UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
2021 Short-Term Incentive Plan
Effective March 8, 2021, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Noble Corporation, an exempted company incorporated in the Cayman Islands with limited liability (the “Company”), approved the Noble Corporation 2021 Short-Term Incentive Plan (the “2021 STIP”). The 2021 STIP gives participants, including the Company’s named executive officers, the opportunity to earn annual cash bonuses in relation to specified target award levels defined as a percentage of their base salaries. All of the Company’s executive officers and certain other employees are eligible to participate in the 2021 STIP, and the 2021 STIP is administered by the Committee. The 2021 STIP is designed to focus employees’ efforts on optimizing the Company’s performance by rewarding employees for successful achievement of specific Company goals.
2021 STIP award sizes are developed based on a combination of factors, including the Company’s compensation philosophy, market compensation data, competition for key executive talent, the employee’s experience, leadership, prior contribution to the Company’s (and its predecessor’s) success, the Company’s overall annual budget for merit increases and the employee’s individual performance in the prior year.
The pool of awards for 2021 will primarily be a function of the Company’s performance on key metrics related to the Company’s financial results and safety and environmental results. Financial performance is measured by the Company’s ability to achieve certain levels of free cash flow and contract drilling margin less general and administrative expenses. Safety and environmental performance is measured by the Company’s success in minimizing total recordable incidents and preventing spills, as well as through achievement of measurable environmental and social governance goals.
The individual target performance bonus for an employee is an amount equal to the employee’s salary at the end of the 2021 STIP year multiplied by the assigned target bonus percentage, which ranges from 4% to 110% of salary. Individual target performance bonuses may be adjusted upward or downward to reflect merit, individual and team performance and/or additional selected criteria, subject to the approval of the Committee and the Chief Executive Officer of the Company.
The foregoing description of the 2021 STIP does not purport to be complete and is qualified in its entirety by reference to the 2021 STIP, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
CEO Employment Agreement
On March 9, 2021, Noble Services Company LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Noble Services”), entered into the First Amendment to Executive Employment Agreement with the Company’s President and Chief Executive Officer, Robert Eifler (the “Amendment”). The Amendment contains a non-competition provision that applies during Mr. Eifler’s employment with Noble Services or its affiliates and for a period of 12 months thereafter. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| EXHIBIT |
DESCRIPTION | |||
| 10.1 | — | Noble Corporation 2021 Short-Term Incentive Plan. | ||
| 10.2 | — | First Amendment to Executive Employment Agreement, dated as of March 9, 2021, by and between Noble Services Company LLC and Robert Eifler. | ||
| 104 | — | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document. | ||
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 hereunto duly authorized.
| NOBLE CORPORATION | ||||||
| Date: March 11, 2021 | By: | /s/ William E. Turcotte | ||||
| William E. Turcotte | ||||||
| Senior Vice President, General Counsel and Corporate Secretary | ||||||
Exhibit 10.1
Portions of this document have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K
because it is both not material and would likely cause competitive harm to the registrant if publicly
disclosed. Redacted portions are indicated with the notation “[***]”.
NOBLE CORPORATION
2021 Short-Term Incentive Plan (“STIP”)
Plan Overview, Terms and Conditions
Plan Purpose
The success of Noble Corporation (“Noble”) and its subsidiaries (collectively, the “Company”) is a result of the efforts of all key employees. To focus each employee’s efforts on optimizing the Company’s performance, the Company maintains this Short Term Incentive Plan (the “Plan”) to reward employees for successful achievement of specific Company goals.
An effective incentive plan should both align employee interests with those of shareholders and motivate and influence employee behavior. Key positions within the Company have the ability to make a positive contribution to key factors that increase shareholder value. These factors can be quantified and measured through achievement of various targets. The objectives of using such targets in the formulation of the specific Company goals are to link an employee’s annual incentive award more closely to the metrics that most directly benefit shareholders within existing market conditions and to promote a culture of high performance and an environment of teamwork.
Eligibility and Participation
Full-time shore-based employees and select offshore employees are eligible for consideration of a bonus under the Plan, based upon performance, subject to the approval of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Noble.
To be eligible to receive a bonus payment with respect to a Plan year, an employee must be actively employed by the Company on the last day of such Plan year and must continue to be employed through the date on which bonus payments for such Plan year are made. An employee shall not be eligible to receive any bonus payment if the employee’s employment with the Company terminates for any reason, either voluntarily or involuntarily (except as noted below), before that date on which bonus payments for a Plan year are made. The Plan year is also the calendar year unless otherwise specified.
In the event of death, disability or retirement, the employee or estate of the former employee may receive a payment from the Plan, at the discretion of the Committee and the President and Chief Executive Officer (the “CEO”). For purposes of the Plan, “disability” means any termination of employment with the Company or an affiliate of the Company because of a long-term or total disability, as determined by the Company’s disability insurance programs. “Retirement” means a termination of employment with the Company on a voluntary basis by a person if, immediately prior to such termination of employment, the sum of the age and the number of years of continuous service of such person with the Company is equal to or greater than 65 and the employee has attained the age of 55.
Plan Funding
The Award Pool for 2021 will primarily be a function of the Company’s performance on key metrics to include:
| • | Financial results (weighted 70%) |
| • | Safety and environmental results (weighted 30%) |
See Exhibit 1 for details on the Company’s specific goals and performance measures. Generally, each goal is structured to include a Threshold, Target and Maximum level of achievement. The Threshold is the minimum level of achievement. If Performance is below Threshold for a goal, it will yield no pool funding associated with that goal.
The Award Pool available will be determined first by multiplying the sum of the target bonuses for all eligible employees at the end of the year (“Aggregate Target Bonuses”) by the Company’s weighted performance as measured by the results of the key metrics. See Exhibit 2 for an example illustrating the calculation of the Award Pool.
The Award Pool will be allocated as described in the next sections.
Individual Target Bonus
The target bonus for an employee is an amount equal to the employee’s salary at the end of the Plan year multiplied by the assigned target bonus percentage. Target bonuses range from 4% to 110% of salary. The assigned targets are based on competitive market data and internal equity considerations and are reviewed each year. Note that, for purposes of calculating the Aggregate Target Bonuses, a target bonus percentage of up to 6% will be used for those employees covered under the Plan that do not have a target bonus percentage.
Company Goals
The 2021 goals and performance measures are provided in Exhibit 1.
In administering the Plan and reviewing the Company’s performance, the Committee may take into consideration the effect of any unusual, non-recurring or extraordinary item or event that impacts the Company or any member of the Driller Peer Group during the year, including, but not limited to, acquisitions, divestitures or impairments. Furthermore, the Committee may make adjustments to the calculation of any of the goals so that any such unusual, non-recurring or extraordinary item or event does not distort the calculation of the Financial and Operating goals.
Determination of Individual Awards
Target bonuses should be adjusted based on performance results (see Exhibit 1). This will be the Adjusted Target Bonus. For example, if an individual’s target bonus is $10,000, and the performance multiple is 1.20, the Adjusted Target Bonus would be $12,000. The cumulative total of awards for all employees will be the “Aggregate Calculated Pool”. If on a cumulative basis the sum of the awards in the Aggregate Calculated Pool is greater than the Award Pool, bonuses will be adjusted on a pro-rata basis to remain within the constraints of the Award Pool.
Amounts may be adjusted for employees hired or promoted during the Plan year considering length of service or time in position and may also be adjusted upward or downward by up to 20% to reflect merit, individual and team performance and/or additional selected criteria, subject to the approval of the Committee and CEO. In extreme circumstances, the Adjusted Target Bonus can be adjusted downward by as much as 100% for any reason, including, but not limited to, Company or region performance, individual employee performance, employee conduct, separation of employment, etc., subject to the approval of the Committee and CEO.
Review and Approval
The Board will approve the Company’s budget for the year in terms of goal performance measurement criteria (and associated payout levels) no later than March 31st of the year.
If, after the establishment of goals for a Plan year, the budget changes substantially due to subsequent events, such as the acquisition, spin-off or sale of assets, any unusual or non- recurring item or any unforeseen event that impacts the Company and distorts the results used in the determination of awards, a region or the industry as a whole, then the Committee may make adjustments to the respective goals in order that the affected participants may not be adversely or favorably impacted by such an event or item. Any such revised goals shall be applicable to the Plan year from and after the time of their approval.
After the end of each Plan year, the Committee, in its best business judgment, will make the final determination on the size of the Award Pool for such Plan year. All bonus calculations, allocations and recommendations are subject to review and approval by the Committee.
Separately, managers having responsibility for recommending the allocation of bonuses to eligible employees shall submit their recommended bonus for each employee to the CEO for review and approval. Notwithstanding anything otherwise contained in this Plan, the Committee and the CEO (and any delegated designee of the CEO) shall have the authority to adjust individual bonus amounts as deemed to be appropriate for any reason, including, but not limited to, Company or region performance, individual employee performance, employee conduct, separation of employment, etc.
At-Will Employment
Nothing in the Plan guarantees or constitutes a contract for any specific term of employment or otherwise limits the Company’s or an employee’s right to terminate the employment relationship for any reason at any time.
Exhibit 1
2021 STIP – Goals and Performance Measures
Performance relative to the following goals will determine the size of the Award Pool for 2021:
| Goal |
Scale >> | 50% | 100% | 200% | ||||
| Weighting | Threshold | Target | Maximum | |||||
| Free Cash Flow |
35% | [***] | [***] | [***] | ||||
| Contract Drilling Margin less G&A |
35% | [***] | [***] | [***] | ||||
| Total Recordable Incident Rate (“TRIR”) |
10% | £0.40 | £0.35 | £0.30 | ||||
| Loss of Primary Containment (“LOPC”) |
10% | £0.55 | £0.43 | £0.30 | ||||
| Finalizing measurable ESG goals to be included in the Sustainability Report and publishing the report during 2021 |
10% | Committee’s Discretion | ||||||
Achievement at levels between the points shown will be determined via linear interpolation.
Free Cash Flow is defined as adjusted EBITDA minus capital expenditures, minus cash interest expense, minus cash taxes, plus/minus changes in working capital, and adjusted to exclude any restructuring related expenses, litigation expenses, other non-recurring items, and separation related expenses. Additionally, it is assumed that interest on the second lien notes is paid-in-kind.
Contract Drilling Margin is defined as Contract Drilling Revenues less Contract Drilling Costs less G&A divided by Contract Drilling Revenues determines the margin. Contract Drilling Revenues, Contract Drilling Costs and G&A shall be as shown on the face of the income statements.
TRIR as calculated using IADC’s prescribed formula per 200,000 manhours, the total number of recordable work-related injuries or illnesses multiplied by 200,000 and then divided by hours worked. If the Company were to experience a fatality during the period the achievement for this goal will be reduced to zero regardless of actual TRIR calculation.
LOPC is defined as an event that results in a spill that is lost to sea. To calculate, the number of LOPC events is multiplied by 200,000, then divided by cumulative manhours for the year.
The Company will formulate measurable environmental and social governance goals and will publish a Sustainability Report in 2021; the level of achievement will be decided by the Committee.
Exhibit 2
Plan Funding Calculation Example
Assuming Aggregate Target Bonuses of $15 million and bonus pool multiples of 1.00 for the Company’s financial goals, and 1.20 for safety and environmental goals, the Award Pool would be $15.9 million:
| Plan Award Pool Calculation | ||||||||||||||||
| Goal | Multiple | Weighting | Factor | |||||||||||||
| Financial Goals |
1.00 | x | 70 | % | = | 0.70 | ||||||||||
| Safety and Environmental Goals |
1.20 | x | 30 | % | = | 0.36 | ||||||||||
| Combined Award Pool Multiple |
1.06 | |||||||||||||||
| Aggregate Target Bonuses |
$ | 15mm | ||||||||||||||
| Award Pool (1.06 x $15mm) |
$ | 15.9mm | ||||||||||||||
Exhibit 10.2
FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
WHEREAS, Noble Services Company LLC, a Delaware limited liability company (the “Company”), and Robert Eifler (“Executive”) are parties to that certain Executive Employment Agreement (the “Employment Agreement”) effective as of February 5, 2021 (the “Effective Date”); and
WHEREAS, pursuant to Paragraph 17(a) of the Employment Agreement, the Employment Agreement may be amended by a written document signed by the party against whom such amendment is sought to be enforced; and
WHEREAS, the Company and Executive desire to enter into this First Amendment to Executive Employment Agreement (the “Amendment”) for purposes of amending the terms and conditions of Executive’s employment with the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows, effective as of March 9, 2021:
1. Paragraph 9(e) is renamed Paragraph 9(f) and subparagraph (vii) of that paragraph is replaced in its entirety with the following:
(vii) The provisions of this Paragraph 9 are in addition to and supplement any other agreements, covenants or obligations to which the Executive is or may be bound from time to time. To the extent a covenant set forth in this Paragraph 9 conflicts with a covenant or obligation set forth in any other such agreement, the provision that is more favorable to the Company and its affiliated companies will control; provided however that, with respect to the Non-Competition Restriction in Paragraph 9(e), to the extent a covenant set forth in Paragraph 9(e) conflicts with a covenant or obligation set forth in any other such agreement (whether effectuated prior to or following the Effective Date), the provision set forth in Paragraph 9(e) will control unless otherwise expressly agreed to in writing by the Company and Executive.
2. The following paragraph is added as the new Paragraph 9(e):
(e) Non-Competition Restriction. In consideration of the Company’s provision of confidential information to Executive during Executive’s employment, during Executive’s employment with the Company or its affiliates and for a period of 12 months thereafter, Executive will not, directly or indirectly, either as an individual, proprietor, stockholder, partner, officer, employee or otherwise, work for, become an employee of, contractor to, invest in, provide consulting services to or in any way engage in any business which is primarily engaged in contract drilling services for offshore oil and gas wells and competes (whether directly or indirectly) with the Company anywhere in the world (a “Competitor”); provided, however, that Executive may in any event (i) own up to a 2% passive ownership interest in any public entity that is a Competitor or through a private, non-operating investment vehicle in a Competitor and (ii) following termination of employment with the Company, become employed by or otherwise provide services to a conglomerate that maintains a business unit that is a Competitor, provided that Executive does not provide any services to the Competitor or otherwise engage in any professional communications with any personnel in such business unit that is a Competitor.
1
3. All other provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment effective as of March 9, 2021.
| COMPANY: | ||
| NOBLE SERVICES COMPANY LLC | ||
| By: | /s/ William E. Turcotte | |
| Name: | William E. Turcotte | |
| Title: | Senior Vice President, General Counsel and Corporate Secretary | |
| EXECUTIVE: | ||
| /s/ Robert Eifler | ||
| Robert Eifler | ||
2
Document and Entity Information |
Mar. 08, 2021 |
|---|---|
| Cover [Abstract] | |
| Entity Registrant Name | Noble Corp |
| Amendment Flag | false |
| Entity Central Index Key | 0001458891 |
| Document Type | 8-K |
| Document Period End Date | Mar. 08, 2021 |
| Entity Incorporation State Country Code | E9 |
| Entity File Number | 001-36211 |
| Entity Tax Identification Number | 98-1575532 |
| Entity Address, Address Line One | 13135 Dairy Ashford |
| Entity Address, Address Line Two | Suite 800 |
| Entity Address, City or Town | Sugar Land |
| Entity Address, State or Province | TX |
| Entity Address, Postal Zip Code | 77478 |
| City Area Code | (281) |
| Local Phone Number | 276-6100 |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
| Entity Emerging Growth Company | false |