UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the
Securities Exchange Act of 1934
Date
of
Report (date of earliest event reported): July 13, 2005
TRANSOCEAN
INC.
(Exact
name of registrant as specified in its charter)
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Cayman
Islands
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333-75899
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66-0582307
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File
Number)
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(I.R.S.
Employer
Identification
No.)
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4
Greenway Plaza
Houston,
Texas 77046
(Address
of principal executive offices and zip code)
Registrant’s
telephone number, including area code: (713)
232-7500
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
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ITEM
1.01
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ENTRY
INTO A MATERIAL DEFINITIVE
AGREEMENT.
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Annual
Base Salaries
On
July
13, 2005, the Executive Compensation Committee (“Committee”) of Transocean Inc.
(together with its subsidiaries, unless the context requires otherwise,
“Transocean,”“we,”“us” or “our”) approved the following annual base salaries to
be effective July 15, 2005 for our named executive officers:
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Name
and Position
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2005
Annual
Base
Salary
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||
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Robert
L. Long
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President
and Chief Executive Officer
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$750,000
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Jean
P. Cahuzac
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Executive
Vice President and Chief Operating Officer
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$435,000
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Gregory
L. Cauthen
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Senior
Vice President and Chief Financial Officer
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$360,000
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Eric
B. Brown
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Senior
Vice President, General Counsel and Corporate Secretary
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$315,000
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Barbara
S. Wood (1)
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Vice
President and Chief Information Officer
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$225,000
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J.
Michael Talbert (2)
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Former
Executive Chairman of the Board and current Non-Executive Chairman
of the
Board
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N/A
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_______________
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(1)
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Mrs.
Wood is no longer one of our executive
officers.
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(2)
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Mr.
Talbert was our executive Chairman of the board of directors until
his
retirement in October 2004. After his retirement, he became our
non-executive chairman.
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Executive
Change of Control Severance Benefit Policy
The
board
of directors and the executive compensation committee have, over a considerable
period of time, analyzed the merits of a change of control severance policy
for
our senior executives. After careful consideration, the board concluded that
it
was in the best interest of shareholders to establish a policy applicable to
a
limited number of senior executives.
Effective
as of July 15, 2005, the board established an executive change of control
severance benefit policy for executives who are designated by the board. The
policy provides for severance benefits to designated executives who, within
24
months after a change of control (as defined by the policy) are terminated
for
other than cause (as defined in the policy) or who leave the Company for good
reason (also as defined in the policy) (with either such termination of
employment referred to herein as a “Qualifying Employment Termination”). The
board designated Robert L. Long, President and Chief Executive Officer, Jean
P.
Cahuzac, Executive Vice President and Chief Operating Officer, Eric B. Brown,
Senior Vice President, General Counsel and Corporate Secretary, and Gregory
L.
Cauthen, Senior Vice President and Chief Financial Officer, as being eligible
to
receive benefits under the policy.
Under
the
policy, a designated executive who is subject to a Qualifying Employment
Termination will be entitled to the following:
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·
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a
cash payment for his base salary up to the date of
termination;
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2
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·
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a
cash payment of a pro rata share of his bonus opportunity up to the
date
of termination at the then projected year-end rate of payout, in
an
amount, if any, determined by the Executive Compensation Committee
in its
sole discretion;
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·
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a
cash severance payment equal to 2.99 times the sum of (a) the base
salary
of the executive calculated using the higher of the annual base salary
in
effect at the time of termination of employment or that in effect
on the
date of the change of control and (b) any target bonus at the 100%
level
for which the executive is eligible for the fiscal year in which
termination occurs;
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·
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certain
outplacement services not to exceed a cost to us of 5% of the base
annual
salary of the executive used to determine the severance payment described
in the bullet above; and
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·
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certain
gross-up payments for any applicable excise tax such that the net
amount
received would be the same as without the application of the excise
tax,
subject to specified limits described in the
policy.
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A
designated executive who is subject to a Qualifying Employment Termination
will
also be deemed to have been terminated for our convenience for purposes of
any
awards under our long-term incentive plan. Currently, our performance-based
option awards and our contingent restricted ordinary share awards provide that
a
holder of an award who is terminated for our convenience before the end of
a
performance period will be granted a pro rata share of the total potential
award
to the date of termination. Any such executive will further be assumed to have
3
additional years of age and service credits for the purposes of our supplemental
retirement plan.
Under
the
policy, a change in control shall be deemed to have occurred in the event any
of
the following occurs:
(1) a
person
or entity becomes the “beneficial owner,” as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, directly or indirectly, of 20% or more of
the
combined voting power of our outstanding securities, excluding any person or
entity that becomes a beneficial owner in accordance with clause (A) of
paragraph (3) below,
(2) our
continuing directors (including directors serving on July 15, 2005 and any
new
directors whose appointment or election to our board if directors or nomination
for election by our shareholders was approved or recommended by a vote of at
least two-thirds of the continuing directors then serving, other than a new
director who assumed office in connection with an actual or threatened election
contest) cease to constitute at least a majority of our board of
directors,
(3) the
consummation of a scheme of arrangement, merger or consolidation of us or any
direct or indirect subsidiary of ours with any other corporation, other than,
(A) a scheme of arrangement, merger or consolidation resulting in our voting
securities outstanding immediately prior to such scheme of arrangement, merger
or consolidation continuing to represent, in combination with the ownership
of
any trustee or other fiduciary under our employee benefit plans, at least 65%
of
the combined voting securities of our company or a surviving entity or (B)
a
scheme of arrangement, merger or consolidation effected to implement a
recapitalization or similar transaction involving us, in which no person or
entity is or becomes the beneficial owner, directly or indirectly, of 20% or
more of the combined voting power of our outstanding securities (not including
any securities acquired directly from us other than in connection with our
acquisition of a business), or
3
(4) our
shareholders approve a plan of liquidation or dissolution, or an agreement
for
the sale of substantially all of our assets is consummated, other than a sale
of
substantially all of our assets to an entity of which at least 65% of the
combined voting power of its voting securities is owned by our shareholders
in
substantially the same proportion as their ownership of our company immediately
prior to such sale.
4
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ITEM
9.01
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FINANCIAL
STATEMENTS AND EXHIBITS.
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Exhibit
Number
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Description
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10.1
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Executive
Change of Control Severance Benefit Policy of Transocean Inc. Effective
July 15, 2005
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5
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| TRANSOCEAN INC. | |||
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Date:
July 19, 2005
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By:
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/s/ William E. Turcotte
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Name:
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William
E. Turcotte
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Title:
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Associate
General Counsel
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6
INDEX
TO
EXHIBITS
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Exhibit
Number
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Description
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10.1
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Executive
Change of Control Severance Benefit Policy of Transocean Inc. Effective
July 15, 2005
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7
Executive
Change of Control Severance Benefit
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1.
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POLICY
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Transocean
Inc. (together with its subsidiaries, unless the context requires otherwise,
the
“Company”) will provide, or will cause the appropriate employing subsidiary to
provide, the severance benefits as defined herein to designated executives
who
are terminated for other than Cause or who leave for Good Reason, in either
case
within 24 months after a Change of Control.
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2.
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PURPOSE
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The
purpose of this policy is to define the severance policy of the Company for
designated executives after a Change of Control.
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3.
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SCOPE
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This
policy shall only apply to certain executives designated by the Company’s Board
of Directors in its sole discretion. As a condition precedent to receipt of
these severance benefits, each executive will be required to execute a binding
release satisfactory to the Company pursuant to which such employee releases
the
Company and its affiliates from any liability in connection with employment
by
the Company and its affiliates. To the extent an executive is entitled to the
benefits of this policy, such executive shall not be entitled to the benefits
under the Company’s Executive Severance Benefit effective February 9,
2005.
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4.
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PROCEDURE
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Executives
who, within 24 months after a Change of Control, are terminated for other than
Cause or leave the Company for Good Reason as defined under this policy shall
be
provided the following payments, benefits and other services as hereinafter
defined, with payments to be made within eight (8) business days after execution
of a satisfactory release.
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4.1
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Base
Salary
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The
Company will pay base salary up to the date of termination.
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4.2
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Bonus
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The
Company will pay the executive a prorata share of the bonus opportunity up
to
the date of termination at the then projected year end rate of payout, in an
amount, if any, as determined by the Executive Compensation Committee in its
sole discretion.
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4.3
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Severance
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The
executive will be eligible to receive a lump sum cash severance payment equal
to
2.99 times the sum of (a) base salary of the executive calculated using the
higher of the annual base salary in effect at the time of termination or that
in
effect on the date of the Change of Control and (b) any target bonus at the
100%
level for which the executive is eligible for the fiscal year in which the
termination of employment occurs.
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4.4
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Long
Term Incentives
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Terminations
of employment made under the provisions of this policy shall, unless otherwise
governed by the specific award and plan, for purposes of any long term incentive
plan (“LTIP”) awards held by the executive be deemed “For the Convenience of the
Company”, as defined within the individual LTIP award documents.
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4.5
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Outplacement
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The
executive will be eligible to receive outplacement services the duration and
costs for which shall be determined by the then prevailing Human Resources’
practice concerning use of outplacement services, and in no event should exceed
a cost to the Company of 5% of the base annual salary of the executive used
to
determine the severance payment in Section 4.3.
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4.6
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Excise
Tax
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If
any of
the payments or benefits received by the executive designated to participate,
whether or not pursuant to this policy, will be subject to the Excise Tax,
then
the Company shall pay to the executive an additional amount (“Gross-Up Payment”)
such that the net amount retained by the executive, after deduction of any
Excise Tax on the total payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to
the
amount executive would have otherwise received without such Excise Tax;
provided, however, that if it shall be determined that the executive is entitled
to a Gross-Up Payment, but that the total to be paid to executive does not
exceed 110% of the greatest amount (the “Reduced Amount”) that could be paid to
the executive such that the receipt of the total would not give rise to any
Excise Tax, then no Gross-Up Payment shall be made to the executive and the
total payments to executive in the aggregate shall be reduced to the Reduced
Amount.
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4.7
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Supplemental
Retirement Plan
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For
purposes of determining the executive’s benefits under the Company’s
Supplemental Retirement Plan, the executive shall be assumed to have three
(3)
additional years of age and service credits for vesting and benefit accrual
(subject to the maximum services period under the Company’s Retirement Plan),
for purposes of calculating the amount under Section 4.1(a)(1) of the
Supplemental Retirement Plan that would otherwise have been payable under the
Company’s Retirement Plan; provided, further, that for purposes of determining
“final average earnings” under the Company’s Retirement Plan, the executive’s
employment shall be deemed to have continued for three (3) years following
termination with the annualized base salary rate and the annual incentive award
used in the calculation of base and bonus compensation per Section 4.3 of this
policy.
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4.8
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Other
Benefits
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Any
other
termination benefits will be managed consistent with current severance practices
for non-executive employees.
2
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5.
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DEFINITIONS
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“Cause”
for termination by the Company of the executive’s employment shall mean (i) the
willful and continued failure by the executive to substantially perform the
executive’s duties with the Company (other than any such failure resulting from
the executive’s incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to the executive by the Board
which demand specifically identifies the manner in which the Board believes
that
the executive has not substantially performed the executive’s duties, or (ii)
the willful engaging by the executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, no act,
or
failure to act, on the executive’s part shall be deemed “willful” unless done,
or omitted to be done, by the executive not in good faith and without reasonable
belief that the executive’s act, or failure to act, was in the best interest of
the Company.
“Change
in Control” - a Change in Control shall be deemed to have occurred for purposes
of this policy if the event set forth in any one of the following paragraphs
shall have occurred:
(I.)
any
person or entity ( “Person”) is or becomes the Beneficial Owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of securities of the Company (not including in the securities beneficially
owned
by such Person any securities acquired directly from the Company or its
affiliates) representing 20% or more of the combined voting power of the
Company’s then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (i) of
paragraph (III) below; or
(II.)
the
following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of directors of the Company) whose appointment
or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously
so approved or recommended; or
(III.)
there is consummated a scheme of arrangement, merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a scheme of arrangement, merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior to such scheme of arrangement, merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any subsidiary
of
the Company, at least 65% of the combined voting power of the securities of
the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (ii) a scheme of arrangement, merger
or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates other than in connection with the acquisition
by the Company or its Affiliates of a business) representing 20% or more of
the
combined voting power of the Company’s then outstanding securities; or
3
(IV.)
the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale
or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all
of
the Company’s assets to an entity, at least 65% of the combined voting power of
the voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.
Notwithstanding
the foregoing, a “Change in Control” shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all or the assets of the Company immediately
following such transaction or series of transactions.
“Excise
Tax” shall mean any excise tax imposed under section 4999 of the
Code.
“Good
Reason” for termination by the executive of the executive’s employment shall
mean the occurrence (without the executive’s express written consent) within 24
months after any Change in Control of any one of the following acts by the
Company, or failures by the Company to act:
(I.)
a
reduction in the executive’s annual base salary as in effect on the date of the
Change in Control or as the same may be increased from time to time except
for
across-the-board salary reductions similarly affecting all senior executives
of
the Company and all senior executives of any Person in control of the
Company;
(II.)
the
failure by the Company to continue in effect any compensation plan in which
the
executive participates immediately prior to the Change in Control which is
material to the executive’s total compensation, including but not limited to the
Company’s Long Term Incentive Plan and the Performance Award and Cash Bonus Plan
or any substitute plans adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan or unless the Company eliminates the
compensation plan for all participants, or the failure by the Company to
continue the executive’s participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of
the
amount or timing of payment of benefits provided and the level of the
executive’s participation relative to other participants, as existed immediately
prior to the Change in Control;
(III.)
the failure by the Company to continue to provide the executive with benefits
substantially similar to those enjoyed by the executive under any of the
Company’s pension, savings, life insurance, medical, health and accident, or
disability plans in which the executive was participating immediately prior
to
the Change in Control (except for across-the-board changes similarly affecting
all senior executives of the Company and all senior executives of any Person
in
control of the Company), the taking of any other action by the Company which
would directly or indirectly materially reduce any of such benefits or deprive
the executive of any material fringe benefit or perquisite enjoyed by the
executive at the time of the Change in Control, or the failure by the Company
to
provide the executive with the number of paid vacation days to which the
executive is entitled on the basis of years of service with the Company in
accordance with the Company’s normal vacation policy in effect at the time of
the Change in Control.
4
The
executive’s right to terminate the executive’s employment for Good Reason shall
not be affected by the executive’s incapacity due to physical or mental illness.
The executive’s continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting Good
Reason hereunder.
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6.
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RESPONSIBILITY
|
Except
as
otherwise stated herein, this policy will be administered by the Vice President
of Human Resources. This policy is subject to review, change or cancellation
at
any time at the sole discretion of the Executive Compensation Committee of
Transocean Inc., provided, however, that the policy shall not be changed as
to
the designated executives after a Change of Control.
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7.
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SECTION
409A
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Notwithstanding
anything in this policy to the contrary, if any payment or benefit under this
policy would result in the imposition of an additional tax under Section 409A
of
the Internal Revenue Code and related regulations and United States Department
of the Treasury pronouncements, that provision of this policy will be reformed
to avoid imposition of the applicable tax.
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8.
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EFFECTIVE
DATE
|
The
effective date of this policy is July 15, 2005.
5