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STOCK-BASED COMPENSATION | 6 Months Ended
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Mar. 31, 2020
Share-based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | NOTE 12 STOCK-BASED COMPENSATION On March 3, 2020, the Helmerich & Payne, Inc. 2020 Omnibus Incentive Plan (the “2020 Plan”) was approved by our stockholders. The 2020 Plan replaces our stockholder-approved Helmerich & Payne, Inc. 2016 Omnibus Incentive Plan (the "2016 Plan"). The 2020 Plan is a stock and cash-based incentive plan that, among other things, authorizes the Board or Human Resources Committee of the Board to grant executive officers, employees and non-employee directors stock options, stock appreciation rights, restricted shares and restricted share units, share bonuses, other share-based awards and cash awards. Awards outstanding under the Helmerich & Payne, Inc. 2005 Long-Term Incentive Plan, the Helmerich & Payne, Inc. 2010 Long-Term Incentive Plan and the 2016 Plan remain subject to the terms and conditions of those plans. Beginning with fiscal year 2019, we replaced stock options with performance share units as a component of our executives’ long-term equity incentive compensation. As a result, there were no new non-qualified stock options granted during the six months ended March 31, 2020. We have also eliminated stock options as an element of our non-employee director compensation program. The Board has determined to award stock-based compensation to non-employee directors solely in the form of restricted stock. During the six months ended March 31, 2020, 727,009 shares of restricted stock awards and 258,857 performance share units were granted under the 2016 Plan and 54,118 shares of restricted stock awards were granted under the 2020 Plan. A summary of compensation cost for stock-based payment arrangements recognized in contract drilling services operating expense and selling, general and administrative expense is as follows:
| Three Months Ended March 31, |  | Six Months Ended March 31,
(in thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
Stock-based compensation expense |  |  |  |  |  |  |
Stock options | $ | 416 |  |  | $ | 938 |  |  | $ | 987 |  |  | $ | 2,354 |
Restricted stock | 8,273 |  |  | 6,861 |  |  | 15,643 |  |  | 12,603 |
Performance share units | 2,062 |  |  | 1,632 |  |  | 4,322 |  |  | 1,632 |
| $ | 10,751 |  |  | $ | 9,431 |  |  | $ | 20,952 |  |  | $ | 16,589 |
Of the total stock-based compensation expense, for the three and six months ended March 31, 2020, $2.9 million and $5.3 million, respectively, was recorded in contract drilling services operating expenses on our Unaudited Condensed Consolidated Statements of Operations. For the three and six months ended March 31, 2019, $1.8 million and $3.4 million, respectively, was recorded in contract drilling services operating expenses. Of the total stock-based compensation expense, for the three and six months ended March 31, 2020, $7.9 million and $15.7 million, respectively, was recorded in selling, general and administrative expense on our Unaudited Condensed Consolidated Statements of Operations. For the three and six months ended March 31, 2019, $7.6 million and $13.2 million, respectively, was recorded in selling, general and administrative expense. Stock Options A summary of stock option activity under all existing long-term incentive plans for the three and six months ended March 31, 2020 is presented in the following tables:
| Three Months Ended March 31, 2020
(in thousands, except per share amounts and years) | Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term in Years |  | Aggregate Intrinsic Value
Outstanding at December 31, 2019 | 3,028 |  |  | $ | 62.44 |  |  |  |  |
Exercised | — |  |  | — |  |  |  |  |
Forfeited/Expired | — |  |  | — |  |  |  |  |
Outstanding at March 31, 2020 | 3,028 |  |  | $ | 62.44 |  |  | 5.05 |  | $ | — |
Vested and expected to vest at March 31, 2020 | 3,028 |  |  | $ | 62.44 |  |  | 5.05 |  | $ | — |
Exercisable at March 31, 2020 | 2,633 |  |  | $ | 62.44 |  |  | 4.68 |  | $ | — |
| Six Months Ended March 31, 2020
(in thousands, except per share amounts and years) | Shares |  | Weighted Average Exercise Price
Outstanding at September 30, 2019 | 3,238 |  | $ | 60.86 |
Exercised | (202) |  | 38.02 |
Forfeited/Expired | (8) |  | 39.37 |
Outstanding at March 31, 2020 | 3,028 |  | $ | 62.44 |
The total intrinsic value of options exercised during the three months ended March 31, 2019 was $0.1 million, and $0.3 million and $7.7 million during the six months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, the unrecognized compensation cost related to stock options was $2.3 million, which is expected to be recognized over a weighted-average period of 1.6 years. Restricted Stock Restricted stock awards consist of our common stock and are time-vested over four years. Non-forfeitable dividends are paid on non-vested shares of restricted stock. We recognize compensation expense on a straight-line basis over the vesting period. The fair value of restricted stock awards is determined based on the closing price of our shares on the grant date. As of March 31, 2020, there was $49.7 million of total unrecognized compensation cost related to unvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of 2.6 years. A summary of the status of our restricted stock awards as of March 31, 2020 and changes in non-vested restricted stock outstanding during the six months then ended is presented below:
| Six Months Ended March 31, 2020
(in thousands, except per share amounts) | Shares |  | Weighted Average Grant Date Fair Value per Share
Non-vested restricted stock outstanding at September 30, 2019 | 1,085 |  |  | $ | 61.28 |
Granted | 781 |  |  | 39.99 |
Vested (1) | (415 | ) |  | 62.15 |
Forfeited | (15 | ) |  | 50.75 |
Non-vested restricted stock outstanding at March 31, 2020 | 1,436 |  |  | $ | 49.56 |
(1) | The number of restricted stock awards vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements.
Performance Share Units We have made awards to certain employees that are subject to market-based performance conditions ("performance share units"). Subject to the terms and conditions set forth in the applicable performance share unit award agreements and the 2016 Plan, grants of performance share units are subject to a vesting period of three years (the “Vesting Period”) that is dependent on the achievement of certain performance goals. Such performance share unit awards consist of two separate components. Performance share units that comprise the first component are subject to a three-year performance cycle. Performance share units that comprise the second component are further divided into three separate tranches, each of which is subject to a separate one-year performance cycle within the full three-year performance cycle. The vesting of the performance share units is generally dependent on (i) the achievement of the Company’s total shareholder return (“TSR”) performance goals relative to the TSR achievement of a peer group of companies (the “Peer Group”) over the applicable performance cycle, and (ii) the continued employment of the recipient of the performance share unit award throughout the Vesting Period. At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance share units. The vesting of units ranges from zero to 200 percent of the units granted depending on the Company’s TSR relative to the TSR of the Peer Group on the vesting date. The grant date fair value of performance share units was determined through use of the Monte Carlo simulation method. The Monte Carlo simulation method requires the use of highly subjective assumptions. Our key assumptions in the method include the price and the expected volatility of our stock and our self-determined Peer Group companies’ stock, risk free rate of return and cross-correlations between the Company and our Peer Group companies. The valuation model assumes dividends are immediately reinvested. As of March 31, 2020, there was $11.6 million of unrecognized compensation cost related to unvested performance share units. That cost is expected to be recognized over a weighted-average period of two years. A summary of the status of our performance share units as of March 31, 2020 and changes in non-vested performance share units outstanding during the six months then ended is presented below:
| Six Months Ended March 31, 2020
(in thousands, except per share amounts) | Shares |  | Weighted Average Grant Date Fair Value per Share
Non-vested performance share units outstanding at September 30, 2019 | 145 |  |  | $ | 62.66 |
Granted | 259 |  |  | 43.40 |
Non-vested performance share units outstanding at March 31, 2020 | 404 |  |  | $ | 50.31 |
The weighted-average fair value calculation for performance share units granted during the six months ended March 31, 2020 is based on the following weighted-average assumptions set forth in the table below.
| Six Months Ended March 31, 2020
Risk-free interest rate (1) | 1.6 | %
Expected stock volatility (2) | 34.8 | %
Expected term (in years) | 3.2 |
(1) | The risk-free interest rate is based on U.S. Treasury securities for the expected term of the performance share units.
(2) Expected volatilities are based on the daily closing price of our stock based upon historical experience over a period which approximates the expected term of the performance share units.

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