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2007 PERFORMANCE AWARD: GOALS AND
MEASURES
ESTABLISHMENT AND
PURPOSE
1.1
Establishment of the 2007-2009 Performance Goals .
Oceaneering International, Inc. (the “Company”), has
previously established the 2005 Incentive Plan of Oceaneering
International, Inc. (the “Plan”). The Plan permits the
establishment of Performance Goals and the award of Performance
Awards to Participants. The Committee has established Performance
Goals (as detailed herein) for the performance period under the
Plan which shall run from January 1, 2007 through December 31,
2009 (the “2007-2009 Performance Period”). This
2007-2009 Performance Period is subject to all the provisions of
the Plan.
1.2
Establishment of 2007-2009 Performance Goal Targets .
The 2007-2009 Performance Goal targets are as follows:
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%
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Cumulative Three Year Cash Flow:
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$
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1
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1.3
Purpose . The establishment of Performance Goals for the
2007-2009 Performance Period is to provide Participants with a
long-term incentive opportunity in respect of the 2007-2009
Performance Period. Performance Awards granted in
February 2007 (the “2007 Performance Awards”) are
subject to the attainment of these Performance Goals.
2.1
Definitions . Whenever used in this document,
capitalized terms shall have the meanings assigned in the Plan,
unless defined otherwise or specifically provided herein. The
following terms shall have the meanings set forth below:
(a)
“Average Cost of Capital” means the average (the
arithmetic mean) of the Cost of Capital for each of the three
calendar years within the 2007-2009 Performance Period.
(b)
“Average Invested Capital” means the sum of
Average Total Debt and Average Shareholders’ Equity for each
of the three calendar years within the 2007-2009 Performance
Period.
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1
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In accordance
with Instruction 4 to Item 402(k) of Regulation S-K,
Oceaneering is not disclosing these and the other amounts or items
left blank herein, as they reflect confidential commercial or
business information.
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(c)
“Average Return on Invested Capital” or
“ROIC” means a percentage derived by dividing
(i) the cumulative NOPAT (the sum of NOPAT for each of the
three calendar years within the 2007-2009 Performance Period) by
(ii) Average Invested Capital.
(d)
“Average Total Debt” means (i) the sum of
the Total Debt as of the end of the prior year and the Total Debt
as of the end of the current year (ii) divided by two. For
example, the Average Total Debt for calendar year 2007 will be the
Total Debt as of December 31, 2006, plus the Total Debt as of
December 31, 2007, divided by two.
(e)
“Average Shareholders’ Equity” means
(i) the sum of Shareholders’ Equity as of the end of the
prior year and Shareholders’ Equity as of the end of the
current year (ii) divided by two.
(f) “Cost
of Capital” or “Kc” means a percentage
determined by dividing (i) the sum of the Cost of Debt and the
Cost of Equity for each of the three calendar years within the
2007-2009 Performance Period by (ii) the sum of Average Total
Debt and Average Shareholders’ Equity for each of the three
calendar years within the 2007-2009 Performance Period. All
components of Cost of Capital shall be obtained directly from the
audited financial statements of the Company for the applicable
year.
(g) “Cost
of Debt” means the product of annual Interest Expense and
65% (100% less a deemed income tax rate of 35%).
(h) “Cost
of Equity” means the product of Average
Shareholders’ Equity and 9.71%, which is the sum of the 4.71%
yield on the 10-year Treasury Notes as of December 31, 2006,
as published by the U.S. Federal Reserve, plus an equity return
premium of 5.0%.
(i)
“Cumulative Three Year Cash Flow” means the sum
of the earnings before interest, taxes, depreciation and
amortization (“EBITDA”) amounts for each of the three
calendar years in the 2007-20098 Performance Period. EBITDA shall
be calculated as Net Income (Loss) plu
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