UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF EARLIEST EVENT REPORTED: December 5, 2005
HELMERICH & PAYNE, INC.
(Exact name of registrant as specified in its charter)
State of Incorporation: Delaware
COMMISSION FILE NUMBER 1-4221
Internal Revenue Service — Employer Identification No. 73-0679879
1437 South Boulder Avenue, Suite 1400, Tulsa, Oklahoma 74119
(918)742-5531
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

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ITEM 1.01 — Entry into a Material Definitive Agreement.
(a) On December 5, 2005, the Human Resources Committee (the “Committee”) of the Board of Directors of Helmerich & Payne, Inc. (the “Company”), with the approval of all independent Directors as a group, determined and set the following compensation for the executive officers of the Company.
Restated Bonus Plan and Fiscal 2005 Bonus Payments
     A. On December 5, 2005, the Committee amended and restated the Helmerich & Payne, Inc. Annual Bonus Plan for Executive Officers (the “Bonus Plan”). The amended and restated Bonus Plan is attached as Exhibit 10.1 to this Report on Form 8-K.
     B. On December 5, 2005, the Committee reviewed the criteria for payment under the Bonus Plan. The Committee determined that criteria for payment based on certain financial and strategic objectives had been satisfied. Accordingly, the Committee approved payments under the Bonus Plan based on the attainment of those objectives in the following amounts:
         
    Fiscal 2005 Bonus  
 
       
Hans Helmerich,
  $ 780,000  
President and Chief Executive Officer
       
 
       
George S. Dotson,
  $ 393,000  
Vice President and President and Chief Operating Officer of Helmerich & Payne International Drilling Co.
       
 
       
Douglas E. Fears,
  $ 251,000  
Vice President and Chief Financial Officer
       
 
       
Steven R. Mackey,
  $ 210,000  
Vice President, Secretary and General Counsel
       
Stock Option and Restricted Stock Award Grants
     On December 5, 2005, the Committee approved grants of ten-year non-qualified stock options and restricted stock to the executive officers listed below. The Committee based its decision on, among other factors, individual performance and the nature and value of stock awards made by competitor companies to their executive officers. The following table sets forth information regarding the stock option and restricted stock grants to the listed executive officers.
                 
            Number of Shares of
    Number of Stock   Restricted
    Options 1   Stock 2
 
               
Hans Helmerich,
President and Chief Executive Officer
    45,000       5,000  
 
               
Douglas E. Fears,
Vice President and Chief Financial Officer
    17,500       5,000  
 
               
Steven R. Mackey,
Vice President, Secretary and General Counsel
    15,000       5,000  
 
(1)   The options were granted under the Helmerich & Payne, Inc. 2000 Stock Incentive Plan at an exercise price of $60.475 per share, vesting in 25% increments annually beginning one year from the date of grant.
 
(2)   The restricted shares vest in 1/3 increments on 12/5/08, 12/5/09 and 12/05/10.

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New Base Salaries
     On December 5, 2005, the Committee approved a 4 percent increase in the annual base salary for the Company’s executive officers. The Committee based its decision on various factors, including compensation studies which include salary and bonus compensation data from several competitor companies including certain of those companies contained within the S&P 500 Oil and Gas Drilling Index. The base salaries for the executive officers effective January 1, 2006 are as follows:
         
    2006 Base Salary  
 
       
Hans Helmerich,
  $ 554,152  
President and Chief Executive Officer
       
 
       
George S. Dotson,
  $ 472,725  
Vice President and President and Chief Operating Officer of Helmerich & Payne International Drilling Co.
       
 
       
Douglas E. Fears,
  $ 287,254  
Vice President and Chief Financial Officer
       
 
       
Steven R. Mackey,
  $ 239,755  
Vice President, Secretary and General Counsel
       
Consulting Arrangement
     As announced by the Company on December 8, 2005, George S. Dotson, following his retirement on March 1, 2006, will provide advisory services to the Company for a period of at least one year and will continue to serve as a Director of the Company until the expiration of his current term in March 2007. In consideration of such advisory services, Mr. Dotson shall be paid a monthly fee of $25,000.
ITEM 9.01 — Financial Statements and Exhibits.
(d)   Exhibits.
     
Exhibit No.   Description
 
   
10.1
  Helmerich & Payne, Inc. Annual Bonus Plan for Executive Officers

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly authorized the undersigned to sign this report on its behalf.
         
  HELMERICH & PAYNE, INC.
(Registrant)
  		 
  /s/ Steven R. Mackey    
  Steven R. Mackey   
  Vice President

DATE: December 9, 2005  		 
 
EXHIBIT INDEX
     
Exhibit No.   Description
 
   
10.1
  Helmerich & Payne, Inc. Annual Bonus Plan for Executive Officers

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Exhibit 10.1
Helmerich & Payne, Inc.
Annual Bonus Plan for Executive Officers
Overview
Annual bonus awards are available to certain executive officers to recognize and reward desired performance. Each year the Human Resources Committee (the “Committee”) approves the participants, the performance measures, and the specific financial and strategic objectives. An executive officer’s bonus award opportunity is determined primarily by the individual’s position and level of responsibility.
Participation
The current participants in the Plan will be H&P’s executive management team, which includes
Hans Helmerich,
John Lindsay,
Alan Orr,
Doug Fears, and
Steve Mackey.
Bonus Award Opportunity
Participants are assigned target bonus awards expressed as percentages of base salary. These bonus awards are earned when performance objectives are achieved. The award percentages are as follows:
                         
    Threshold   Target   Reach
Hans Helmerich
    40 %     80 %     120 %
John Lindsay
    25 %     50 %     75 %
Alan Orr
    25 %     50 %     75 %
Doug Fears
    20 %     45 %     70 %
Steve Mackey
    20 %     45 %     70 %
Financial Performance Objectives
The financial performance objectives selected align management with shareholders. When these objectives are met, shareholders will realize greater value in their Company ownership. A participant’s bonus award will be based upon three disproportionately weighted financial measures being:
         
Financial Measure   Weighting
Earnings Per Share
    35 %
Return on Invested Capital
    35 %
Operating EBITDA
    30 %

 

 

The Board of Directors annually approves an operating and capital budget at its September meeting. Each financial measure would be assigned threshold, target and reach numbers based upon this approved budget. Actual financial results would be compared to the budgeted numbers for each of the financial measures to determine the amount of any bonus. Based on the ___fiscal year budget, the following financial performance benchmarks have been developed for each financial measure:
                                 
                            Prior  
                            Fiscal  
                            Year  
    Threshold     Target     Reach     Actual  
Earnings Per Share
                               
 
                       
Return on Invested Capital
                               
 
                       
Operating EBITDA
                               
 
                       
                 
    Current     Prior  
    Fiscal     Fiscal  
    Year     Year  
Assumptions   Target     Actual  
Revenue Days — U.S. Land:
               
 
           
Revenue Per Day — U.S. Land:
               
 
           
U.S. Land Rig Utilization:
               
 
           
U.S. Offshore Utilization:
               
 
           
International Utilization:
               
 
           
Strategic Performance Objectives
The bonus, if any, derived from the Company’s financial performance may then be adjusted by a maximum of 30% as determined by the Committee (“adjustment factor”). Seventy-five percent of this adjustment factor would be based upon the Committee’s evaluation of the Company’s total shareholder return relative to an industry peer group. The remaining 25% of this adjustment factor would be based upon the Committee’s evaluation of the Company’s goal of attaining higher than industry average utilization and premium day rates.
This adjustment factor would be subject to a pre-determined safety performance threshold. For fiscal year ___, in order to meet that threshold, H&P’s OSHA and DAWFC rates must be ___below IADC averages. If this safety performance threshold is not met, then the bonus would not be increased by the adjustment factor. The bonus would not be decreased by the adjustment factor solely for the reason that safety performance threshold was not met. However, if the adjustment factor resulted in a decrease to the bonus, then the bonus would be decreased even if the safety performance threshold is met.

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