On April 21, 2022, the compensation committee of the board of directors of Diamond Offshore Drilling, Inc. (the “Company”) approved forms of award agreements for grants of restricted stock units (“RSUs”) under the Company’s 2021 Long-Term Stock Incentive Plan to certain of its key employees, including its executive officers, with grant dates on or after May 12, 2022. The award agreements provide for time-based awards that vest in equal amounts annually over a three-year period and performance-based awards that vest based on the achievement of a performance goal over a three-year period.
Time-Based RSU Awards. The time-based RSUs vest and become non-forfeitable with respect to approximately 1/3 of the RSUs on each of May 12, 2023, May 12, 2024 and May 12, 2025, subject to the recipient’s continuous service or employment with the Company through the applicable vesting date. If the recipient is terminated for “cause” (as defined in the award agreement), all vested and unvested time-based RSUs will immediately be forfeited and cancelled for zero compensation. In connection with a “change in control” (as defined in the award agreement) in which the award is continued, assumed or replaced with an economically equivalent equity-based award that contains substantially comparable terms and conditions (a “Rollover Award”), the Rollover Award will vest in accordance with the schedule set forth above. In the case of a Rollover Award, upon the occurrence of a termination of the recipient’s service (i) by the Company without cause, (ii) by the recipient for “good reason” (as defined in the award agreement) or (iii) by reason of the recipient’s death or “disability” (as defined in the award agreement) (a “Qualifying Termination”) during the 12-month period following such change in control, such award will 100% vest and become non-forfeitable as of the date on which such Qualifying Termination occurred. In connection with a change in control in which the award does not become a Rollover Award, a pro-rated portion of the number of RSUs scheduled to vest on the next vesting date (to the extent not previously vested) will immediately vest in full, subject to the recipient’s continued service through the consummation of the change in control and, to the extent not continued, assumed or replaced in connection with the change in control, any remaining unvested time-based RSUs will immediately be forfeited and cancelled for zero compensation. Upon a termination of service for any other reason, all outstanding and unvested time-based RSUs will immediately be forfeited and cancelled for zero compensation. Any vested RSUs may be settled in cash in lieu of stock.
Performance-Based RSU Awards. The performance-based RSUs vest and become non-forfeitable based on the level of achievement of the Measurement VWAP (as defined below) during the three-year period commencing on the grant date (unless terminated earlier in connection with a “change in control” (as defined in the award agreement) as set forth in the award agreement) (the “Performance Period”), subject to the recipient’s continuous service or employment with the Company through the end of the Performance Period. If during the Performance Period the highest 30 consecutive trading day volume-weighted average price of the Company’s common stock at any time during the Performance Period (“Measurement VWAP”) equals the First Threshold (as defined in the award agreement), then 1/3 of the RSUs will vest and become non-forfeitable. If during the Performance Period, the highest Measurement VWAP equals the Second Threshold (as defined in the award agreement), which exceeds the First Threshold, then 2/3 of the RSUs will vest and become non-forfeitable. If during the Performance
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