tesco1021.htm


    Exhibit
10.21

    


    TESCO
CORPORATION

    2010
SHORT TERM INCENTIVE PLAN

    (EMT—Levels
5 and 6)

    


    The Tesco
Corporation Short Term Incentive Plan (“STIP”) is a compensation plan designed
to motivate participating employees of TESCO and its affiliates to work as a
team to accomplish the overall profitability goals of TESCO, as well as provide
incentive to each individual to meet his or her business unit, business line and
personal objectives.

    


    The STIP
is approved by the Board of Directors of TESCO and is reviewed annually and may
be modified or discontinued in the sole discretion of the Board of Directors.
The STIP for calendar year 2010 has been approved by the Board of Directors as
set forth below.

     
 

    Plan
Parameters

    


    In order
to reward employees for individual performance, taking into account Company
financial objectives, the STIP is structured with two specific areas to measure
performance:

    


    
      	
              Ø  

            	
              Financial
      Objectives: Adjusted Earnings Before Interest, Taxes, Depreciation,
      and Amortization (“Adjusted EBIDTA”)..
      For purposes of this plan, “Adjusted EBITDA” consists of earnings (net
      income or loss) available to common stockholders before interest expense,
      income tax expense, non-cash stock compensation, non-cash impairments,
      depreciation and amortization and other non-cash
  items.

            


    

    
      	
              Ø  

            	
              Personal
      Objectives: Individual performance against established
      objectives

            


    

    


    The
following applies to employees covered by the 2010 STIP:

    


    
      	
              Ø  

            	
              The
      incentive is expressed as a percentage of base salary, with the targets
      and percentage allocations approved by the Board of
    Directors.

            


    

    
      	
              Ø  

            	
              30%
      of the incentive is based on an Adjusted EBITDA target approved by the
      Board of Directors.

            


    

    
      	
              Ø  

            	
              70%
      of the incentive is based on achievement of personal objectives. The
      personal goals, if met, will be paid regardless of the Company’s financial
      objective accomplishments.

            


    

    


    Executive
Management Team (Levels 5 and 6; “EMT”) members who qualify may have an
additional multiplier applied to their STIP payout, based on an additional
earnings-per-share (“EPS”) target approved by the Board of Directors. After
calculating financial Adjusted EBITDA performance and personal objectives, a
payout will be reached that is the sum of these two percentages. This will be
multiplied by an EPS-based factor between 1.0 and 2.0.

    


    Objectives
and Payout:

    


    
      	
              Ø  

            	
              In
      the event that TESCO records negative net income for the year ending
      December 31, 2010, there will be no payments under the
    plan.

            


    

    
      	
              Ø  

            	
              Calculations
      are based on employee’s aggregate base salary earned during the program
      year.

            


    

    
      	
              Ø  

            	
              The
      Board of Directors will approve the payouts of each member of the EMT and
      review and approve the remaining STIP participant payouts as a
      group.

            


    

    
      	
              Ø  

            	
              The
      incentive payout will be made in the payroll currency of the plan
      participant.

            


    

    
      	
              Ø  

            	
              Payout
      is made no later than March 15 of the following year. STIP payouts are
      based on audited financial results.

            


    

    


    Employment
Status

    


    
      	
              Ø  

            	
              Employees
      entering the plan during the year will have their STIP payout calculated
      using their aggregate base salary earned while in the
  plan.

            


    

    
      	
              Ø  

            	
              Employees
      terminated for cause or resigning at any time prior to December 31,
      2010 will not receive any payment under the
  STIP.

            


    

    
      	
              Ø  

            	
              Employees
      terminated at any time prior to September 30, 2010 will not receive any
      payout under the STIP. If terminated, except for cause, in the fourth
      quarter, their payout will be calculated using their aggregate base salary
      earned while in the plan, dependent on all plan parameters being
      met.

            


    

    
      	
              Ø  

            	
              Employees
      terminated or resigning from the Company after December 31, 2010, but
      before the payout date, will receive their payout in accordance with the
      STIP at the same time as other
recipients.

            


    

    
      	
              Ø  

            	
              The
      Company reserves the right to modify responsibilities and positions as may
      be required from time to time. Such modifications may result in the future
      ineligibility of an employee for participation in the STIP. In such cases,
      any earned incentive will be calculated using their aggregate base salary
      earned while in the plan.

            


    

    
      	
              Ø  

            	
              Situations
      not covered above will be resolved by the President and Chief Executive
      Officer, whose determination shall be
final.

            


    

    


    Death,
Disability and Retirement

    


    
      	
              Ø  

            	
              If
      an employee’s employment status changes due to death, disability or
      retirement (at normal retirement age) his or her STIP payment will be
      calculated using their aggregate base salary earned while in the
      plan.