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): February 9, 2005
TRANSOCEAN INC.
(Exact name of registrant as specified in its charter)
CAYMAN ISLANDS 333-75899 66-0582307
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
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))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Annual Cash Bonuses
Transocean Inc. ("Transocean," "we," "us" or "our") awards annual cash
bonus incentive opportunities under its Performance Award and Cash Bonus Plan
and as contemplated under its Long-Term Incentive Plan. The amount of an
executive's bonus opportunity, which is expressed as a percentage of base
salary, depends primarily upon that individual's position and responsibilities
and bonus opportunities provided to comparable positions within our peer group.
Our Executive Compensation Committee ("Committee") determined in February
2004 that the payout for an executive's 2004 bonus opportunity would be based on
the level of achievement of a company-wide financial goal and specific corporate
goals, as described below. The overall bonus payout would also be subject to the
application of a reduction factor based on our cash flow return on market
capitalization ("CFROMC") against established targets, the effect of which could
reduce the bonus payment by 0-50%. The financial goal was weighted at 50% and
the corporate goals at 50%. For 2004, bonus opportunities ranged from 30% to 90%
of base pay. The actual percentage payment can range from 0% to 200% of the
bonus opportunity, depending on the Committee's evaluation of an individual's
performance against his or her goals.
The financial goals included in the 2004 bonus opportunities were our 2004
earnings per share ("EPS") as compared to return on equity targets, and a
measure of cash flow return on capital ("CFROC"), as assessed and ranked to a
group of companies within our peer group. Payout of the EPS goal was based on
minimum, target and maximum levels of achievement. The corporate goals for all
senior executives included in the 2004 bonus opportunities included goals
related to safety, fleet downtime, marketing and cost containment. The final
bonus payout was decreased by the application of the CFROMC reduction factor.
The Committee met on February 9, 2005 and reviewed the EPS, CFROC performance,
the attainment of the corporate goals and objectives and CFROMC for the year
2004. Based on this review, the Committee determined the cash bonuses to be paid
to our named executive officers in respect of their 2004 bonus opportunities.
The Committee has previously determined that the payout for an executive's
2005 bonus opportunity will consist of two separate components: the level of
achievement of a company-wide financial goal and corporate goals, with the
financial goal to be weighted at 30% and the corporate goals at 70%, and with
the potential reduction of payout for both components based on CFROMC
performance. For 2005, aggregate bonus opportunities for both components will
range from 30% to 90% of base pay, and the actual percentage payment can range
from 0% to 200% of the bonus opportunity, depending on the Committee's
assessment of an individual's performance against his or her goals. The CFROMC
factor can reduce the overall bonus payout by up to 50%.
The financial goals included in the 2005 bonus opportunities for senior
management are our 2005 EPS as compared to return on equity targets, and CFROC,
as assessed and ranked to a group of companies within our peer group. Payout of
the EPS goal is to be based on minimum, target and maximum levels of
achievement. The corporate goals for all senior executives included in the 2005
bonus opportunities included goals related to safety, fleet downtime, marketing,
human resource development and cost containment.
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The cash bonuses paid for 2004 and the 2005 cash bonus opportunities for
our named executive officers are as follows:
2005 CASH
2004 ANNUAL BONUS
NAME AND POSITION CASH BONUS OPPORTUNITY
------------------------------------------------------------------ ----------- -----------
Robert L. Long President and Chief Executive Officer $410,449 90%
Jean P. Cahuzac Executive Vice President and Chief $206,737 75%
Operating Officer
Gregory L. Cauthen Senior Vice President and Chief Financial $120,870 55%
Officer
Eric B. Brown Senior Vice President, General Counsel and $107,281 55%
Corporate Secretary
Barbara S. Wood Vice President and Chief Information Officer $ 58,895 40%
J. Michael Talbert Former Executive Chairman of the Board and $113,768 N/A
current Non-Executive Chairman of the Board
Director Compensation
Fees and Retainers. The Corporate Governance Committee of our board of
directors annually reviews the compensation paid to directors to be certain that
it is competitive in attracting and retaining qualified directors. Our employees
receive no extra pay for serving as directors. On February 9, 2005 the annual
retainer paid to each director who is not one of our officers or employees was
increased from $40,000 to $50,000, except with respect to Mr. Talbert, whose
director compensation arrangement is described below. The annual retainer,
committee chairmen annual retainers, board meeting attendance fees and committee
meeting attendance fees paid to our outside directors other than Mr. Talbert are
as follows:
- Annual Retainer - $50,000
- Audit Committee Chairman Retainer - $20,000
- Other Committee Chairman Retainer - $10,000
- Board Meeting Attendance Fee - $2,000
- Committee Meeting Attendance Fee - $1,500
Mr. Talbert became our non-executive Chairman after his retirement from
active employment with the company in October 2004. Based upon research done by
us and our compensation consultant, the board determined that an appropriate
retainer for a non-executive chairman would be $160,000 per year. Mr. Talbert
was paid a pro-rated portion of this retainer for 2004. Mr. Talbert receives the
regular board meeting attendance fees but does not receive any additional fees
for attendance at board committee meetings. In addition, Mr. Talbert will
receive the same equity grant given to other outside directors.
Equity Awards. Under our Long-Term Incentive Plan, we currently make
discretionary equity awards determined by our board to outside directors. For
2005, the board expects to grant deferred units to outside directors equal in
value to $88,000, based upon the average price of our
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ordinary shares for the 10 trading days prior to our 2005 annual general meeting
of shareholders. This grant will be made immediately after such annual meeting.
The units will vest equally over a three year period and will be required to be
held by directors until they leave the board. The board may grant directors
joining our board after the annual meeting an award but it has not yet made a
determination as to the size of that award.
Severance Policy
The Committee also adopted, on behalf of the board of directors, a
severance benefit policy for our executives, effective as of February 9, 2005.
The policy applies to employees holding a job title of vice president or higher,
which currently includes approximately 15 persons. The benefits under the policy
are not available to any executives who enter into separate severance agreements
with us after February 9, 2005. Under the policy, any executive who is
terminated for our convenience (as determined in the sole discretion of the
Committee) will be entitled to the following:
- a cash payment for his base salary up to the date of termination;
- 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;
- a cash payment equal to his annual base salary in effect at the date of
termination; and
- certain outplacement services not to exceed a cost to us of 5% of the base
annual salary of the executive.
An executive is required to sign a release in favor of Transocean in order to
receive benefits under the policy.
Any executive terminated under the provisions of this policy 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.
Forward-Looking Statements
The statements made in this report that are not historical facts are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements made in this report include, but are not limited to,
statements involving the timing and nature of future awards to our outside
directors. Such statements are subject to numerous risks, uncertainties and
assumptions, including but not limited to, the results of deliberations by our
board of directors, and those risks described in our Form 10-K for the year
ended December 31, 2003 and in our other filings with the SEC, which are
available free of charge on the SEC's website at www.sec.gov. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those indicated. You
should not place undue reliance on forward-looking statements. Each
forward-looking statement speaks only as of the date of the particular
statement, and we undertake no obligation to publicly update or revise any
forward looking statements.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
10.1 Executive Severance Benefit Policy of Transocean Inc.
effective February 9, 2005.
10.2 Form of 2004 Performance-Based Nonqualified Share Option
Award Letter.
10.3 Form of 2004 Employee Contingent Restricted Ordinary
Share Award.
10.4 Form of 2004 Director Deferred Unit Award.
10.5 Performance Award and Cash Bonus Plan of Transocean Inc.
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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.
Date: February 15, 2005 By: /s/ William E. Turcotte
-------------------------
Name: William E. Turcotte
Title: Associate General Counsel
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INDEX TO EXHIBITS
Exhibit Number Description
-------------- -----------
10.1 Executive Severance Benefit of Transocean Inc. effective
February 9, 2005.
10.2 Form of 2004 Performance-Based Nonqualified Share Option
Award Letter.
10.3 Form of 2004 Employee Contingent Restricted Ordinary
Share Award.
10.4 Form of 2004 Director Deferred Unit Award.
10.5 Performance Award and Cash Bonus Plan of Transocean Inc.
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