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STOCK-BASED COMPENSATION | 12 Months Ended
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Sep. 30, 2022
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION |
NOTE 11 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 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 (including performance share units), share bonuses, other share-based awards and cash awards. Restricted stock may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant. Stock options expire ten years after the grant date. Awards outstanding under the Helmerich & Payne, Inc. 2010 Long-Term Incentive Plan and the Helmerich & Payne, Inc. 2016 Omnibus Incentive Plan (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 stock options granted during the fiscal years ended September 30, 2022, 2021, and 2020. We have also eliminated stock options as an element of our non-employee director compensation program. At September 30, 2022, we had 2.4 million outstanding exercisable stock options with weighted-average exercise prices of $63.90. During the fiscal year ended September 30, 2022, 743,920 shares of restricted stock awards and 227,385 performance share units were granted under the 2020 Plan. A summary of compensation cost for stock-based payment arrangements recognized in Drilling Services Operating Expense, Research and Development Expense and Selling, General and Administrative Expense on our Consolidated Statements of Operations, in fiscal years 2022, 2021 and 2020 is as follows:
| September 30,
(in thousands) | 2022 |  | 2021 |  | 2020
Stock-based compensation expense |  |  |  |  |
Drilling services operating | $ | 5,142 |  |  | $ | 5,927 |  |  | $ | 9,086 |
Research and development | 1,551 |  |  | 1,271 |  |  | 765 |
Selling, general and administrative | 21,339 |  |  | 20,660 |  |  | 29,960 |
Restructuring charges 1 | — |  |  | — |  |  | (3,482) |
| $ | 28,032 |  |  | $ | 27,858 |  |  | $ | 36,329 |
. (1)These restructuring charges are specific to the stock-based compensation benefit which resulted from the recognition of forfeitures in fiscal year 2020. Refer to Note 18—Restructuring Charges to our Consolidated Financial Statements for details. Restricted Stock Restricted stock awards consist of our common stock. Awards granted prior to September 30, 2020 are time-vested over four years, and awards granted after September 30, 2020 are time vested over three 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 September 30, 2022, there was $24.8 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 1.7 years. A summary of the status of our restricted stock awards as of September 30, 2022, and of changes in restricted stock outstanding during the fiscal years ended September 30, 2022, 2021 and 2020, is as follows:
| 2022 |  | 2021 |  | 2020
(shares in thousands) | Shares 1 |  | Weighted-Average Grant Date Fair Value per Share |  | Shares 1 |  | Weighted-Average Grant Date Fair Value per Share |  | Shares 1 |  | Weighted-Average Grant Date Fair Value per Share
Non-vested restricted stock outstanding at October 1, | 1,412 |  |  | $ | 37.36 |  |  | 1,280 |  |  | $ | 49.81 |  |  | 1,085 |  |  | $ | 61.28 |
Granted | 744 |  |  | 25.83 |  |  | 701 |  |  | 25.61 |  |  | 781 |  |  | 39.99 |
Vested 2 | (610) |  |  | 39.81 |  |  | (534) |  |  | 51.79 |  |  | (501) |  |  | 59.46 |
Forfeited | (53) |  |  | 30.98 |  |  | (35) |  |  | 35.76 |  |  | (85) |  |  | 48.98 |
Non-vested restricted stock outstanding at September 30, | 1,493 |  |  | $ | 30.85 |  |  | 1,412 |  |  | $ | 37.36 |  |  | 1,280 |  |  | $ | 49.81 |
(1)Restricted stock shares include restricted phantom stock units under our Director Deferred Compensation Plan. These phantom stock units confer the economic benefits of owning company stock without the actual ownership, transfer or issuance of any shares. Phantom stock units are subject to a vesting period of one year from the grant date. During the fiscal years ended September 30, 2022, 2021, and 2020, 14,199, 18,906, and 20,616 restricted phantom stock units were granted, respectively. During the fiscal years ended September 30, 2022, and 2021, 18,906 and 20,616 restricted phantom stock units vested during the period, respectively. There were no restricted phantom stock units that vested during fiscal year 2020, as it was the first year that restricted phantom stock units were granted. (2)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 Units We have made awards to certain employees that are subject to market-based performance conditions ("performance units"). Subject to the terms and conditions set forth in the applicable performance share unit award agreements and the 2020 Plan, grants of performance 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 unit grants consist of two separate components. Performance units that comprise the first component are subject to a three-year performance cycle. Performance 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 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 unit award throughout the Vesting Period. The Vesting Period for performance units granted in December 2018 ended on December 31, 2021 and the performance units earned were settled in shares of common stock during the second quarter of fiscal year 2022. At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance 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 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 September 30, 2022, there was $8.9 million of unrecognized compensation cost related to unvested performance units. That cost is expected to be recognized over a weighted-average period of 1.8 years. A summary of the status of our performance units as of September 30, 2022, 2021 and 2020 and changes in non-vested performance units outstanding during the fiscal years ended September 30, 2022, 2021 and 2020 is presented below:
| 2022 |  | 2021 |  | 2020
(in thousands, except per share amounts) | Shares |  | Weighted-Average Grant Date Fair Value per Share |  | Shares |  | Weighted-Average Grant Date Fair Value per Share |  | Shares |  | Weighted-Average Grant Date Fair Value per Share
Non-vested performance units outstanding at October 1, | 699 |  |  | $ | 41.55 |  |  | 337 |  |  | $ | 51.09 |  |  | 145 |  |  | $ | 62.66 |
Granted | 227 |  |  | 30.12 |  |  | 313 |  |  | 29.77 |  |  | 259 |  |  | 43.40 |
Vested 1 | (161) |  |  | 62.66 |  |  | — |  |  | — |  |  | — |  |  | — |
Dividend rights performance units credited | 15 |  |  | 32.82 |  |  | 60 |  |  | 49.64 |  |  | — |  |  | — |
Forfeited | (54) |  |  | 34.16 |  |  | (11) |  |  | 43.40 |  |  | (67) |  |  | 46.35 |
Non-vested performance units outstanding September 30,2 | 726 |  |  | $ | 33.67 |  |  | 699 |  |  | $ | 41.55 |  |  | $ | 337 |  |  | $ | 51.09 |
(1)The number of performance units vested includes units that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements. (2)Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 96,819 performance units which is calculated based on the payout percentage for the completed performance period. The vesting and number of the remainder of non-vested performance units reflected at the end of the period is contingent upon our achievement of specified target performance criteria. If we meet the specified maximum performance criteria, approximately 1,145,726 additional performance units could vest or become eligible to vest. The weighted-average fair value calculations for performance units granted within the fiscal period are based on the following weighted-average assumptions set forth in the table below.
| 2022 |  | 2021 |  | 2020
Risk-free interest rate 1 | 1.0 | % |  | 0.2 | % |  | 1.6 | %
Expected stock volatility 2 | 67.3 | % |  | 62.3 | % |  | 34.8 | %
Expected term (in years) | 3 |  | 3 |  | 3
(1)The risk-free interest rate is based on U.S. Treasury securities for the expected term of the performance 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 units.

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