
-
-
Towers Watson Oilfield Services 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. 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 the current median of peer compensation.
Similarly, the percentile ranking for total direct compensation (discussed below) could generally be overstated as well because such rankings are derived from dated peer compensation data.
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.
The
Committee has generally awarded a mix of 70% stock options and 30% time-based restricted stock which the Committee believes has the effect of aligning the interests of executives
with stockholders. The Committee continued to use the 70/30 mix with respect to equity awards made in fiscal 2016. However, for equity awards granted in December of 2016 (i.e., in fiscal 2017),
the Committee modified the award structure by moving to a 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, the Committee has generally limited the value of annual equity awards to a range of 270% to 440% of the CEO's base salary and 200% to 275% of the base salary
of the other named executive officers. To determine the actual number of stock option shares awarded to a named executive officer, the dollar value of the award is divided by the applicable
Black-Scholes value. In determining the Black-Scholes value, the Committee uses an average price for our common stock over a 10-day trading period ending on the Friday before the week that stock
option awards are considered by the Committee. Exceptions to our long-term incentive compensation policy have occurred and may occur in the future as dictated by retention considerations and market
factors.
2016 Executive Compensation Components
The principal components of compensation for named executive officers for the fiscal year ended September 30, 2016, are described below.
Base
Salary
We
provide named executive officers and other employees with a base salary to compensate them for services rendered during the fiscal year. Base salaries of named
executive officers
are targeted to generally approximate the median level of base salaries of similarly situated executives of companies included in the Compensation Peer Group. If base salaries of our named executive
officers consistently fall below such median level, then the Committee will consider market adjustments to base salaries. Salary levels are typically considered annually as part of our review process
as well as upon a promotion. Although named executive officers generally receive the same percentage salary increase applicable to office-based employees, the named executive officers may receive
greater increases as a
24
result
of market adjustments, changes in duties or retention considerations. Due to market conditions, the Committee approved the CEO's recommendation to freeze the salaries for the named executive
officers for calendar 2016.
Bonus
The
annual bonus plan for executive officers ("Bonus Plan") is a cash incentive plan for calculation of 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 bonus levels.
The
Bonus Plan is structured to be funded at an amount equal to 1% of our earnings before interest, taxes, depreciation, and amortization ("EBITDA"). This funding pool 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 executive
officer under the Bonus Plan. In addition, each named executive officer is assigned a threshold, target and reach bonus award opportunity expressed as a percentage of base salary. These bonus award
opportunities are as follows and do not include the potential bonus adjustment described below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Reach
|
|
Chief Executive Officer
|
|
|
40
|
%
|
|
100
|
%
|
|
130
|
%
|
Other Named Executive Officers
|
|
|
25
|
%
|
|
75
|
%
|
|
100
|
%
|
An
executive officer's bonus opportunity is based upon three weighted corporate performance criteria. These performance criteria and their weightings are: earnings per share (35%);
return on invested capital (35%); and EBITDA (30%). At the beginning of each fiscal year, the Committee establishes (and recommends for approval by the full Board) the Bonus Plan funding structure and
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. Once the target objective is established, the threshold objective is generally adjusted 30% below and the reach objective is generally adjusted 30%
above the target objective. However, on occasion we adjust the threshold and reach objectives by more than 30% when in the Committee's judgment a wider spread is more meaningful, appropriate and/or
fair to our stockholders and named executive officers. Actual fiscal year financial results are compared to plan objectives in order to determine the amount of any executive officer bonus. If actual
financial results fall between the threshold and target or the target and reach objectives, then bonuses are proportionately increased as a result of the threshold or target objective being exceeded.
Notwithstanding the other provisions of the Bonus Plan, the Committee has the right to reduce or eliminate any bonus due a named executive officer based upon the Committee's determination 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. No adjustments were made to the corporate performance criteria during fiscal 2016.
The
approved corporate performance criteria for fiscal 2016 were:
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Reach
|
|
Earnings Per Share
|
|
$
|
0.01
|
|
$
|
0.08
|
|
$
|
0.16
|
|
Return on Invested Capital
|
|
|
0.1
|
%
|
|
0.4
|
%
|
|
0.7
|
%
|
EBITDA
|
|
$
|
419,580,000
|
|
$
|
599,400,000
|
|
$
|
779,220,000
|
|
25
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 and dayrates, our stockholder returns
relative to both the returns of our U.S. land drilling peers within the Compensation Peer Group and all companies within our peer group, and our performance with respect to implementation of certain
Company strategic 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 by up to 100% is primarily dependent upon the Committee's judgment as to the named
executive officer's success in positively affecting the strategic objectives.
Within
this framework, the Committee determined that the fiscal 2016 threshold objectives of earnings per share and return on invested capital had not been met. However, the Committee
determined that the EBITDA threshold objective had been exceeded in fiscal 2016. In light of the Company's performance with respect to our three corporate performance criteria, the Committee
determined that, after a proportionate reduction for achieving threshold performance with respect to only one of our three metrics, our bonus award structure would generate bonuses of 28% of base
salary for our CEO and 20.5% for our other named executive officers, which are below the threshold bonus percentages noted above. However, the Committee also determined that our CEO and other current
named executive officers had achieved favorable results with respect to the strategic objectives discussed above. After consideration of same, the Committee determined that the annual bonus for the
CEO and the other current named executive officers, as a group, be increased by 100%. After application of the 100% bonus modifier our CEO's bonus was set at 56% of base salary, significantly below
our 100% target bonus, and the other current named executive officers bonuses were set at 41% of base salary, well below our 75% target bonus. Please refer to the "Bonus" and "Non-Equity Incentive
Plan Compensation" columns of the Summary Compensation Table on page 32 for actual bonuses paid.
Mr. Flaherty
resigned on August 19, 2016. Therefore, Mr. Flaherty was not eligible for a bonus for the completed 2016 fiscal year.
Long-Term
Equity Incentive Compensation
The
Helmerich & Payne, Inc. 2016 Omnibus Incentive Plan (the "2016 Plan") was approved by our stockholders at the 2016 Annual Meeting of Stockholders. The
2016 Plan governs all stock-based awards granted on or after March 2, 2016, and the 2005 and the 2010 Long-Term Incentive Plans govern stock-based awards granted under such plans prior to
March 2, 2016. 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 180 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 market data, and vary among participants based on their positions.
Under
the 2016 Plan, the Committee may grant nonqualified stock options, 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 such Plan. To date, the Committee has only 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 only approves annual stock-based awards at its meeting in late November or early December 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 appointed
Directors may be considered
26
for
stock-based awards at the time they join the Company. Exceptions to this policy may occur as dictated by retention considerations or market factors.
The
Committee believes that stock options align the interests of executives with stockholders in that stock options only have value to the extent the price of our stock
on the date of exercise exceeds the exercise price on the grant date.
The
grant date for all stock options is the date the Committee approves the grant. The Committee does not make equity grants in anticipation of the release of material non-public
information and does not time the release of such information based on equity award grant dates. The Committee has never approved a backdated stock option grant.
The
exercise price for all option grants, as provided by the 2016 Plan, is the closing price on the date of grant. Such Plan also prohibits repricing of stock option awards.
The
majority of options granted by the Committee vest at a rate of 25% per year over the first four years of the ten-year option term. Prior to the exercise of an option, the holder has
no rights as a stockholder with respect to the shares subject to the option.
The
number and grant date fair value of non-qualified stock options awarded to the named executive officers in fiscal 2016 are shown in the Grants of Plan-Based Awards in Fiscal 2016
table on page 34. In making these awards, the Committee applied the methodology discussed above and considered individual and corporate performance and the value of equity awards made by
competitors.
We
believe that awards of restricted stock assist in retention of executives and other key employees. Since 2009, the Committee has annually awarded time-vested
restricted stock to the named executive officers and other key employees. Generally, all restricted stock awards fully vest
over a range of three to five years from the original 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.
The
number of shares of restricted stock awarded to the named executive officers in fiscal 2016 are shown in the Grants of Plan-Based Awards in Fiscal 2016 table on page 34. In
making these awards, the Committee applied the methodology discussed above and considered the retentive 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.
Total
Direct Compensation for 2016
With
the exception of Ms. Hair and Messrs. Stauder, Bell and Flaherty, the following reflects the percentile ranking of how fiscal 2016 total direct
compensation (i.e., base salary, bonus and equity awards) for the named executive officers compares to the total direct compensation of executives of the Compensation Peer Group:
|
|
|
John W. Lindsay
|
|
6
th
percentile
|
Juan Pablo Tardio
|
|
8
th
percentile
|
With
regard to Ms. Hair and Messrs. Stauder, Bell and Flaherty, there was insufficient peer group data to provide a meaningful percentile ranking.
27
Retirement
Pension
Plans
Prior
to October 1, 2003, most full-time employees, including certain named executive officers, participated in our qualified Employees Retirement Plan ("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 2016 year-end present value of accumulated benefits for each of the named executive officers is shown in the Pension Benefits for Fiscal 2016 table on page 39.
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 ("Savings Plan") is a tax-qualified savings plan pursuant to which most employees paid in U.S. dollars, including the named executive officers,
are able to contribute to the Savings Plan on a before tax basis the lesser of up to 100% of their annual compensation or the dollar limit prescribed annually by the Internal Revenue Service ("IRS").
We match 100% of the first 5% of cash compensation that is contributed to the Savings Plan subject to IRS annual compensation limits ($265,000 for 2016). All employee contributions are immediately
vested and matching contributions are subject to a six-year graded vesting schedule.
In
addition to the Savings Plan, the 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 2016 table on page 40 contains additional Supplemental Savings Plan information for the named executive officers.
Other Benefits
The named executive officers are provided with other benefits, including perquisites, that the Company and the Committee believe are reasonable.
The Committee annually reviews the levels of these benefits provided to the named executive officers. The compensation associated with these benefits is included in the "All Other Compensation" column
of the Summary Compensation Table on page 32 and a brief explanation of these benefits is shown in footnote 8 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 the named executive officers and other employees for business purposes. Since many of our operations and
offices are in
remote locations, our aircraft provide a more efficient use of employee time and improved flight times than are available
28
commercially.
Our aircraft also provide a more secure traveling environment where sensitive business issues may be discussed.
The
Chairman and CEO positions are each allocated 10 hours personal use of our aircraft annually without reimbursement to us. The time attributable to attendance at board meetings
of publicly held companies will not be counted against the 10 hour limitation. Any personal use in excess of this allotment will only be permitted under extraordinary circumstances. With the
approval of the CEO, the other named executive officers are permitted personal use of our aircraft, without reimbursement to us, only under extraordinary circumstances.
For
tax purposes, imputed income is assessed to each named executive officer for his or his guest's personal travel based upon the Standard Industrial Fare Level of such flights during
the calendar year.
Executive Officer and Director Stock Ownership Guidelines; Prohibited Transactions
Because the Board believes in linking the interests of management and stockholders, the Board has adopted stock ownership guidelines for the
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 requiring ownership of shares having a value equal to two times
annual compensation.
We
prohibit our directors, officers and other employees from engaging in certain transactions involving Company stock. Transactions that are prohibited include hedging transactions and
the pledging of Company stock as collateral.
Deductibility of Executive Compensation
In connection with making decisions on executive compensation, the Committee takes into consideration the provisions of Section 162(m) of
the Internal Revenue Code, which limits 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. It is the Company's policy to maximize the effectiveness of its compensation programs while also taking into consideration the requirements of Section 162(m). Accordingly,
the Company intends to maintain the flexibility to implement executive compensation programs that it deems to be in the best interests of the Company and its stockholders, and it reserves the
authority to award nondeductible compensation as it deems appropriate.
Potential Payments Upon Change-in-Control or Termination
Change-in-Control
We
have entered into change-in-control agreements with the 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 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
29
occurrence
of a substantial downturn, or if any of the named executive officers terminates his 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 (2
1
/
2
) times the base salary and annual bonus of the CEO and two (2) times
the base salary and 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 41.
Our
2005 and 2010 long-term equity compensation plans 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 Omnibus Incentive Plan contains a "double" trigger provision whereby stock options and restricted stock 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 41.
Other
Termination Payments
The
Supplemental Pension Plan and Supplemental Savings Plan described on page 28 and quantified in the Pension Benefits for Fiscal 2016 and Nonqualified Deferred
Compensation for Fiscal 2016 tables on pages 39 and 40 provide for potential payments to named executive officers upon termination of employment for other than change-in-control.
30
Compensation Committee Report
The Human Resources Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis ("CD&A") required by
Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Human Resources Committee recommended to the Board that the CD&A be included in this proxy
statement. This report is provided by the following Directors, who comprise the Human Resources Committee:
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John D. Zeglis, Chairman
Paula Marshall
Thomas A. Petrie
|
31
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, 2016, 2015 and 2014.
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Name and Principal
Position
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Year
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Salary
($) (2)
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Bonus
($) (3)
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Stock
Awards
($) (4)
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Option
Awards
($) (5)
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Non-Equity
Incentive
Plan
Compensation
($) (6)
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Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) (7)
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All Other
Compensation
($) (8)
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Total
($)
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John W. Lindsay,
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2016
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840,865
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229,750
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1,019,375
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2,427,200
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229,750
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150,461
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194,681
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5,092,082
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President and Chief
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2015
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832,115
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929,205
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1,835,680
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11,743
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97,952
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3,706,695
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Executive Officer
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2014
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769,949
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439,971
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836,535
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1,840,000
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879,941
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32,495
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114,040
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4,912,931
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Juan Pablo Tardio,
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2016
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445,000
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92,146
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302,900
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734,720
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92,146
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5,622
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64,532
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1,737,066
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Vice President and
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2015
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441,250
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282,203
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565,455
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1,683
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30,635
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1,321,226
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Chief Financial
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2014
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425,000
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254,307
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278,845
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647,680
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363,296
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4,051
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52,962
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2,026,141
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Officer
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Robert L. Stauder,
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2016
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431,288
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87,622
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291,250
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708,480
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87,622
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34,025
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89,423
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1,729,710
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Senior Vice President
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2015
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423,000
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440,512
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364,678
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9,648
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27,735
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1,265,573
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and Chief Engineer of Drilling Subsidiary
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John R. Bell,
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2016
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325,000
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|
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67,298
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233,000
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537,920
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67,298
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8,494
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48,076
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1,287,086
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Vice President,
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2015
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316,750
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189,283
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368,775
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2,905
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21,520
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899,233
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Corporate Services
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Cara M. Hair,
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2016
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275,000
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56,944
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174,750
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406,720
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56,944
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30,251
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1,000,609
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Vice President and General Counsel
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Jeffrey L. Flaherty,
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2016
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394,096
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|
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291,250
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|
708,480
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|
|
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20,500
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56,202
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1,470,528
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Former Senior Vice
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2015
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|
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410,873
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399,214
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|
|
331,898
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5,746
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13,280
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1,161,011
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President of Operations of Drilling Subsidiary (1)
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-
(1)
-
Mr. Flaherty
resigned from his position as Senior Vice President of Operations of Helmerich & Payne International Drilling Co. on
August 19, 2016. The Summary Compensation Table for fiscal 2016 reflects Mr. Flaherty's compensation for the period October 1, 2015 to August 19, 2016.
-
(2)
-
The
amounts shown in this column are salaries earned during fiscal 2016, 2015 and 2014. 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.
-
(3)
-
The
amounts shown in this column reflect the amounts paid pursuant to our Bonus Plan based on the Human Resources Committee's assessment of our rig utilization and
dayrates, our stockholder returns relative to both the returns of our U.S. land drilling peers within the Compensation Peer Group and all companies within our peer group, and our performance with
respect to certain 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 succeeding
fiscal year. Also, the amounts are over and above the amounts earned by meeting the performance objectives under the Bonus Plan.
-
(4)
-
The
amounts included in this column represent the aggregate grant date fair value of stock awards determined pursuant to FASB 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 6, "Stock-Based Compensation," to our audited financial statements for the fiscal year ended September 30, 2016, included in the 2016 Annual
Report on Form 10-K filed with the SEC on November 23, 2016.
-
(5)
-
The
amounts included in this column represent the aggregate grant date fair value of option awards determined pursuant to FASB 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 6, "Stock-Based Compensation," to our audited financial statements for the fiscal
32
year
ended September 30, 2016, included in the 2016 Annual Report on Form 10-K filed with the SEC on November 23, 2016.
-
(6)
-
The
amounts included in this column are payments under our Bonus 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 2016 are described in the CD&A beginning on page 25.
-
(7)
-
The
amounts 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 2016 for Mr. Lindsay, who is retirement eligible, is based on an immediate annuity (with an assumed
retirement date of September 30, 2016), whereas the present value calculation for Messrs. Tardio, Stauder, Bell and Flaherty, who are not retirement eligible, is based on a deferred
annuity (with an assumed retirement age of 61). Ms. Hair is not a participant under either the Pension Plan or the Supplemental Pension Plan.
-
(8)
-
"All
other compensation" for fiscal 2016 includes the following:
-
-
Our matching contribution to our 401(k)/Thrift Plan on behalf of each named executive officer as
follows: John W. Lindsay $13,250; Juan Pablo Tardio $13,250; Robert L. Stauder $13,250; John R. Bell $13,250; Cara
M. Hair $13,433; and Jeffrey L. Flaherty $13,250.
-
-
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 $46,024; Juan Pablo Tardio $15,911; Robert L.
Stauder $14,886; John R. Bell $4,197; Cara M. Hair $4,725; and Jeffrey L. Flaherty $0.
-
-
Dividends on restricted stock as follows: John W. Lindsay $101,195; Juan Pablo
Tardio $34,354; Robert L. Stauder $58,499; John R. Bell $30,599; Cara M. Hair $12,063; and Jeffrey L.
Flaherty $42,922.
-
-
For John W. Lindsay, the amount reported includes $27,733 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 pages 28 and 29 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 $25,000 or 10% of the total amount of perquisites and personal benefits for each named executive officer.
33
GRANTS OF PLAN-BASED AWARDS IN FISCAL 2016
As described on pages 25 through 27 of the CD&A, we provide incentive award opportunities to executives, designed to reward both short-term and
long-term business performance, and create a close alignment between incentive compensation and stockholders' interests. The following table provides information on non-equity incentive plan awards
and restricted stock and stock options granted in fiscal 2016 to each of our named executive officers. Although the grant date fair value is shown in the table for these stock and option awards, there
can be no assurance that these values will actually be realized during the terms of these grants.
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All Other
Stock
Awards:
Number
of
Shares of
Stock or
Units
(#) (2)
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All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) (3)
|
|
|
|
Grant
Date
Fair
Value of
Stock and
Option
Awards
($) (5)
|
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|
|
|
Estimated Possible
Payouts Under Non-Equity
Incentive Plan Awards (1)
|
|
Estimated Future
Payouts Under Equity
Incentive Plan Awards
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh) (4)
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Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
John W. Lindsay
|
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|
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330,000
|
|
|
825,000
|
|
|
1,072,500
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11/30/2015
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|
|
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|
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|
|
185,000
|
|
|
58.25
|
|
|
2,427,200
|
|
|
|
|
11/30/2015
|
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|
|
|
|
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17,500
|
|
|
|
|
|
|
|
|
1,019,375
|
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Juan Pablo Tardio
|
|
|
|
|
|
111,250
|
|
|
333,750
|
|
|
445,000
|
|
|
|
|
|
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|
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|
11/30/2015
|
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|
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56,000
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|
|
58.25
|
|
|
734,720
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|
11/30/2015
|
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5,200
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|
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|
|
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302,900
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Robert L. Stauder
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105,788
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317,363
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423,150
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11/30/2015
|
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54,000
|
|
|
58.25
|
|
|
708,480
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|
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|
11/30/2015
|
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5,000
|
|
|
|
|
|
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291,250
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John R. Bell
|
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|
81,250
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|
|
243,750
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325,000
|
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11/30/2015
|
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41,000
|
|
|
58.25
|
|
|
537,920
|
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|
|
11/30/2015
|
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4,000
|
|
|
|
|
|
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|
233,000
|
|
Cara M. Hair
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68,750
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|
206,250
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|
275,000
|
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|
11/30/2015
|
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|
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|
|
|
|
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|
31,000
|
|
|
58.25
|
|
|
406,720
|
|
|
|
|
11/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
174,750
|
|
Jeffrey L. Flaherty (6)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,000
|
|
|
58.25
|
|
|
708,480
|
|
|
|
|
11/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
291,250
|
|
-
(1)
-
The
columns show the threshold, target, and maximum potential value of a payout for each named executive officer under our Bonus Plan if certain of our financial
performance objectives were achieved for the October 1, 2015, to September 30, 2016, performance period. The amounts are based on salaries in effect as of January 1, 2016 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 Human Resources 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 25 and 26.
-
(2)
-
The
shares of restricted stock were granted in fiscal 2016 to the named executive officers. The stock vests ratably in four equal annual installments, beginning on
November 30, 2016, one year after the grant date. Dividends are paid on the restricted stock at the same rate applicable to other holders of our common stock.
-
(3)
-
This
column shows the number of stock options granted in fiscal 2016 to the named executive officers. The options vest and become exercisable ratably in four equal
annual installments, beginning on November 30, 2016, one year after the grant date.
-
(4)
-
This
column shows the exercise price for the stock options granted, which was the closing price of our common stock on November 30, 2015.
-
(5)
-
The
fair value shown for stock awards and option awards are accounted for in accordance with FASB ASC Topic 718. This column shows the full grant date fair value of
the restricted stock and stock options under FASB ASC Topic 718 granted to the named executive officers in fiscal 2016. The full grant date fair value is the amount that we would expense in our
financial statements over the award's vesting schedule. For restricted stock, fair value is calculated based on the closing sales prices on November 30, 2015. For stock options, fair value was
calculated using the Black-Scholes value on the grant date of $13.12. In applying the Black-Scholes model, we have made certain valuation assumptions. For additional information on the valuation
assumptions, refer to note 6, "Stock-Based Compensation," to our audited financial statements for the fiscal year ended September 30, 2016, included in the 2016 Annual Report on
Form 10-K filed with the SEC on November 23, 2016. The actual value, if any, the named executive officer will realize on option awards will depend on the excess of the market value of
the common stock over the exercise price on the date the option is exercised. The values reflect the accounting expense and may not reflect the actual value realized by the named executive officer.
-
(6)
-
Mr. Flaherty
resigned on August 19, 2016. Therefore, Mr. Flaherty was not eligible for a payout under the Bonus Plan for the completed 2016
fiscal year.
34
OUTSTANDING EQUITY AWARDS AT FISCAL 2016 YEAR-END
The following table provides information on the current holdings of stock option awards and restricted stock awards by the named executive
officers at September 30, 2016. This table includes exercisable and unexercisable option awards and unvested restricted stock awards, and such awards are reflected in each row below on an
award-by-award basis. The vesting schedule for each grant that has not fully vested is shown following this table. For additional information about the option awards and stock awards, see the
description of such awards in the CD&A on pages 26 and 27.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Grant
Date
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
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
($) (8)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
|
|
John W. Lindsay
|
|
|
12/5/2006
|
|
|
23,000
|
|
|
|
|
|
|
|
26.895
|
|
|
12/5/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2007
|
|
|
50,000
|
|
|
|
|
|
|
|
35.105
|
|
|
12/4/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/2/2008
|
|
|
65,000
|
|
|
|
|
|
|
|
21.065
|
|
|
12/2/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
3,000 (2)
|
|
|
201,900
|
|
|
|
|
|
|
|
|
|
|
12/4/2012
|
|
|
40,875
|
|
13,625 (1)
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
2,250 (4)
|
|
|
151,425
|
|
|
|
|
|
|
|
|
|
|
12/3/2013
|
|
|
31,250
|
|
31,250 (1)
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
5,250 (5)
|
|
|
353,325
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
28,000
|
|
84,000 (1)
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
10,125 (6)
|
|
|
681,413
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
|
|
185,000 (1)
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
17,500 (7)
|
|
|
1,177,750
|
|
|
|
|
|
|
|
Juan Pablo Tardio
|
|
|
12/7/2010
|
|
|
2,500
|
|
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/6/2011
|
|
|
9,000
|
|
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
1,500 (2)
|
|
|
100,950
|
|
|
|
|
|
|
|
|
|
|
12/4/2012
|
|
|
13,000
|
|
6,500 (1)
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
1,063 (4)
|
|
|
71,540
|
|
|
|
|
|
|
|
|
|
|
12/3/2013
|
|
|
11,000
|
|
11,000 (1)
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
1,750 (5)
|
|
|
117,775
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
8,625
|
|
25,875 (1)
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
3,075 (6)
|
|
|
206,948
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
|
|
56,000 (1)
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
5,200 (7)
|
|
|
349,960
|
|
|
|
|
|
|
|
Robert L. Stauder
|
|
|
12/7/2010
|
|
|
1,750
|
|
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/6/2011
|
|
|
5,000
|
|
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
6,000 (3)
|
|
|
403,800
|
|
|
|
|
|
|
|
|
|
|
12/4/2012
|
|
|
8,750
|
|
4,375 (1)
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
1,625 (4)
|
|
|
109,363
|
|
|
|
|
|
|
|
|
|
|
12/3/2013
|
|
|
8,500
|
|
8,500 (1)
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
2,124 (5)
|
|
|
142,945
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
5,563
|
|
16,687 (1)
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
4,800 (6)
|
|
|
323,040
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
|
|
54,000 (1)
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
5,000 (7)
|
|
|
336,500
|
|
|
|
|
|
|
|
John R. Bell
|
|
|
12/4/2007
|
|
|
10,000
|
|
|
|
|
|
|
|
35.105
|
|
|
12/4/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/2/2008
|
|
|
13,000
|
|
|
|
|
|
|
|
21.065
|
|
|
12/2/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
1,250 (3)
|
|
|
84,125
|
|
|
|
|
|
|
|
|
|
|
12/4/2012
|
|
|
7,500
|
|
2,500 (1)
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
1,250 (4)
|
|
|
84,125
|
|
|
|
|
|
|
|
|
|
|
12/3/2013
|
|
|
4,250
|
|
4,250 (1)
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
2,250 (5)
|
|
|
151,425
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
5,625
|
|
16,875 (1)
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
2,062 (6)
|
|
|
138,773
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
|
|
41,000 (1)
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
4,000 (7)
|
|
|
269,200
|
|
|
|
|
|
|
|
Cara M. Hair
|
|
|
12/6/2011
|
|
|
750
|
|
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250 (4)
|
|
|
16,825
|
|
|
|
|
|
|
|
|
|
|
12/3/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500 (5)
|
|
|
33,650
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
1,250
|
|
3,750 (1)
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
1,125 (6)
|
|
|
75,713
|
|
|
|
|
|
|
|
|
|
|
11/30/2015
|
|
|
|
|
31,000 (1)
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
3,000 (7)
|
|
|
201,900
|
|
|
|
|
|
|
|
Jeffrey L. Flaherty
|
|
|
12/3/2013
|
|
|
5,250
|
|
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/2/2014
|
|
|
5,063
|
|
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
remaining, unexercisable options vest as follows:
|
|
|
Grant Date
|
|
Vesting Schedule
|
12/4/2012
|
|
100% on 12/4/2016
|
12/3/2013
|
|
ratably on each of the following dates: 12/3/2016 and 12/3/2017
|
12/2/2014
|
|
ratably on each of the following dates: 12/2/2016, 12/2/2017 and 12/2/2018
|
11/30/2015
|
|
ratably on each of the following dates: 11/30/2016, 11/30/2017, 11/30/2018 and 11/30/2019.
|
-
(2)
-
The
unvested shares of restricted stock vest ratably on 12/6/2016 and 12/6/2017.
-
(3)
-
The
unvested shares of restricted stock vest ratably on 12/6/2016.
-
(4)
-
The
unvested shares of restricted stock vest on 12/4/2016.
-
(5)
-
The
unvested shares of restricted stock vest ratably on 12/3/2016 and 12/3/2017.
35
-
(6)
-
The
unvested shares of restricted stock vest ratably on 12/2/2016, 12/2/2017 and 12/2/2018.
-
(7)
-
The
unvested shares of restricted stock vest ratably on 11/30/2016, 11/30/2017, 11/30/2018 and 11/30/2019.
-
(8)
-
The
aggregate market value is based on the closing market price of our common stock of $67.30 at September 30, 2016.
36
OPTION EXERCISES AND STOCK VESTED IN FISCAL 2016
The following table provides additional information about stock option exercises and shares acquired upon the vesting of stock awards, including
the value realized, during the fiscal year ended September 30, 2016, by the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value
Realized on
Exercise
($)
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
Value
Realized on
Vesting
($) (1)
|
|
John W. Lindsay
|
|
|
34,000
|
|
|
1,377,337
|
|
|
11,500
|
|
|
617,111
|
|
Juan Pablo Tardio
|
|
|
|
|
|
|
|
|
4,588
|
|
|
244,413
|
|
Robert L. Stauder
|
|
|
|
|
|
|
|
|
11,538
|
|
|
602,243
|
|
John R. Bell
|
|
|
9,000
|
|
|
355,064
|
|
|
5,063
|
|
|
268,775
|
|
Cara M. Hair
|
|
|
|
|
|
|
|
|
957
|
|
|
52,287
|
|
Jeffrey L. Flaherty
|
|
|
39,500
|
|
|
707,334
|
|
|
7,263
|
|
|
384,146
|
|
-
(1)
-
The
value realized on vesting is calculated using the closing market price of our common stock on the relevant vesting dates.
37
PENSION BENEFITS FOR FISCAL 2016
The Pension Benefits table below sets forth the fiscal 2016 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.
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 5 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 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) 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 5 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
38
the
present value of the monthly benefits that would have been expected to be paid for the retiree's lifetime no 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 Internal Revenue 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years
Credited
Service
(#)
|
|
Present
Value of
Accumulated
Benefit
($) (1)
|
|
Payments
During
Last
Fiscal Year
($)
|
|
John W. Lindsay
|
|
Pension Plan
|
|
|
30
|
|
|
329,564
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
30
|
|
|
53,301
|
|
|
|
|
Juan Pablo Tardio
|
|
Pension Plan
|
|
|
16
|
|
|
31,185
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
16
|
|
|
|
|
|
|
|
Robert L. Stauder
|
|
Pension Plan
|
|
|
33
|
|
|
206,087
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
33
|
|
|
610
|
|
|
|
|
John R. Bell
|
|
Pension Plan
|
|
|
19
|
|
|
41,361
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
19
|
|
|
|
|
|
|
|
Cara M. Hair (2)
|
|
Pension Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
|
|
|
|
|
|
|
|
Jeffrey L. Flaherty
|
|
Pension Plan
|
|
|
21
|
|
|
123,136
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
21
|
|
|
|
|
|
|
|
-
(1)
-
The
actuarial present value calculation for fiscal 2016 for Mr. Lindsay, who is retirement eligible, is based on an immediate annuity (with an assumed
retirement date of September 30, 2016), whereas the present value calculation for Messrs. Tardio, Stauder, Bell and Flaherty, who are 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 of 2006 - 2016 Applicable Mortality Table and the following tier rates: Segment
1 1.39%; Segment 2 3.27%; and Segment 3 4.18%. The lump-sum assumptions are consistent with those used at
September 30, 2016. The Company's pension and the assumptions are more fully described in the Company's 2016 Annual Report on Form 10-K filed with the SEC on November 23, 2016.
Mr. Lindsay
is currently eligible to receive a reduced early retirement benefit upon termination of employment. Messrs. Tardio, Stauder, Bell and Flaherty would be eligible to receive a
benefit anytime after attaining age 55 upon their termination of employment. Depending on their age at termination, they 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
is not a participant under either the Pension Plan or the Supplemental Pension Plan.
39
NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL 2016
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 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.
The
following Nonqualified Deferred Compensation table summarizes the named executive officers' compensation for fiscal 2016 under our Supplemental Savings Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last FY
($) (1)
|
|
Registrant
Contributions in
Last FY
($) (1)
|
|
Aggregate
Earnings in
Last FY
($) (2)
|
|
Aggregate
Withdrawals /
Distributions
($)
|
|
Aggregate
Balance at
Last FYE
($) (3)
|
|
John W. Lindsay
|
|
|
42,043
|
|
|
46,024
|
|
|
109,484
|
|
|
117,571
|
|
|
1,226,817
|
|
Juan Pablo Tardio
|
|
|
55,625
|
|
|
15,911
|
|
|
29,549
|
|
|
|
|
|
977,857
|
|
Robert L. Stauder
|
|
|
21,564
|
|
|
14,886
|
|
|
73,822
|
|
|
|
|
|
521,830
|
|
John R. Bell
|
|
|
5,688
|
|
|
4,197
|
|
|
6,864
|
|
|
10,194
|
|
|
127,343
|
|
Cara M. Hair
|
|
|
5,500
|
|
|
4,725
|
|
|
975
|
|
|
|
|
|
15,242
|
|
Jeffrey L. Flaherty
|
|
|
|
|
|
|
|
|
73,639
|
|
|
|
|
|
653,889
|
|
-
(1)
-
The
amounts reflected as Registrant Contributions above are included in the Summary Compensation Table under "All Other Compensation." Executive Contributions
reflected above are made monthly during the fiscal year and are based on the employee's elected deferral percentage rate. 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 2014 and 2015: John W. Lindsay $286,341; Juan Pablo Tardio $576,048; Robert L. Stauder $61,605; John R.
Bell $30,443; Cara M. Hair $0; and Jeffrey L. Flaherty $0.
40
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, 2016 termination date and using the closing price ($67.30) of our common stock on September 30, 2016. Any payments due under the agreements
are to be paid in a lump sum within 30 days after an executive's employment termination date. In addition, our named executive officers are also entitled to the payments reflected in the
columns captioned "Stock Options" and "Restricted Stock" in the event of a change-in-control without termination of employment under the applicable long-term equity incentive plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Salary
and
Bonus
($) (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
|
|
|
4,125,000
|
|
|
825,000
|
|
|
30,143
|
|
|
266,425
|
|
|
5,000
|
|
|
1,853,010
|
|
|
2,565,813
|
|
|
1,280,118
|
|
|
10,950,509
|
|
Juan Pablo Tardio
|
|
|
1,557,500
|
|
|
333,750
|
|
|
20,056
|
|
|
139,279
|
|
|
5,000
|
|
|
592,080
|
|
|
847,172
|
|
|
977,857
|
|
|
4,472,694
|
|
Robert L. Stauder
|
|
|
1,481,025
|
|
|
317,363
|
|
|
25,225
|
|
|
141,230
|
|
|
5,000
|
|
|
546,100
|
|
|
1,315,648
|
|
|
522,440
|
|
|
4,354,031
|
|
John R. Bell
|
|
|
1,137,500
|
|
|
243,750
|
|
|
6,718
|
|
|
90,990
|
|
|
5,000
|
|
|
403,850
|
|
|
727,648
|
|
|
127,343
|
|
|
2,742,799
|
|
Cara M. Hair
|
|
|
962,500
|
|
|
206,250
|
|
|
8,792
|
|
|
66,995
|
|
|
5,000
|
|
|
280,550
|
|
|
328,088
|
|
|
15,242
|
|
|
1,873,417
|
|
Jeffrey L. Flaherty (9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
653,889
|
|
|
653,889
|
|
-
(1)
-
For
Mr. Lindsay, this amount represents a lump sum payment equal to two and one-half (2
1
/
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, 2016. 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, 2016.
-
(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 6 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 $67.30, the market price of our common stock at September 30, 2016, and the exercise price of each option that vested.
-
(7)
-
This
column represents the value of unvested restricted stock awards that would vest. The value on September 30, 2016, is shown at $67.30 per share, the
closing price of our common stock on that date.
-
(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. Tardio 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.
-
(9)
-
Mr. Flaherty
resigned on August 19, 2016. Consequently, the first seven columns of this table are not applicable to Mr. Flaherty because of the
assumed employment termination date of September 30, 2016 and his change of control agreement is no longer applicable.
41
DIRECTOR COMPENSATION IN FISCAL 2016
Mr. Helmerich, as Chairman of the Board, receives a quarterly retainer of $30,000. Each non-employee Director receives a quarterly
retainer of $20,000. The Audit Committee chair receives a quarterly retainer of $3,750. The Human Resources Committee and Nominating and Corporate Governance Committee chairs each receive a quarterly
retainer of $2,500. In addition, each member of the Audit Committee receives a quarterly retainer of $1,250. In addition to quarterly retainers, each non-employee Director (other than the Chairman of
the Board) received in fiscal 2016 an option to purchase shares of our common stock pursuant to the Helmerich & Payne, Inc. 2010 Long-Term Incentive Plan which had a value of
approximately $155,000 on the date of grant. The Chairman of the Board received in fiscal 2016 options to purchase shares of our common stock with an approximate value of $232,500. All non-employee
Directors are reimbursed for expenses incurred in connection with the attending of Board or Committee meetings. Employee Directors do not receive compensation for serving on the Board.
The
Directors may participate in our Director Deferred Compensation Plan ("Plan"). Each Director participating in the Plan may defer into a separate account maintained by us, all or a
portion of such Director's cash compensation paid by us for services as a Director. A Director may select between two deemed investment alternatives, being an interest investment alternative and a
stock unit investment alternative. The interest investment alternative provides for the payment of interest on deferred amounts in the Director's account at a rate equal to prime plus one percent.
Under the stock unit investment alternative, we credit the Director's account with a number of stock units determined by dividing the Director's deferred compensation amount by the fair market value
of a share of our common stock on the compensation deferral date. The Director's account is also credited with any dividends that would have been paid by us had the Director held actual shares of our
common stock. The account balance attributable to the stock unit investment alternative may increase or decrease depending upon fluctuations in the value of our common stock and the distribution of
dividends. The stock units credited to a Director's account are used solely as a device for the determination of the amount of cash payment to be distributed to the Director under the Plan. No
Director is entitled to a distribution of actual shares of our common stock or to any other stockholder rights with respect to the stock units credited under the Plan. Except for emergency withdrawals
and a change-in-control event (as defined in the Plan), the deferred cash amounts in a Director's account are not paid until he or she ceases to be a Director. The Plan does not create a trust and the
participating Directors would be general unsecured creditors of the Company. Since employee Directors do not receive compensation for serving on the Board, only non-employee Directors are able to
participate in the Plan. The Plan is interpreted and administered by the Human Resources Committee of the Board.
42
DIRECTOR COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned or
Paid in
Cash
($) (5)
|
|
Stock
Awards
($)
|
|
Option
Awards
($) (6)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
William L. Armstrong (1)
|
|
|
45,000
|
|
|
|
|
|
164,800
|
|
|
|
|
|
|
|
|
|
|
|
209,800
|
|
Randy A. Foutch
|
|
|
87,500
|
|
|
|
|
|
164,800
|
|
|
|
|
|
|
|
|
|
|
|
252,300
|
|
Hans Helmerich (2)
|
|
|
120,000
|
|
|
|
|
|
247,194
|
|
|
|
|
|
|
|
|
419,238
|
|
|
786,432
|
|
Paula Marshall
|
|
|
80,000
|
|
|
|
|
|
164,800
|
|
|
|
|
|
|
|
|
|
|
|
244,800
|
|
Thomas A. Petrie
|
|
|
80,000
|
|
|
|
|
|
164,800
|
|
|
|
|
|
|
|
|
|
|
|
244,800
|
|
Donald F. Robillard, Jr.
|
|
|
100,000
|
|
|
|
|
|
164,800
|
|
|
|
|
|
|
|
|
|
|
|
264,800
|
|
Hon. Francis Rooney (3)
|
|
|
85,000
|
|
|
|
|
|
164,800
|
|
|
|
|
|
|
|
|
|
|
|
249,800
|
|
Edward B. Rust, Jr. (4)
|
|
|
85,000
|
|
|
|
|
|
164,800
|
|
|
|
|
|
3,394
|
|
|
|
|
|
253,194
|
|
John D. Zeglis
|
|
|
90,000
|
|
|
|
|
|
164,800
|
|
|
|
|
|
|
|
|
|
|
|
254,800
|
|
-
(1)
-
Mr. Armstrong
retired from the Board on May 26, 2016.
-
(2)
-
As
noted above under Corporate Governance Board Leadership Structure, Mr. Helmerich agreed to provide consulting services to the Company
for a three-year period (March 5, 2014 to February 28, 2017). The amount reflected in the column above captioned "All Other Compensation" discloses (i) consulting fees earned by
Mr. Helmerich during fiscal 2016 in the amount of $341,665, (ii) $75,538 for personal use of our aircraft, and $2,035 in club memberships. 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. The amount reported for Mr. Helmerich is attributable primarily to flights in connection with
attending board meetings of publicly held companies. Flights for Mr. Helmerich comply with the Company's aircraft use policy described on pages 28 and 29 of the CD&A.
-
(3)
-
Mr. Rooney
resigned from the Board on September 7, 2016.
-
(4)
-
The
reported amount is the above-market portion of interest earned pursuant to the interest investment alternative under the Director Deferred Compensation Plan.
-
(5)
-
Cash
retainers and committee chair fees are paid quarterly in March, June, September, and December.
-
(6)
-
The
amounts included in this column represent the aggregate grant date fair value of option awards determined pursuant to FASB ASC Topic 718. We use a Black-Scholes
valuation formula to estimate the fair value of options for amortization to compensation expense as well as to calculate the number of shares to be awarded in connection with stock option grants to
Directors. However, the two formulas utilize different inputs, such as a single closing price of our stock on the grant date (for accounting expense) and a ten day closing price average (for computing
awards). Therefore, the value in the table is different than the intended award value discussed in the narrative preceding the table. Further, because the amounts in the table reflect our accounting
expense, the amounts do not correspond to the actual value that will be recognized by our Directors. For additional information, including valuation assumptions with respect to the grants, refer to
note 6, "Stock-Based Compensation," to our audited financial statements for the fiscal year ended September 30, 2016, included in the 2016 Annual Report on Form 10-K filed with
the SEC on November 23, 2016.
-
-
The
following table provides information on the outstanding equity awards at September 30, 2016 for non-employee Directors. This table includes
unexercised option awards reflected in each row below on an award-by-award basis. All options vested on the date of grant and expire ten years following the grant date. For additional information
about the option awards, see the description of such awards in the CD&A on page 27. Also, note that while not reflected in the table below, at September 30, 2016 Mr. Helmerich
held 2,009 restricted shares that vested on December 4, 2016. The Directors in the table below presently hold the number of shares of restricted stock (granted on December 5, 2016 with a
one-year vesting schedule) as set forth in the footnotes to the Security Ownership of Management table beginning on page 5.
43
OUTSTANDING EQUITY AWARDS AT FISCAL 2016 YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Name
|
|
Grant
Date
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
William L. Armstrong
|
|
|
12/4/2007
|
|
|
3,823
|
|
|
|
|
|
35.105
|
|
|
12/4/2017
|
|
|
|
|
|
12/2/2008
|
|
|
4,122
|
|
|
|
|
|
21.065
|
|
|
12/2/2018
|
|
|
|
|
|
12/1/2009
|
|
|
2,349
|
|
|
|
|
|
38.015
|
|
|
12/1/2019
|
|
|
|
|
|
12/7/2010
|
|
|
1,902
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
12/6/2011
|
|
|
2,980
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
12/4/2012
|
|
|
4,078
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/3/2013
|
|
|
5,086
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
12/2/2014
|
|
|
7,851
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
12,561
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
Randy A. Foutch
|
|
|
12/4/2007
|
|
|
3,446
|
|
|
|
|
|
35.105
|
|
|
12/4/2017
|
|
|
|
|
|
12/1/2009
|
|
|
2,349
|
|
|
|
|
|
38.015
|
|
|
12/1/2019
|
|
|
|
|
|
12/7/2010
|
|
|
1,902
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
12/6/2011
|
|
|
2,980
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
12/4/2012
|
|
|
4,078
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/3/2013
|
|
|
5,086
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
12/2/2014
|
|
|
7,851
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
12,561
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
Hans Helmerich
|
|
|
12/5/2006
|
|
|
70,000
|
|
|
|
|
|
26.895
|
|
|
12/5/2016
|
|
|
|
|
|
12/4/2007
|
|
|
110,000
|
|
|
|
|
|
35.105
|
|
|
12/4/2017
|
|
|
|
|
|
12/2/2008
|
|
|
120,000
|
|
|
|
|
|
21.065
|
|
|
12/2/2018
|
|
|
|
|
|
12/1/2009
|
|
|
80,000
|
|
|
|
|
|
38.015
|
|
|
12/1/2019
|
|
|
|
|
|
12/7/2010
|
|
|
40,000
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
12/6/2011
|
|
|
62,000
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
12/4/2012
|
|
|
62,250
|
|
|
20,750
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/2/2014
|
|
|
11,777
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
18,841
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
Paula Marshall
|
|
|
12/5/2006
|
|
|
4,405
|
|
|
|
|
|
26.895
|
|
|
12/5/2016
|
|
|
|
|
|
12/4/2007
|
|
|
3,823
|
|
|
|
|
|
35.105
|
|
|
12/4/2017
|
|
|
|
|
|
12/2/2008
|
|
|
4,122
|
|
|
|
|
|
21.065
|
|
|
12/2/2018
|
|
|
|
|
|
12/1/2009
|
|
|
2,349
|
|
|
|
|
|
38.015
|
|
|
12/1/2019
|
|
|
|
|
|
12/7/2010
|
|
|
1,902
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
12/6/2011
|
|
|
2,980
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
12/4/2012
|
|
|
4,078
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/3/2013
|
|
|
5,086
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
12/2/2014
|
|
|
7,851
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
12,561
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
Thomas A Petrie
|
|
|
6/6/2012
|
|
|
1,208
|
|
|
|
|
|
47.29
|
|
|
6/6/2022
|
|
|
|
|
|
12/4/2012
|
|
|
4,078
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/3/2013
|
|
|
5,086
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
12/2/2014
|
|
|
7,851
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
12,561
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
Donald F. Robillard, Jr.
|
|
|
6/6/2012
|
|
|
1,208
|
|
|
|
|
|
47.29
|
|
|
6/6/2022
|
|
|
|
|
|
12/4/2012
|
|
|
4,078
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/3/2013
|
|
|
5,086
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
12/2/2014
|
|
|
7,851
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
12,561
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Name
|
|
Grant
Date
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
Hon. Francis Rooney
|
|
|
12/6/2011
|
|
|
2,980
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
12/4/2012
|
|
|
4,078
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/3/2013
|
|
|
5,086
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
12/2/2014
|
|
|
7,851
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
12,561
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
Edward B. Rust, Jr.
|
|
|
12/4/2007
|
|
|
3,823
|
|
|
|
|
|
35.105
|
|
|
12/4/2017
|
|
|
|
|
|
12/2/2008
|
|
|
4,122
|
|
|
|
|
|
21.065
|
|
|
12/2/2018
|
|
|
|
|
|
12/1/2009
|
|
|
2,349
|
|
|
|
|
|
38.015
|
|
|
12/1/2019
|
|
|
|
|
|
12/7/2010
|
|
|
1,902
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
12/6/2011
|
|
|
2,980
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
12/4/2012
|
|
|
4,078
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/3/2013
|
|
|
5,086
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
12/2/2014
|
|
|
7,851
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
12,561
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
|
John D. Zeglis
|
|
|
12/4/2007
|
|
|
3,823
|
|
|
|
|
|
35.105
|
|
|
12/4/2017
|
|
|
|
|
|
12/2/2008
|
|
|
4,122
|
|
|
|
|
|
21.065
|
|
|
12/2/2018
|
|
|
|
|
|
12/1/2009
|
|
|
2,349
|
|
|
|
|
|
38.015
|
|
|
12/1/2019
|
|
|
|
|
|
12/7/2010
|
|
|
1,902
|
|
|
|
|
|
47.935
|
|
|
12/7/2020
|
|
|
|
|
|
12/6/2011
|
|
|
2,980
|
|
|
|
|
|
59.76
|
|
|
12/6/2021
|
|
|
|
|
|
12/4/2012
|
|
|
4,078
|
|
|
|
|
|
54.18
|
|
|
12/4/2022
|
|
|
|
|
|
12/3/2013
|
|
|
5,086
|
|
|
|
|
|
79.67
|
|
|
12/3/2023
|
|
|
|
|
|
12/2/2014
|
|
|
7,851
|
|
|
|
|
|
68.83
|
|
|
12/2/2024
|
|
|
|
|
|
11/30/2015
|
|
|
12,561
|
|
|
|
|
|
58.25
|
|
|
11/30/2025
|
|
Summary of All Existing Equity Compensation Plans
The following chart sets forth information concerning our equity compensation plans as of September 30, 2016.
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
|
|
3,312,036 (1)
|
|
$51.7447
|
|
6,600,000 (3)
|
Equity compensation plans not approved by security holders (2)
|
|
|
|
|
|
|
Total
|
|
3,312,036
|
|
$51.7447
|
|
6,600,000
|
-
(1)
-
Includes
the 2005 Long-Term Incentive Plan and the 2010 Long-Term Incentive Plan of the Company.
-
(2)
-
We
do not maintain any equity compensation plans that have not been approved by the stockholders.
-
(3)
-
The
reported 6,600,000 shares available for future issuance pertain to our 2016 Omnibus Incentive Plan approved by our stockholders at the March 2, 2016
Annual Meeting of Stockholders. Of the 6,600,000 shares that remain available for issuance under our 2016 Omnibus Incentive Plan, up to 3,300,000 shares may be awarded as restricted stock or certain
other awards as contemplated under the 2016 Omnibus Incentive Plan.
45
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has appointed the firm of Ernst & Young LLP as the independent registered public accounting firm ("independent
auditors") to audit our financial statements for fiscal year 2017. A proposal will be presented at the Annual Meeting asking the stockholders to ratify this appointment. The firm of Ernst &
Young LLP has served us in this capacity for many years.
Representatives
of Ernst & Young LLP will be present at the Annual Meeting and will have the opportunity to make a statement if they so desire and to respond to appropriate
questions. In the event the stockholders do not ratify the appointment of Ernst & Young LLP as the independent auditors to audit our financial statements for fiscal year 2017, the Audit
Committee will consider the voting results and evaluate whether to select a different independent auditor.
Although
ratification is not required by Delaware law, our articles or our by-laws, we are submitting the selection of Ernst & Young LLP to our stockholders for
ratification as a matter of good corporate governance. Even if the selection of Ernst & Young LLP is ratified, the Audit Committee may select different independent auditors at any time
during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
OUR
BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT AUDITORS FOR FISCAL 2017.
Audit Fees
The following table sets forth the aggregate fees and costs paid to Ernst & Young LLP during the last two fiscal years for
professional services rendered to us:
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
|
|
2016
|
|
2015
|
|
Audit Fees (1)
|
|
$
|
2,198,147
|
|
$
|
1,771,518
|
|
Audit-Related Fees (2)
|
|
|
465,620
|
|
|
71,823
|
|
Tax Fees (3)
|
|
|
343,926
|
|
|
414,487
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,007,693
|
|
$
|
2,257,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Includes
fees for services related to the annual audit of the consolidated financial statements for the years ended September 30, 2016 and 2015 and the
reviews of the financial statements included in our Form 10-Q reports, required domestic and international statutory audits and attestation reports, and the auditor's report for internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002.
-
(2)
-
Includes
fees for the audits of our Employee Retirement Plan, 401(k)/Thrift Plan, Employee Benefit Program Maintenance Costs of Common Area Facilities for a
wholly-owned subsidiary, and internal controls review related to enterprise resource planning (ERP) implementation.
-
(3)
-
Includes
fees for services rendered for tax compliance, tax advice, and tax planning, including expatriate tax services and transfer pricing studies.
The
Audit Committee reviews and pre-approves audit and non-audit services performed by our independent registered public accounting firm as well as the fee charged for such services.
Pre-approval is generally provided for up to one year, is detailed as to the particular service or category of service, and is subject to a specific budget. The Audit Committee may also pre-approve
particular services on a case-by-case basis. The Audit Committee may delegate pre-approval authority for such services to one or more of its members, whose decisions are then presented to the full
Audit Committee at its next scheduled meeting. For fiscal 2015 and 2016, all of the audit and non-audit services provided by our independent registered public accounting firm were pre-approved by the
Audit Committee in
46
accordance
with the Audit Committee Charter. In its review of all non-audit service fees, the Audit Committee considers among other things, the possible effect of such services on the auditor's
independence.
Audit Committee Report
The Audit Committee of the Board of Directors is composed of three Directors and operates under a written charter adopted by the Board of
Directors. All members of the Audit Committee meet the independence standards set forth in our Corporate Governance Guidelines as well as the listing standards of the NYSE and the applicable rules of
the SEC. Two members of the Audit Committee meet the "audit committee financial expert" requirements under applicable SEC rules. The Audit Committee charter is available on our website at
www.hpinc.com
under the "Governance" section. The Audit Committee reviews the adequacy of and compliance with such charter annually.
Our
management is responsible for, among other things, preparing our consolidated financial statements in accordance with accounting principles generally accepted in the United States of
America ("GAAP"), establishing and maintaining internal controls over financial reporting and evaluating the effectiveness of such internal controls over financial reporting. Our independent
registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board ("PCAOB"), and for
expressing an opinion on the conformity of the financial statements with GAAP. Our independent registered public accounting firm is also responsible for auditing our internal controls over financial
reporting in accordance with such standards and for expressing an opinion on our internal controls over financial reporting.
The
Audit Committee assists the Board of Directors in fulfilling its responsibility to oversee management's implementation of our financial reporting process and the audits of our
consolidated financial statements and our internal controls over financial reporting. In this regard, the Audit Committee meets periodically with management, our internal auditor and our independent
registered public accounting firm. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. As part
of fulfilling this responsibility, the Audit Committee engages in an annual evaluation of, among other things, our independent registered public accounting firm's qualifications, competence,
integrity, expertise, performance, independence and communications with the Audit Committee, and whether our independent registered public accounting firm should be retained for the upcoming year's
audit. The Audit Committee discusses with the Company's internal auditor and our independent registered public accounting firm the overall scope and plans for their respective audits. The Audit
Committee meets with the Company's internal auditor and our independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting. The Audit Committee reviews significant audit findings together with management's
responses thereto. The Audit Committee performs other activities throughout the year, in accordance with the responsibilities of the Audit Committee specified in the Audit Committee charter.
In
its oversight role, the Audit Committee reviewed and discussed our audited consolidated financial statements and our internal controls over financial reporting with management and
with Ernst & Young LLP ("E&Y"), our independent registered public accounting firm for fiscal 2016. Management
and E&Y indicated that our consolidated financial statements as of and for the year ended September 30, 2016 were fairly stated in accordance with GAAP and that our internal controls over
financial reporting were effective as of September 30, 2016. The Audit Committee discussed with E&Y and management the significant accounting policies used and significant estimates made by
management in the preparation of our audited consolidated financial statements, and the overall quality, not just the acceptability, of our consolidated financial statements and management's financial
47
reporting
process. The Audit Committee and E&Y also discussed any issues deemed significant by E&Y or the Audit Committee, including the matters required to be discussed pursuant to PCAOB Auditing
Standard 1301, the rules of the SEC and other applicable regulations.
E&Y
has provided to the Audit Committee written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm's
communications with the audit committee concerning independence, and the Audit Committee discussed with E&Y the firm's independence. The Audit Committee also concluded that E&Y's provision of other
permitted non-audit services to us and our related entities is compatible with E&Y's independence.
Based
on its review of the audited financial statements and the various discussions noted above, the Audit Committee recommended to our Board that the audited financial statements be
included in our Annual Report on Form 10-K for our fiscal year ended September 30, 2016, filed with the SEC.
|
|
|
|
|
Submitted by the Audit Committee
|
|
|
Donald F. Robillard, Jr., Chairman
Edward B. Rust, Jr.
Randy A. Foutch
|
PROPOSAL 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Company is requesting stockholder approval, on an advisory basis, of the compensation of the Company's named executive officers as disclosed
in this proxy statement. The Human Resources Committee of the Board has overseen the development of a compensation program that is described more fully in the Executive Compensation Discussion and
Analysis section of this proxy statement, including the related compensation tables and narrative. Our compensation program is designed to attract and retain qualified executives who are critical to
the successful implementation of our strategic business plan. Further, we believe that our compensation program promotes a performance-based culture and aligns the interests of executives with those
of stockholders by linking a substantial portion of compensation to the Company's performance. It balances short-term and long-term compensation opportunities to ensure that the Company meets
short-term objectives while continuing to produce value for our stockholders over the long-term. The Company believes that its compensation program is appropriate and has served to accomplish the
goals mentioned above. In deciding how to vote on this proposal, the Board urges you to consider the Executive Compensation Discussion and Analysis beginning on page 20 of this proxy statement.
For
the reasons discussed, the Board recommends a vote in favor of the following resolution:
"Resolved,
that the stockholders of the Company approve, on an advisory basis, the compensation of the Company's named executive officers as disclosed pursuant to the SEC's compensation
disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the related narrative disclosure contained in the proxy statement)."
As
an advisory vote, this proposal is not binding on the Company. However, the Human Resources Committee, which is responsible for designing and administering the Company's executive
compensation program, values the opinions expressed by stockholders in their vote on this proposal, and will consider the outcome of the vote when making future compensation decisions for named
executive officers.
48
OUR
BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
PROPOSAL 4
ADVISORY VOTE ON THE FREQUENCY OF STOCKHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION
Applicable SEC rules also require that, at least once every six years, stockholders be given the opportunity to vote on an advisory basis
regarding the frequency (i.e., annually, every two years or every three years) of future stockholder advisory votes on the compensation of our named executive officers. At our 2011 Annual
Meeting of Stockholders, stockholders indicated a preference for holding "say-on-pay" advisory votes on an annual basis. We have held a "say-on-pay" advisory vote each year since 2011. The Company is
again requesting stockholder approval, on an advisory basis, as to whether the Company should hold a stockholder advisory vote on executive compensation every 1, 2 or 3 years.
Some
commentators have said that a two-year or three-year frequency might be better aligned with compensation trends or programs and would place less emphasis on the results or actions
of a single
year; other commentators have stated that an annual vote provides a company with more opportunity for timely feedback. We are prepared to operate under any of the three alternative frequencies and
look forward to the stockholder vote for input. The Board is not making a recommendation as to a favored alternative. Accordingly, stockholders are being asked to vote on the following advisory
resolution:
"Resolved,
that the stockholders desire to hold an advisory vote on the compensation of the Company's named executive officers every 1, 2 or 3 years, as determined by the
alternative that receives the highest number of stockholder votes."
As
an advisory vote, this proposal is not binding on the Company. However, the Board of Directors values the opinions expressed by stockholders in their vote on this proposal, and will
consider the outcome of the vote when making a determination as to the frequency of future advisory votes on executive compensation.
OUR
BOARD DOES NOT HAVE A RECOMMENDATION WITH RESPECT TO THIS PROPOSAL.
2018 Annual Meeting / Stockholder Proposals
Our annual meeting for 2018 will be held Wednesday, March 7, 2018. Any stockholder wishing to submit a proposal to the vote of the
stockholders at such 2018 annual meeting must submit such proposal or proposals in writing to us at our headquarters in Tulsa, Oklahoma, Attention: Corporate Secretary, on or before
September 19, 2017, in order for such proposal or proposals to be considered for inclusion in our proxy statement and accompanying proxy. For any other proposal that a stockholder wishes to
have considered at our 2018 annual meeting, the Corporate Secretary must receive written notice of such proposal during the period beginning November 1, 2017, and ending December 1,
2017. Proposals which are not received in such time period will be considered untimely and the persons serving as proxies will have discretion on whether to vote on such matters at the meeting. In
addition, proposals must also comply with our By-laws and the rules and regulations of the SEC.
Section 16(a) Beneficial Ownership Reporting Compliance
For the fiscal year ended September 30, 2016, all reports required by Section 16(a) of the Securities Exchange Act of 1934, as
amended, were filed on a timely basis with the SEC, except as
49
follows:
Robert L. Stauder, a named executive officer of the Company, filed one late report involving one transaction. In making this disclosure, we have relied solely upon the written representations
of our Directors and executive officers, and copies of the reports they have filed with the SEC.
Executive Officers
The names, ages, and other information for our executive officers is incorporated by reference to the section "Executive Officers of the
Company" included in Part I of our Annual Report on Form 10-K for fiscal 2016 filed with the SEC on November 23, 2016.
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By Order of the Board of Directors,
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Jonathan M. Cinocca
Corporate Secretary
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Dated:
January 17, 2017
50
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. 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. HELMERICH & PAYNE, INC. 1437 S. BOULDER AVENUE SUITE 1400 TULSA, OK 74119-3623 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 up until 11:59 P.M. Eastern Time the day before the meeting date. 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: E16535-P84955 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. Randy A. Foutch 1b. Hans Helmerich The Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain ! ! ! ! ! ! 1c. John W. Lindsay 2. Ratification of Ernst & Young LLP as auditors for 2017. 3. Advisory vote on executive compensation. 1d. Paula Marshall 1e. Thomas A. Petrie The Board of Directors makes no recommendation 1 Year regarding proposal 4. 2 Years 3 Years Abstain ! ! ! ! 1f. Donald F. Robillard, Jr. 4. Advisory vote on the frequency of the advisory vote on executive compensation. 1g. Edward B. Rust, Jr. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 1h. 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 V.1.1
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. E16536-P84955 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 Wednesday, March 1, 2017, 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, FOR PROPOSALS 2 AND 3, AND ABSTAIN WITH RESPECT TO PROPOSAL 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 V.1.1 Address changes/comments:
QuickLinks
1437 South Boulder Avenue Tulsa, Oklahoma 74119
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on March 1, 2017
1437 South Boulder Avenue Tulsa, Oklahoma 74119
PROXY STATEMENT
PROPOSAL 1 ELECTION OF DIRECTORS
CORPORATE GOVERNANCE
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
SUMMARY COMPENSATION TABLE
GRANTS OF PLAN-BASED AWARDS IN FISCAL 2016
OUTSTANDING EQUITY AWARDS AT FISCAL 2016 YEAR-END
OPTION EXERCISES AND STOCK VESTED IN FISCAL 2016
PENSION BENEFITS FOR FISCAL 2016
NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL 2016
POTENTIAL PAYMENTS UPON CHANGE-IN-CONTROL
DIRECTOR COMPENSATION IN FISCAL 2016
DIRECTOR COMPENSATION TABLE
OUTSTANDING EQUITY AWARDS AT FISCAL 2016 YEAR-END
Equity Compensation Plan Information
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
PROPOSAL 3 ADVISORY VOTE ON EXECUTIVE COMPENSATION
PROPOSAL 4 ADVISORY VOTE ON THE FREQUENCY OF STOCKHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION
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