<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>d83368ddef14a.txt
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
HELMERICH AND PAYNE, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) 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):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
Helmerich & Payne, Inc.
Utica at Twenty-First
Tulsa, Oklahoma 74114
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Helmerich
& Payne, Inc., will be held at The Philbrook Museum of Art, Patti Johnson Wilson
Hall, 2727 South Rockford Road, Tulsa, Oklahoma, at 12:00 noon, Tulsa time, on
Wednesday, March 7, 2001, for the following purposes:
1. To elect three Directors comprising the class of Directors of the
Corporation known as the "First Class" for a three-year term expiring in
2004.
2. To consider and vote upon the approval of the proposed Helmerich &
Payne, Inc. 2000 Stock Incentive Plan (a copy of which is attached hereto
and marked Appendix "A").
3. 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 9, 2001,
has been fixed as the record date for the determination of the stockholders
entitled to notice of, and to vote at, said meeting. The stock transfer books
will not close.
The Corporation's Proxy Statement is submitted herewith. The annual report
for the year ended September 30, 2000, has been mailed previously to all
stockholders.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON, BUT WISH THEIR STOCK TO
BE VOTED ON MATTERS TO BE TRANSACTED, ARE URGED TO SIGN, DATE, AND MAIL THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, TO WHICH NO POSTAGE NEED BE AFFIXED
IF MAILED IN THE UNITED STATES. THE PROMPT RETURN OF YOUR SIGNED PROXY,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL AID THE CORPORATION IN
REDUCING THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF SUCH PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE
MEETING.
By Order of the Board of Directors
/s/ STEVEN R. MACKEY
STEVEN R. MACKEY
Secretary
Tulsa, Oklahoma
January 26, 2001
<PAGE> 3
HELMERICH & PAYNE, INC.
Utica at Twenty-First
Tulsa, Oklahoma 74114
-------------------------------
PROXY STATEMENT
-------------------------------
GENERAL INFORMATION
The enclosed proxy is being solicited by and on behalf of the Board of
Directors of Helmerich & Payne, Inc. (the "Corporation"), and will be voted at
the Annual Meeting of Stockholders on March 7, 2001. This statement and the
accompanying proxy are first being sent or given to stockholders on or about
January 26, 2001.
Any stockholder giving a proxy may revoke it at any time before it is voted
by voting in person at the Annual Meeting or by delivery of a later-dated proxy.
The cost of this solicitation will be paid by the Corporation. In addition
to solicitation by mail, arrangements may be made with brokerage houses and
other custodians, nominees and fiduciaries to send proxies and proxy material to
their principals. The Corporation does not intend to cause a solicitation to be
made by specially engaged employees or other paid solicitors.
At the close of business on January 9, 2001, there were 53,528,952 issued
and outstanding shares of the common stock of the Corporation, the holders of
which, except the Corporation which is the holder of 3,391,484 shares of
treasury stock, are entitled to one vote per share on all matters. There is no
other class of securities of the Corporation entitled to vote at the meeting.
Only stockholders of record at the close of business on January 9, 2001, will be
entitled to vote at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the name and address of each stockholder of
the Corporation who, to the knowledge of the Corporation, beneficially owns more
than 5% of the Corporation's common stock, the number of shares beneficially
owned by each, and the percentage of outstanding stock so owned, as of January
9, 2001.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
TITLE OF NAME AND ADDRESS BENEFICIAL OF
CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
-------- ------------------- ---------- -------
<C> <S> <C> <C>
Common Stock State Farm Mutual Automobile
Insurance Company
One State Farm Plaza
Bloomington, Illinois
61710 4,133,929(1) 8.245%
</TABLE>
---------------
(1) State Farm Mutual Automobile Insurance Company has sole voting and
dispositive power with respect to 4,128,600 shares. State Farm Investment
Management Corp. shares sole voting and dispositive power with respect to
5,329 shares. This information is based upon State Farm Mutual Automobile
Insurance Company's Schedule 13G Amendment dated February 4, 2000.
<PAGE> 4
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, the
Corporation's Chief Executive Officer ("CEO") and the other four most highly
compensated executive officers (the Chief Executive Officer and other four most
highly compensated executive officers collectively, the "named executive
officers"), and all directors and executive officers as a group, and the percent
of the outstanding common stock so owned by each as of January 9, 2001.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
DIRECTORS AND NAMED BENEFICIAL OF
EXECUTIVE OFFICERS TITLE OF CLASS OWNERSHIP(1) CLASS(2)
------------------- -------------- ------------ --------
<S> <C> <C> <C>
W. H. Helmerich, III Common Stock 2,050,335(3) 4.089%
Hans Helmerich Common Stock 527,611(4) 1.037%
George S. Dotson Common Stock 292,118(5)
Steven R. Shaw Common Stock 179,929(6)
Douglas E. Fears Common Stock 88,997(7)
Steven R. Mackey Common Stock 46,588(8)
L. F. Rooney, III Common Stock 33,000(9)
John D. Zeglis Common Stock 7,000
Glenn A. Cox Common Stock 6,000(10)
George A. Schaefer Common Stock 5,000
William L. Armstrong Common Stock 5,000
Edward B. Rust, Jr. Common Stock 3,400
All Directors and Executive
Officers as a Group Common Stock 3,275,510(11) 6.439%
</TABLE>
---------------
(1) Unless otherwise indicated, all shares are owned directly by the named
person, and he has sole voting and investment power with respect to such
shares.
(2) Percentage calculation not included if beneficial ownership is less than
one percent of class.
(3) Includes 150,000 shares owned by The Helmerich Foundation, an Oklahoma
charitable trust, for which Mr. Helmerich is Trustee, and 20,000 shares
owned by Ivy League, Inc., of which Mr. Helmerich is President and
Director. Mr. Helmerich possesses sole voting and investment power over all
indirectly owned shares.
(4) Includes options to purchase 281,000 shares exercisable within 60 days;
8,914 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of December 13, 2000; 21,245 shares owned by Mr. Hans Helmerich's wife,
with respect to which he has disclaimed all beneficial ownership; 15,450
shares held by Mr. Helmerich as Trustee for various trusts for members of
his immediate family, as to which he has sole voting and investment power;
2,000 shares held by Mr. Helmerich as a Co-trustee for a family trust for
which he shares voting and investment power; and 15,000 shares held by The
Helmerich Trust, an Oklahoma charitable trust, for which Mr. Helmerich is a
Co-trustee, for which he shares voting and investment power.
(5) Includes options to purchase 190,000 shares exercisable within 60 days;
3,560 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of December 13, 2000; 1,300 shares held in a trust for a
2
<PAGE> 5
family member for which Mr. Dotson, as a Co-trustee, shares voting and
investment power; 42,554 shares owned by Mr. Dotson's wife, with respect to
which he has disclaimed all beneficial ownership; and 11,125 shares owned
by The Dotson Family Charitable Foundation, for which Mr. Dotson is
Co-trustee, and for which he shares voting and investment power.
(6) Includes options to purchase 124,000 shares exercisable within 60 days; and
3,186 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of December 13, 2000; and 4,400 shares in Mr. Shaw's IRA rollover account.
(7) Includes options to purchase 70,000 shares exercisable within 60 days; and
800 shares owned by a charitable foundation, for which Mr. Fears is
Co-trustee, and for which he shares voting and investment power.
(8) Includes options to purchase 41,000 shares exercisable within 60 days; and
2,922 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of December 13, 2000.
(9) Includes 29,000 shares held by a corporation controlled by Mr. Rooney.
(10) Includes 2,000 shares held in a revocable trust known as the Glenn A. Cox
Trust, UTA, with respect to which voting and investment power are shared
with Mr. Cox's wife.
(11) Includes options to purchase 728,978 shares exercisable within 60 days; and
20,718 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of December 13, 2000.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Corporation ("Board") is divided into three
classes - First Class, Second Class, and Third Class - whose terms expire in
different years. The terms of the Directors of the First Class expire this year,
and their successors are to be elected at this Annual Meeting. The terms of the
Directors of the Second Class and the Third Class do not expire until 2002 and
2003, respectively, and consequently their successors are not to be elected at
this Annual Meeting. Upon the conclusion of this Annual Meeting, the First,
Second and Third Classes of Directors will be comprised of three Directors each.
The Directors belonging to the Second Class and the Third Class, which are
not coming up for election at this meeting, and the Nominees for Directors of
the First Class, are as follows:
3
<PAGE> 6
DIRECTORS OF THE SECOND CLASS
<TABLE>
<CAPTION>
YEAR
EXPIRATION FIRST
OF PRESENT PRINCIPAL OCCUPATION BECAME
NAME AGE TERM AND CURRENT DIRECTORSHIPS DIRECTOR
---- --- ---------- ------------------------- --------
<S> <C> <C> <C> <C>
John D. Zeglis 53 2002 President of AT&T Corporation; Chairman and 1989
CEO, AT&T Wireless Group (telecommunica-
[J.D. Zeglis photo] tions services). Director of AT&T
Corporation; AT&T Canada Corporation;
Dynergy Corp.; and Sara Lee Corp.
William L. 63 2002 Chairman of Transland Financial Services, 1992
Armstrong Inc. (mortgage banking); Cherry Creek
Mortgage Company (mortgage banking); and
[William Armstrong Frontier Real Estate, Inc. (residential
photo] real estate brokerage). Director of
UNUMProvident Corporation; Storage
Technology Corp. and Oppenheimer Funds.
L. F. Rooney, III 47 2002 Chairman, Manhattan Construction Company 1996
(construction and construction management
[L.F. Rooney, III services) and President of Rooney Brothers
photo] Company (holding company with interests in
construction, electronics and building
components). Director of BOK Financial
Corp. and Bank of Oklahoma, N.A.
</TABLE>
4
<PAGE> 7
DIRECTORS OF THE THIRD CLASS
<TABLE>
<CAPTION>
YEAR
EXPIRATION FIRST
OF PRESENT PRINCIPAL OCCUPATION BECAME
NAME AGE TERM AND CURRENT DIRECTORSHIPS DIRECTOR
---- --- ---------- ------------------------- --------
<S> <C> <C> <C> <C>
W. H. Helmerich, 78 2003 Chairman of the Board of the Corporation. 1949
III Director of Atwood Oceanics, Inc.
[W.H. Helmerich-III
photo]
Glenn A. Cox 71 2003 Retired President and Chief Operating 1992
Officer of Phillips Petroleum Company
[Glenn A. Cox (large integrated oil company). Director
photo] of The Williams Companies, Inc.
Edward B. Rust, Jr. 50 2003 Chairman of the Board and Chief Executive 1997
Officer of State Farm Mutual Automobile
[Edward B. Rusy, Insurance Company. Director of State Farm
Jr. photo] VP Management Corp. and State Farm Mutual
Fund Trust.
</TABLE>
5
<PAGE> 8
NOMINEES FOR THE DIRECTORS OF THE FIRST CLASS
<TABLE>
<CAPTION>
YEAR
EXPIRATION FIRST
OF PRESENT PRINCIPAL OCCUPATION BECAME
NAME AGE TERM AND CURRENT DIRECTORSHIPS DIRECTOR
---- --- ---------- ------------------------- --------
<S> <C> <C> <C> <C>
Hans Helmerich 42 2001 President of the Corporation and Chief 1987
Executive Officer; holds similar positions
[Hans Helmerich as Chairman or President and as Chief
photo] Executive Officer of subsidiary companies.
Director of Atwood Oceanics, Inc.
George S. Dotson 60 2001 Vice President of the Corporation and 1990
President and Chief Operating Officer of
[George S. Dotson Helmerich & Payne International Drilling
photo] Co.; holds similar positions as President
and Chief Operating Officer of Helmerich &
Payne International Drilling Co.
subsidiary companies. Director of Atwood
Oceanics, Inc. and Varco International,
Inc.
George A. Schaefer 72 2001 Retired Chairman and Chief Executive Officer 1988
of Caterpillar Inc. (manufacturer of
[George A. Schaefer earthmoving, construction, and
photo] materials-handling machinery and
equipment). Director of Aon Corporation.
</TABLE>
With regard to the election of the Directors, stockholders may vote in
favor of all nominees, withhold their votes as to all nominees, or withhold
their votes as to specific nominees. Unless otherwise specified, the proxies on
the enclosed form which are executed and returned will be voted for the nominees
listed above as
6
<PAGE> 9
"Nominees for Directors of the First Class." The proxies executed and returned
on the enclosed form can be voted only for the named nominees. If any one of the
nominees is not a candidate at the Annual Meeting, an event which management
does not anticipate, the proxies will be voted for a substitute nominee. The
election of Directors will require the affirmative vote of a plurality of the
shares of common stock voting in person or by proxy at the Annual Meeting. In
all matters other than election of directors, a majority of shares of common
stock voting in person or by proxy is required for approval. Abstentions and
broker non-votes shall not be counted except for purposes of determining the
presence of a quorum at the meeting.
The Corporation's transfer agent will tabulate all votes which are received
prior to the date of the Annual Meeting. The Corporation has appointed two
employee inspectors to receive the transfer agent's tabulation, to tabulate all
other votes, and to certify the voting results.
The principal occupation of each of the Directors and the Nominees for
Directors of the First Class is as set forth in the tables above and has been
the same occupation for the past five years except with respect to Mr. John D.
Zeglis, who was Senior Vice President - General Counsel and Government Affairs
of AT&T prior to October, 1997; and Mr. Edward B. Rust, Jr. who was President of
State Farm Mutual Automobile Insurance Company prior to September, 1998. Mr.
Hans Helmerich is a son of Mr. W. H. Helmerich, III.
ATTENDANCE
There were four regularly scheduled meetings of the Board held during
fiscal 2000. No Director attended fewer than 75% of the aggregate of the total
number of the meetings of the Board of Directors and its committees held during
fiscal 2000.
COMMITTEES
Mr. Glenn A. Cox and Mr. L. F. Rooney, III, are members of the Audit
Committee. The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its independent and objective oversight responsibilities
of financial reporting and internal financial and accounting controls of the
Corporation. Each member of the Audit Committee is "independent" as that term is
defined by the Listing Standards of the New York Stock Exchange. A copy of the
Audit Committee Charter is included as Appendix "B" to this Proxy Statement.
During the fiscal year ended September 30, 2000, the Audit Committee held two
meetings.
Mr. William L. Armstrong, Mr. George A. Schaefer, and Mr. John D. Zeglis
are members of the Human Resources Committee. The functions of the Human
Resources Committee are to review and make recommendations or decisions
regarding: (i) the election and salaries of officers and key management
employees; (ii) bonus awards, stock option plans and awards, and other fringe
benefit plans; and (iii) management succession. During the year ended September
30, 2000, the Human Resources Committee held three meetings.
The Corporation does not have a nominating committee. All nominations are
presented to the Board.
7
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The information contained in the following Summary Compensation Table for
fiscal years 2000, 1999, and 1998 is furnished with respect to the named
executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------- ----------------------- -------
(1) (2)
OTHER RESTRICTED SECURITIES (3)
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) ($) (#) ($) ($)
------------------ ---- --------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hans Helmerich 2000 460,000 425,000 782 -- 90,000 -- 8,500
President and 1999 440,185 125,000 765 -- 90,000 -- 8,000
CEO 1998 417,500 187,000 784 -- 90,000 -- 8,000
George S. Dotson 2000 405,654 220,000 545 -- 60,000 -- 8,500
Vice President 1999 385,257 110,000 537 -- 60,000 -- 8,000
and President of 1998 367,019 160,000 548 -- 60,000 -- 8,000
Drilling Subsidiary
Steven R. Shaw 2000 286,000 200,000 479 -- 50,000 -- 8,500
Vice President 1999 262,753 45,000 464 -- 50,000 -- 8,000
Production 1998 258,750 70,000 604 -- 50,000 -- 8,000
Douglas E. Fears 2000 237,500 135,000 669 -- 30,000 -- 8,500
Vice President 1999 218,011 37,000 646 -- 30,000 -- 9,400
Finance 1998 216,250 73,000 639 -- 30,000 -- 8,000
Steven R. Mackey 2000 199,000 110,000 582 -- 25,000 -- 8,200
Vice President, 1999 190,744 30,000 702 -- 25,000 -- 8,000
General Counsel 1998 182,500 60,000 627 -- 25,000 -- 8,000
and Secretary
</TABLE>
---------------
(1) The amounts specified in this column represent payments of estimated tax
liability with respect to Corporation-provided health and retirement
benefits. The aggregate amount of perquisites and other personal benefits
was less than either $50,000 or 10% of the total annual salary and bonus
reported for each of the named executive officers.
(2) The references to "SARs" in the Summary Compensation Table and all other
tables in this Proxy Statement have been omitted, since the Corporation has
never authorized any SARs.
(3) With respect to each of the named executive officers, the amounts specified
in this column represent only the Corporation's matching contributions to
its 401(k) Plan on behalf of each such executive officer.
8
<PAGE> 11
STOCK OPTION GRANTS
The following table provides information with respect to stock options
granted during fiscal year 2000.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
-------------------------------------------------- -------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) YEAR ($/SH)(2) DATE $(3)
---- ---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Hans Helmerich.............................. 90,000 .117 24.75 12/1/09 791,100
George S. Dotson............................ 60,000 .078 24.75 12/1/09 527,400
Steven R. Shaw.............................. 50,000 .065 24.75 12/1/09 439,500
Douglas E. Fears............................ 30,000 .039 24.75 12/1/09 263,700
Steven R. Mackey............................ 25,000 .033 24.75 12/1/09 219,750
</TABLE>
---------------
(1) These options were granted pursuant to the Helmerich & Payne, Inc. 1996
Stock Incentive Plan and are nonqualified stock options which vest annually
in 25% increments, beginning one year from the date of grant.
(2) The exercise price is the fair market value of the Corporation's stock on
the grant date.
(3) The hypothetical present values on grant date were calculated under a
modified Black-Scholes model, which is a mathematical formula used to value
options. This formula considers a number of factors in hypothesizing an
option's present value. Factors used to value the options include the
stock's expected annual volatility rate (47.51%), risk free rate of return
(6.28%), dividend yield (1.13%), term (10 years), and discounts for
forfeiture of unvested shares (21.21%) and reduced term on vested shares
(18.42%).
The ultimate values of these options will depend on the future market price
of the Corporation's stock, which cannot be forecast with reasonable accuracy.
The Corporation does not believe that the Black-Scholes model, whether modified
or not modified, or any other valuation model, is a reliable method of computing
the present value of the Corporation's employee stock options. The actual value,
if any, the optionee will realize will depend on the excess of the market value
of the Corporation's stock over the exercise price on the date of exercise.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executive officers of the Corporation concerning the exercise of options during
the last fiscal year and unexercised options held as of the end of the fiscal
year.
9
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(1)
SHARES ACQUIRED EXERCISABLE(2)/ EXERCISABLE/
NAME ON EXERCISE($) VALUE REALIZED($) UNEXERCISABLE(3) UNEXERCISABLE
---- --------------- ----------------- ---------------- -------------
<S> <C> <C> <C> <C>
Hans Helmerich..................... -0- -0- 199,500/ 2,848,407/
230,500 2,609,094
George S. Dotson................... -0- -0- 135,000/ 1,919,062/
155,000 1,752,812
Steven R. Shaw..................... 15,000 360,000 80,500/ 975,657/
124,500 1,413,719
Douglas E. Fears................... 16,500 358,501 43,500/ 464,719/
75,500 856,282
Steven R. Mackey................... 15,250 255,547 24,500/ 120,750/
64,250 726,985
</TABLE>
---------------
(1) Fair market value used for computations in this column was $36.125 per
share, which was the closing price of the Corporation's common stock on
September 30, 2000.
(2) These totals contain out-of-the-money options of 45,000, 30,000, 25,000
15,000 and 12,500 for Messrs. Helmerich, Dotson, Shaw, Fears and Mackey,
respectively.
(3) These totals contain out-of-the-money options of 45,000, 30,000, 25,000,
15,000 and 12,500 for Messrs. Helmerich, Dotson, Shaw, Fears and Mackey,
respectively.
LONG-TERM INCENTIVE PLANS
The Corporation has no long-term incentive plans.
PENSION PLANS
The pension plan benefit under the Corporation's retirement plan is
calculated pursuant to the following formula:
Compensation X 1.5% = Annual Pension Benefit.
Pension benefits, which are accrued annually, 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. Therefore, the pension benefit is not
determined primarily by final compensation and years of service.
10
<PAGE> 13
Based upon this formula, an assumed annual salary growth rate of 6%, and an
age 62 retirement date, the estimated annual benefits payable to each named
executive officer at retirement are:
<TABLE>
<CAPTION>
ANNUAL
CURRENT RETIREMENT
NAME AGE BENEFIT(1)
---- ------- ----------
<S> <C> <C>
Hans Helmerich.............................................. 42 $435,998
George S. Dotson............................................ 60 $142,704
Steven R. Shaw.............................................. 50 $141,497
Douglas E. Fears............................................ 51 $100,775
Steven R. Mackey............................................ 50 $ 97,638
</TABLE>
---------------
(1) The annual retirement benefit has not been reduced for statutory
compensation and benefit limits, as amounts over these limits would be
payable pursuant to the Supplemental Retirement Income Plan for Salaried
Employees of Helmerich & Payne, Inc. The benefits listed above are computed
as a straight single life annuity and are not subject to any reduction for
Social Security or other offset amounts.
REPORT ON REPRICING OF OPTIONS
There were no adjustments or amendments to the exercise price of stock
options previously awarded to any of the named executive officers during the
last fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000, the members of the Corporation's Human Resources
Committee (which functions as the Corporation's compensation committee) were Mr.
William L. Armstrong, George A. Schaefer, and Mr. John D. Zeglis. No executive
officer or director of the Corporation has any relationship covered by the
Compensation Committee Interlock and Insider Participation regulations.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-OF-CONTROL
ARRANGEMENTS
The Helmerich & Payne, Inc. 1990 Stock Option Plan and the Helmerich &
Payne, Inc. 1996 Stock Incentive Plan contain a provision whereby all stock
options and restricted stock will automatically become fully vested and
immediately exercisable in the event of a "change of control" of the
Corporation, as defined in such plans.
If a named executive officer dies prior to age 65 while employed by the
Corporation or after having retired under the Corporation's pension plan, then
pursuant to an agreement with each named executive officer the surviving spouse
of such deceased executive will be paid $2,250 per month for 120 consecutive
months, commencing upon the date of death. Alternatively, if the named executive
officer remains in the employment of the Corporation until age 65 or has retired
under the provisions of the Corporation's pension plan, then commencing on his
65th birthday such executive officer shall be paid $225 per month for 120
consecutive months.
11
<PAGE> 14
HUMAN RESOURCES COMMITTEE REPORT
Decisions with regard to the compensation of the Corporation's executive
officers are generally made by the Human Resources Committee of the Board
("Committee"). Each member of the Committee is a non-employee director.
Decisions about awards under the Corporation's stock-based compensation plans
are made by the Committee and reported to the Board. All other decisions by the
Committee relating to compensation of the Corporation's executive officers are
reviewed and approved by the Board. Generally, the Committee meets in December
following the end of a particular fiscal year to consider prospective
calendar-year salary adjustments and stock-based compensation, as well as to
consider bonus compensation for executive officers for the prior fiscal year.
Executive Officer Compensation Policies
The Corporation's executive compensation policies are designed to provide
competitive levels of compensation that integrate pay with the Corporation's
performance, recognize individual initiative and achievements, and assist the
Corporation in attracting and retaining qualified executives. The Committee
relies in large part on compensation studies for the determination of
competitive compensation. These studies include salary and bonus compensation
data from several competitor companies including certain of those companies
contained within the S&P Oil & Gas (Drilling & Equipment)-500 Index. Also, when
the Committee contemplates the awarding of stock options or restricted stock to
its executives, it considers the nature and amount of stock awards made by
competitor companies to their executive officers. In order to implement these
objectives, the Corporation has developed a straightforward compensation package
consisting of salary, annual bonus, and periodic awards of stock options and/or
restricted stock. Each element of the compensation package serves a particular
purpose. Salary and bonus are primarily designed to reward current and past
performance. Base salaries are conservatively set to recognize individual
performance while attempting to generally approximate the median level of base
salaries among the Corporation's competitors. Annual bonuses to executive
officers are awarded based upon corporate and/or divisional performance
criteria, competitive considerations, and the Committee's subjective
determination of individual performance. Awards of stock options and restricted
stock are primarily designed to tie a portion of each executive's compensation
to long-term future performance of the Corporation. The Committee believes that
stock ownership by management through stock-based compensation arrangements is
beneficial in aligning management's and stockholders' interests. The value of
these awards will increase or decrease based upon the future price of the
Corporation's stock.
During fiscal 2000, the Committee, with the assistance of an independent
compensation consulting firm, reviewed the Corporation's executive compensation
practices. There were no material changes made in the Corporation's executive
compensation practices as a result of such review.
In determining executive compensation for fiscal 2000, the Committee
considered the Corporation's overall historical performance and its future
objectives, together with fiscal 2000 corporate performance. The Committee
believes that this policy provides a certain degree of stability in executive
compensation considering the cyclical nature of the Corporation's businesses.
Within this framework, the Committee considered several disproportionately
weighted corporate and divisional performance objectives in making its
compensation decisions for fiscal 2000. The performance objectives applicable to
the entire corporation and their weighting were: net income as a percentage of
invested capital (70%) and earnings per share (30%). The divisional objectives
and weighting for the contract drilling business were: divisional net income as
a
12
<PAGE> 15
percentage of invested capital (70%); pre-tax cash flow from operations (15%);
and after-tax income (15%). The divisional objectives and weighting for the
exploration and production business were: finding cost (50%); after-tax income
(25%); and divisional net income as a percentage of invested capital (25%). The
Committee determined that all of the divisional and corporate target performance
objectives were exceeded in fiscal 2000.
Each of the executive officers was assigned a 2000 target bonus award
expressed as a percentage of base salary. Each of the executive officers was
also assigned a corporate and/or divisional performance weighting percentage
based upon each officer's corporate and/or divisional responsibilities. Whether
an executive officer earns all, more, or a portion of his target bonus award
depends upon satisfaction of corporate and/or divisional performance objectives,
the corporate and/or divisional weighting assigned to an executive officer and
the Committee's subjective determination of individual performance.
During fiscal 2000, stock options were awarded to the executive officers
and other key employees. In making these stock option awards, the Committee
considered both individual performance and the amount of stock option awards
made by competitors.
Section 162(m) of the Internal Revenue Code provides that certain
compensation to certain executive officers in excess of $1 million annually will
not be deductible for federal income tax purposes. The current compensation
levels of the Corporation's executive officers are below the $1 million
threshold. In the event that the Corporation's compensation levels approach the
$1 million deduction cap, the Committee will further analyze Section 162(m) and
take such action as it deems appropriate.
Compensation Paid to the Chief Executive Officer
Mr. Helmerich's compensation is determined in the same manner as described
for the other executive officers. For fiscal 2000, Mr. Helmerich earned a
$425,000 bonus and a 4.5% salary increase. Consistent with the Corporation's
compensation policies, Mr. Helmerich's salary was increased in order to
approximate the median level of base salaries of competitor CEOs. However, Mr.
Helmerich's fiscal 2000 bonus was $300,000 more than the bonus he received for
fiscal 1999. The increase in Mr. Helmerich's bonus was due to the fact that all
divisional and corporate target performance objectives were exceeded in fiscal
2000 but were only partially met in fiscal 1999.
In addition, the Committee awarded Mr. Helmerich stock options to purchase
90,000 shares of stock. The Committee based this award on its subjective
assessment of Mr. Helmerich's performance as CEO and the amount of stock options
awarded to competitor CEOs.
SUBMITTED BY THE HUMAN RESOURCES COMMITTEE
William L. Armstrong George A. Schaefer John D. Zeglis
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<PAGE> 16
AUDIT COMMITTEE REPORT
In conjunction with its activities during the fiscal year ended September
30, 2000, the Audit Committee has reviewed and discussed the Corporation's
audited financial statements with management of the Corporation. The members of
the Audit Committee have also discussed with the Corporation's independent
auditors the matters required to be discussed by Statement on Accounting
Standards No. 61. The Audit Committee has received from the Corporation's
independent auditors the written disclosures and the letter required by
Independence Standards Board Standard No. 1 and has discussed with the
independent auditors the independent auditor's independence. Based on the
foregoing review and discussions, the Audit Committee recommended to the
Corporation's Board of Directors that the audited financial statements be
included in the Corporation's Annual Report on Form 10-K for the Corporation's
fiscal year ended September 30, 2000.
SUBMITTED BY THE AUDIT COMMITTEE
Glenn A. Cox L. F. Rooney, III
14
<PAGE> 17
PERFORMANCE GRAPH
The following performance graph reflects the yearly percentage change in
the Corporation's cumulative total stockholder return on common stock as
compared with the cumulative total return of the S&P 500 Index and the S&P Oil &
Gas (Drilling & Equipment)-500 Index. All cumulative returns assume reinvestment
of dividends and are calculated on a fiscal year basis ending on September 30 of
each year.
CUMULATIVE TOTAL RETURN ON COMMON STOCK
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Base
Period
September September September September September September
1995 1996 1997 1998 1999 2000
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELMERICH & PAYNE, INC. 100.00 157.46 291.56 154.79 189.18 272.61
S&P 500 INDEX 100.00 120.33 169.00 184.29 235.53 266.82
S&P OIL & GAS (DRILLING
& EQUIPMENT)-500 INDEX 100.00 134.13 246.72 145.16 193.49 273.22
</TABLE>
DIRECTOR COMPENSATION
Pursuant to the Non-Employee Directors' Stock Compensation Plan, each
non-employee Director of the Corporation receives a minimum of 800 shares,
subject to a maximum of 1,600 shares, of the Corporation's common stock as an
annual retainer fee in lieu of a cash retainer payment. In addition, each
non-employee Director receives a $2,500 attendance fee for each regularly
scheduled meeting that he attends, plus expenses incurred in connection with
attending meetings. Mr. W. H. Helmerich, III receives no compensation from the
Corporation for serving as its Chairman of the Board, nor do the employee
Directors receive compensation for serving on the Board of Directors.
15
<PAGE> 18
Members of the Corporation's Audit Committee and the Human Resources
Committee receive a fee of $500 per meeting attended, plus expenses incurred in
connection with attending meetings. It is anticipated that there will be four
regularly scheduled meetings of the Board during fiscal 2001.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Mr. W. H. Helmerich, III, Chairman of the Board, retired from the
Corporation in December of 1989. Pursuant to a consulting agreement with the
Corporation, he receives $154,800 per year for a one-year term commencing
January 1, 1990, plus reimbursement of reasonable business, travel, and other
expenses in consideration of his agreement to provide advisory and consulting
services (exclusive of services rendered by Mr. Helmerich as Chairman of the
Board) to the Corporation. The consulting agreement is automatically renewed for
successive one-year terms unless terminated by the Corporation or Mr. W. H.
Helmerich, III.
Mr. Rik Helmerich is the son of Mr. W. H. Helmerich, III and the brother of
Mr. Hans Helmerich. The Corporation, through a wholly-owned subsidiary, owns an
outdoor shopping mall and leases space, at competitive rates, to two restaurants
which are partially owned by Mr. Rik Helmerich. The annual rental paid by such
restaurants to the Corporation's subsidiary in fiscal 2000 totaled $111,059.40.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
For the fiscal year ended September 30, 2000, all reports were filed on a
timely basis with the Securities and Exchange Commission.
In making this disclosure, the Corporation has relied solely upon the
written representations of its Directors and executive officers, and copies of
the reports they have filed with the Securities and Exchange Commission.
INDEPENDENT ACCOUNTANTS
The independent public accounting firm selected by the Corporation for the
current year which audited the accounts of the Corporation for the fiscal year
most recently completed is Ernst & Young LLP. Representatives of Ernst & Young
LLP are expected to be present at the stockholders' meeting with the opportunity
to make a statement if they so desire and to respond to appropriate questions.
AUDIT FEES
For fiscal 2000, the Corporation agreed to pay Ernst & Young LLP a total
audit fee of $126,500, which has been paid. The audit fee covers the (i) annual
audit of the Corporation's financial statements included in the Corporation's
Form 10-K, and (ii) review of the Corporation's quarterly reports on Form 10-Q
for the fiscal year ended September 30, 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young LLP did not perform any financial information technology
services for the Corporation during fiscal 2000.
16
<PAGE> 19
ALL OTHER FEES
The Corporation was billed a total of $128,795 for all other services,
including $33,200 for audit related services and $95,595 for tax related and
other services rendered by Ernst & Young LLP during the fiscal year ended
September 30, 2000.
The Audit Committee considered whether Ernst & Young LLP's provision of
non-audit services is compatible with maintaining such firm's independence.
PROPOSAL 2
APPROVAL OF HELMERICH & PAYNE, INC.
2000 STOCK INCENTIVE PLAN
Currently the Corporation has stock options outstanding under the Helmerich
& Payne, Inc. 1990 Stock Option Plan approved by the stockholders on March 6,
1991 ("1990 Plan") and under the Helmerich & Payne, Inc. 1996 Stock Incentive
Plan approved by the stockholders on March 5, 1997 ("1996 Plan"). Also, the
Corporation has awarded common stock grants to non-employee Directors on an
annual basis pursuant to the Helmerich & Payne, Inc. Non-Employee Directors'
Stock Compensation Plan approved by the stockholders on March 5, 1997
("Non-Employee Directors Plan"). Since options will not be awarded nor
restricted stock granted after December 6, 2000 under the 1990 Plan and the 1996
Plan nor will stock grants be awarded under the Non-Employee Directors Plan
after December 6, 2000, and in order, among other things, to permit the
Corporation to grant stock options and/or restricted stock to key employees and
non-employee Directors in the future, it is proposed that the stockholders
approve the Helmerich & Payne, Inc. 2000 Stock Incentive Plan (the "Stock
Incentive Plan").
The Board has adopted, subject to stockholder approval, the Stock Incentive
Plan, which will have the effect of authorizing the Corporation through the
Committee to grant non-qualified stock options, incentive stock options and
restricted stock awards to key employees and non-employee Directors subject to
the conditions set forth in the Stock Incentive Plan. The Board has reserved
3,000,000 shares of common stock of the Corporation for grant to participants
designated by the Committee under the Stock Incentive Plan. A brief description
of the Stock Incentive Plan appears below. A copy of the Stock Incentive Plan is
attached to this Proxy Statement as Appendix "A" and the description contained
herein is qualified in its entirety by reference to the complete text of the
Stock Incentive Plan. Capitalized terms used below not otherwise defined herein
shall have the meaning ascribed to them in the Stock Incentive Plan.
BACKGROUND
The purpose of the Stock Incentive Plan is to create incentives that are
designed to motivate participants to put forth maximum efforts toward the
success and growth of the Corporation and to enable the Corporation to attract
and retain experienced individuals who by their position, ability and diligence
are able to make important contributions to the Corporation's success. Toward
these objectives, the Stock Incentive Plan provides for the granting of options
and restricted stock awards.
17
<PAGE> 20
ADMINISTRATION
The Stock Incentive Plan provides for administration by the Human Resources
Committee of the Corporation's Board of Directors ("Committee"). Among the
powers granted to the Committee are the powers to interpret the Stock Incentive
Plan, establish rules and regulations for its operation, select participants to
receive awards, and, subject to the other terms and provisions of the Stock
Incentive Plan, determine the timing, form, amount and other terms and
conditions pertaining to any award.
ELIGIBILITY FOR PARTICIPATION
Any key employee of the Corporation or any of its subsidiaries and any
non-employee Director of the Corporation is eligible to participate in the Stock
Incentive Plan. The selection of participants is within the discretion of the
Committee. Approximately 200 employees are eligible to participate in the Stock
Incentive Plan. The benefits or amounts to be received by or allocated to the
participants in the Stock Incentive Plan will be determined in the sole
discretion of the Committee.
TYPES OF AWARDS
The Stock Incentive Plan provides for the granting of any or all of the
following types of awards: (i) stock options, including non-qualified stock
options and stock options intended to qualify as incentive stock options under
Section 422 of the Code; and (ii) restricted stock. The awards may be granted
singly or in combination as determined by the Committee; provided however that
non-employee Directors shall not be awarded incentive stock options or
restricted stock.
AMENDMENT OF THE STOCK INCENTIVE PLAN
The Corporation, through the Board, may amend the Stock Incentive Plan at
any time, but may not, without stockholder approval, adopt any amendment that
would increase the maximum number of shares that may be issued under the Stock
Incentive Plan (except for certain antidilution adjustments described below), or
materially modify any provision of the Stock Incentive Plan. In addition, the
Stock Incentive Plan provides for the automatic adjustment of the number and
kind of shares available thereunder and the number and kind of shares subject to
outstanding awards in the event the common stock is changed into or exchanged
for a different number or kind of shares of stock or other securities of the
Corporation or another corporation, or if the number of shares of common stock
is increased through a stock dividend. The Stock Incentive Plan also provides
that an adjustment in the number of shares available thereunder and in the
number of shares subject to any outstanding awards may be made if the Committee
determines that any other change in the number or kind of shares of common stock
equitably requires such an adjustment.
OTHER COMPONENTS OF THE STOCK INCENTIVE PLAN
The Stock Incentive Plan authorizes the Committee to grant awards during
the period beginning December 6, 2000 and ending December 6, 2010. Shares of
common stock subject to stock option awards that terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of shares, will again
be available for issuance subject to awards under the Stock Incentive Plan.
18
<PAGE> 21
STOCK OPTIONS
Under the Stock Incentive Plan, the Committee may grant awards in the form
of options to purchase shares of common stock. The Committee will, with regard
to each option, determine the terms and conditions of each option, the number of
shares subject to the option and the manner and time of the option's exercise.
The exercise price of an option may not be less than the fair market value of
the common stock on the date of grant. The exercise price of an option may be
paid by a participant in cash, shares of common stock or a combination thereof.
Any option granted in the form of an incentive stock option will satisfy the
applicable requirements of Section 422 of the Code. Subject to the adjustment
provisions of the Stock Incentive Plan, the aggregate number of shares of common
stock made subject to the award of options to any participant in any fiscal year
of the Corporation may not exceed 200,000. The closing price of the
Corporation's common stock on January 9, 2001 was $41.625 per share.
RESTRICTED STOCK AWARDS
The Stock Incentive Plan authorizes the Committee to grant awards in the
form of restricted stock. Restricted stock awards will be subject to such terms,
conditions, restrictions and/or limitations as the Committee deems appropriate
including, but not limited to, restrictions on transferability, and continued
employment. Each restricted stock award will require a minimum restriction
period of three years. Subject to the adjustment provisions of the Stock
Incentive Plan, in no event shall more than 450,000 shares of common stock be
awarded to participants as restricted stock awards.
OTHER TERMS OF AWARDS
Upon granting of any award, the Committee will, by way of an award
agreement, establish such other terms, conditions, restrictions and/or
limitations governing the granting of such awards as are not inconsistent with
the Stock Incentive Plan.
CHANGE OF CONTROL EVENT
Upon the occurrence of a Change of Control of the Corporation, the unvested
portions of all outstanding awards are immediately and automatically fully
vested without the requirement of any further act of the Corporation or the
participant.
FEDERAL TAX TREATMENT
Under current federal tax law, the following are the federal tax
consequences generally arising with respect to awards under the Stock Incentive
Plan. A participant who is granted an incentive stock option does not realize
any taxable income at the time of the grant or at the time of exercise.
Similarly, the Corporation is not entitled to any deduction at the time of grant
or at the time of exercise. If the participant makes no disposition of the
shares acquired pursuant to an incentive stock option before the later of two
years from the date of grant of such option and one year of the transfer of such
shares to the participant, any gain or loss realized on a subsequent disposition
of the shares will be treated as a long-term capital gain or loss. Under such
circumstances, the Corporation will not be entitled to any deduction for federal
income tax purposes.
The participant who is granted a non-qualified stock option does not have
taxable income at the time of grant, but does have taxable income at the time of
exercise equal to the difference between the exercise price
19
<PAGE> 22
of the shares and the market value of the shares on the date of exercise. The
Corporation is entitled to a corresponding deduction for the same amounts.
A participant who has been granted a restricted stock award will not
realize taxable income at the time of the grant, and the Corporation will not be
entitled to a deduction at the time of the grant, assuming that the restrictions
constitute a substantial risk of forfeiture for federal income tax purposes.
When such restrictions lapse, the participant will receive taxable income in an
amount equal to the excess of the fair market value of the shares at such time
over the amount, if any, paid for such shares, and the Corporation will be
entitled to a corresponding deduction.
NEW PLAN BENEFITS
The Committee, in its sole discretion, selects both the participants and
that number of stock options that each participant will be awarded. Since no
decisions have been made with respect to the grants of any awards under the
Stock Incentive Plan, it is not possible to determine the benefits or dollar
amounts to be received by either the named executive officers, the executive
group or the non-executive officer group.
THE CORPORATION'S BOARD HAS UNANIMOUSLY APPROVED THE ADOPTION OF THE HELMERICH &
PAYNE, INC. 2000 STOCK INCENTIVE PLAN AND UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE PROPOSAL TO APPROVE THE ADOPTION OF THE HELMERICH & PAYNE, INC. 2000 STOCK
INCENTIVE PLAN. PROXIES SOLICITED BY THE BOARD OF THE CORPORATION WILL BE VOTED
"FOR" APPROVAL OF THE STOCK INCENTIVE PLAN UNLESS INSTRUCTIONS TO THE CONTRARY
ARE SPECIFIED IN THE ENCLOSED PROXY.
STOCKHOLDER PROPOSALS
The Corporation's annual meeting for 2002 will be held Wednesday, March 6,
2002. Any stockholder wishing to submit a proposal to the vote of the
stockholders at such 2002 annual meeting must submit such proposal or proposals
in writing to the Corporation at its executive office in Tulsa, Oklahoma,
Attention: Corporate Secretary, on or before September 28, 2001. For any other
proposal that a stockholder wishes to have considered at the Corporation's 2002
annual meeting, the Corporate Secretary must receive written notice of such
proposal during the period beginning December 12, 2001, and ending January 11,
2002. Proposals which are not received in such time period will be considered
untimely and the persons serving as proxies will have discretion to vote on such
matters at the meeting. In addition, proposals must also comply with the
Corporation's Bylaws and the rules and regulations of the Securities and
Exchange Commission.
20
<PAGE> 23
OTHER MATTERS
As of this date, management knows of no business which will come before the
meeting other than that set forth in the notice of said 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.
By Order of the Board of Directors
/s/ Steven R. Mackey
STEVEN R. MACKEY
Secretary
Dated: January 26, 2001
21
<PAGE> 24
APPENDIX "A"
HELMERICH & PAYNE, INC.
2000 STOCK INCENTIVE PLAN
<PAGE> 25
HELMERICH & PAYNE, INC.
2000 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I PURPOSE...................................... A-1
Section 1.1 Purpose................................... A-1
Section 1.2 Establishment............................. A-1
Section 1.3 Shares Subject to the Plan................ A-1
ARTICLE II DEFINITIONS.................................. A-1
Section 2.1 "Affiliated Entity"....................... A-1
Section 2.2 "Award"................................... A-1
Section 2.3 "Award Agreement"......................... A-1
Section 2.4 "Board"................................... A-1
Section 2.5 "Change of Control Event"................. A-2
Section 2.6 "Code".................................... A-3
Section 2.7 "Committee"............................... A-3
Section 2.8 "Common Stock"............................ A-3
Section 2.9 "Company"................................. A-3
Section 2.10 "Date of Grant"........................... A-3
Section 2.11 "Director"................................ A-3
Section 2.12 "Eligible Employee"....................... A-3
Section 2.13 "Exchange Act"............................ A-3
Section 2.14 "Fair Market Value"....................... A-3
Section 2.15 "Incentive Stock Option".................. A-4
Section 2.16 "Nonqualified Stock Option"............... A-4
Section 2.17 "Option".................................. A-4
Section 2.18 "Participant"............................. A-4
Section 2.19 "Plan".................................... A-4
Section 2.20 "Restricted Stock Award".................. A-4
Section 2.21 "Subsidiary".............................. A-4
ARTICLE III ADMINISTRATION............................... A-4
Section 3.1 Administration of the Plan; the A-4
Committee..............................................
Section 3.2 Committee to Make Rules and Interpret A-5
Plan...................................................
ARTICLE IV GRANT OF AWARDS............................... A-5
Section 4.1 Committee to Grant Awards................. A-5
ARTICLE V ELIGIBILITY................................... A-6
ARTICLE VI STOCK OPTIONS................................. A-6
Section 6.1 Grant of Options.......................... A-6
Section 6.2 Conditions of Options..................... A-6
</TABLE>
i
<PAGE> 26
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VII RESTRICTED STOCK AWARDS....................... A-8
Section 7.1 Grant of Restricted Stock Awards.......... A-8
Section 7.2 Conditions of Restricted Stock Awards..... A-8
ARTICLE VIII STOCK ADJUSTMENTS............................. A-9
ARTICLE IX GENERAL....................................... A-9
Section 9.1 Amendment or Termination of Plan.......... A-9
Section 9.2 Termination of Employment................. A-10
Section 9.3 Limited Transferability - Options......... A-10
Section 9.4 Withholding Taxes......................... A-10
Section 9.5 Change of Control......................... A-11
Section 9.6 Amendments to Awards...................... A-11
Section 9.7 Regulatory Approval and Listings.......... A-11
Section 9.8 Right to Continued Employment............. A-11
Section 9.9 Reliance on Reports....................... A-11
Section 9.10 Construction.............................. A-12
Section 9.11 Governing Law............................. A-12
</TABLE>
ii
<PAGE> 27
ARTICLE I
PURPOSE
SECTION 1.1 Purpose. This 2000 Stock Incentive Plan (the "Plan") is
established by Helmerich & Payne, Inc. (the "Company") to create incentives
which are designed to motivate Participants to put forth maximum effort toward
the success and growth of the Company and to enable the Company to attract and
retain experienced individuals who by their position, ability and diligence are
able to make important contributions to the Company's success. Toward these
objectives, the Plan provides for the granting of Options and Restricted Stock
Awards to Eligible Employees and Directors subject to the conditions set forth
in the Plan.
SECTION 1.2 Establishment. The Plan is effective as of December 6, 2000
and for a period of ten years thereafter. The Plan shall continue in effect
until all matters relating to the payment of Awards and administration of the
Plan have been settled.
The Plan is subject to approval by the holders of a majority of the
outstanding shares of Common Stock, present, or represented, and entitled to
vote at a meeting called for such purpose, which approval must occur within the
period ending twelve months after the date the Plan is adopted by the Board.
Pending such approval by the shareholders, Awards under the Plan may be granted
to Participants, but no such Awards may be exercised prior to receipt of
shareholder approval. In the event shareholder approval is not obtained within
such twelve-month period, all such Awards shall be void.
SECTION 1.3 Shares Subject to the Plan. Subject to the limitations set
forth in the Plan, Awards may be made under this Plan for a total of Three
Million (3,000,000) shares of Common Stock.
ARTICLE II
DEFINITIONS
SECTION 2.1 "Affiliated Entity" means any partnership or limited liability
company in which a majority of the partnership or other similar interest thereof
is owned or controlled, directly or indirectly, by the Company or one or more of
its Subsidiaries or Affiliated Entities or a combination thereof. For purposes
hereof, the Company, a Subsidiary or an Affiliated Entity shall be deemed to
have a majority ownership interest in a partnership or limited liability company
if the Company, such Subsidiary or Affiliated Entity shall be allocated a
majority of partnership or limited liability company gains or losses or shall be
or control a managing director or a general partner of such partnership or
limited liability company.
SECTION 2.2 "Award" means, individually or collectively, any Option or
Restricted Stock Award granted under the Plan to an Eligible Employee or
Director by the Committee pursuant to such terms, conditions, restrictions,
and/or limitations, if any, as the Committee may establish by the Award
Agreement or otherwise.
SECTION 2.3 "Award Agreement" means any written instrument that
establishes the terms, conditions, restrictions, and/or limitations applicable
to an Award in addition to those established by this Plan and by the Committee's
exercise of its administrative powers.
SECTION 2.4 "Board" means the Board of Directors of the Company.
A-1
<PAGE> 28
SECTION 2.5 "Change of Control Event" means each of the following:
(i) The acquisition after the Effective Date of this Plan by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 15% or more of either (1) the
then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (2) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a
Change of Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (D) any acquisition previously
approved by at least a majority of the members of the Incumbent Board (as
such term is hereinafter defined), (E) any acquisition approved by at least
a majority of the members of the Incumbent Board within five business days
after the Company has notice of such acquisition, or (F) any acquisition by
any corporation pursuant to a transaction which complies with clauses (1),
(2), and (3) of subsection (iii) of this Section 2.5; or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, appointment or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for purposes of this definition, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
share exchange, merger (a "Business Combination"), in each case, unless,
following such Business Combination, (1) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination will beneficially
own, directly or indirectly, more than 70% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction will own the Company
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) will beneficially own, directly or indirectly, 15% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business
Combination, and (3) at least a majority of the members of the board of
directors of the corporation resulting from such
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Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination or were elected, appointed or
nominated by the Board; or
(iv) Approval by the shareholders of the Company of (1) a complete
liquidation or dissolution of the Company or, (2) the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation, with respect to which following such sale or other
disposition, (A) more than 70% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) less than 15% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors will be
beneficially owned, directly or indirectly, by any Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation), except to the extent that such Person owned 15% or more of
the Outstanding Company Common Stock or Outstanding Company Voting
Securities prior to the sale or disposition, and (C) at least a majority of
the members of the board of directors of such corporation were members of
the Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such sale or other disposition
of assets of the Company or were elected, appointed or nominated by the
Board.
SECTION 2.6 "Code" means the Internal Revenue Code of 1986, as amended.
References in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.
SECTION 2.7 "Committee" means the Human Resources Committee of the Board.
SECTION 2.8 "Common Stock" means the common stock, par value $.10 per
share, of the Company, and after substitution, such other stock as shall be
substituted therefor as provided in Article VIII.
SECTION 2.9 "Company" means Helmerich & Payne, Inc., a Delaware
corporation.
SECTION 2.10 "Date of Grant" means the date on which the granting of an
Award to a Participant is authorized by the Committee or such later date as may
be specified by the Committee in such authorization.
SECTION 2.11 "Director" means any person who is a member of the Board and
is not an employee of the Company, a Subsidiary or an Affiliated Entity.
SECTION 2.12 "Eligible Employee" means any key employee of the Company, a
Subsidiary, or an Affiliated Entity.
SECTION 2.13 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
SECTION 2.14 "Fair Market Value" means (i) during such time as the Common
Stock is listed upon the New York Stock Exchange or other exchanges or the
Nasdaq/National Market System, the average of
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the highest and lowest sales prices of the Common Stock as reported by such
stock exchange or exchanges or the Nasdaq/National Market System on the day for
which such value is to be determined, or if no sale of the Common Stock shall
have been made on any such stock exchange or the Nasdaq/National Market System
that day, on the next preceding day on which there was a sale of such Common
Stock or (ii) during any such time as the Common Stock is not listed upon an
established stock exchange or the Nasdaq/National Market System, the mean
between dealer "bid" and "ask" prices of the Common Stock in the
over-the-counter market on the day for which such value is to be determined, as
reported by the National Association of Securities Dealers, Inc.
SECTION 2.15 "Incentive Stock Option" means an Option within the meaning
of Section 422 of the Code.
SECTION 2.16 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
SECTION 2.17 "Option" means an Award granted under Article VI of the Plan
and includes both Nonqualified Stock Options and Incentive Stock Options to
purchase shares of Common Stock.
SECTION 2.18 "Participant" means an Eligible Employee or Director of the
Company, a Subsidiary, or an Affiliated Entity to whom an Award has been granted
by the Committee under the Plan.
SECTION 2.19 "Plan" means the Helmerich & Payne, Inc. 2000 Stock Incentive
Plan.
SECTION 2.20 "Restricted Stock Award" means an Award granted to a
Participant under Article VII of the Plan.
SECTION 2.21 "Subsidiary" shall have the same meaning set forth in Section
424 of the Code.
ARTICLE III
ADMINISTRATION
SECTION 3.1 Administration of the Plan; the Committee.
The Committee shall administer the Plan. Unless otherwise provided in the
by-laws of the Company or the resolutions adopted from time to time by the Board
establishing the Committee, the Board may from time to time remove members from,
or add members to, the Committee. Vacancies on the Committee, however caused,
shall be filled by the Board. The Committee shall hold meetings at such times
and places as it may determine. A majority of the members of the Committee shall
constitute a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present or acts reduced to or approved in writing
by a majority of the members of the Committee shall be the valid acts of the
Committee.
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
(i) Select the Participants to be granted Awards.
(ii) Determine the time or times when Awards will be made.
(iii) Determine the form of an Award, whether an Option or a
Restricted Stock Award, the number of shares of Common Stock subject to the
Award, all the terms, conditions (including performance requirements),
restrictions and/or limitations, if any, of an Award, including the time
and conditions of
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exercise or vesting, and the terms of any Award Agreement, which may
include the waiver or amendment of prior terms and conditions or
acceleration or early vesting or payment of an Award under certain
circumstances determined by the Committee.
(iv) Determine whether Awards will be granted singly or in
combination.
(v) Accelerate the vesting, exercise or payment of an Award or the
performance period of an Award.
(vi) Take any and all other action it deems necessary or advisable for
the proper operation or administration of the Plan.
SECTION 3.2 Committee to Make Rules and Interpret Plan. The Committee in
its sole discretion shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any Awards and all decisions and determinations by the Committee with respect
to the Plan shall be final, binding, and conclusive on all parties.
ARTICLE IV
GRANT OF AWARDS
SECTION 4.1 Committee to Grant Awards. The Committee may, from time to
time, grant Awards to one or more Participants, provided, however, that:
(i) Subject to Article VIII, the aggregate number of shares of Common
Stock made subject to the Award of Options to any Participant in any
calendar year may not exceed 200,000.
(ii) Subject to Article VIII, in no event shall more than 450,000
shares of Common Stock subject to the Plan be awarded to Participants as
Restricted Stock Awards (the "Restricted Stock Award Limit").
(iii) Any shares of Common Stock related to Awards which terminate by
expiration, forfeiture, cancellation or otherwise without the issuance of
shares of Common Stock or are exchanged in the Committee's discretion for
Awards not involving Common Stock, shall be available again for grant under
the Plan.
(iv) Common Stock delivered by the Company in payment of any Award
under the Plan may be authorized and unissued Common Stock or Common Stock
held in the treasury of the Company.
(v) The Committee shall, in its sole discretion, determine the manner
in which fractional shares arising under this Plan shall be treated.
(vi) Separate certificates representing Common Stock to be delivered
to a Participant upon the exercise of any Option will be issued to such
Participant.
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ARTICLE V
ELIGIBILITY
Subject to the provisions of the Plan, the Committee shall, from time to
time, select from the Eligible Employees and Directors those to whom Awards
shall be granted and shall determine the type or types of Awards to be made and
shall establish in the related Award Agreements the terms, conditions,
restrictions and/or limitations, if any, applicable to the Awards in addition to
those set forth in the Plan and the administrative rules and regulations issued
by the Committee.
ARTICLE VI
STOCK OPTIONS
SECTION 6.1 Grant of Options. The Committee may, from time to time,
subject to the provisions of the Plan and such other terms and conditions as it
may determine, grant Options to Participants. These Options may be Incentive
Stock Options or Nonqualified Stock Options, or a combination of both. Each
grant of an Option shall be evidenced by an Award Agreement executed by the
Company and the Participant, and shall contain such terms and conditions and be
in such form as the Committee may from time to time approve, subject to the
requirements of Section 6.2.
SECTION 6.2 Conditions of Options. Each Option so granted shall be
subject to the following conditions:
(i) Exercise Price. As limited by Section 6.2(v) below, each Option
shall state the exercise price which shall be set by the Committee at the
Date of Grant; provided, however, no Option shall be granted at an exercise
price which is less than the Fair Market Value of the Common Stock on the
Date of Grant.
(ii) Form of Payment. The exercise price of an Option may be paid (1)
in cash or by check, bank draft or money order payable to the order of the
Company; (2) by delivering shares of Common Stock having a Fair Market
Value on the date of payment equal to the amount of the exercise price, but
only to the extent such exercise of an Option would not result in an
accounting compensation charge with respect to the shares used to pay the
exercise price unless otherwise determined by the Committee; or (3) a
combination of the foregoing. In addition to the foregoing, any Option
granted under the Plan may be exercised by a broker-dealer acting on behalf
of a Participant if (A) the broker-dealer has received from the Participant
or the Company a notice evidencing the exercise of such Option and
instructions signed by the Participant requesting the Company to deliver
the shares of Common Stock subject to such Option to the broker-dealer on
behalf of the Participant and specifying the account into which such shares
should be deposited, (B) adequate provision has been made with respect to
the payment of any withholding taxes due upon such exercise or, in the case
of an Incentive Stock Option, upon the disposition of such shares and (C)
the broker-dealer and the Participant have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR, Part 220 and any successor rules and
regulations applicable to such exercise.
(iii) Exercise of Options. Options granted under the Plan shall be
exercisable, in whole or in such installments and at such times, and shall
expire at such time, as shall be provided by the Committee in the Award
Agreement. Exercise of an Option shall be by written notice to the
Secretary at least two
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business days in advance of such exercise stating the election to exercise
in the form and manner determined by the Committee. Every share of Common
Stock acquired through the exercise of an Option shall be deemed to be
fully paid at the time of exercise and payment of the exercise price and
applicable withholding taxes.
(iv) Other Terms and Conditions. Among other conditions that may be
imposed by the Committee, if deemed appropriate, are those relating to (1)
the period or periods and the conditions of exercisability of any Option;
(2) the minimum periods during which Participants must be employed by the
Company, its Subsidiaries, or an Affiliated Entity, or must hold Options
before they may be exercised; (3) the minimum periods during which shares
acquired upon exercise must be held before sale or transfer shall be
permitted; (4) conditions under which such Options or shares may be subject
to forfeiture; (5) the frequency of exercise or the minimum or maximum
number of shares that may be acquired at any one time; (6) the achievement
by the Company of specified performance criteria; and (7) non-compete and
protection of business matters.
(v) Special Restrictions Relating to Incentive Stock Options. Options
issued in the form of Incentive Stock Options shall only be granted to
individuals who are Eligible Employees of the Company or a Subsidiary.
Furthermore, Incentive Stock Options shall, in addition to being subject to
all applicable terms, conditions, restrictions and/or limitations
established by the Committee, comply with the requirements of Section 422
of the Code, including, without limitation, the requirement that the
exercise price of an Incentive Stock Option not be less than 100% of the
Fair Market Value of the Common Stock on the Date of Grant, the requirement
that each Incentive Stock Option, unless sooner exercised, terminated or
cancelled, expire no later than 10 years from its Date of Grant, and the
requirement that the aggregate Fair Market Value (determined on the Date of
Grant) of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by a Participant during any calendar
year (under this Plan or any other plan of the Company or any Subsidiary)
not exceed $100,000.
(vi) Application of Funds. The proceeds received by the Company from
the sale of Common Stock pursuant to Options will be used for general
corporate purposes.
(vii) Shareholder Rights. No Participant shall have a right as a
shareholder with respect to any share of Common Stock subject to an Option
prior to purchase of such shares of Common Stock by exercise of the Option.
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ARTICLE VII
RESTRICTED STOCK AWARDS
SECTION 7.1 Grant of Restricted Stock Awards. The Committee may, from
time to time, subject to the provisions of the Plan and such other terms and
conditions as it may determine, grant a Restricted Stock Award to any Eligible
Employee. Restricted Stock Awards shall be awarded in such number and at such
times during the term of the Plan as the Committee shall determine. Each
Restricted Stock Award may be evidenced in such manner as the Committee deems
appropriate, including, without limitation, a book-entry registration or
issuance of a stock certificate or certificates, and by an Award Agreement
setting forth the terms of such Restricted Stock Award.
SECTION 7.2 Conditions of Restricted Stock Awards. The grant of a
Restricted Stock Award shall be subject to the following:
(i) Restriction Period. In addition to any vesting conditions
determined by the Committee, including, but not by way of limitation, the
achievement by the Company of specified performance criteria, vesting of
each Restricted Stock Award shall require the holder to remain in the
employment of the Company, a Subsidiary, or an Affiliated Entity for a
prescribed period (a "Restriction Period"). The Committee shall determine
the Restriction Period or Periods which shall apply to the shares of Common
Stock covered by each Restricted Stock Award or portion thereof; provided,
however, each Restricted Stock Award shall have a minimum Restriction
Period of at least three years. At the end of the Restriction Period,
assuming the fulfillment of any other specified vesting conditions, the
restrictions imposed by the Committee shall lapse with respect to the
shares of Common Stock covered by the Restricted Stock Award or portion
thereof. In addition to acceleration of vesting upon the occurrence of a
Change of Control Event as provided in Section 9.5, the Committee may, in
its sole discretion, accelerate the vesting of a Restricted Stock Award
under such circumstances as it deems appropriate.
(ii) Restrictions. The holder of a Restricted Stock Award may not
sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the
shares of Common Stock represented by the Restricted Stock Award during the
applicable Restriction Period. The Committee shall impose such other
restrictions and conditions on any shares of Common Stock covered by a
Restricted Stock Award as it may deem advisable including, without
limitation, restrictions under applicable Federal or state securities laws,
and may legend the certificates representing Restricted Stock to give
appropriate notice of such restrictions.
(iii) Rights as Shareholders. During any Restriction Period, the
Committee may, in its discretion, grant to the holder of a Restricted Stock
Award all or any of the rights of a shareholder with respect to the shares,
including, but not by way of limitation, the right to vote such shares and
to receive dividends. If any dividends or other distributions are paid in
shares of Common Stock, all such shares shall be subject to the same
restrictions on transferability as the shares of Restricted Stock with
respect to which they were paid.
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ARTICLE VIII
STOCK ADJUSTMENTS
In the event that the shares of Common Stock, as presently constituted,
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification, stock
split, spinoff, combination of shares or otherwise), or if the number of such
shares of Common Stock shall be increased through the payment of a stock
dividend, or a dividend on the shares of Common Stock or rights or warrants to
purchase securities of the Company shall be issued to holders of all outstanding
Common Stock, then there shall be substituted for or added to each share
available under and subject to the Plan, and each share theretofore appropriated
under the Plan, the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock shall be so changed or for which
each such share shall be exchanged or to which each such share shall be
entitled, as the case may be, on a fair and equivalent basis in accordance with
the applicable provisions of Section 424 of the Code; provided, however, with
respect to Options, in no such event will such adjustment result in a
modification of any Option as defined in Section 424(h) of the Code. In the
event there shall be any other change in the number or kind of the outstanding
shares of Common Stock, or any stock or other securities into which the Common
Stock shall have been changed or for which it shall have been exchanged, then if
the Committee shall, in its sole discretion, determine that such change
equitably requires an adjustment in the shares available under and subject to
the Plan, or in any Award, theretofore granted, such adjustments shall be made
in accordance with such determination, except that no adjustment of the number
of shares of Common Stock available under the Plan or to which any Award relates
that would otherwise be required shall be made unless and until such adjustment
either by itself or with other adjustments not previously made would require an
increase or decrease of at least 1% in the number of shares of Common Stock
available under the Plan or to which any Award relates immediately prior to the
making of such adjustment (the "Minimum Adjustment"). Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment together with other adjustments required by
this Article VIII and not previously made would result in a Minimum Adjustment.
Notwithstanding the foregoing, any adjustment required by this Article VIII
which otherwise would not result in a Minimum Adjustment shall be made with
respect to shares of Common Stock relating to any Award immediately prior to
exercise, payment or settlement of such Award.
No fractional shares of Common Stock or units of other securities shall be
issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.
ARTICLE IX
GENERAL
SECTION 9.1 Amendment or Termination of Plan. The Board may alter,
suspend or terminate the Plan at any time. In addition, the Board may, from time
to time, amend the Plan in any manner, but may not without shareholder approval
adopt any amendment which would (i) increase the aggregate number of shares of
Common Stock available under the Plan (except by operation of Article VIII) or
(ii) modify any provision of the Plan which would materially increase the
benefit or rights of any Participant in the Plan.
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SECTION 9.2 Termination of Employment. If a Participant's employment with
the Company, a Subsidiary or an Affiliated Entity terminates on or after his
"Retirement Date" as such term is defined in the Helmerich & Payne, Inc.
Employees' Retirement Plan (or its successor), death or disability (as defined
in Section 22(e) of the Code), the Participant (or his personal representative
in the case of death) shall be entitled to purchase all or any part of the
shares subject to any (i) vested Incentive Stock Option for a period of up to
three months from such date of termination (one year in the case of death or
disability (as defined above) in lieu of the 3 month period), and (ii) vested
Nonqualified Stock Option during the remaining term of the Option. If a
Participant's employment terminates for any other reason, the Participant shall
be entitled to purchase all or any part of the shares subject to any vested
Option for a period of up to three months from such date of termination. In no
event shall any Option be exercisable past the term of the Option. The Committee
may, in its sole discretion, accelerate the vesting of unvested Options in the
event of termination of employment of any Participant.
SECTION 9.3 Limited Transferability - Options. The Committee may, in its
discretion, authorize all or a portion of the Nonqualified Stock Options granted
under this Plan to be on terms which permit transfer by the Participant to (i)
the ex-spouse of the Participant pursuant to the terms of a domestic relations
order, (ii) the spouse, children or grandchildren of the Participant ("Immediate
Family Members"), (iii) a trust or trusts for the exclusive benefit of such
Immediate Family Members, or (iv) a partnership in which such Immediate Family
Members are the only partners. In addition (1) unless the Committee otherwise
permits, there may be no consideration for any such transfer, (2) the Award
Agreement pursuant to which such Nonqualified Stock Options are granted must be
approved by the Committee, and must expressly provide for transferability in a
manner consistent with this paragraph, and (3) subsequent transfers of
transferred Nonqualified Stock Options shall be prohibited except as set forth
below in this Section 9.3. Following transfer, any such Nonqualified Stock
Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for purposes of Section
9.2 hereof, the term "Participant" shall be deemed to refer to the transferee.
The events of termination of employment of Section 9.2 hereof shall continue to
be applied with respect to the original Participant, following which the
Nonqualified Stock Options shall be exercisable by the transferee only to the
extent, and for the periods specified in Section 9.2 hereof. No transfer
pursuant to this Section 9.3 shall be effective to bind the Company unless the
Company shall have been furnished with written notice of such transfer together
with such other documents regarding the transfer as the Committee shall request.
In addition, subject to the foregoing provisions of this Section 9.3, Awards
shall be transferable only by will or the laws of descent and distribution;
however, no such transfer of an Award by the Participant shall be effective to
bind the Company unless the Company shall have been furnished with written
notice of such transfer and an authenticated copy of the will and/or such other
evidence as the Committee may deem necessary to establish the validity of the
transfer and the acceptance by the transferee of the terms and conditions of
such Award.
SECTION 9.4 Withholding Taxes. A Participant shall pay the amount of
taxes required by law upon the exercise of an option in cash or as otherwise
permitted in this Section 9.4. Unless otherwise paid by the Participant, the
Company shall be entitled to deduct from any payment under the Plan, regardless
of the form of such payment, the amount of all applicable income and employment
taxes required by law to be withheld with respect to such payment or may require
the Participant to pay to it such tax prior to and as a condition of the making
of such payment. In accordance with any applicable administrative guidelines it
establishes, the Committee may allow a Participant to pay the amount of taxes
required by law to be withheld from an Award by (i) directing the Company to
withhold from any payment of the Award a number of shares of Common
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Stock having a Fair Market Value on the date of payment equal to the amount of
the required withholding taxes or (ii) delivering to the Company previously
owned shares of Common Stock having a Fair Market Value on the date of payment
equal to the amount of the required withholding taxes; provided, the foregoing
notwithstanding, any payment made by the Participant pursuant to either of the
foregoing clauses (i) or (ii) shall not be permitted if it would result in an
accounting charge with respect to such shares used to pay such taxes unless
otherwise approved by the Committee.
SECTION 9.5 Change of Control. Awards granted under the Plan to any
Participant shall be immediately and automatically vested, fully earned and
exercisable upon the occurrence of a Change of Control Event.
SECTION 9.6 Amendments to Awards. The Committee may at any time
unilaterally amend the terms of any Award Agreement, whether or not presently
exercisable or vested, to the extent it deems appropriate; provided, however,
that any such amendment which is adverse to the Participant shall require the
Participant's consent.
SECTION 9.7 Regulatory Approval and Listings. The Company shall use its
best efforts to file with the Securities and Exchange Commission as soon as
practicable following approval by the shareholders of the Company of the Plan as
provided in Section 1.2 of the Plan, and keep continuously effective, a
Registration Statement on Form S-8 with respect to shares of Common Stock
subject to Awards hereunder. Notwithstanding anything contained in this Plan to
the contrary, the Company shall have no obligation to issue shares of Common
Stock under this Plan prior to:
(i) the obtaining of any approval from, or satisfaction of any waiting
period or other condition imposed by, any governmental agency which the
Committee shall, in its sole discretion, determine to be necessary or
advisable;
(ii) the admission of such shares to listing on the stock exchange on
which the Common Stock may be listed; and
(iii) the completion of any registration or other qualification of
such shares under any state or Federal law or ruling of any governmental
body which the Committee shall, in its sole discretion, determine to be
necessary or advisable.
SECTION 9.8 Right to Continued Employment. Participation in the Plan
shall not give any Participant any right to remain in the employ of the Company,
any Subsidiary, or any Affiliated Entity. The Company or, in the case of
employment with a Subsidiary or an Affiliated Entity, the Subsidiary or
Affiliated Entity reserves the right to terminate any Participant at any time.
Further, the adoption of this Plan shall not be deemed to give any Eligible
Employee, Director or any other individual any right to be selected as a
Participant or to be granted an Award.
SECTION 9.9 Reliance on Reports. Each member of the Committee and each
member of the Board shall be fully justified in relying or acting in good faith
upon any report made by the independent public accountants of the Company and
its Subsidiaries and upon any other information furnished in connection with the
Plan by any person or persons other than himself or herself. In no event shall
any person who is or shall have been a member of the Committee or of the Board
be liable for any determination made or other action taken or any omission to
act in reliance upon any such report or information or for any action taken,
including the furnishing of information, or failure to act, if in good faith.
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SECTION 9.10 Construction. Masculine pronouns and other words of
masculine gender shall refer to both men and women. The titles and headings of
the sections in the Plan are for the convenience of reference only, and in the
event of any conflict, the text of the Plan, rather than such titles or
headings, shall control.
SECTION 9.11 Governing Law. The Plan shall be governed by and construed
in accordance with the laws of the State of Oklahoma except as superseded by
applicable Federal law.
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APPENDIX "B"
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF HELMERICH & PAYNE, INC.
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Helmerich & Payne, Inc. Board of
Directors ("Board") to assist the Board in fulfilling its oversight
responsibilities. The Audit Committee's primary duties and responsibilities are
to:
- Monitor the integrity and quality of Helmerich & Payne, Inc.'s (the
"Company") financial reporting process and systems of internal controls
regarding finance, accounting, legal compliance and financial risk
exposure.
- Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
- Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall be appointed by the Board and shall meet the
requirements of the New York Stock Exchange ("NYSE"). By June 6, 2001, the Audit
Committee shall be comprised of three or more directors. All members of the
Audit Committee shall be independent of management and the Company as defined in
the NYSE listing standards. All members of the Audit Committee shall have a
basic understanding of finance and accounting and be able to read and understand
fundamental financial statements. At least one member of the Audit Committee
shall have accounting or related financial management expertise.
The Audit Committee shall meet at least two (2) times annually, or more
frequently as circumstances dictate. If the Audit Committee Chair is not
present, the members of the Audit Committee may designate a Chair by majority
vote of the Audit Committee membership. The Audit Committee Chair shall prepare
and/or approve an agenda in advance of each meeting. The Audit Committee shall
meet privately in executive session at least annually with management, the
director of the internal auditing department, the independent auditors, and as
an Audit Committee to discuss any matters that the Audit Committee or each of
these groups believe should be discussed. In addition, the Audit Committee, or
at least its Chair, shall communicate with management and the independent
auditors quarterly to review the Company's financial statements and significant
findings based upon the auditors limited review procedures.
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III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
A. General Review Procedures. The Audit Committee shall:
1. Review and reassess the adequacy of this Charter at least annually.
Submit the Charter to the Board for approval and have the Charter published
at least every three (3) years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior to
filing. Review should include discussion with management and independent
auditors of significant issues regarding accounting principles, practices,
and judgments.
3. In consultation with management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control and report
such exposures. Review significant findings prepared by the independent
auditors and the internal auditing department together with management's
responses.
4. Review with management and the independent auditors the Company's
quarterly financial results prior to the release of earnings and/or the
Company's quarterly financial statements prior to filing. Discuss any
significant changes to the Company's accounting principles and any items
required to be communicated by the independent auditors in accordance with
generally accepted auditing standards. The Chair of the Audit Committee may
represent the entire Audit Committee for purposes of this review.
B. Independent Auditors. The independent auditors are ultimately
accountable to the Audit Committee and the Board. The Audit Committee shall:
1. Review the independence and performance of the auditors and
annually recommend to the Board the appointment of the independent auditors
or approval of any discharge of auditors when circumstances warrant.
2. Approve the fees and other significant compensation to be paid to
the independent auditors.
3. On an annual basis, review and discuss with the independent
auditors all significant relationships they have with the Company that
could impair the auditors' independence.
4. Discuss the audit scope of the independent auditors.
5. Prior to releasing the year-end earnings, discuss the results of
the audit with the independent auditors. Discuss certain matters required
to be communicated to audit committees in accordance with generally
accepted auditing standards.
6. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
C. Internal Audit Department and Legal Compliance. The Audit Committee
shall:
1. Review the audit plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as needed.
B-2
<PAGE> 41
2. Review the appointment, performance, and replacement of the senior
internal auditor.
3. Review significant reports prepared by the internal audit
department together with management's response and follow-up to these
reports.
4. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental
agencies.
D. Other Audit Committee Responsibilities. The Audit Committee shall:
1. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report shall be included in the
Company's annual proxy statement.
2. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing laws, as the Audit Committee or the Board
deems necessary or appropriate.
3. Maintain minutes of meetings and periodically provide reports to
the Board.
B-3
<PAGE> 42
-----------------------------------
-----------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD
MARCH 7, 2001
AND
PROXY STATEMENT
[HELMERICH & PAYNE, INC. LOGO
OMITTED]
HELMERICH & PAYNE, INC.
-----------------------------------
-----------------------------------
<PAGE> 43
<TABLE>
<S> <C>
PROXY FOR ANNUAL MEETING THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS.
HELMERICH & PAYNE, INC. The undersigned hereby appoints as his/her proxies, with
powers of substitution and revocation, W. H. Helmerich, III,
---------------------------- Hans Helmerich, and Steven R. Mackey, or each of them, 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 The
Philbrook Museum Of Art, Patti Johnson Wilson Hall, 2727 South
Rockford Road, Tulsa, Oklahoma, on Wednesday, March 7, 2001,
at 12:00 noon, Tulsa time, and all adjournments thereof.
1. "Nominees for Directors of the First Class" for a three-year term are Hans Helmerich, George S.
Dotson and George A. Schaefer. DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 1.
[ ] FOR all listed nominees [ ] WITHHOLD vote from [ ] WITHHOLD vote only from
all listed nominees
-----------------------
2. Approval of the Helmerich & Payne, Inc. 2000 Stock Incentive Plan. DIRECTORS RECOMMEND A VOTE
FOR PROPOSAL 2.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting.
(Continued on Next Page)
</TABLE>
<PAGE> 44
(Continued from First Page)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE WISHES OF THE
STOCKHOLDER AS SPECIFIED IN THE SQUARES AND ON THE LINE PROVIDED ON THE REVERSE
SIDE HEREOF; HOWEVER, IF NO SPECIFICATION IS MADE IN THE SQUARES OR ON THE LINE
PROVIDED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE FULL SLATE OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE COMPLETE, SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated: , 2001.
---------------------------
--------------------------------------------
(Sign here exactly as name appears. When
signing as attorney, executor,
administrator, guardian, or corporate
official, please give your full title as
such.)
<PAGE> 45
APPENDIX TO ELECTRONIC FILING
LIST OF IMAGE INFORMATION NOT FILED ELECTRONICALLY
Photographs of the Directors and Nominees for Directors have been omitted from
Pages 5 through 7 of this Proxy Statement.
A graphic representation of the Performance Graph described on Page 17 of this
Proxy Statement has been omitted.
Proxy for Annual Meeting is filed herewith as an appendix.
</TEXT>
</DOCUMENT>