UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
               Date of Report (Date of earliest event reported): March 3, 2010                                
 
ALLIS-CHALMERS ENERGY INC.
(Exact name of registrant as specified in its charter)
 
Delaware
001-02199
39-0126090
(State or other jurisdiction of
incorporation or organization)
(Commission File
Number)
(I.R.S. Employer Identification
No.)
 
5075 Westheimer
Suite 890
Houston, Texas
77056
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:  (713) 369-0550
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 

Cash Incentive Program
 
On March 3, 2010, the Board of Directors (the “Board”) of Allis-Chalmers Energy Inc. (the “Company”), upon recommendation by its Compensation Committee (the “Committee”), approved individual cash incentive bonus opportunities under a 2010 annual incentive program for each of the Company’s named executive officers.  The approved potential bonuses were expressed as percentages of base salaries. For Munawar H. Hidayatallah and Victor M. Perez, 50% of each of their performance objectives is tied to the Company attaining established earnings before interest, taxes, depreciation and amortization (“EBITDA”) goals and the other 50% of their performance objectives is tied to the attainment of five individual goals set forth by the Committee.  For David K. Bryan, Terrence P. Keane and Mark C. Patterson, 25% of each of their performance objectives is tied to the Company attaining established EBITDA goals and 25% of their performance objectives is tied to their respective divisions achieving established EBITDA goals.  The remaining 50% of their performance objectives is tied to the attainment of five individual goals set forth by the Committee.  The EBITDA performance criteria opportunities are granted at “Threshold,” “Target” and “Maximum” levels, which are expressed as percentages of base salary, such that each named executive may earn up to 150% of his base salary for achieving the EBITDA portion of his performance criteria.  The maximum total bonus opportunity for each such executive is 200% of his base salary, as illustrated below.
 
Bonus Opportunity Based on EBITDA Performance Objectives
 
 
Payout Level
  
Bonus opportunity based on
EBITDA Performance Objective
  
EBITDA Performance Target
Maximum
  
150% of Base Salary
  
140%
         
Target
  
50% of Base Salary
  
100%
         
Threshold
  
37.5% of Base Salary
  
90%
 
Maximum Total Bonus Opportunity
 
Maximum
EBITDA Target Bonus
  
Maximum Individual
Performance Bonus
  
Maximum Bonus Opportunity
150% of Base Salary
  
50% of Base Salary
  
200% of Base Salary
 
 
 
 
 
Equity Incentive Awards
 
In addition, on March 3, 2010, the Board, upon recommendation of the Committee, authorized and approved equity awards in the form of stock options, restricted stock and performance-based restricted stock for the Company’s named executive officers pursuant to the Company’s Amended and Restated 2006 Incentive Plan.  The terms of the stock options and time-based restricted stock are generally consistent with the same type of awards granted in prior years. The vesting of the performance-based restricted stock are subject to the Company achieving specified EBITDA targets and at least a 20% annualized return on new capital expenditures in the aggregate.  All of the stock options, restricted stock and performance-based restricted stock vest in five equal installments on March 3, 2011, 2012, 2013, 2014 and 2015.

The specific amount of stock options, restricted stock and performance-based restricted stock for each named executive officer is as follows:

Name
  
Stock Options
    
Restricted Stock
    
Performance-Based
Restricted Stock
  
Munawar H. Hidayatallah
     333,334       250,000       500,000  
Victor M. Perez
     86,667       65,000       130,000  
David K. Bryan
     33,334       25,000       50,000  
Terrence P. Keane
     53,334       40,000       80,000  
Mark C. Patterson
     50,000       37,500       75,000  

The form of Performance Award Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Item 9.01.           Financial Statements and Exhibits
 
(d)        Exhibits:
 
Exhibit
No.
  
Description
     
10.1
  
Form of Performance Award Agreement, amended and restated effective March 3, 2010.
 
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
ALLIS-CHALMERS ENERGY INC.
     
Date:  March 8, 2010
By:
/s/ Theodore F. Pound III
 
Name:   Theodore F. Pound III
 
Title:     General Counsel and Secretary
 
 
 
 

EXHIBIT INDEX
 
Exhibit
No.
  
Description
     
10.1
  
Form of Performance Award Agreement, amended and restated effective March 3, 2010.