McDermott International,
Inc.
New Supplemental Executive
Retirement Plan
As Amended and Restated Effective
December 31, 2008
ARTICLE I
Purpose
1.1
Purpose of Plan. The purpose of this
McDermott International, Inc., New Supplemental Executive
Retirement Plan (the “Plan”) is to advance the
interests of McDermott International, Inc., its subsidiaries and
affiliates by providing certain retirement benefits that will
attract and retain highly qualified key employees accountable for
the successful conduct of its business.
1.2
ERISA Status. The Plan is governed by the
Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). It has been designed to qualify
for certain exemptions under Title I of ERISA that apply to plans
that are unfunded and maintained primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees. The Plan is intended to
comply with Section 409A of the Internal Revenue Code of 1986, as
amended, and regulations and rulings issued thereunder.
1.3
Effective Date.
The original effective
date of this Plan is January 1, 2005. The effective date
of this restatement is the close of business December 31,
2008.
ARTICLE II
Definitions and
Construction
Definitions . Where the following words and
phrases appear in the Plan, they shall have the respective meanings
set forth below, unless their context clearly indicates to the
contrary.
2.1
Account
. Collectively, means the Participant’s Company Account
and the Participant’s Deferral Account.
2.2
Account Value.
At any given time, the
sum of all amounts credited to the Participant’s Account,
adjusted for any income, gain or loss and any payments attributable
to such account.
2.2.1
Beneficiary . The person designated by
each Participant, on a form provided by the Company for this
purpose, to receive the Participant’s distribution under
Article VI in the event of the Participant’s death prior to
receiving complete payment of his Account. In order to
be effective under this Plan, any form designating a Beneficiary
must be delivered to the Committee before the Participant’s
death. In the absence of such an effective designation
of a Beneficiary, “Beneficiary” means the
Participant’s spouse, or if there is no spouse on the date of
the Participant’s death, the Participant’s estate, or
heirs at law if there is no administration of the
Participant’s estate.
2.4
Board . The Board of Directors of
McDermott International, Inc. or the board of directors of a
company that is a successor to the Company.
2.5
Bonus. Any bonus paid to a Participant under
any plan, policy or program of the Company providing for the
payment of annual bonuses to employees or any extraordinary payment
paid to a Participant if such payment is designated by the
Committee to be a Bonus for purposes of this Plan. Bonus
shall not include any compensation under the 2002 B&W
Performance Incentive Plan.
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the overt and
willful disobedience of orders or directives issued to a
Participant that are within his scope of duties, or any other
willful and continued failure of a Participant to perform
substantially his duties with the Company (occasioned by reason
other than physical or mental illness or disability) after a
written demand for substantial performance is delivered to the
Participant by the Committee or the Chief Executive Officer of the
Company which specifically identifies the manner in which the
Committee or the Chief Executive Officer believes that the
Participant has not substantially performed his duties, after which
the Participant shall have thirty days to defend or remedy such
failure to substantially perform his duties;
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the willful
engaging by the Participant in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company;
or
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the conviction
of the Participant with no further possibility of appeal or, or
plea of nolo contendere by the Participant to, any felony or crime
of falsehood.
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The cessation
of employment of a Participant under subparagraph (a) and (b) above
shall not be deemed to be for “Cause” unless and until
there shall have been delivered to him a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Committee at a meeting of
such Committee called and held for such purpose (after reasonable
notice is provided to the Participant and the Participant is given
an opportunity to be heard before the Committee), finding that, in
the good faith opinion of the Committee, the Participant is guilty
of the conduct described in subparagraph (a) or (b) above, and
specifying the particulars thereof in detail.
2.7
Change in Control. A change in control shall
occur when:
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any person
(other than a trustee or other fidicuary holding securities under
an Employee benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
the Company) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the
Company’s then outstanding voting securities;
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during any
period of two (2) consecutive years (not including any period prior
to the execution of this Plan), individuals who at the beginning of
such period constitute the Board of the Company, and any new
director of the Company (other than a director designated by a
person who has entered into an agreement with the Company to effect
a transaction described in Clauses (a) or (c) of this Paragraph (7)
whose election by the Company’s Board or nomination for
election by the stockholders of the Company, was approved by a vote
of at least two-thirds (2/3) of the Directors of the
Company’s Board, then still in office who either were
Directors thereof at the beginning of the period or who election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof:
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the
shareholders of the Company approve a) a merger or consolidation of
the Company, with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto, continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty
percent (50%) of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or b) the shareholders of the
Company approve a plan of complete liquidation of the Company, or
c) an agreement for the sale or disposition by the Company of all
or substantially all of the Company’s assets; or
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Such other
circumstances as may be deemed by the Board in its sole discretion
to constitute a change in control of the Company.
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However, in no
event shall a “Change In Control” be deemed to have
occurred with respect to a Participant if the Participant is part
of the purchasing group which consummates the Change-In-Control
transaction. A Participant shall be deemed “part
of a purchasing group” for purposes of the preceding sentence
if the Participant is an equity participant in the purchasing
company or group (except for: (i) passive ownership of
less than three percent (3%) of the stock of the purchasing
company; or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not significant, as
determined prior to the Change in Control by a majority of the
non-employee continuing directors).
2.8
Code . The Internal Revenue Code of 1986,
as amended.
2.9
Committee . The Compensation Committee of
the Board, or such other administrative committee that is appointed
by the Board to administer the Plan.
2.10
Company. McDermott International, Inc.
and except where the context clearly indicates otherwise, shall
include the Company’s subsidiaries and affiliates, as well as
any successor to any such entities.
2.11
Company Account . The notional account
maintained by the Committee reflecting each Participant’s
Company Contributions, together with any income, gain or loss and
any payments attributable to such account.
2.12
Company Contribution. The total
contributions credited to a Participant’s Company Account for
any one Plan Year pursuant to the provisions of Section 4.1 or
4.2.
2.13
Compensation. The salary, wages and other cash
remuneration received by a Participant during any Plan Year or in
respect of employment with the Company, including any contributions
made to a plan described in Sections 125, 132(f) or 401(k) of the
Code pursuant to a salary reduction agreement entered into between
a Participant and the Company and Bonuses, and amounts, if any,
deferred by the Participant under this Plan, but excluding cash
payments under the Company’s 2001 Directors and Officers Long
Term Incentive Plan and any successor plan thereto and other
additional remuneration in any form.
2.14
Deemed Investments . With respect to any
Account, the hypothetical investment options with respect to which
such Account is deemed to be invested for purposes of determining
the value of such Account under this Plan, as selected from time to
time by the Committee in its discretion.
2.15
Deferral Account. The notional account
maintained by the Committee reflecting each Participant’s
Deferral Contributions, together with any income, gain or loss and
any payments attributable to such amount.
2.16
Deferral Contribution. Compensation that
is deferred by a Participant pursuant to Section 4.3 and credited
to a Participant’s Deferral Account pursuant to the
provisions of Section 4.3.
2.17
Disabled. A Participant will be
considered Disabled if the Committee determines in its sole
discretion that the Participant is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment that is expected to last
for a continuous period of not less than twelve (12)
months.
2.18
Eligible Employee . The Company’s
CEO and any officers of the Company and its subsidiaries and
affiliates.
2.19
ERISA . The Employee Retirement Income
Security Act of 1974, as amended.
2.20
Exchange Act . The Securities Exchange
Act of 1934, as amended.
2.21
Participant . An Eligible Employee who
has been selected by the Committee as a Participant in the Plan
until such Eligible Employee ceases to be a Participant in
accordance with Article III of the Plan.
2.22
Plan Year . The twelve-consecutive month
period commencing January 1 of each year.
2.23
Retirement. Separation from Service with the
Company on or after the first of the calendar month following the
Participant’s attainment of the age of 65.
2.24
Separation from Service. A Separation from
Service occurs on the date a Participant dies, retires or otherwise
has a termination of employment with the Company. A
termination of employment occurs on the date after which the
Participant and the Company reasonably anticipate that no further
services will be performed by the Participant or that the level of
bona fide services reasonably anticipated to be performed after
such date will permanently decrease to 49% or less of the average
level of bona fide services provided in the immediately preceding
thirty-six months.
2.25
Specified Person. Specified Person shall have
the meaning set forth in Code Section 409A(a)(2)(B)(i) and
regulations and ruling promulgated thereunder.
2.26
Unforeseeable Emergency. A severe financial
hardship to the Participant resulting from an illness or accident
of the Participant, the Participant’s spouse, the
Participant’s Beneficiary, or the Participant’s
dependent (as defined in Section 409A of the Code); loss of the
Participant’s property due to casualty; or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. Whether
a Participant is faced with an Unforeseeable Emergency is to be
determined by the Committee in its sole discretion, based on the
relevant facts and circumstances of each case. In any
case, a distribution on account of Unforeseeable Emergency may not
exceed the amount necessary to relieve the emergency, plus amounts
necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent that the
emergency may be relieved through reimbursement or compensation
from insurance or otherwise, by liquidation of the
Participant’s assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship, or by
cessation of deferrals under the Plan.
2.27
Vested Account . The sum of the
Participant’s vested Company Account and the
Participant’s Deferral Account.
2.28
Vested Percentage . The percentage as to
which a Participant is vested in his or her Company Account as
determined under Sections 5.4 and 5.5.
2.29
Years of Participation . The sum of whole
Plan Years of participation in the Plan as an active employee in
continuous employment, excluding fractional years.
Participation
The Committee, in its sole discretion, shall
select and notify in writing those Eligible Employees of the
Company who shall participate in the Plan. An Eligible
Employee who has been selected by the Committee as a Participant
shall begin participation in the Plan effective on the date
specified by the Committee in its notification and shall continue
to participate in the Plan until the earlier of (a) the date the
Committee notifies the Participant that he is no longer eligible to
participate in the Plan or (b) the date of his Separation from
Service. A Participant who ceases to participate in the
Plan pursuant to (a) of the preceding sentence shall be treated as
if he had terminated employment with the Company but (i) his
benefit, if any, shall not be payable until after his Separation
from Service, and (ii) his Vested Account shall be adjusted as
provided in Article V. An Eligible Employee who is
rehired by the Company following his Separation from Service shall
become a Participant only if such Eligible Employee is again
selected to participate in the Plan by the Committee.
ARTICLE IV
4.1
Annual Company
Contribution . As of the first day of each Plan
Year, the Company shall declare a contribution percentage for each
Participant’s Company Account. The contribution
percentage declared for a Participant may, but need not be, the
same as the contribution percentage declared for other
Participants. Company Contributions shall be credited as
a bookkeeping entry as of the first day of the Plan Year or at
other such times as determined by the Committee to each
Participant’s Company Account, in an amount equal to the
contribution percentage declared for the Participant multiplied by
the Participant’s Compensation received during the prior Plan
Year.
4.2
Discretionary Company
Contribution. The Committee may in its sole
discretion at any time make an extraordinary contribution to the
Company Account of any Participant.
4.3
Participant
Deferrals. For any Plan Year, the Committee
may, in its sole discretion, allow a Participant to elect to defer
the payment by the Company of any whole percentage (or dollar
amount) of his annual base salary that would otherwise be paid
during such Plan Year and/or of any whole percentage (or dollar
amount) of any Bonus earned during such Plan Year, and instead have
such amounts credited as a bookkeeping entry to his Deferral
Account. The Compensation otherwise payable to the
Participant shall be reduced by the amount the Participant elected
to have contributed to the Participant’s Deferral Account,
which shall be a Deferral Contribution.
4.4
Participant
Elections. Prior to the first day of each Plan
Year, a Participant shall file a written election with the
Committee specifying (i) the type(s) and amount(s) of Compensation
that he wishes to defer pursuant to Section 4.3, if Deferral
Contributions are permitted by the Committee for the relevant Plan
Year, (ii) the payment date or payment commencement date pertaining
to the portion of his Vested Account that is attributable to
contributions made in the relevant Plan Year, and (iii) the form of
payment of the portion of his Vested Account that is attributable
to contributions made in the relevant Plan Year. Such
election with respect to any Plan Year must be filed with the
Committee no later than the last day of the immediately preceding
Plan Year; provided however, that an election made by a new
Participant who is first eligible to participate in the Plan may be
made no later than the 30 th day following the date on which he is initially
eligible to participate in the Plan but only with respect to
Compensation earned after the effective date of such
election. If Deferral Contributions are permitted, a
Participant may elect to defer up to 50% of his annual Salary
and/or up to 100% of any Bonus earned in any Plan Year.
Except as set
forth in Section 6.3, a Participant shall not be permitted to
change his election with respect to the timing or form of payment
and any election made hereunder shall not apply with respect to
prior Plan Years. Failure to make a timely Deferral
Contribution election will result in no Deferral Contributions for
the relevant Plan Year. If a Participant fails to make a
timely election specifying time and form of payment, payment of the
portion of the Participant’s Vested Account that is
attributable to contributions made in the relevant Plan Year shall
be paid in accordance with Section 6.4
4.5
Suspension of Deferral
Contributions. Except as provided below, an
election to make Deferral Contributions in a Plan Year shall be
irrevocable on the last day of the immediately preceding Plan Year.
To the extent expressly permitted under Code Section 409A and
regulations and rulings issued thereunder, a Participant’s
deferral election shall be suspended during any unpaid leave of
absence granted in accordance with Company policies; provided,
however that such deferral election shall become fully operative as
of the first day of the payroll period commencing coincident with
or next following the Participant’s return to active
employment following termination of the approved unpaid leave in
the Plan Year to which the Participant’s deferral
pertains. In the event of an Unforeseeable Emergency, a
Participant shall suspend deferrals in order to relieve
the emergency, provided that the deferrals must be suspended for
the entire remainder of the Plan Year. In the event of a
Disability, the Parti
