The U.S. Bankruptcy Court approved Pacific Drilling’s motion to (a) pay certain earned ordinary course compensation and (b) continue compensation programs in the ordinary course of business on a post-petition basis.
As previously reported, “The approximately 700 employees who run the Debtors’ drillships and operations are critical to the Debtors’ performance and success….For 2018, the bonus opportunity will be tied to three metrics: (a) an EBITDA performance measure, which will continue to account for 60% of the total bonus opportunity; (b) an HSE index performance measure, which will continue to account for 20% of the total bonus opportunity; and (c) a contract backlog measure accounting for the final 20% of the total bonus opportunity.”
In addition, “The EBITDA performance targets are consistent with the Debtors’ budget and require improvement over the current forecasted level of performance in 2017 in order to achieve 100% of the target. The HSE targets are consistent with the targets that apply to the 2017 Performance Bonus Plan, which are expected to be achieved well below the target level in 2017 and, therefore, incentivize continued improvement in 2018….The target opportunities for Employees for 2018 again will range from 10% to 100% of annual base salary, with Debtor Employees ranging from 10% to 100% of annual base salary and Non-Debtor Employees ranging from 10% to 20% of annual base salary….If the performance targets are achieved at the target level, the total payout earned by the Employees (before any individual reductions and assuming all Employees remain eligible for bonus payouts) will equal approximately $13.0 million in the aggregate, with approximately $12.9 million payable to Debtor Employees and $30,000 payable to Non-Debtor Employees.”
Court-filed documents continue, “Target award opportunities can range up to 250% of annual base salary (representing up to 56% of the Employee’s total target compensation level) and typically vest over a three-year period based on continued employment and, for senior leaders (comprising all insiders), achieving pre-established performance targets….Individual award values will be sized in the same manner as described above (up to 250% of base salary). The total target costs of the 2018 Long-Term Incentives will be approximately $8.7 million….The Non-Insider Retention Awards have an aggregate value of approximately $3.2 million (for 102 Debtor Employees) and approximately $1.7 million (for 19 Non-Debtor Employees).”
Read more Pacific Drilling bankruptcy news.