William A. Hendricks, Jr.
PATTERSON UTI ENERGYAbout William A. Hendricks, Jr.
William Andrew Hendricks, Jr. is President and Chief Executive Officer of Patterson-UTI Energy, Inc. and serves on its Board; age 60, CEO since October 2012, and director since June 2017 . He holds a BS in Petroleum Engineering from Texas A&M, spent 24 years at Schlumberger culminating as a drilling division President, and began his career on an offshore rig for Ocean Drilling & Exploration Company . Under his leadership, 2024 highlights included increased operating cash flow versus 2023, $400 million returned to shareholders via repurchases and dividends, strengthened liquidity, and completion of NexTier and Ulterra integrations . PTEN’s 3-year TSR ending March 31, 2024 was 51.4% (47th percentile vs. 2021 peer group), resulting in an 87.9% PSU payout for that cohort .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Patterson-UTI Energy | Chief Operating Officer | Apr–Sep 2012 | Transition to CEO; groundwork for transformation, acquisitions, ESG focus |
| Schlumberger Limited | Drilling division President; various executive roles | 24 years; nearly 2 years as President of Drilling & Measurements | Global operations leadership; technology and operational excellence |
| Ocean Drilling & Exploration Co. (Diamond Offshore) | Offshore rig role (early career) | Not disclosed | Foundation in offshore drilling operations |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| International Association of Drilling Contractors (IADC) | Past Chairman | Not disclosed | Recognized as IADC Contractor of the Year in 2021 |
| Society of Petroleum Engineers | Member | Not disclosed | Industry engagement |
| U.S. Senate Committee on Energy and Natural Resources | Testified on energy matters | Not disclosed | Policy influence and thought leadership |
| Media (CNBC) | Energy contributor | Not disclosed | Public industry commentary |
Fixed Compensation
| Year | Base Salary ($) | 401(k) Contribution ($) | Notes |
|---|---|---|---|
| 2022 | 1,000,000 | 12,200 | — |
| 2023 | 1,000,000 | 13,200 | — |
| 2024 | 1,300,000 | 13,800 | CEO salary increased effective Jan 1, 2024; no change for 2025 |
Stock options are legacy only; PTEN does not currently grant options. Hendricks holds options exercisable at $20.33 expiring 4/20/2025 (257,000 shares) and $18.54 expiring 4/25/2026 (315,400 shares) . PTEN maintains executive share ownership requirements (CEO: shares equal to 5x base salary) and an anti-hedging and anti-pledging policy; all covered persons were in compliance as of the proxy date .
Performance Compensation
Annual Incentive (2024)
| Metric | Weight | Target | Actual | Metric Achievement | Weighted Achievement |
|---|---|---|---|---|---|
| Operating Cash Flow ($mm) | 60% | 583.0 | 568.1 | 97% | 56% |
| Adjusted EBITDA ($mm) | 20% | 1,488.5 | 1,205.7 | 53% | 11% |
| Health, Safety & Environmental | 10% | Holistic KPI | Committee determination | 200% | 20% |
| Strategy | 10% | Holistic KPI | Committee determination | 200% | 20% |
| Total Payout vs Target | — | — | — | — | 107% |
2024 CEO target bonus was 125% of base salary; actual bonus paid was $1,733,000 based on 107% payout .
Long-Term Incentives (2024 grants)
| Award Type | Grant Date | Units/Target | Vesting/Performance Design | Grant Date Fair Value |
|---|---|---|---|---|
| RSUs | 5/9/2024 | 373,200 | Time-based; 1/3 each on 5/9/2025, 5/9/2026, 5/9/2027 | $4,164,912 |
| PSUs (Relative/Absolute TSR) | 5/9/2024 | Target 388,400; Threshold 194,200; Max 776,800 | Three overlapping performance periods starting 4/1/2024; 25th percentile threshold, 55th target, 75th max; capped at target if 3-year absolute TSR not positive | $4,839,464 |
2024 CEO LTI target value was $8.5 million (51% PSUs, 49% RSUs) . 2021 PSU cohort paid out at 87.9% (units earned: 325,669) based on 47th percentile relative TSR for the 3-year period ending 3/31/2024 .
Equity Ownership & Alignment
| Item | Amount |
|---|---|
| Total beneficial ownership (shares) | 2,725,962; includes 572,400 presently exercisable options and 264,500 RSUs vesting within 60 days; excludes 329,300 RSUs vesting after 60 days |
| Ownership as % of shares outstanding | <1.0% (indicated as “*”) |
| Options outstanding | 257,000 @ $20.33 exp. 4/20/2025; 315,400 @ $18.54 exp. 4/25/2026 |
| RSUs unvested at 12/31/2024 | 593,800 total; scheduled across 4/29/2025 (59,600), 5/5/2025 (80,500), 5/9/2025 (124,400), 5/5/2026 (80,500), 5/9/2026 (124,400), 5/9/2027 (124,400) |
| PSUs unearned at 12/31/2024 (threshold counts) | 412,950 across 2022, 2023, 2024 grants (93,050; 125,700; 194,200) |
| Ownership guidelines compliance | All covered officers/directors in compliance at proxy date |
| Hedging/Pledging | Prohibited for officers/directors; waiver exists only for a legacy NexTier director (Stewart), not for Hendricks |
Note: RSU and PSU vesting dates create predictable supply windows; near-term option expirations in 2025/2026 may also be relevant for trading dynamics .
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment agreement term | Initial 3-year term; auto-renews 1 year annually unless terminated |
| Severance (no CIC) | If terminated without cause or for good reason: lump sum 3x (CEO) base + avg bonus over prior 3 years; pro-rated actual-year bonus; time-based awards accelerate; performance-based continue to end of period and vest on actual results; accrued obligations paid |
| Change-in-control (double trigger) | Similar severance; pro-rated bonus based on highest of last 3 years; 36 months subsidized benefits (CEO); performance awards accelerate at target after termination; no single-trigger acceleration |
| Clawback | Nasdaq Rule 10D-1 compliant recovery policy for excess incentive comp upon restatement; additional Sarbanes-Oxley 304-related recovery in plan |
| Tax gross-ups | No tax gross-up provisions in CEO agreement; PTEN policy of no new gross-ups for >10 years |
| Qualified Retiree Program | Continued vesting of time-based awards and pro-rata annual bonus eligibility upon qualifying retirement; Hendricks meets age/service requirements; example continued vesting value if retired 12/31/2024: 593,800 RSUs valued $4,904,788 |
| Non-compete/solicit, garden leave | Not disclosed in proxy; skip if not disclosed — |
Board Governance
- Board leadership: Chair and CEO roles are separated; independent Chairman and independent Vice Chairman provide oversight; independent directors meet regularly in executive session .
- Committees: Hendricks serves on the Executive Committee (current composition: Huff, Drummond, Hendricks); Executive Committee held no meetings in 2024 .
- Independence: Majority of Board is independent; Hendricks is CEO and not independent .
- Attendance: Board met nine times in 2024; each then-serving director attended at least 75% of Board and committee meetings .
- Governance policy post-NexTier merger: Committee composition balance through September 1, 2025; Executive Committee consists of Chairman, Vice Chairman, and CEO .
Director Compensation (context; employees receive none)
| Component | Chair ($) | Member ($) |
|---|---|---|
| Annual cash retainer (non-employee director) | 100,000; plus RSUs valued at 175,000 each Jan 1 | — |
| Additional: Non-Exec Chairman | +70,000 cash; +70,000 RSUs | — |
| Committee retainers | Compensation: 20,000 / 10,000; Nominating: 15,000 / 7,500; Audit: 25,000 / 10,000; Sustainability: 15,000 / 7,500 | |
| Employees do not receive director compensation; Hendricks receives no separate director fees . |
Compensation Structure Analysis
- 2024 cash vs equity: CEO base increased to $1.3m; LTI target increased to $8.5m, with more than 50% of LTI performance-based (PSUs) .
- Pay-for-performance alignment: 2024 annual bonus payout 107% driven by OCF, EBITDA, HSE, and strategy KPIs; PSU design requires above-median relative TSR for target and caps payout at target if 3-year absolute TSR is not positive .
- Best practices: Clawback policy, ownership requirements, anti-hedging/pledging, no re-pricing, no single-trigger CIC severance or equity grants; no new gross-ups in >10 years .
Compensation Peer Group and Targets
- 2024 Compensation peer group included APA, ChampionX, Halliburton, Helmerich & Payne, NOV, Weatherford, TechnipFMC, and various Industrials/E&Ps; PTEN was ~43rd percentile on projected 2024 revenues and ~62nd percentile on TTM EBITDA at formation .
- Targeting approach: No fixed market percentile targeted; holistic design based on market, performance, tenure, retention risk .
- 2024 Performance peer group used for PSUs included Baker Hughes, Halliburton, Schlumberger, Precision Drilling, Weatherford, ProFrac, ProPetro, etc. .
- PSU targets: 55th percentile relative TSR for target, 75th for max; threshold at 25th percentile; multi-period measurement over 1, 2, and 3 years starting April 1, 2024 .
Say-on-Pay & Shareholder Feedback
| Year | Say-on-Pay Support |
|---|---|
| 2020 | 96% |
| 2021 | 98% |
| 2022 | 97% |
| 2023 | 98% |
| 2024 | 96% |
Strong and consistent shareholder support; no program changes were made specifically due to 2024 vote feedback .
Risk Indicators & Red Flags
- Pledging/Hedging: Prohibited for officers/directors; only a legacy director has a waiver; no indication of CEO pledging .
- Clawback: Robust, compliant with Nasdaq Rule 10D-1 .
- Options: Legacy options expiring in 2025/2026 could create exercise-related supply; RSU vesting schedule creates known windows for potential insider sales .
- Adjustments: Committee excluded certain Ulterra legal fees and severance costs from incentive calculations, and included asset sale proceeds in OCF, with immaterial payout impact; transparent disclosure reduces perceived risk of manipulation .
- Tax gross-ups: No gross-up rights for CEO; policy against new gross-ups .
Board Service Summary and Dual-Role Implications
- Director since 2017; serves on Executive Committee; no chair roles; Board majority independent, with independent Chairman and Vice Chairman .
- Dual-role risk mitigation: Separation of Chair and CEO roles and regular independent executive sessions mitigate independence concerns; governance policy ensures balanced committee composition post-merger .
Investment Implications
- Compensation alignment: High at-risk mix with rigorous TSR-based PSUs requiring above-median performance and positive absolute TSR for full upside supports shareholder alignment; predictable RSU vesting and option expirations indicate potential near-term insider supply windows relevant for trading .
- Retention and continuity: Robust severance/change-in-control protections and a Qualified Retiree Program promote continuity; CEO is retirement-eligible, but policies provide orderly transition incentives, reducing abrupt departure risk .
- Governance strength: Separated Chair/CEO, majority independent board, and strong say-on-pay history suggest low governance friction and stable support for strategic execution .
- Performance focus: 2024 emphasis on cash generation (60% OCF weighting) and EBITDA alongside HSE and strategy KPIs aligns incentives with deleveraging, capital returns, and operational discipline—favorable for equity holders in cyclical OFS markets .