Pacific Drilling (PDSA) filed with the U.S. Bankruptcy Court a motion for entry of an order approving implementation of its key employee incentive plan (KEIP).
The motion explains, “The aggregate cost of the KEIP if target performance goals are achieved represents 0.1% of the book value of the Debtors’ assets based on December 31, 2017 asset value on the Debtors’ balance sheet. The cost of the KEIP may surpass this amount only if achieved performances exceed $140 million for the 2018 Revenue Period and/or $450 million for the 2019 Revenue Period. Performance at or above the maximum levels of the metrics (which will be extremely challenging) would result in a maximum aggregate payout under the 2018 KEIP and AIP of approximately $12.976 million (sum of AIP of $7.258 million and KEIP of $5.718 million).”
Separately, PDSA also filed a motion for entry of an order approving its long term incentive plan (LTIP) and authorizing, but not directing, the Debtors to (a) award and pay certain earned ordinary course compensation under the 2018 LTIP and (b) otherwise continue the 2018 LTIP in the ordinary course of business on a post-petition basis.
The LTIP motion explains, “PDSA’s compensation philosophy consistently weights total target compensation opportunities…less heavily towards fixed salary and more heavily towards performance-based and longer-term compensation….The LTIP was designed to pay a meaningful portion of regular, targeted annual compensation in a form that would drive performance by Employees. Consistent with their historical practice, the proposed 2018 LTIP awards total $2,276,000. In that connection, only minor changes have been implemented to the 2018 LTIP in light of the Debtors’ restructuring efforts and the Company’s current stock price.”
The Court scheduled a May 17, 2018 hearing to consider the motion with objections due by May 10, 2018.
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