STOCK-BASED COMPENSATION

3 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 9 STOCK-BASED COMPENSATION

A summary of compensation expense for stock-based payment arrangements recognized in Drilling services operating expense, Research and development expense and Selling, general and administrative expense on our Unaudited Condensed Consolidated Statements of Operations, is as follows:

	Three Months Ended December 31,
(in thousands)	2023		2022
Stock-based compensation expense
Drilling services operating	$	1,397	$	1,385
Research and development	473		426
Selling, general and administrative	5,802		6,462
	$	7,672	$	8,273

Restricted Stock

A summary of the status of our restricted stock awards as of December 31, 2023 and changes in non-vested restricted stock outstanding during the three months then ended is presented below:

(in thousands, except per share amounts)	Shares1	Weighted-Average Grant Date Fair Value per Share
Non-vested restricted stock outstanding at September 30, 2023	1,362	$	35.11
Granted	746	35.24
Vested2	(734)	33.08
Forfeited	(1)	44.65
Non-vested restricted stock outstanding at December 31, 2023	1,373	$	36.25

(1)Restricted stock shares include restricted phantom stock units under our Director Deferred Compensation Plan. These phantom stock units confer the economic benefits of owning company stock without the actual ownership, transfer or issuance of any shares. Phantom stock units are subject to a vesting period of one year from the grant date. During the three months ended December 31, 2023, no restricted phantom stock units were granted and no restricted phantom stock units vested.

(2)The number of restricted stock awards vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements.

Performance Units

A summary of the status of our performance-vested restricted share units ("performance units") as of December 31, 2023 and changes in non-vested performance units outstanding during the three months then ended is presented below:

(in thousands, except per unit amounts)	Performance Units	Weighted-Average Grant Date Fair Value per Unit
Non-vested performance units outstanding at September 30, 2023	796	$	34.51
Granted	223	39.86
Dividend equivalent rights performance units credited and performance factor adjustment1	(115)	35.11
Non-vested performance units outstanding at December 31, 20232	904	$	35.67

(1)At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance units. The vesting of units ranges from zero to 200 percent of the units granted depending on the Company’s total shareholder return ("TSR") relative to the TSR of the Peer Group on the vesting date.

(2)Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 401,904 performance units which is calculated based on the payout percentage for the completed performance period. The vesting and number of the remainder of non-vested performance units reflected at the end of the period is contingent upon our achievement of specified target performance criteria. If we meet the specified relative TSR performance criteria at target, approximately 503,371 additional performance units could vest or become eligible to vest. Beginning with performance units granted in December 2022, performance units include an additional return on invested capital (“ROIC”) performance metric. Based on the Company's ROIC performance over a full three-year performance period, the Human Resources Committee may increase or decrease by 25 percent the number of performance units that otherwise would be paid out solely based on the achievement of relative TSR performance over a full three-year performance period (the "ROIC Modifier").

Subject to the terms and conditions set forth in the applicable performance share unit award agreements and the 2020 Plan, grants of performance units are subject to a vesting period of three years (the “Vesting Period”) that is dependent on the achievement of certain performance goals. Such performance unit grants consist of two separate components. Performance units that comprise the first component are subject to a three-year performance cycle. Performance units that comprise the second component are further divided into three separate tranches, each of which is subject to a separate one-year performance cycle within the full three-year performance cycle. The vesting of the performance units is generally dependent on (i) the achievement of the Company's TSR performance goals relative to the TSR achievement of a peer group of companies (over the applicable performance cycle), (ii) the continued employment of the recipient of the performance unit award throughout the Vesting Period, and (iii) for performance units granted beginning in December 2022, the application of the ROIC Modifier. The Vesting Period for performance units granted in December 2020 ended on December 31, 2023 and the performance units eligible to vest were settled in shares of common stock in January 2024. Stock-based compensation expense related to these grants has been fully recognized as of December 31, 2023.