Exhibit 10.22
DIAMOND OFFSHORE DRILLING, INC.
EXECUTIVE PERFORMANCE-VESTING
RESTRICTED STOCK UNIT AWARD AGREEMENT
This EXECUTIVE PERFORMANCE-VESTING RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is made as of January 18, 2023 (the “Grant Date”) between Diamond Offshore Drilling, Inc., a Delaware corporation (the “Company”), and [•] (the “Participant”), and is made pursuant to the terms of the Company’s 2021 Long-Term Stock Incentive Plan (the “Plan”). Capitalized terms used herein but not defined shall have the meanings set forth in the Plan.
2023 Executive Performance-Vesting RSU Award Agreement Page 1 of NUMPAGES 10
For purposes hereof, a “Qualifying Termination” means the termination of the Participant’s Service (i) by the Company without Cause, (ii) by the Participant for Good Reason, or (iii) by reason of the Participant’s death or Disability.
For purposes hereof, “Disability” means the Participant’s inability to perform the essential duties, responsibilities and functions of the Participant’s position with the Company for a period of 90 consecutive days or for a total of 180 days during any 12-month period as a result of any mental or physical illness, disability or incapacity even with reasonable accommodations for such illness, disability or incapacity provided by the Company or if providing such accommodations would be unreasonable, all as determined by the Committee in its reasonable good faith judgment; provided that if any such Disability would not be a “disability” within the meaning of Code Section 409A, no payment shall be made hereunder as a result of any such Disability that would be deferred compensation for purposes of Code Section 409A. The Participant shall cooperate in all respects with the Company if a question arises as to whether the Participant has become disabled (including submitting to reasonable examinations by one or more medical doctors and other health care specialists and authorizing such medical doctors and other health care specialists to discuss the Participant’s condition with the Company).
2023 Executive Performance-Vesting RSU Award Agreement Page 2 of NUMPAGES 10
2023 Executive Performance-Vesting RSU Award Agreement Page 3 of NUMPAGES 10
2023 Executive Performance-Vesting RSU Award Agreement Page 4 of NUMPAGES 10
DIAMOND OFFSHORE DRILLING, INC.
By:
Name:
Title:
2023 Executive Performance-Vesting RSU Award Agreement Page 5 of NUMPAGES 10
Annex A
Performance Matrix
The “Performance Period” shall be January 18, 2023 through January 17, 2026.
The “Performance Metric” shall be the TSR of the Company relative to the Peer Group (as defined below). Achievement of the Performance Metric shall be determined by the percentile rank of the Company’s TSR relative to the TSR of each other entity in the Peer Group.
The “TSR” means the total shareholder return measured over the Performance Period.
Determination of TSR: TSR for the Company and each other entity in the Peer Group shall be determined in accordance with the following formula (expressed as a percentage):
TSR= (A*B)C-1
where:
“A” represents the Ending Price.
“B” represents the Reinvestment Factor.
“C” represents the Starting Price.
For purposes of determining TSR:
“Starting Price” means the volume-weighted average price of one share of common stock on the applicable stock exchange during the thirty (30) trading days immediately preceding and including the first day of the Performance Period. The Starting Price for a Share is $9.7394.
“Ending Price” means the volume-weighted average price of one share of common stock on the applicable stock exchange during the thirty (30) trading days immediately preceding and including the last day of the Performance Period; provided, that in the case of a Change in Control, the Ending Price for the Company shall be the fair market value of a Share immediately prior to the Change in Control, and the Ending Price for all other companies shall be the volume-weighted average price of one share of common stock on the applicable stock exchange during the thirty (30) trading days immediately preceding the date of the Change in Control.
“Reinvestment Factor” means the Share Count at the end of the Performance Period.
“Share Count” equals one share of common stock of the applicable entity on the first day of the Performance Period, which is adjusted cumulatively for any dividends declared over the Performance Period, in accordance with the following formula:
F=G+(G* HIJ )
where:
“F” represents the new Share Count following adjustment to account for the applicable dividend.
“G” represents the Current Share Count.
“H” represents the aggregate dollar value of the declared dividend.
2023 Executive Performance-Vesting RSU Award Agreement Page 6 of NUMPAGES 10
“I” represents the aggregate number of shares of common stock outstanding participating in the dividend, including equity-based awards that are entitled to dividends or dividend equivalents.
“J” represents the closing price of one share of common stock of the applicable entity on the dividend payment date.
“Current Share Count” means the Share Count before each dividend adjustment, if any.
The Company’s “Rank” shall be determined by the Company’s position within the ranking of each entity in the Peer Group (including the Company) in descending order based on their respective TSRs (with the highest TSR having a Rank of one). For purposes of developing the ordering provided in the immediately-preceding sentence, (A) any entity that filed for bankruptcy protection under the United States Bankruptcy Code during the Performance Period shall be assigned the lowest Rank of any entity in the Peer Group and (B) any entity that is acquired during the Performance Period, or otherwise no longer listed on a national securities exchange at the end of the Performance Period (other than the Company), shall be removed from the Peer Group and shall be excluded for purposes of ordering the entities in the Peer Group (and for purposes of calculating the Company’s Percentile).
After determining the Company’s Rank, the Company’s “Percentile” will be calculated as follows:
P=1-R-1N-1
where:
“P” represents the Percentile which will be rounded, if necessary, to the nearest whole percentile by application of regular rounding.
“N” represents the total number of entities in the Peer Group (including the Company, but after removal of any entities in accordance with the calculation of the Rank).
“R” represents Company’s Rank (as determined above).
The “Payout Percentage” shall be determined as follows, subject to the exception below:
Straight-line interpolation shall be used to determine the Payout Percentage for any Company Percentile between 25% and 75%, based upon the Payout Percentages set forth above.
The following exception exists with respect to the Payout Percentage determination set forth above: If the Company’s TSR (irrespective of its Rank or Percentile) is less than 0%, then the Payout Percentage shall not exceed 100% of the Target RSU Amount (subject to adjustment as set forth in Section 2 of the Agreement, if applicable).
2023 Executive Performance-Vesting RSU Award Agreement Page 7 of NUMPAGES 10
In addition to the Company, the “Peer Group” shall be comprised of the following companies (subject to adjustment as set forth in the definition of Rank above):
The Compensation Committee of the Board of Directors shall be permitted to adjust or modify the Peer Group and calculations set forth above as it deems appropriate, including pursuant to any adjustments under Sections 4(b) and 11(c) of the Plan.
2023 Executive Performance-Vesting RSU Award Agreement Page 8 of NUMPAGES 10
Performance Matrix Illustration
Below is an example of how the TSR of an entity would be determined in accordance with this Performance Matrix.
Assumptions:
Starting Price: $10
Ending Price: $20
Number of shares outstanding prior to any dividend: 100
Number of RSUs outstanding prior to any dividend: 10
Dividend declared of $1 for each outstanding share and RSU (in the form of dividend equivalents)
Closing price of one share on dividend payment date: $9 (assumes no growth from starting price)
First, determine the Reinvestment Factor using the formula above (reproduced below).
F=G+(G* HIJ )
where:
“F” represents the new Share Count following adjustment to account for the applicable dividend.
“G” represents the Current Share Count.
“H” represents the aggregate dollar value of the declared dividend.
“I” represents the aggregate number of shares of common stock outstanding participating in the dividend, including equity-based awards that are entitled to dividends or dividend equivalents.
“J” represents the closing price of one share of common stock of the applicable entity on the dividend payment date.
Based on the assumed facts of this illustration, the immediately above formula with the assumed numbers plugged in looks as follows:
F=1+(1* 1101109 )
This simplifies as follows:
F=1+(1* 19 )
F=1+(0.111 )
F=1.111
Assuming there is only one dividend during the Performance Period for this entity, the 1.111 is the Reinvestment Factor which equals B in the below.
To find the TSR for this entity we use the following formula.
2023 Executive Performance-Vesting RSU Award Agreement Page 9 of NUMPAGES 10
TSR= (A*B)C-1
where:
“A” represents the Ending Price.
“B” represents the Reinvestment Factor.
“C” represents the Starting Price.
Based on the assumed facts of this illustration, the immediately above formula with the assumed numbers plugged in looks as follows:
TSR= (20*1.111)10-1
This simplifies as follows:
TSR= 2.222-1
TSR= 1.222
2023 Executive Performance-Vesting RSU Award Agreement Page 10 of NUMPAGES 10