Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On June 6, 2018, the Compensation Committee (the Compensation Committee) of the Board of Directors (the Board) of
McDermott International, Inc. (McDermott) took the following actions relating to the compensation of McDermotts chief executive officer, chief financial officer and each of the other executive officers listed in the Summary
Compensation Table in the Amendment to McDermotts Annual Report on Form
10-K
filed with the U.S. Securities and Exchange Commission on March 8, 2018 (collectively, the Named Executive
Officers).
2018 Annual Base Salaries
. The Compensation Committee approved the following annual base salaries for the
Named Executive Officers, effective May 10, 2018:
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Named Executive Officer
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Annual Base Salary
(effective May 10, 2018)
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David Dickson
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$1,125,000
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Stuart Spence
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$ 650,000
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Linh Austin
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$ 500,000
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Brian McLaughlin
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$ 450,000
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Scott Munro
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$ 375,000
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2018 Annual Cash Bonus
. On March 1, 2018, the Compensation Committee previously established
2018 annual target award opportunities, financial metrics and performance goals for participants in McDermotts Executive Incentive Compensation Plan (the EICP), including the Named Executive Officers, for the 2018 period prior to
the date the closing of the combination (the Combination) of McDermott and Chicago Bridge & Iron Company N.V. occurred, which closing date was May 10, 2018 (the Closing Date). On June 6, 2018, the
Compensation Committee established 2018 annual target award opportunities for participants in the EICP, including the Named Executive Officers, for the period beginning on the Closing Date and ending on December 31, 2018, as follows:
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Named Executive Officer
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Target EICP Award Opportunity
(as a percentage of base salary
earned for the period beginning
on the
Closing Date through
December 31, 2018)
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David Dickson
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125%
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Stuart Spence
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100%
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Linh Austin
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70%
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Brian McLaughlin
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70%
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Scott Munro
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70%
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In connection with the 2018 EICP awards for the period beginning on July 1, 2018 and ending on
December 31, 2018 (the Post-Combination Prorated Period), the Compensation Committee approved financial metric performance goals based on McDermotts consolidated adjusted operating income and adjusted free cash flow, weighted
as set forth below. McDermotts financial performance against the stated goals will determine the threshold (0.5x), target (1.0x) and maximum (2.0x) possible funding for each financial performance goal, with the weighted sum of each funding
multiple determining the pool funding multiple for the Post-Combination Prorated Period (the Pool Funding Multiple):
2
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Weight
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Financial Metric Performance Goals
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Performance Level
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Funding Multiple
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50%
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Adjusted Operating Income
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Threshold
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0.5x
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Target
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1.0x
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Maximum
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2.0x
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50%
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Adjusted Free Cash Flow
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Threshold
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0.5x
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Target
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1.0x
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Maximum
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2.0x
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The Pool Funding Multiple will then be, for each participant in the EICP, multiplied by the product of such
participants actual base salary earned during the period from the Closing Date through December 31, 2018 times their respective Target EICP Award Opportunity, and such amounts will be aggregated to determine the total amount of the EICP
bonus pool for the Post-Combination Prorated Period (the Post-Combination Prorated Period EICP Pool). However, the Compensation Committee determined that the Post-Combination Prorated Period EICP Pool will not be less than 0.5x nor more
than 2.0x the aggregate dollar amount of the participants target award opportunities for the Post-Combination Prorated Period.
In
no event may any Named Executive Officers annual bonus exceed two times his or her respective Target EICP Award Opportunity, and no participant is guaranteed a minimum award under the EICP. The Compensation Committee has the discretion to
increase or decrease the amount of any payout in its sole discretion.
A participants actual bonus award will be determined by
achievement of the participants individual performance goals, in each case in accordance with objective measures required by the terms of the EICP and the exercise of the Compensation Committees discretion.
2018 Long-Term Incentive Awards
. After the Combination, the Compensation Committee considered and deemed it appropriate to make
additional long-term incentive awards to participants in McDermotts long-term incentive plans, including the Named Executive Officers. On June 6, 2018, the Compensation Committee approved the type of grant and form of grant agreements to
be used in connection with the additional 2018 annual long-term incentive awards. The additional 2018 awards consist of, for certain Named Executive Officers, a grant of restricted stock units in the approximate grant date fair value amount set
forth below, and, for each Named Executive Officer, a grant of performance units in the approximate grant date fair value amount set forth below. The grants to the Named Executive Officers were made pursuant to the 2016 McDermott International, Inc.
Long-Term Incentive Plan. The foregoing description of the grants of restricted stock units and performance units is a summary and is qualified in its entirety by reference to the form of 2018 restricted stock unit grant agreement approved by the
Compensation Committee on March 1, 2018, which was included as Exhibit 10.1 to the Current Report on Form
8-K
filed on March 7, 2018, and the form of 2018 performance unit grant agreement, which is
included as Exhibit 10.1 to this report.
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Named Executive Officer
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Restricted Stock Units
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Performance Units
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David Dickson
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$1,750,000
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$4,150,000
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Stuart Spence
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$ 250,000
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$1,000,000
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Linh Austin
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$ 100,000
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$ 300,000
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Brian McLaughlin
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$ 175,000
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$ 375,000
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Scott Munro
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$ 0
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$ 200,000
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