exv10w1



 






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.




1









 







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.




2









 







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.




3









 





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
	 







4









 








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.





5