Exhibit 10.3
PHI, INC.
SENIOR MANAGEMENT INCENTIVE BONUS PLAN
I. Purpose
     The purpose of the PHI, Inc. Senior Management Incentive Bonus Plan (the
“Plan”) is to advance the interests of PHI, Inc., a Louisiana corporation (the
“Company”), by providing key executives of the Company with cash bonus
opportunities based on the Company’s performance.
II. Term
     The effective date of this Plan is January 1, 2011. The Plan will remain in
effect for successive fiscal years beginning on January 1, 2011 (each, a “Plan
Year”) until terminated by the Compensation Committee of the Company’s Board of
Directors (the “Committee”).
III. Administration
     The Plan shall be administered by the Committee. The authority of the
Committee shall include, in particular, authority to:

  (a)   designate participants and target award percentages for each Plan Year;
    (b)   establish performance measures and objectives, as well as the
particular targets, for each Plan Year;     (c)   consider the achievement of
the performance measures and objectives and whether any payment will be made
hereunder; and     (d)   establish regulations for the administration of the
Plan and make all determinations deemed necessary for the administration of the
Plan.

IV. Eligibility
     The participants in this Plan (the “Participants”) shall be those officers
and key employees who directly impact the Company’s financial and business
performance and who do not participate in the Company’s Employee Incentive Bonus
Plan. The specific positions eligible to participate in the Plan shall be
reviewed and determined annually by the Committee. To be eligible to receive an
award under the Plan for a given Plan Year, employees must remain actively
employed through the payment date for awards under the Plan for such year unless
otherwise determined by the Committee.
V. Change in Eligibility Status
     In making decisions regarding the selection of Participants, the Committee
may consider any factors that it may consider relevant. However, the following
guidelines set forth the general parameters governing eligibility based on the
occurrence of the events described below:

 

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  (a)   New Hire, Transfer, Promotion. An employee who is hired, transferred or
promoted during the Plan Year may participate in the Plan on a pro rata basis as
of the date the employee was hired, transferred or promoted.     (b)  
Termination. An award under the Plan will generally not be made to any
Participant whose services are terminated for any reason prior to the payment
date for awards under the Plan for a given Plan Year.     (c)   Resignation. An
award under the Plan will generally not be made to any Participant who resigns
for any reason, including retirement, prior to the payment date for awards under
the Plan for a given Plan Year. However, in the Committee’s sole discretion, the
Participant may be considered for a pro rata award, provided the Participant
otherwise qualifies for the award.

     Nothing in the Plan shall confer any right to any employee to continue in
the employ of the Company.
VI. Performance Measures

  (a)   Performance Measures. The performance measures applicable under the Plan
will include a financial component and a safety component. Unless the Committee
determines otherwise for a given Plan Year, the financial component shall be
measured by earnings before taxes of the Company and the safety component shall
be measured by a combination of number of flight accidents, Total Recordable
Injury Rate (“TRIR”) and Total Proactive Efforts Rate (“TPER”). The resulting
awards under the Plan will be based on the level of achievement of the financial
measure, as adjusted upward or downward to reflect the Company’s achievement of
the safety measures.     (b)   Setting Performance Targets and Individual Award
Opportunities. Except as noted below with respect to the 2011 Plan Year, prior
to the end of the first quarter of each Plan Year, the Committee will specify
(i) the specific targets relative to each performance measure applicable for
that year under the Plan to Participants, and (ii) the individual award
opportunities of each Participant for the Plan Year, which will be a percentage
of the Participant’s base salary based on Company’s achievement of the financial
target at three levels — a threshold level, the target level (generally,
equivalent to the business plan for the year) and a stretch level. With respect
to the 2011 Plan Year, the Committee will specify the targets and individual
award opportunities as set forth above promptly following the approval of the
Plan. Once the specific targets have been set for a given Plan Year, management
will communicate the targets to Participants in the Plan.     (c)   Earnings
Before Taxes. For purposes of the Plan, in determining whether the required
earnings before taxes (“EBT”) target of the Company or of a business unit has
been achieved for a given Plan Year, the following shall be excluded from the
calculation of EBT:

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  1.   interest income;     2.   gains or losses related to the sale of
aircraft;     3.   gains or losses related to investments; and     4.   gains or
losses related to financial arrangements.

     For purposes of the Plan, EBT for a given Plan Year shall not be reduced by
any amounts paid under bonus or incentive plans for that year.
VII. Payout of Awards

  (a)   Determination of Award Amounts. Following the end of each Plan Year, the
Committee will determine the Company’s level of achievement of the applicable
financial and safety performance measures. If the threshold level of the
financial measure has been achieved, the Committee will calculate each
Participant’s award opportunity under the Plan as a percentage of the
Participant’s base salary, which shall then be adjusted upward or downward to
reflect the level of achievement of the safety measures if applicable.     (b)  
Discretionary Adjustments. The Committee, in its sole discretion, may adjust any
award payable under the Plan upward or downward to reflect the Company’s
achievement of other performance goals or the Committee’s subjective assessment
of the individual performance of the Participant. The chief executive officer
may make recommendations to the Committee with respect to such adjustments for
Participants other than himself.     (c)   Payment Timing. Payments of any
awards under the Plan will be made by March 15 of the year following the Plan
Year.

VIII. Miscellaneous

  (a)   Nothing in this Plan is to be considered a guarantee of an award. Any
payments under the Plan shall be in the sole discretion of the Committee. The
Company shall have no obligation to set aside, earmark or invest any fund or
money with which to pay bonuses under the Plan.     (b)   The grant of an award
under the Plan shall not constitute an assurance of continued employment. Any
decisions by the Committee are final and binding on all parties.     (c)  
Participant payments under the Plan shall be net of an amount sufficient to
satisfy any federal, state or local withholding tax liability. The Company
retains the right to withhold payment from any Participant who violates Company
policies or for any other reason.

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  (d)   The payments made hereunder are intended to comply with the requirements
of Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”) or an exception from compliance with Section 409A, and the
terms of the Plan related thereto shall be construed accordingly. Any payments
hereunder that are subject to Section 409A shall not be accelerated or postponed
unless permitted under Section 409A.     (e)   If any term or provision of the
Plan shall at any time or to any extent be invalid, illegal or unenforceable in
any respect as written, the participant and the Company intend for any court
construing the Plan to modify or limit such provision so as to render it valid
and enforceable to the fullest extent allowed by law. Any such provision that is
not susceptible of such reformation shall be ignored so as to not affect any
other term or provision hereof, and the remainder of the Plan, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid, illegal or unenforceable, shall not be
affected thereby and each term and provision of the Plan shall be valid and
enforced to the fullest extent permitted by law.     (f)   The Committee shall
have the right to amend or terminate the Plan at any time in its sole
discretion.     (g)   This Plan shall be governed and construed under the laws
of the State of Louisiana.

     IN WITNESS WHEREOF, PHI has adopted this Plan on the 5th day of May, 2011.

           

PHI, INC.
      BY:   /s/ Al A. Gonsoulin         Chairman of the Board           

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