Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
(e) On December 19, 2017, the board of directors (the
Board) of Tidewater Inc. (Tidewater and, together with its subsidiaries, the Company) and its compensation committee (the Committee) took certain actions with respect to executive compensation
arrangements.
Changes in Base Salaries Effective January
1, 2018
. In support of the Companys overall cost-cutting
efforts, the Committee approved a decrease in base salary, effective January 1, 2018, for four of its five current named executive officers. The fifth named executive, Joseph M. Bennett, has previously advised the Company of his intention to
retire effective December 31, 2017.
Specifically, the Committee approved a 15% decrease in the annual base salary of each of Quinn P. Fanning,
Jeffrey A. Gorski, and Bruce D. Lundstrom. Larry T. Rigdon, a former executive officer of the Company who joined the Board on July 31, 2017, currently serves as President and CEO on an interim basis and is the only named executive with an
employment agreement. Mr. Rigdon and the Committee have agreed to amend his employment agreement in order to decrease his base salary from $240,000 to $150,000.
SERP Frozen Effective January
1, 2018
. Upon the recommendation of the Committee, the Board has frozen any additional accruals under
the Amended and Restated Supplemental Executive Retirement Plan (the SERP), effective January 1, 2018. Currently, all of the named executives are SERP participants except for Mr. Gorski, who joined the Company after the SERP
was closed to new participants. Mr. Rigdon, who retired from the Company in 2010, is currently receiving payouts under the SERP based on his prior service and has not accrued any additional benefits for his service as interim CEO.
New Change of Control Agreements
. The Committee approved a new form of change of control agreement to be entered into with certain Company officers
(the Agreement). For each, the Agreement will become effective January 1, 2018, following the expiration of the officers current change of control agreement on December 31, 2017. Messrs. Fanning, Gorski, and Lundstrom are
the only named executive officers who are expected to enter into the Agreement, given Mr. Rigdons status as interim CEO and Mr. Bennetts expected retirement.
The Agreement has an initial term of one year (January
1-December
31, 2018) but is subject to
one-year
evergreen renewal periods unless the Company provides written notice to officer by June 30 of a given year that it does not wish to extent the Agreement past its current term.
The Agreement provides each officer with certain employment protections for a
two-year
period following a change in
control of the Company. In addition, if the officer experiences a qualifying termination during that
two-year
protected period (if either the Company terminates him without cause or the officer terminates his
own employment with good reason), he will be entitled to receive certain payments and benefits. Specifically, the officer would be entitled to receive, among other benefits: (1) a cash severance payment equal to a specific multiple (two times
for the chief executive officer,
one-and-a-half
times for any executive vice president, and one time for all other officers) of
the sum of (a) his base salary in effect at the time of termination and (b) his target bonus; (2) a
pro-rata
cash bonus for the fiscal year in which the termination occurs; (3) a cash
payment equal to any unpaid bonus with respect to a completed fiscal year as calculated by the Agreement; and (4) reimbursement for the cost of insurance and welfare benefits for a specified number of months (24 months for the chief executive
officer, 18 months for any executive vice president, and 12 months for all other officers) following termination of employment.
1
Under the Agreement, the officer would not be entitled to any tax
gross-ups
for excise taxes that may be triggered under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended. However, the officer would be entitled to receive the best net
treatment, which means that if the total of all change of control payments due him exceeds the threshold that would trigger the imposition of excise taxes, the officer will either (1) receive all payments and benefits due him and be responsible
for paying all such taxes or (2) have his payments and benefits reduced such that imposition of the excise taxes is no longer triggered, depending on which method provides him the better
after-tax
result.
This description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, a copy of which is attached as Exhibit
10.1 to, and is incorporated by reference into, this Current Report on Form
8-K.