Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On March 14, 2019, the Compensation Committee (the “Committee”) of the Board of Directors of Diamond Offshore Drilling, Inc. (the “Company”) adopted additional forms of incentive award agreements under the Company’s Incentive Compensation Plan (Amended and Restated as of January 1, 2018, as amended on June 28, 2018) (the “Incentive Compensation Plan”) and the Company’s Equity Incentive Compensation Plan (the “Equity Compensation Plan”).
Incentive Compensation Plan Award Agreements
Officer Awards. The Committee adopted a form of Cash Incentive Award Agreement for executive officers under the Incentive Compensation Plan that provides for both time-vesting awards, a portion of which vests over atwo-year period and a portion which vests over a three-year period, and performance-vesting awards that have a performance period of three calendar years. The performance-vesting awards become eligible to vest dependent upon the level of achievement of three specified, equally-weighted performance goals, subject to the negative discretion of the Committee. The performance goals consist of (i) a specified average target ratio of Adjusted Operating Cash Flow to Adjusted Net PP&E, as such terms are defined in the agreement, for each calendar year in the performance period, (ii) a specified level of average annual rig efficiency for the three calendar years in the performance period and (iii) a specified amount of added cumulative contract backlog during the performance period. Unless otherwise determined by the Committee, the percentage of the performance-vesting awards eligible to vest may range from 0% to 133% of the target amount, based on the specified levels of achievement of the performance goals as set forth in the agreement.
If the Company or its subsidiary terminates the employment of the grantee without Cause, as defined in the Incentive Compensation Plan, on or after two years after the grant of a performance-vesting award but before such award vests, the grantee will receive 50% of the amount that would have been payable. Upon the grantee’s Retirement, as defined in the agreement, before a performance-vesting award vests, the grantee will receive a performance-vesting award that is prorated as provided in the agreement. If the grantee’s employment terminates due to death or Disability, as defined in the Incentive Compensation Plan, during or after the performance period, the grantee will receive the amount of the performance-vesting award that would have been payable, as provided in the agreement. In addition, if the grantee’s employment terminates due to death or Disability, the unvested portion of the time-vesting awards will fully vest as of the date of termination of employment. The agreement also obligates the grantee to comply with certain restrictive covenants, including obligations of confidentiality, a prohibition on solicitation of employees of the Company or its subsidiaries for a period of two years after termination of employment and a prohibition on competition for a period of one year after termination of employment.
CEO Awards. The Committee also adopted a form of Cash Incentive Award Agreement for the Chief Executive Officer (“CEO”) under the Incentive Compensation Plan that is substantially similar to the form of cash incentive award agreement for executive officers, except
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