| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
In a Form 8-K filed with the Securities and Exchange Commission on August 30, 2024, Talos Energy Inc. (the “Company”) previously reported Timothy S. Duncan departed his role as President and Chief Executive Officer of the Company and Joseph A. Mills was appointed as Interim Chief Executive Officer and President of the Company, in each case, effective August 29, 2024.
Joseph A. Mills
As a result of Mr. Mills’ appointment, the compensation committee of the board of directors of the Company (the “Board”) determined that (i) Mr. Mills’ base salary will be $800,000, effective August 29, 2024, prorated for 2024 and (ii) the Company will grant (a) 43,630 restricted stock units (“RSUs”) pursuant to the Amended and Restated Talos Energy Inc. 2021 Long Term Incentive Plan, which RSUs shall vest on the earlier to occur of (A) December 31, 2024 and (B) the date the Company appoints a new Chief Executive Officer and President and Mr. Mills ceases to serve in that role; provided, that Mr. Mills completes tasks reasonably requested by the Board to ensure a smooth transition of the role of Chief Executive Officer and President from Mr. Mills to his successor. Additionally, Mr. Mills agreed to forfeit 4,273 RSUs that he was granted in 2024 for his service as a non-employee member of the Board. The forfeited RSUs represent the amount that would have been applicable to his service as a non-employee member of the Board from August 29, 2024 to December 31, 2024.
The foregoing description of the Mr. Mills’ RSUs and cancellation of his director RSUs is only a summary and is qualified in its entirety by the terms of such RSU grant notice and agreement and RSU cancellation agreement, copies of which are filed hereto as Exhibit 10.1 and Exhibit 10.2, respectively.
Timothy S. Duncan
In connection with his termination, the Company entered into a Separation and Release Agreement with Mr. Duncan on November 1, 2024 (the “Agreement”), pursuant to which Mr. Duncan releases the Company and its affiliates from certain liabilities and affirms the restrictive covenants with which he has an obligation to comply, and the Company, in turn, confirms that it will (i) provide Mr. Duncan with the payments and benefits pursuant to the terms and conditions of the Talos Energy Operating Company LLC Amended and Restated Executive Severance Plan (the “Severance Plan”) and the terms and conditions of Mr. Duncan’s outstanding 2022 and 2023 award agreements (the “Existing Equity Awards”) and (ii) grant a stock award and performance stock unit (“PSU”) award (the “2024 Award Agreements”) to Mr. Duncan. In connection with his entry into the Agreement, Mr. Duncan also resigned as a member of the Board.
The payments and benefits that Mr. Duncan has a right to, upon a qualifying termination without cause of a Tier 1 participant under the Severance Plan, are as follows: (i) a lump-sum cash payment equal to 2 times the sum of (a) his annualized base salary and (b) the target amount for his annual cash bonus; (ii) a pro-rated bonus for 2024, based on actual performance and paid at the time such bonuses are paid to other executives of the Company; and (iii) partially subsidized continuation coverage for himself, his spouse and eligible dependents under the Company’s health plans for up to 24 months. Additionally, pursuant to the Existing Equity Awards, upon a termination without cause Mr. Duncan is entitled to accelerated vesting and settlement of his outstanding unvested RSUs that would have vested within the 12-month period following his termination and the deemed fulfillment of the service requirement with respect to a pro-rata portion of his PSUs granted in 2022 and 2023, the settlement of which will continue to be subject to the Company’s actual performance with respect to the applicable performance metrics through the end of the relevant performance periods. Pursuant to the 2024 Award Agreements, the Company also granted Mr. Duncan (A) a stock award of 28,519 shares of the Company’s common stock and (B) a PSU award of 38,844 PSUs, which PSUs are eligible to performance vest based on the Company’s relative and absolute total shareholder return from the period commencing January 1, 2024 to December 31, 2026.
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