Exhibit 10.1
PERFORMANCE SHARE
GRANT AGREEMENT
AMENDED AND RESTATED 2001 DIRECTORS AND OFFICERS LONG-TERM INCENTIVE PLAN
On __________, ___ (the "Date of Grant"), the Compensation Committee of the
Board of Directors (the "Committee") of McDermott International, Inc. (the
"Company") selected you to receive a grant of Performance Shares under the
Company's amended and restated 2001 Directors and Officers Long-Term Incentive
Plan (the "Plan"). The provisions of the Plan are incorporated herein by
reference. A copy of the Plan is attached for your reference.
PERFORMANCE SHARES
PERFORMANCE SHARES AWARD. You have been awarded an initial grant (the "Initial
Grant") of Performance Shares. This grant represents a right to receive shares
of common stock of the Company at the close of the applicable performance
measurement period, calculated as described below, provided the applicable
performance measures and vesting requirements set forth in this agreement have
been satisfied. No shares are awarded or issued to you on the Initial Grant
Date.
VESTING REQUIREMENTS. Except as provided in the following paragraph, Performance
Shares do not provide you with any rights or interest therein until they become
vested on the third anniversary of the Date of Grant, provided you are still
employed by the Company or one of its subsidiaries.
In the event you terminate employment prior to the third anniversary of the Date
of Grant due to "Retirement," 25% of the Initial Grant will continue to vest
provided your termination date is on or after the first anniversary of the Date
of Grant, and 50% of the Initial Grant will continue to vest provided your
termination date is on or after the second anniversary of the Date of Grant.
For this purpose, the term "Retirement" means (a) voluntary termination of
employment after attaining age 60 and completing at least 10 years of service
with the Company or its subsidiaries, or (b) involuntary termination in
connection with a reduction in force.
In the event your employment terminates by reason of your death or disability
prior to the third anniversary of the Date of Grant, 100% of the Initial Grant
shall continue to vest.
The Committee may, in its sole discretion, provide for additional vesting.
FORFEITURE OF PERFORMANCE SHARES. Except as otherwise provided above,
Performance Shares which are not vested at your termination of employment for
any reason shall, coincident therewith, be forfeited.
In addition, in the event that (a) you are convicted of (i) a felony or (ii) a
misdemeanor involving fraud, dishonesty or moral turpitude, or (b) you engage in
conduct that adversely affects or may reasonably be expected to adversely affect
the business reputation or economic interests of the Company, as determined in
the sole judgment of the Committee, then all Performance Shares and all rights
or benefits awarded to you under this grant of Performance Units are forfeited,
terminated and withdrawn immediately upon such conviction or notice of such
determination. The Committee shall have the right to suspend any and all rights
or benefits awarded to you hereunder pending its investigation and final
determination with regard to such matters.
NUMBER OF PERFORMANCE SHARES. The number of Performance Shares ultimately
awarded to you, if any, shall be determined as of the third anniversary of the
Date of Grant (the "Performance Measurement Date"). The percentage of
Performance Shares in your Initial Grant in which you will vest shall be
determined based on the Cumulative Operating Income of the Company on December
31, 2009 as illustrated in the schedule set forth below. The actual vested
percentage above 25% will be determined by linear interpolation. For this
purpose, the term "Cumulative Operating Income" means operating income for the
period beginning on January 1, 2007 and ending on December 31, 2009.
CUMULATIVE OPERATING INCOME VESTED PERCENTAGE
$______ 25%
$______ 100%
$______ 150%
For example, if the Cumulative Operating Income determined as of the close of
the Performance Measurement Date is $______, you will vest in 125% of the
Performance Shares in your Initial Grant. The number of shares of common stock
of the Company you receive shall be equal to the number of your vested
Performance Shares. No Performance Shares will vest if the Cumulative Operating
Income on December 31, 2009 is below $______. In no event will the vested
percentage be greater than 150%.
PAYMENT OF PERFORMANCE SHARES. Except as otherwise provided below in the section
entitled "Change in Control," you (or your beneficiary, if applicable) will
receive one share of common stock of the Company for each Performance Share that
vests on the Performance Measurement Date. Shares shall be distributed as soon
as administratively practicable after the Performance Measurement Date.
CHANGE IN CONTROL
If a Change in Control (as defined in the Plan) of the Company occurs, all
outstanding Performance Shares granted hereunder shall immediately vest. The
number of Performance Shares that vest in connection with a Change in Control
shall be the greater of (i) 100% of the Initial Grant or (ii) the vested
percentage determined in accordance with the schedule set forth above, based on
Cumulative Operating Income earned as of the end of the fiscal quarter
immediately prior to the date the Change in Control occurs, and the Performance
Measurement Date shall be the date such Change in Control occurs and adjusted
Cumulative Operating Income targets. The Adjusted Cumulative Operating Income
target shall be determined by multiplying the targets set forth above by a
fraction, the numerator of which is the number of months from the Date of Grant
through the end of the fiscal quarter immediately prior to the date the Change
in Control occurs and the denominator of which is 36. Shares of common stock of
the Company shall be distributed as soon as administratively practicable.
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TAX CONSEQUENCES
The Company has been advised that, in the opinion of counsel, the grants awarded
hereunder will have the following tax consequences under the present U. S.
Federal tax laws and regulations:
You will not realize income on the grant of Performance Shares. For U.S. federal
income tax purposes, you will be deemed to have received compensation taxable as
ordinary income equal to the fair market value, as of the Performance
Measurement Date, of the shares you receive, which will be included in your
taxable income and reported on IRS Form W-2 in the tax year in which they vest.
By acceptance of this letter you agree that, upon vesting in the shares, you
will promptly pay to the Company the amount of income tax which the Company is
required to withhold in connection with the income realized by you and that,
failing such payment by you, the Company is authorized to withhold such amount
from subsequent salary payments.
TRANSFERABILITY
Performance Shares granted hereunder are non-transferable other than by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order.
SECURITIES AND EXCHANGE COMMISSION REQUIREMENTS
If you are a Section 16 insider, this grant of Performance Shares is not
reportable on a Form 4 unless and until they become vested. At that time, the
number of Performance Shares ultimately awarded to you must be reported on a
Form 4 before the end of the second (2nd) business day following the Performance
Measurement Date or your date of retirement, as applicable. Please be aware that
if you are going to reject the grant, you should do so immediately after the
Date of Grant. Please advise Kathy Peres and Renee Hack immediately by e-mail,
fax or telephone if you intend to reject this grant.
Those of you covered by these requirements will have already been advised of
your status. Others may become Section 16 insiders at some future date, in which
case reporting will be required in the same manner noted above.
OTHER INFORMATION
Neither the action of the Company in establishing the Plan, nor any action taken
by it, by the Committee or by your employer, nor any provision of the Plan or
this Agreement shall be construed as conferring upon you the right to be
retained in the employ of the Company, Inc. or any of its subsidiaries or
affiliates.
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