pratikkk

Pratik Kukreja
Hornbeck Offshore Services, Inc (NYSE: HOS) through its subsidiaries, operates offshore supply vessels (OSVs), multi-purpose support vessels (MPSVs), and a shore-base facility to provide logistics support and specialty services to the offshore oil and gas exploration and production industry, primarily in the United States, Gulf of Mexico, and select international markets. The Company is a provider of marine services to exploration and production, oilfield service, offshore construction and military customers. The Company, through its subsidiaries, also operates ocean-going tugs and tank barges that provide transportation of petroleum products, primarily in the northeastern United States, Gulf of Mexico and Puerto Rico. It operates two business segments in the marine industry: Upstream segment and Downstream segment. Its Upstream segment owns and operates fleets of United States flagged, new generation OSVs and United States-owned fleets of DP-2 and DP-3 MPSVs.

Base Salary . The Company pays base salary to executive officers in order to compensate them for day-to-day services rendered to the Company over the course of each year. Salaries for executive officers are reviewed annually by the compensation committee. In determining individual salaries, the compensation committee considers the scope of the executive’s job responsibilities, unique skill sets and experience, individual contributions, market conditions, current compensation as compared to peer and competitor companies, including the Industry Peer Group, and the financial budget of the Company for the coming year. In addition, the compensation committee considers the overall performance of the Company and the recommendations of the Chief Executive Officer, as they concern the compensation of the other executive officers. Consistent with the Company’s cost-cutting efforts and in light of economic conditions that the Company anticipated would prevail in 2009, the Chief Executive Officer did not recommend, and the compensation committee did not award, base salary increases in 2009 for any of our executive officers.

Cash Incentive Compensation and Bonuses . The Company utilizes cash incentive pay in order to incentivize the achievement of specific operating results each year and to encourage short-term performance. The program for awarding annual cash incentive pay is identical (other than the percentage of base salary that can be achieved as set forth in the table below) for all of our executive officers and is described in the employment agreements of Messrs. Hornbeck, Annessa and Harp. The program provides for cash incentive payments comprised of two components.

The first component represents 50% of the aggregate potential cash incentive compensation that can be earned by our executive officers and is based on the Company achieving a target level of earnings before interest, taxes, depreciation and amortization, or EBITDA, as adjusted by loss on early extinguishment of debt, stock-based compensation expense and interest income (as applicable), or adjusted EBITDA, established at the beginning of the year by the compensation committee. A discussion concerning our use of adjusted EBITDA in connection with compensation-related matters is described in the section entitled “How and why we use adjusted EBITDA as the performance measure to determine whether cash compensation has been earned” on pages 37 and 38 below. The compensation committee also reviews the recommended cash incentive compensation potential of each executive officer not subject to an employment agreement, and may revise, upward or downward, the threshold, target and maximum percentages of base salary that can be awarded to each of them as compensation under the first component.

For compensation paid for 2009, if the Company achieved an adjusted EBITDA between 80% and 100%, or between 100% and 120%, of the adjusted EBITDA target, cash incentive compensation would be paid in an amount equal to the percentage of base salary that would be earned by the executive officers as determined by the compensation committee based on the actual adjusted EBITDA achieved, interpolated on a straight-line basis between 80% and
 
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