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DELAWARE
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1-5491
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75-0759420
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(State or
other jurisdiction
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(Commission
file Number)
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(IRS
Employer
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of
incorporation)
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Identification
No.)
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2800 POST OAK
BOULEVARD
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SUITE
5450
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HOUSTON,
TEXAS
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77056
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(Address
of principal executive offices)
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(zip
code)
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240-14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240-13e-4(c))
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Metric
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Percent
of
Possible
Bonus
Pool
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Percent
of
Metric
Achieved
in 2009
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Funding
of
Bonus
Pool
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|||||||||
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Achievement
of budgeted EBITDA for 2009 (1)
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25 | % | 36 | % | 9 | % | ||||||
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Actual
costs compared to 2009 budget (2)
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25 | % | 200 | % | 50 | % | ||||||
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Safety
performance (3)
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20 | % | 200 | % | 40 | % | ||||||
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Capital
projects: (4)
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Newbuild
construction
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15 | % | 200 | % | 30 | % | ||||||
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Other
capital projects
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5 | % | 100 | % | 5 | % | ||||||
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Contracted
non-productive time (5)
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10 | % | 61 | % | 6 | % | ||||||
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Total
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100 | % | 140 | % | ||||||||
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(1)
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The
2009 Drilling Division EBITDA (earnings before interest, taxes,
depreciation and amortization) was 87.3% of our budget, which resulted in
an achievement of 36% of the allocation of this metric.
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(2)
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“Actual
costs” are Drilling operations’ costs plus selling, general and
administrative costs, excluding insurance costs and reimbursables. The
2009 actual costs were 89.4% of budget, which resulted in an achievement
of 200% of the allocation of this metric.
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(3)
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Safety
performance is derived from Drilling Division internal incident reporting
by comparing the trailing total recordable incident rate (“TRIR”) with
Company goals. The target metric for safety was set as a 20% improvement
over 2008 TRIR results, or a 2.0 TRIR. In 2009, the Drilling
Division had record safety results, with a TRIR of 1.53, a 42% improvement
over 2008, which resulted in an achievement of 200% of the allocation of
this metric.
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(4)
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Of
the 20% capital projects goal, 15% is based on construction of our
newbuild offshore jack-up rigs remaining on time and on
budget. As of December 31, 2009, our newbuild projects are 1.2%
under budget and remain on schedule, which resulted in an achievement of
200% of the allocation of this portion of the metric. The
remaining 5% of this capital projects goal is determined by other capital
expenditure projects and adherence to schedule, budget, work readiness
upon leaving the ship yard, use of our project software and certain other
qualitative factors. The average results of these capital
projects were at target, or 100% of the allocation of this portion of the
metric.
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(5)
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Contracted
non-productive time refers to any period when a rigs is on location and
under contract but not operational due to equipment failure or other
unplanned stoppage. In an effort to reduce non-productive time,
the target for this metric was set at a 25% reduction from the 2008 level,
and the threshold was set at a 10% reduction. Non-productive
downtime declined by 13%, which resulted in an achievement of 61% of the
allocation of this metric.
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NEO
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2009
AIP
Award
($)
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W.
Matt Ralls, President & CEO(1)
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1,134,440 | |||
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David
P. Russell, EVP, Drilling Operations
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365,000 | |||
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Mark
A. Keller, EVP, Business Development
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295,000 | |||
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John
L. Buvens, EVP, Legal(1)
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275,000 | |||
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William
H. Wells, SVP & CFO(1)
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265,000 | |||
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(1)
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Each
of these officers had 10% of his target bonus determined by the
performance of our manufacturing subsidiary as evidenced by achievement
under the subsidiary’s bonus plan.
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·
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Grow
and Diversify the Rig Fleet
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·
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Grow
the Earnings Power of the Fleet
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·
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Enhance
Leadership Development
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·
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Maximize
Stockholder Value from Manufacturing
Division
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·
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Enhance
Tone at the Top
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SAR
Value ($)
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SARs
(#)(1)
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Value Restricted
Stock
Award ($)
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Shares
of Restricted
Stock
(#)(2)
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Ralls(3)
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1,500,000 | 100,827 | 1,900,000 | 71,193 | ||||||||||||
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Russell
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650,000 | 43,692 | 650,000 | 24,357 | ||||||||||||
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Keller
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481,250 | 32,349 | 500,000 | 18,735 | ||||||||||||
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Buvens
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373,650 | 25,116 | 400,000 | 14,988 | ||||||||||||
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Wells
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373,650 | 25,116 | 375,000 | 14,052 | ||||||||||||
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(1)
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The
number of SARs granted was determined using a Black-Scholes valuation that
provided a 53.5% value compared to fair market value. Fair
market value is defined in the LTIP as the volume weighted average price
of the Company’s common stock on the day of grant, or $27.80 per
share.
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(2)
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The
number of shares of restricted stock granted was determined by the fair
market value discounted by 4% to reflect the time-based restrictions on
the stock.
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(3)
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The
Committee determined to award Mr. Ralls an additional $400,000 in
restricted stock value (14,988 shares of restricted stock) in recognition
of his performance in 2009 and his below-market long-term incentive
multiple.
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Base
Salary
Increase
(%)
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2010
Base
Salary
($)
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2010
AIP
Target
(1)(2)
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2010
LTIP
Multiple(1)(3)
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Ralls
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0 | % | 800,000 | 100 | % | 425 | % | |||||||||
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Russell
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6 | % | 425,000 | 65 | % | 350 | % | |||||||||
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Keller
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7 | % | 375,000 | 65 | % | 300 | % | |||||||||
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Buvens
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4 | % | 330,000 | 60 | % | 275 | % | |||||||||
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Wells
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4 | % | 330,000 | 60 | % | 275 | % | |||||||||
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(1)
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As
a percentage of base salary.
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(2)
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Mr.
Keller’s AIP target was increased from 60% to 65%. All other NEO targets
remained unchanged from 2009.
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(3)
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Each
NEO’s long-term incentive multiple was increased: Mr. Ralls – from 375% to
425%; Mr. Russell – from 325% to 350%; Mr. Keller – from 275% to 300%; and
each of Messrs. Buvens and Wells – from 235% to
275%.
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