| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On August 29, 2018, the Board of Directors (the “Board”) of Talos Energy Inc. (the “Company”) adopted the Talos Energy Operating Company LLC Executive Severance Plan (the “Plan”). In addition, the Company expects that each of its executive officers and certain other management employees will enter into participation agreements pursuant to the Plan in which they will (i) agree to terminate their employment agreement with Talos Energy Operating Company LLC, to the extent they are a party to such an agreement, provided that certain confidentiality, non-competition, and non-solicitation covenants included in the employment agreement will survive such termination and (ii) become eligible to receive the severance benefits provided for under the Plan, pursuant to the terms and conditions of the Plan.
Upon a termination without “cause” or a resignation for “good reason” (in each case, as defined in the Plan), participants in the Plan will be eligible to receive the following benefits:
| | • | | a lump sum cash payment equal to 1.5 (or 2.0 in the case of the Chief Executive Officer of the Company) times the participant’s annualized base salary then in effect; |
| | • | | any earned but unpaid bonus for the year preceding the year of termination based on the Company’s actual performance, paid at the time such bonuses are paid to executives; |
| | • | | apro-rated bonus for the year of termination based on the Company’s actual performance, paid at the time such bonuses are paid to executives; and |
| | • | | partially subsidized continuation coverage for the participant and his or her spouse and eligible dependents under the Company’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for 18 months (or 24 months in the case of the Chief Executive Officer of the Company), unless such coverage is earlier terminated in accordance with the terms of the Plan. |
Additionally, if a participant’s employment with the Company terminates as a result of his or her death or “disability” (as defined in the Plan), then the participant will be eligible to receive the following benefits:
| | • | | any earned but unpaid bonus for the year preceding the year of termination based on the Company’s actual performance, paid at the time such bonuses are paid to executives; and |
| | • | | apro-rated bonus for the year of termination based on the Company’s actual performance, paid at the time such bonuses are paid to executives. |
In order to receive any of the foregoing severance benefits under the Plan, a participant must timely execute (and not revoke) a release of claims in favor of the Company and its affiliates. Further, the Plan requires continued compliance with certain confidentiality,non-solicitation andnon-disparagement covenants. If the severance benefits under the Plan would trigger an excise tax for a participant under Section 4999 of the Internal Revenue Code of 1986, as amended, the Plan provides that the participant’s severance benefits will be reduced to a level at which the excise tax is not triggered, unless the participant would receive a greater amount without such reduction after taking into account the excise tax and other applicable taxes.
The foregoing description of the Plan and the participation agreements thereunder is not complete and is qualified in its entirety by reference to the full text of the Plan and the form of such participation agreements, which are attached as Exhibits 10.1 and 10.2 to this Current Report on Form8-K and incorporated in this Item 5.02 by reference.
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