<PAGE> 1
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 sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
Helmerich & 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.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<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 1, 2000, for the following purposes:
1. To elect three Directors comprising the class of Directors of the
Corporation known as the "Third Class" for a three-year term expiring in
2003.
2. 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 10, 2000,
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, 1999, 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 27, 2000
<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 1, 2000. This statement and the
accompanying proxy are first being sent or given to stockholders on or about
January 27, 2000.
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 10, 2000, 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 3,873,052 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 10, 2000, 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
10, 2000.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
TITLE OF NAME AND ADDRESS BENEFICIAL OF
CLASS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
-------- ------------------- ------------ -------
<C> <S> <C> <C>
Common Stock State Farm Mutual Automobile
Insurance Company
One State Farm Plaza
Bloomington, Illinois
61710 4,131,147 8.320%
</TABLE>
- ---------------
(1) State Farm Mutual Automobile Insurance Company has sole voting and
dispositive power with respect to 4,128,600 shares. State Farm Variable
Product Trust has sole voting and dispositive power with respect to 2,547
shares. This information is based upon State Farm Mutual Automobile
Insurance Company's Schedule 13G Amendment dated February 12, 1999.
<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 10, 2000.
<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 2,193,910(3) 4.418%
Hans Helmerich Common Stock 454,065(4)
George S. Dotson Common Stock 262,019(5)
Steven R. Shaw Common Stock 151,093(6)
Douglas E. Fears Common Stock 81,854(7)
Steven R. Mackey Common Stock 45,032(8)
L. F. Rooney, III Common Stock 32,200(9)
John D. Zeglis Common Stock 6,200
Glenn A. Cox Common Stock 5,200(10)
George A. Schaefer Common Stock 5,200
William L. Armstrong Common Stock 10,200
Edward B. Rust, Jr. Common Stock 2,600
All Directors and Executive Officers as a Group Common Stock 3,241,719(11) 6.556%
</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 200,000 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 199,500 shares exercisable within 60 days;
8,498 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of September 30, 1999; 22,245 shares owned by Mr. Hans Helmerich's wife,
with respect to which he has disclaimed all beneficial ownership; 14,800
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 135,000 shares exercisable within 60 days;
3,186 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of September 30, 1999; 11,801 shares in Mr. Dotson's IRA rollover account;
1,300 shares held in a trust for a family member for which Mr. Dotson, as a
Co-trustee,
2
<PAGE> 5
shares voting and investment power; 900 shares owned by Mr. Dotson's wife,
with respect to which he has disclaimed all beneficial ownership; and
10,625 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 95,500 shares exercisable within 60 days; and
7,166 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of September 30, 1999.
(7) Includes options to purchase 60,000 shares exercisable within 60 days;
2,857 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of September 30, 1999; 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 39,750 shares exercisable within 60 days; and
2,616 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of September 30, 1999.
(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 511,958 shares exercisable within 60 days; and
24,323 shares fully vested under the Helmerich & Payne, Inc. 401(k) Plan as
of September 30, 1999.
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 Third Class expire this year,
and their successors are to be elected at this Annual Meeting. The terms of the
Directors of the First Class and the Second Class do not expire until 2001 and
2002, 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.
3
<PAGE> 6
The Directors belonging to the First Class and the Second Class, which are
not coming up for election at this meeting, and the Nominees for Directors of
the Third Class, are as follows:
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 41 2001 President of the Corporation and Chief 1987
Executive Officer; holds similar positions
[H. HELMERICH PHOTO] as Chairman or President and as Chief
Executive Officer of subsidiary companies.
Director of Atwood Oceanics, Inc.
George S. Dotson 59 2001 Vice President of the Corporation and 1990
President and Chief Operating Officer of
[G. A. SCHAEFER PHOTO] Helmerich & Payne International Drilling
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 71 2001 Retired Chairman and Chief Executive Officer 1988
of Caterpillar Inc. (manufacturer of
[G. A. SCHAEFER PHOTO] earth-moving, construction, and
materials-handling machinery and
equipment). Director of Aon Corporation
and Caterpillar Inc.
</TABLE>
4
<PAGE> 7
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 52 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. 62 2002 Chairman of Transland Financial Services, 1992
Armstrong Inc. (mortgage banking); Cherry Creek
Mortgage Company (mortgage banking); and
[W. L. ARMSTRONG PHOTO] Frontier Real Estate, Inc. (residential
real estate brokerage). Director of
UNUMProvident Corporation; Storage
Technology Corp. and Oppenheimer Funds
L. F. Rooney, III 46 2002 Chairman, Manhattan Construction Company 1996
(construction and construction management
[L. F. ROONEY-III PHOTO] services) and President of Rooney Brothers
Company (holding company with interests in
construction, electronics and building
components). Director of BOK Financial
Corp. and Bank of Oklahoma, N.A
</TABLE>
5
<PAGE> 8
NOMINEES FOR THE 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, III 77 2000 Chairman of the Board of the Corporation. 1949
Director of Atwood Oceanics, Inc.
[W. H. HELMERICH-III PHOTO]
Glenn A. Cox 70 2000 Retired President and Chief Operating 1992
Officer of Phillips Petroleum Company
[G. A. COX PHOTO] (large integrated oil company). Director
of The Williams Companies, Inc.
Edward B. Rust, Jr. 49 2000 Chairman of the Board and Chief Executive 1997
Officer of State Farm Mutual Automobile
[E. B. RUST PHOTO] Insurance Company. Director of State Farm
VP Management Corp.
</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 Third 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 Third 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; Mr. L. F. Rooney, III who was Chief Executive
Officer of Manhattan Construction Company prior to October, 1995 and was
President of Manhattan Construction Company prior to May, 1994; 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 1999. 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 1999.
COMMITTEES
Mr. Glenn A. Cox and Mr. L. F. Rooney, III are members of the Audit
Committee. The functions of the Audit Committee include: (i) reviewing with
management and the Corporation's independent accountants the scope of the
various audits to be conducted during the coming year; (ii) reviewing with
management and the independent accountants the results of such audits, including
the auditor's comments on the Corporation's accounting policies and the adequacy
of the internal controls; (iii) discussing with management and the independent
accountants the Corporation's annual financial statements; (iv) reviewing fees
paid to, and the scope of services provided by, the independent accountants; (v)
reviewing the independence of the independent accountants; (vi) recommending to
the Board of Directors the engagement or discharge of the independent
accountants; and (vii) monitoring compliance with the Foreign Corrupt Practices
Act. During the year ended September 30, 1999, 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, 1999, the Human Resources Committee held one meeting.
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 1999, 1998, and 1997 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 1999 440,185 125,000 765 -- 90,000 -- 8,000
President and 1998 417,500 187,000 784 -- 90,000 -- 8,000
CEO 1997 387,500 260,000 630 -- 70,000 -- 8,000
George S. Dotson 1999 385,257 110,000 537 -- 60,000 -- 8,000
Vice President 1998 367,019 160,000 548 -- 60,000 -- 8,000
and President of 1997 346,634 210,000 450 -- 50,000 -- 8,000
Drilling Subsidiary
Steven R. Shaw 1999 262,753 45,000 464 -- 50,000 -- 8,000
Vice President 1998 258,750 70,000 604 -- 50,000 -- 8,000
Production 1997 235,500 105,000 630 -- 30,000 -- 7,965
Douglas E. Fears 1999 218,011 37,000 646 -- 30,000 -- 9,400
Vice President 1998 216,250 73,000 639 -- 30,000 -- 8,000
Finance 1997 196,250 65,000 630 -- 20,000 -- 9,271
Steven R. Mackey 1999 190,744 30,000 702 -- 25,000 -- 8,000
Vice President, 1998 182,500 60,000 627 -- 25,000 -- 8,000
General Counsel 1997 173,250 65,000 630 -- 20,000 -- 8,497
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 $50,000 or 10% of the total annual salary and bonus
reported for each of the named executive officers.
(2) The references to "SARs" in the Summary Compensation Table and all other
tables in this Proxy Statement have been omitted, since the Corporation has
never authorized any SARs.
(3) With respect to each of the named executive officers, the amounts specified
in this column represent only the Corporation's matching contributions to
its 401(k) Plan on behalf of each such executive officer.
8
<PAGE> 11
STOCK OPTION GRANTS
The following table provides information with respect to stock options
granted during fiscal year 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
-------------------------------------------------- -------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) YEAR ($/SH)(2) DATE $(3)
---- ---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Hans Helmerich.............................. 90,000 .124 16.8125 12/2/08 423,900
George S. Dotson............................ 60,000 .083 16.8125 12/2/08 282,600
Steven R. Shaw.............................. 50,000 .069 16.8125 12/2/08 235,500
Douglas E. Fears............................ 30,000 .041 16.8125 12/2/08 141,300
Steven R. Mackey............................ 25,000 .034 16.8125 12/2/08 117,750
</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 (39.47%), risk free rate of return
(4.65%), dividend yield (1.67%), term (10 years), and discounts for
forfeiture of unvested shares (21.21%) and reduced term on vested shares
(18.23%).
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.
9
<PAGE> 12
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.
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 VALUE EXERCISABLE(2)/ EXERCISABLE/
NAME ON EXERCISE($) REALIZED($) UNEXERCISABLE(3) UNEXERCISABLE
---- --------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Hans Helmerich................... 6,600 89,100 113,500/ 752,063/
226,500 1,143,562
George S. Dotson................. 6,600 83,737 77,000/ 501,375/
153,000 762,375
Steven R. Shaw................... 6,600 83,737 52,500/ 334,250/
117,500 599,500
Douglas E. Fears................. 11,100 135,831 32,000/ 196,969/
73,500 381,188
Steven R. Mackey................. 20,600 196,802 14,250/ -0-/
64,750 335,863
</TABLE>
- ---------------
(1) Fair market value used for computations in this column was $25.9375 per
share, which was the closing price of the Corporation's common stock on
September 30, 1999.
(2) These totals contain out-of-the-money options of 50,500, 35,000, 24,500
15,500 and 14,250 for Messrs. Helmerich, Dotson, Shaw, Fears and Mackey,
respectively.
(3) These totals contain out-of-the-money options of 109,500, 75,000, 55,500,
34,500 and 30,750 for Messrs. Helmerich, Dotson, Shaw, Fears and Mackey,
respectively.
LONG-TERM INCENTIVE PLANS
There were no long-term incentive plan awards to the named executive
officers in the last fiscal year.
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
10
<PAGE> 13
deferrals, and Section 125 "cafeteria plan" deferrals. Therefore, the pension
benefit is not determined primarily by final compensation and years of service.
Based upon this formula, an assumed annual salary growth rate of 5.5%, 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.............................................. 41 $458,196
George S. Dotson............................................ 59 $145,508
Steven R. Shaw.............................................. 49 $146,880
Douglas E. Fears............................................ 50 $108,357
Steven R. Mackey............................................ 49 $104,950
</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 1999, 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, 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 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 1999, the Committee, with the assistance of Towers Perrin (an
independent compensation consulting firm), reviewed the Corporation's executive
compensation policies. There were no material changes made in the Corporation's
executive compensation policies as a result of such review.
In determining executive compensation for fiscal 1999, the Committee
considered the Corporation's overall historical performance and its future
objectives, together with fiscal 1999 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 1999. 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 percentage of invested capital (70%); cash flow from operations (15%); and
after-tax income (15%). The
12
<PAGE> 15
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 performance objectives for the contract drilling division were met.
In addition, the Committee determined that the divisional performance objectives
for the exploration and production business and the corporate performance
objectives were partially met during fiscal 1999.
Each of the executive officers was assigned a 1999 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 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 1999, 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 well 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 1999, Mr. Helmerich earned a
$125,000 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 1999 bonus was approximately 33% less than the bonus he
received for fiscal 1998. The reduction in Mr. Helmerich's bonus was due to the
fact that the corporate performance objectives were partially met in fiscal 1999
but were fully met in fiscal 1998.
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
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
[PERF. GRAPH]
<TABLE>
<CAPTION>
HELMERICH & PAYNE, S&P 500 INDEX S&P OIL & GAS
INC. ------------- (DRILLING &
------------------ EQUIPMENT)-500
INDEX
--------------
<S> <C> <C> <C>
Base Period Sep94 100.00 100.00 100.00
Sep95 101.79 129.74 119.89
Sep96 160.29 156.12 160.81
Sep97 296.79 219.27 295.80
Sep98 157.57 239.11 174.03
Sep99 192.58 305.59 231.97
</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 a
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.
14
<PAGE> 17
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 2000.
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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
For the fiscal year ended September 30, 1999, all reports were filed on a
timely basis with the Securities and Exchange Commission except that Mr. L. F.
Rooney, III, a Director of the Corporation, filed on January 14, 1999, a Form 4
to reflect a purchase of 5,000 shares by a corporation controlled by Mr. Rooney.
The Form 4 filing due date was January 10, 1999.
In making these disclosures, 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.
STOCKHOLDER PROPOSALS
The Corporation's annual meeting for 2001 will be held Wednesday, March 7,
2001. Any stockholder wishing to submit a proposal to the vote of the
stockholders at such 2001 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 30, 2000. For any other
proposal that a stockholder wishes to have considered at the Corporation's 2001
annual meeting, the Corporate Secretary must receive written notice of such
proposal during the period beginning December 15, 2000, and ending January 11,
2001. 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.
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<PAGE> 18
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 27, 2000
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<PAGE> 19
-----------------------------------
-----------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD
MARCH 1, 2000
AND
PROXY STATEMENT
[HELMERICH & PAYNE, INC. LOGO
OMITTED]
HELMERICH & PAYNE, INC.
-----------------------------------
-----------------------------------
<PAGE> 20
--------------------------------------------
<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 (the
"Proxies"), 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
1, 2000, at 12:00 noon, Tulsa time, and all adjournments
thereof.
</TABLE>
1. Nominees for Directors of the "Third Class" for a three-year term are W. H.
Helmerich, III, Glenn A. Cox and Edward B. Rust, Jr. DIRECTORS RECOMMEND A
VOTE FOR ITEM 1.
<TABLE>
<S> <C> <C>
[ ] FOR all listed nominees [ ]WITHHOLD vote from [ ]WITHHOLD vote only from
all listed nominees
--------------------------------------
</TABLE>
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued on Next Page)
--------------------------------------------
<PAGE> 21
--------------------------------------------
(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.
PLEASE COMPLETE, SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: __________________, 2000.
--------------------------------
(Sign here exactly as name
appears. When signing as
attorney, executor,
administrator, guardian, or
corporate official, please give
your full title as such.)
--------------------------------------------
<PAGE> 22
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 16 of this
Proxy Statement has been omitted.
Proxy for Annual Meeting is filed herewith as an appendix.
