EX-10.1


 Exhibit 10.1 

PARAGON OFFSHORE SERVICES LLC 

2014 Short-Term Incentive Plan 

(“STIP”) 

Plan Overview, Terms and Conditions 

Plan Purpose 
 The success of Paragon Offshore Services
LLC (“Paragon Offshore”) and its subsidiaries (collectively, the “Company”) is a result of the efforts of all key employees. In order to focus each employee’s efforts on optimizing the Company’s overall operational and
financial results, the Company maintains this Short-Term Incentive Plan (the “Plan”) to reward employees for successful achievement of specific goals. 

An effective incentive plan should both align employee interests with those of shareholders and motivate and influence employee behavior. Key positions within
the Company have the ability to make a positive contribution to key factors that increase shareholder value. These factors can be quantified and measured through achievement of various financial and operational targets, such as EBITDA, safety and
cash operating margin. The objectives of using such targets in the formulation of the specific Company goals are to link an employee’s incentive award more closely to the metrics that lead to the creation of shareholder wealth and to promote a
culture of high performance and an environment of teamwork. 
 Eligibility and Participation 

All full-time shore-based employees and select offshore employees (Rig Managers, Assistant Rig Managers and Captains) are eligible to receive a bonus under the
Plan, based upon performance, subject to the approval of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Paragon Offshore. Each such employee will be considered either a
“Corporate” employee or a “Division” employee for purposes of determining the employee’s actual target bonus, as described later. 

To be eligible to receive a bonus payment with respect to a Plan period, an employee must be actively employed by the Company on the last day of such Plan
period and must continue to be employed through the date on which bonus payments for such Plan period are made. An employee shall not be eligible to receive any bonus payment if the employee’s employment with the Company terminates for any
reason, either voluntarily or involuntarily (except as noted below), before that date on which bonus payments for a Plan period are made. The Plan period is the period that commences on July 1, 2014 and ends at the close of December 31,
2014 unless otherwise specified. 
 However, in the event of death, disability or retirement, the employee or estate of the former employee may receive a
pro-rated payment from the Plan, at the discretion of the Committee and the Chief Executive Officer (the “CEO”). For purposes of the Plan, “disability” means any termination of employment with the Company or an affiliate of the
Company because of a long-term or total disability, as determined by the Company’s disability insurance programs. “Retirement” means a termination of employment with the Company on a voluntary basis by a person if, immediately prior
to such termination of employment, the sum of the age and the number of years of continuous service of such person with the Company (or a predecessor thereto) is equal to or greater than 60. 






 Plan Funding 

The Award Pool for the Plan period will primarily be a function of the Company’s performance on two key metrics. 

 

	 	•	 	Company EBITDA versus budget (weighted 65%) 

  

	 	•	 	Company Safety results versus the IADC average (weighted 35%) 

 EBITDA will be defined as the Company’s
earnings before the deduction of interest, tax, depreciation and amortization expenses, subject to adjustment to exclude certain gains or losses. 
 The
Company’s performance will be determined in each of these two measures according to the following scales: 
  

							
	Company EBITDA (65%)
	 Level of
 Achievement
	  	Threshold	 	Target	 	Maximum
	 % of Target
	  	75%	 	100%	 	115%
	 Bonus Pool Multiple
	  	0.50	 	1.00	 	2.00

  

							
	Company Safety (35%)
	 Level of
 Achievement
	  	Threshold	  	Target	  	Maximum
	 Performance
	  	Improvement over prior
 six-month period
	  	IADC Industry
 Average
	  	£ 90% of IADC

Industry Average

	 Bonus Pool Multiple
	  	0.50	  	1.00	  	2.00

 Achievement at levels between the points shown above will be determined via linear interpolation. Performance below Threshold
for EBITDA or Minimum for Safety will yield no pool funding for that portion of the Award Pool. Safety is measured by Lost Time Incident Rate (“LTIR”) as compared to the International Association of Drilling Contractors (“IADC”)
Industry Average. Note that the Company Safety results and the IADC Industry Average will be based on the six-month period ending September 30, 2014. 

  
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 The Award Pool available will be determined first by multiplying (i) 50% of the sum of the full year
target bonuses for all eligible employees at the end of the Plan period (“Aggregate Target Bonuses”) by (ii) the Company’s weighted performance as measured by EBITDA and Safety results, based on the scales above. The 50%
multiplier in subpart (i) above provides for the fact that the Plan period represents 50% of the fiscal year for 2014. This calculated result will be increased by 10% to establish a CEO merit performance-award pool, thus yielding the Total Plan
Award Pool for the Plan period. 
 The following illustrates the calculation of the Total Plan Award Pool, assuming Aggregate Target Bonuses of $10 million,
EBITDA performance at target (or 1.00 multiple) and Safety performance at halfway between target and maximum (or 1.50 multiple). This example is included for illustrative purposes only: 

 

																	
	Total Plan Award Pool Calculation Illustration	 
	
	Step 1: Company Performance Calculation (“Award Pool”)	  
					
	EBITDA	  	 	 	  	Safety	 	 	 	 	  	 Company

Performance Multiple
	 
	 (1.00 x .65)
	  	 	x	  	  	 	(1.50 x .35	) 	 	 	=	  	  	 	1.18	  
	
	Step 2: Total Plan Award Pool	  
					
	Initial Pool	  	 	 	  	+ 10% (CEO Merit Pool)	 	 	 	 	  	Total Plan Award Pool	 
	 (1.18 x $10 million)
	  	 	=	  	  	$	11.80 million x 1.10	  	 	 	=	  	  	$	12.98 million	  

 The Total Plan Award Pool will be allocated as described in the next sections. 

Individual Target Bonus 
 The target bonus for an employee
is an amount equal to 50% of the employee’s salary at the end of the Plan period multiplied by the assigned target bonus percentage. Target bonuses range from 4% to 100% of 50% of such salary. The 50% multipliers in the prior sentences provide
for the fact that the Plan period represents 50% of the fiscal year for 2014. The assigned targets are based on competitive market data and internal equity considerations and are reviewed each year. Note that, for purposes of calculating the
Aggregate Target Bonuses, a target bonus percentage of up to 6% will be used for those employees covered under the Plan that do not have a formal target bonus percentage. 

The determination of an individual’s actual award will be based 50% on the achievement of the stated Financial and Operating goals under the Plan
pursuant to the terms outlined in sections below, and 50% will be based on merit, individual and team performance and/or additional selected criteria, including regulatory compliance. 

  
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 Financial and Operating Goals 

Goals for the following categories will be approved by the Committee for each Plan period. The performance for the 50% of the bonus tied to Financial and
Operating results will be based on the goals and weights as shown below, and are different for Corporate and Division employees: 
  

					
	 Corporate Employees
	  	Assigned Weight	 
	 Company EBITDA
	  	 	65.0	% 
	 Company Safety
	  	 	35.0	% 

  

					
	 Division Employees
	  	Assigned Weight	 
	 Division Cash Operating Margin
	  	 	65.0	% 
	 Division Safety
	  	 	17.5	% 
	 Company Safety
	  	 	17.5	% 

 Cash operating margin is defined as contract drilling revenues less contract drilling cost including reimbursables. The
specific goals for the Company and each Division will be communicated after these are set by the Committee. The performance scales for the Plan period for these metrics are provided in Exhibit 1. 

Determination of Individual Awards 
 Each
individual’s target bonus will be adjusted by the overall Corporate and/or Division Financial and Operating results depending on the employee (see Exhibit 1). This will be the Adjusted Target Bonus. 

Next, an individual bonus multiplier ranging from 0 to a maximum of 2.0 may be applied to half of the Adjusted Target Bonus to reflect merit, individual and
team performance and/or additional selected criteria, including regulatory compliance, subject to the approval of the Committee and CEO. 
 For example, if
an individual’s bonus target at a Division is $10,000, and the Division performance multiple for Financial and Operating goals is 1.2, the Adjusted Target Bonus would be $12,000 ($10,000 x 1.2); $6,000 for Financial and Operating performance,
$6,000 for individual achievement. If the manager’s recommendation for individual achievement is 0.8 (or 80%), the final bonus adjusts to $10,800 ($6,000 x 0.8 = $4,800 for individual achievement + $6,000 for Financial and Operating results).
The aggregate total of these awards will be the “Aggregate Calculated Pool”. 

  
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 Amounts may be adjusted for employees hired or promoted during the Plan period considering length of service or
time in position. Note that if on a cumulative basis the sum of the awards in the Aggregate Calculated Pool is greater than the Total Plan Award Pool, bonuses will be adjusted on a pro-rata basis to remain within the constraints of the Total Plan
Award Pool. 
 Plan Funding and Individual Awards under the 2014 Noble Corporation Short-Term Incentive Plan (“Noble STIP”) for Transferred
Employees 
 Employees of the Company, who (i) were employees of Noble Corporation or its subsidiaries (“Transferred Employees”) during
all of the period that commences on or, if applicable, after January 1, 2014 and ends at the close of June 30, 2014, and (ii) were eligible for awards under the Noble STIP with respect to the period thereunder that commences on
January 1, 2014 and ends at the close of June 30, 2014 (the “Noble STIP Period”), shall remain eligible for awards calculated pursuant to the terms of the Noble STIP, except that such awards shall be paid by the Company at the
time awards are determined under this Plan. The general terms and provisions of the 2014 Noble STIP shall govern the determination of award amounts to Transferred Employees, except as otherwise provided in the Employee Matters Agreement as defined
below. For purposes of this Plan, a separate Award Pool will be established for Transferred Employees with respect to the Noble STIP Period, except that the plan period for Safety results and the IADC Industry Average will be based on the six-month
period ending March 31, 2014. This separate Award Pool will be determined first by multiplying (i) the Aggregate Target Bonuses by (ii) Noble Corporation’s weighted performance as measured by EBITDA and Safety results during the
Noble STIP Period. This calculated result will be increased by 10% to establish a CEO merit performance-award pool, thus yielding the Total (Separate) Plan Award Pool hereunder for the Noble STIP Period. The target bonus for a Transferred Employee
is an amount equal to 50% of the employee’s salary at the end of this Plan period multiplied by the assigned target bonus percentage. The 50% multiplier in the prior sentence provides for the fact that Noble STIP Period represents 50% of the
fiscal year for 2014. 
 Reimbursements from Noble Corporation to the Company for amounts payable, if any, to Transferred Employees that relate to the Noble
STIP (i) shall be governed by the provisions of the Employee Matters Agreement by and between Noble Corporation and Paragon Offshore plc dated as of July 31, 2014 (the “Employee Matters Agreement”), and (ii) shall offset any
amounts payable under the separate Award Pool established pursuant to the preceding paragraph. 
 Review and Approval 

The Board will approve the Company’s budget for the Plan period in terms of EBITDA and Cash Operating Margin at the time that, or as soon as possible
after, this Plan is adopted. The specific goals for EBITDA (Corporate employees) and Division Cash Operating Margin (Division employees) will be communicated shortly thereafter. 

  
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 If, after the establishment of goals for a Plan period, the budget changes substantially due to subsequent
events, such as the acquisition, spin-off or sale of assets, any unusual or non- recurring item or any unforeseen event that impacts the Company, a Division or the industry as a whole, then the Committee may make adjustments to the respective goals
in order that the affected participants may not be adversely impacted by such an event or item. Any such revised goals shall be applicable to the Plan period from and after the time of their approval. 

After the end of the Plan period, the Committee, in its best business judgment, will make the final determination on the size of the Total Plan Award Pool for
such Plan period. All bonus calculations, allocations and recommendations are subject to review and approval by the Committee. 
 Separately, managers
having responsibility for recommending the allocation of bonuses to eligible employees shall submit their recommended bonus for each employee to the CEO for review and approval. Notwithstanding anything otherwise contained in this Plan, the
Committee and the CEO (and any delegated designee of the CEO) shall have the authority to adjust individual bonus amounts as deemed to be appropriate for any reason, including, but not limited to, Company or Division performance, individual employee
performance, employee conduct, etc. 
 At-Will Employment 

Nothing in the Plan guarantees or constitutes a contract for any specific term of employment or otherwise limits the Company’s or an employee’s right
to terminate the employment relationship for any reason at any time. 

  
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 Exhibit 1 

2014 Financial and Operating Goals 

STIP 
 Corporate Employees 

 

							
	Company EBITDA (65%)
				
	 Level of Achievement
	  	Threshold	 	Target	 	Maximum
	 % of Target
	  	75%	 	100%	 	115%
	 Bonus Pool Multiple
	  	0.50	 	1.00	 	2.00

  

							
	Company Safety (35%)
				
	 Level of Achievement
	  	Minimum	  	Target	  	Maximum
	 Performance
	  	Improvement over prior
 six-month period
	  	IADC Industry
 Average
	  	£ 90% of IADC

Industry Average

	 Bonus Pool Multiple
	  	0.50	  	1.00	  	2.00

 Division Employees 
  

							
	Company EBITDA (65%)
				
	 Level of Achievement
	  	Threshold	 	Target	 	Maximum
	 % of Target
	  	75%	 	100%	 	115%
	 Bonus Pool Multiple
	  	0.50	 	1.00	 	2.00

  

							
	Division Safety (17.5%)
				
	 Level of Achievement
	  	Minimum	  	Target	  	Maximum
	 Performance
	  	Improvement over prior
 six-month period
	  	IADC Industry
 Average
	  	£ 90% of IADC

Industry Average

	 Bonus Pool Multiple
	  	0.50	  	1.00	  	2.00

  

							
	Company Safety (17.5%)
				
	 Level of Achievement
	  	Minimum	  	Target	  	Maximum
	 Performance
	  	Improvement over prior
 six-month period
	  	IADC Industry
 Average
	  	£ 90% of IADC

Industry Average

	 Bonus Pool Multiple
	  	0.50	  	1.00	  	2.00


  
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 Notes: 

	(1) 	Achievement at levels between the points shown will be determined via linear interpolation 


	(2) 	Safety is measured by Lost Time Incident Rate (“LTIR”) as compared to the International Association of Drilling Contractors (“IADC”) Industry Average. The Safety results and IADC Industry Average
will be based on the six-month period ending September 30, 2014 


	(3) 	Cash operating margin is defined as contract drilling revenues less contract drilling cost including reimbursables 


  
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