EXHIBIT 10.1

WEATHERFORD VARIABLE COMPENSATION PLAN

I. PURPOSE

The Weatherford Variable Compensation Plan (the “Plan”) has been designed to
motivate and reward employees whose efforts impact the performance of
Weatherford International Ltd. and its subsidiaries and affiliates (the
“Company”) through the achievement of pre-established financial objectives.

Performance under the Plan is measured on the Company’s applicable fiscal
(calendar) year and any declared payments under the Plan are made after the end
of the fiscal year.

II. ELIGIBILITY

Officers and key management employees of the Company are eligible to participate
in the Plan upon designation by the Chief Executive Officer of Weatherford. An
employee who is eligible to participate in a sales commission plan of the
Company is not eligible to participate in the Plan. Eligibility of employees on
day rates, per diems and special pay programs will be determined by Division
Presidents for their Divisions. Participation in the Plan is not automatic, and
only those eligible employees who have been designated by the Chief Executive
Officer shall participate in the Plan. Employees must have six months of
employment to be eligible for the plan. Bonus payments for employees not
employed for a full year will be prorated.

III. AWARD CRITERIA

The Compensation Committee of the Board and the Chief Executive Officer of
Weatherford are responsible for approving the Company financial objectives that
are used to determine awards under this Plan. Financial objectives for group
operating units at the Divisional levels will be established by the appropriate
manager, subject to overall approval by the Chief Executive Officer. Performance
under the Plan will be determined based on:

          EBIT (in absolute $ terms)
          Working Capital Ratios

___% of the bonus award, if any, will be based on EBIT and ___% on working
capital ratios. The Company reserves the right on a Company-wide or case-by-case
basis to adjust the EBIT and/or working capital ratio targets of the Divisions
or Corporate to reflect the impact of acquisitions, changes in our industry,
changes in our financial performance and any other circumstances at the sole
discretion of the Company’s Chief Executive Officer.

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IV. AWARD CATEGORIES

A participant may have Corporate, Division or group operating unit financial
objectives, depending on where employed.

V. TARGET AWARDS

A target award percentage is established for each position eligible to
participate in the Plan as a percentage of base annual salary. Target awards may
vary depending on the participant’s position and base salary.

Generally, the participating employee receives the target award when performance
under the Plan meets, but does not exceed, the pre-established financial
objectives.

VI. PERFORMANCE MEASUREMENT

     
Minimum
  This is the lowest level of performance for which an award will be generated.
There will be no payment for performance below the minimum level of performance.
 
   
Target Performance
  This is the expected, or budgeted, level of performance and the award paid for
target performance is the Target Award.
 
   
Maximum
  This is the performance level for which the maximum award under the plan will
be paid. This is paid for a performance level at or above the maximum threshold.

VII. AWARD CALCULATION

Attainment of the financial objectives of the Plan is measured based on actual
financial results as compared to Plan targets, with performance above or below
Plan targets prorated up/down to the maximum/minimum levels established for each
financial objective. The cost of the bonus payouts must be included in the
financial results to be measured.

VIII. ALTERNATIVE CALCULATIONS

There may be circumstances under which the financial performance of the Company
does not generate an award under the Plan. The nature and scope of the Company’s
operations are such that at times unanticipated economic and market conditions
may render pre-established financial objectives unattainable in any given Plan
year. If, in the opinion of the Chief Executive Officer, such circumstances
should arise, an alternative bonus calculation may be performed.

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IX. MODIFICATIONS

If, during a Plan year, there has occurred or should occur, in the opinion of
the Company’s Chief Executive Officer, a significant beneficial or adverse
change in economic conditions, the indicators of growth or recession in the
Company’s business segments, the nature of the operations of the Company, or
applicable laws, regulations or accounting practices, or other matters that were
not anticipated by the Company when it approved Corporate, Division and group
operating unit financial objectives for the Plan year and which, in Management’s
judgment, had or have or are expected to have a positive or negative effect on
the Company, the Chief Executive Officer may modify or revise the financial
objectives for the Plan year in such manner as he deems appropriate in his sole
judgment. By way of illustration, and not limitation, such significant changes
might result from sales of assets, or mergers, acquisitions, divestiture, or
spin-offs.

Notwithstanding the above, the Plan is subject to suspension or termination at
any time (even if the financial objectives of the Plan have been achieved) by
the Chief Executive Officer of the Company, if, in his sole judgment, conditions
or circumstance exist or may exist that had, have or are expected to have a
negative effect on the Company.

X. PAYMENT

Any Plan awards earned and declared for a Plan year will be paid in February or
March of the following year. Payment may be in the form of cash or common shares
of the Company. The form of payment will be determined by the Compensation
Committee of the Board and the CEO.

Employees terminating prior to the date on which awards are paid are not
eligible for payment of any award under this Plan unless termination is due to
death or retirement. In such cases, any bonus payments will be prorated to the
date of termination and determined on the basis of bonuses actually paid to
similarly situated employees.

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Annual Incentive Plan Structure

                                          Bonus as Percent of Base     Group  
Min.   Target   Max.   Financial Objective Weighting  
Corporate CEO
    60 %     120 %     180 %   __% EBIT and __% Working Capital Ratios
 
                                   

                            1.     Corporate employees based
100% on Corporate results  
 
 
Division Presidents
Corporate Sr. VP’s
    50 %     95 %     145 %     2.     Division Presidents — Bonus is based 80%
on Division results and 20% on Corporate results  
 
 
Corporate VP’s
    40 %     80 %     120 %     3.     All others based on Division
results or group results as
determined by Division Presidents
 

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FORM OF AWARD LETTER

____________, ____

Re: Variable Compensation Plan Award

Dear Weatherford Employee:

We are pleased to advise you that your award under the Weatherford Variable
Compensation Plan for year ___will be ___. Thank you for your hard work and
efforts during ___on Weatherford’s behalf.

Sincerely,

Weatherford International Ltd.

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