Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14AProxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934(Amendment No. )
FiledbytheRegistrant☒FiledbyaPartyotherthantheRegistrant☐
Checktheappropriatebox:
☐ PreliminaryProxyStatement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☐ DefinitiveProxyStatement
☒ DefinitiveAdditionalMaterials
☐ SolicitingMaterialPursuantto§24014a-12
McDermott International, Inc.(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PaymentofFilingFee(Checktheappropriatebox):
☒ Nofeerequired.
☐ FeecomputedontablebelowperExchangeActRules14a-6(i)(l)and0-11.
(1)
Titleofeachclassofsecuritiestowhichtransactionapplies:
(2)
Aggregatenumberofsecuritiestowhichtransactionapplies:
(3)
PerunitpriceorotherunderlyingvalueoftransactioncomputedpursuanttoExchangeActRule0-11(setforththeamountonwhichthefilingfeeiscalculatedandstatehowitwasdetermined):
(4)
Proposedmaximumaggregatevalueoftransaction:
(5)
Totalfeepaid:
☐ Feepaidpreviouslywithpreliminarymaterials.
☐CheckboxifanypartofthefeeisoffsetasprovidedbyExchangeActRule0-11(a)(2)andidentifythefilingforwhichtheoffsettingfeewaspaidpreviously.Identifythepreviousfilingbyregistrationstatementnumber,ortheFormorScheduleandthedateofitsfiling.
(1)
AmountPreviouslyPaid:
(2)
Form,ScheduleorRegistrationStatementNo.:
(3)
FilingParty:
(4)
DateFiled:
2019AnnualMeetingofStockholdersInvestorPresentation
AboutMcDermottPremier,fully-integratedprovideroftechnology,engineeringandconstructionsolutionstotheenergyindustryOperatinginover54countries,McDermott’slocallyfocusedandglobally-integratedresourcesincludeapproximately32,000employees,adiversifiedfleetofmarineconstructionvesselsandfabricationfacilitiesaroundtheworldOnMay10,2018,completedthecombinationwithChicagoBridge&IronCompanyN.V.(“CB&I”)throughaseriesoftransactions(the“Combination”)EngagedBoardCommittedtoSoundCorporateGovernanceandOversightofBusinessStrategyTheBoardisaninvaluablesourceofperspectiveandinsight,overseeingandengaginginourstrategyforcontinuedgrowthTheCombinationresultedintheadditionoffivenew,experiencedandqualifiedmemberstotheBoard,providingforimmediaterefreshmentandadiversemixofskills,experience,knowledgeandindependenceforeffectivedecision-makingandriskoversightinsupportingourlong-termstrategyFirmlycommittedtocontinuingourstockholderoutreachprogramandincorporatingfeedback,whichhasresultedinbestpracticecorporategovernanceandexecutivecompensationpoliciesandprogramsStrongCompensationPracticesTheCompensationCommitteeseekstoprovidereasonableandcompetitivecompensation,withtheelementsoftotaldirectcompensation,orTDC,targetedgenerallywithinapproximately15%ofmediancompensationofourmarketforcomparablepositionsSignificantcontinuedemphasisonvariable,“at-risk”compensationthatalignspaywithperformanceRigorousfinancialperformancemetricsutilizedincompensationprogramthataredirectlylinkedtoMcDermott’sstrategyExecutiveSummary
AboutMcDermottCompletedstrategiccombinationwithCB&IonMay10,2018Fundamentallydifferentandmuchlargercompanyascomparedto2017,withexpandedgeographic,operationalandtechnologicalreachFully,verticallyintegratedofferingforcustomersworldwide,withproductsolutionsspanningonshoreandoffshorefromconcepttocommissioningMcDermottisapremier,fullyintegratedproviderofengineering,constructionandtechnologysolutionstotheglobalenergyindustry$NewYorkStockExchangeMDR12MARINECONSTRUCTIONVESSELSCustomersNational,InternationalandIndependentEnergyCompanies54OperatingAreasCountriesinOilandGasProducingRegionsWorldwide7PROJECTSCOMPLETEDACROSSCONTINENTS300+PATENTSPATENTAPPLICATIONSANDTRADEMARKSINEASTLAND,TEXASFOUNDEDFABRICATIONFACILITIES
2019AnnualMeetingofStockholders–ItemsofBusinessElectionofDirectorsITEM1AdvisoryVotetoApproveNamedExecutiveOfficerCompensationITEM2RatificationofAppointmentofErnst&YoungLLPasAuditorsITEM3Approvalof2019McDermottInternational,Inc.Long-TermIncentivePlanITEM4TheBoardrecommendsavoteFOReachoftheseitemsofbusiness
2019AnnualMeetingofStockholders–ItemsofBusinessElectionofDirectorsITEM1TheBoardrecommendsavoteFOReachDirectornominee
WiththeclosingoftheCombination,ourBoardincreasedfrom9to11membersAdded5new,experiencedandqualifiedmemberstotheBoard,complementingtheBoard’sexistingskillsandexpertiseforpost-CombinationMcDermottEachdirectorbringsadiversemixofskills,experience,knowledgeandindependencetobestpositiontheBoardforeffectivedecision-makinginsupportingourlong-termstrategyGaryP.LuquetteChairoftheBoardFormerPresident,ChiefExecutiveOfficerFrank’sInternationalN.V.W.CraigKisselCompensationCommitteeChairFormerPresident,CommercialSystems,Trane,Inc.JohnF.Bookout,IIIPartner,ApolloGlobalManagement,LLCMaryL.Shafer-MalickiFormerSeniorVicePresidentandChiefExecutiveOfficer,BPAngola,BPp.l.c.PhilippeBarrilTransitionCommitteeChairChiefOperatingOfficer,SBMOffshore,N.V.DavidDicksonPresidentandChiefExecutiveOfficer,McDermottInternational,Inc.MarshaC.WilliamsFormerSeniorVicePresidentandChiefFinancialOfficer,OrbitzWorldwide,Inc.L.RichardFluryGovernanceCommitteeChairFormerChiefExecutiveOfficer,Gas,Power&Renewables,BPp.l.c.ForbesI.J.AlexanderExecutiveVicePresident,Jabil,Inc.JamesH.MillerFormerChairman,PPLCorporationNewlyRefreshedBoardisStronglyPositionedtoDriveSuccessWilliamH.Schumann,IIIAuditCommitteeChairFormerExecutiveVicePresidentFMCTechnologies,Inc.
FocusedandEngagedBoardOurBoardcontinuouslyevaluatesitscompositiontoensureeffectiveoversightofMcDermott’sstrategyindrivinglong-termstockholdervalueMandatoryretirementatage72CommitteeChairrotationafterfiveyearsofserviceAnnualreviewofcommitteecompositionandindividualdirectorskillsandqualificationsPeriodicthirdpartyevaluationofBoardandCommitteeeffectiveness,lastconductedearly201711ExecutiveLeadership11Energy/OilfieldServices9OtherPublicCompanyBoardExperience6ExperiencewithCoreCustomers10InternationalOperations7FinancialOversightResponsibilities10CorporateGovernanceIndependentPerspective10IndependentDirectors1Non-IndependentDirectorBalancedBoardTenure28ormoreyears11to4years35to7years5Lessthan1yearRelevantSkillsandExperienceCommitmenttoBoardRefreshment
TheBoardisactivelyinvolvedinstockholderoutreacheffortsIndependentBoardChairConsistentdirectorrefreshmentusingastandardizedprocessIndependentdirectorsearchfirmutilizedinselectingdirectorcandidatesMajorityvotingfordirectorsUseofindependentthirdpartyfacilitatorinconnectionwith2017annualBoardandCommitteeevaluationsManagementsuccessionplanningoversightBoardriskoversightLong-termincentivecompensationissubjecttoforfeitureAnnualincentivecompensationissubjecttolinearandcappedpayoutsUseofmultipleperformancemetricsSignificantstockownershipguidelinesfordirectorsandofficersDouble-triggerchange-in-controlagreementsAnnualreviewofshareutilizationIndependentcompensationconsultantAnnualreviewofpeergroupClawbackpolicyRepricingofunderwaterstockoptionsExcisetaxgross-upsDerivativestrading,hedgingorpledgingofMcDermottstockEmploymentcontractsprovidingforcontinuedemploymentStrongGovernanceandCompensationPracticesRemainaPriorityOurBoardbelievesinsoundcorporategovernanceandplacessignificantweightonstockholderfeedbackinmakingdecisionsoncorporategovernanceandexecutivecompensationpoliciesandprogramsCorporateGovernancePracticesCompensationPractices
CommitmenttoOngoingandMeaningfulStockholderEngagementOurBoardisfirmlycommittedtoconstructiveengagementwithourstockholdersandregularlyreviewsandrespondstotheirexpressedviewsIn2015,ourBoardestablishedaformalandextensivestockholderoutreachprogramonexecutivecompensationandgovernancematters,underwhichcertaindirectorsand/orexecutiveofficerssolicitfeedbackfromourstockholdersongovernanceandcompensationmattersDialoguewithstockholdershasledtoanumberofmeaningfulchangesMaintainingaSeparateChairoftheBoardandCEOMaintainingaBoardcomprisedofallindependentdirectors,exceptourCEOEngaginganindependentthird-partyfacilitatortoconducttheannualBoardandCommitteeevaluationseveryfewyearsorasneededAdoptionoflimitsonthenumberofoutsideboardsonwhichourdirectorsmayserveMaintainingacommitmenttoBoardrefreshmentGovernanceSocialandEnvironmentalCompensationIncreasingdisclosuresonourcorporatesocialresponsibilityandsustainabilityactivitiesEstablishingaformalCSRCorporateSteeringCommitteeandaGlobalCoordinationTeamtomorecloselyalignCSRactivitiestoourbusinessobjectivesTakingstepstoalignourCSRframeworktotheISO26000:10standard,whichprovidesguidancetoassessandaddresssocialresponsibilitiesthatarerelevantandsignificanttoMcDermott’s:missionandvision;operationsandprocesses;customers,employees,communitiesandotherstakeholders;andenvironmentalimpactEnhancingtransparencyinproxystatementdisclosuresregardingcompensationmatters,includingdisclosingspecifictargetsofourcompensationprogramsandhowtheytietoourstrategyIncludingarelativemetricforlong-termincentiveplanawardsRequiringdouble-triggervestingofequityawardsuponachangeincontrolIntroductionofacompetitorpeergroupforperformance-basedequityawardsAppropriaterevisionstoourcompensationpeergroups
2019AnnualMeetingofStockholders–ItemsofBusinessAdvisoryVotetoApproveNamedExecutiveOfficerCompensationITEM2TheBoardrecommendsavoteFORtheadvisoryvoteonNamedExecutiveOfficercompensation
OrderIntakeRevenuesBacklogPost-Combination:OurOperatingStrategyandIncreasedEarningsPotentialPost-Combination,McDermottisafundamentallydifferentandmuchlargercompanyascomparedtowherewewerein2017,withsignificantearningspotentialIntegrateCompletetheintegrationwithCB&Isuccessfullytoestablishatoptier,verticallyintegratedengineering,procurementandconstructioncompany,competitivelydifferentiatedintechnology,customerrelationships,DriveDrivesavingsthroughouttheorganizationandembodyabestinclassculture,withafocusonachievingsynergysavingsviatheCombinationProfitabilityInitiative,orCPIPositionDevelopstrategytopositionMcDermottforfuturegrowthbycapitalizingonarobustrevenueopportunitypipelineandgrowingendmarketsDisciplineExercisedisciplinedbiddingthroughthoroughevaluationandassessmentofprojectriskprofilesExecuteDeliverexcellenceinexecutionthroughimplementationoftheOneMcDermottWayOur2018operatingstrategyfollowingthecombinationwithCB&Iwastopioneeranewkindofcompany,withafocusonthefollowingstrategicobjectives:$inbillions
McDermott'scompensationprogramsaredesignedtoprovidecompensationthat:Attracts,motivatesandretainshigh-performingexecutivesProvidesperformance-basedincentivesthatrewardachievementofshort-termandlong-termbusinessgoalsandstrategicobjectiveswhilerecognizingindividualcontributionsAlignstheinterestsofourexecutiveswiththoseofourstockholdersStrategicObjectivePerformanceMetric2018ExecutiveIncentiveCompensationPlan(AnnualBonus)Integrate&ExecuteDriveprofitabilityviaimprovedprojectexecutionAdjustedOperatingIncomeDrivePrioritizeliquidityneedsAdjustedFreeCashFlow2018Long-TermIncentivePlanAwards—PerformanceUnitsPositionSupportfuturebusinessOrderIntakeIntegrate,Discipline&ExecuteGeneratereturnsforstockholdersRelativeTotalShareholderReturnCompensationPhilosophyLinksStrategyandOperationalPerformancePerformancemetricsandperformancelevelsusedwithinelementsofannualandlong-termcompensationsupportourstrategicandfinancialgoalsanddrivethecreationofstockholdervalue
TheCompensationCommitteeseekstoprovidereasonableandcompetitivecompensation,withtheelementsofTDCtargetedgenerallywithinapproximately15%ofmediancompensationofourmarketforcomparablepositions(marketrange)TheCompensationCommitteeconsideredthesignificantlyincreasedsizeandscaleofMcDermottpost-Combination,andidentifiedanewCompensationPeerGroupwithconsiderationofthefollowing:Post-CombinationbenchmarkingandcompensationreviewprocessledtochangesineachelementofCEO’s2018targetTDCPost-CombinationCompensationPeerGroupandCEOTargetTDCComparableexecutiveexpertiseComparablysizedexecutiverolesCompetitorsforexecutivetalentComparablerevenuesSimilarityofoperationsandbusinessmodelsOthercomparablefinancialandcapitalvaluemetricsIncreasedSize,ScopeandComplexityBenchmarkingofnewpeersNewmarketmediancompensationopportunitiesChangesinelementsofTDCNotwithstandingcompensationincreases,eachelementofCEO2018post-CombinationtargetTDCremainswithin3%ofmarketrangecompensation
90%AtRisk10%AnnualBaseSalaryFixedcashcompensationrecognizinganexecutiveofficer’sexperience,skillandperformance13%AnnualIncentive,orEICPVariablecompensationdesignedtorewardachievementofshort-termbusinessgoalsandstrategicobjectives,whilerecognizingindividualcontributions77%Long-TermIncentives,orLTIVariablecompensationdesignedtoaligninterestsofexecutiveswiththoseofourstockholderswithafocusonlong-termperformanceresultsMcDermott’scompensationprogramisdesignedtoaligninterestsofexecutiveswiththoseofourstockholderswithafocusonlong-termperformanceresultsCEO2018LTIValueReduction$8.3million$1.9million6/1/18PU*0246810$6.4million6/1/18RSU3/1/18RSULTIAwardValueonGrantDateLTIAwardValueasof12/31/18CEO2018Post-CombinationTargetTotalDirectCompensation*TheLTIawardvalueasofDecember31,2018isbasedonMcDermott’sclosingstockpriceasofDecember31,2018.ThevalueofperformanceunitsasofDecember31,2018isbasedonachievingthresholdperformance.SignificantMajorityofCEOPayisAtRisk…DemonstratingPayforPerformanceAlignment
2019AnnualMeetingofStockholders–ItemsofBusinessRatificationofAppointmentofErnst&YoungLLPasAuditorsITEM3TheBoardrecommendsavoteFORtheratificationoftheappointmentofErnst&YoungLLPasAuditors
AuditorandAuditCommitteeMattersEYwasappointedin2018followingacompetitiverequestforproposalprocess,replacingDeloitte&ToucheLLPasourprincipaloutsideauditorInselectingEYtoserveasMcDermott’sauditorovercompetingfirms,theAuditCommitteeconsidered,amongotherthings:IndeterminingwhethertoreappointEYforfiscalyear2019,theAuditCommitteeconsideredanumberoffactors,includingthequalityofEY’sauditandnon-auditwork,basedonitsoversightofthefirm’sworkproduct,EY’sreportsonitsqualitycontrolsanditsperformanceduring2018,externaldataonEY’sauditqualityandperformance,theappropriatenessofEY’sfeesandEY’swrittendisclosuresandindependenceletterTheAuditCommitteedeterminedthecontinuedengagementofErnst&YoungLLP(“EY”)forfiscalyear2019isinthebestinterestsofMcDermottandourstockholdersGlobal,nationalandlocalcapabilitiestohandlethebreadthandcomplexityofMcDermott’sglobaloperationsandabilitytorelyoncomponentregionalteamscorrespondingtotheprimarybusinesslocationsofMcDermottTechnicalexpertiseandknowledgeofMcDermott’sindustry,globaloperationsandpotentialrisksMcDermottwillfaceProposedleadpartnerandengagementteamexperience,qualificationsandeffectiveness;Relationships,resources,andprocessesusedtomonitoremerginglegislative,regulatory,andaccountingissuesProcessesforidentifyingandsharingwithMcDermottmanagementindustrybestpracticesandtrendsanddevelopmentsthataffectourbusinessenvironmentStyle,approachandfrequencyofcommunicationwiththeAuditCommitteeandmanagement;Approachtoidentifyingandresolvingtechnicalissueswithmanagement;Planforutilizinginternalauditactivitiestodriveefficiencyintheexecutionoftheexternalauditplan;Reasonablenessofestimatedfees,costsandbillingpracticesforauditandnon-auditservices;Processesformonitoringandmaintainingindependence;andProcessesforensuringconfidentialityofMcDermottintellectualcapitalfromanycompetitorsservedbythefirm.
2019AnnualMeetingofStockholders–ItemsofBusinessApprovalof2019McDermottInternational,Inc.Long-TermIncentivePlanITEM4TheBoardrecommendsavoteFORthe2019McDermottInternational,Inc.Long-TermIncentivePlan
Approvalof2019Long-TermIncentivePlanAlignswithStockholderInterests2019LTIPwillreplace2016LTIPandtheCB&ILTIPAdoptionof2019LTIPisnecessarytocontinueourequity-basedlong-termincentiveprogramandtoavoidhavingtopotentiallyincreasesignificantlythecashcomponentofourexecutivecompensationprograminordertoremaincompetitiveandadequatelycompensateouremployeesIndeterminingthenumberofsharestomakeavailableunderthe2019LTIP,theCompensationCommitteeconsidered:Numberof12,000,0002,475,000,plusunusedsharesreservedsharesreservedfrompriorplansAnnualLimitsonEmployeeGrantsMaximumannualperpersongrantof3,000,000sharessubjecttooptions.Maximumannualperpersongrantof3,000,000sharesintheformofrestrictedstockorrestrictedstockunits.Maximumannualcashpayoutof$12,000,000perpersonforperformanceunits.Noprovision.Asaresultoftheeliminationoftheperformance-basedcompensationexceptionunderSection162(m)oftheCode,theseperpersonlimitationsarenolongernecessary.Annuallimitsondirectorawardsremaininplace.MinimumVestingAwardstoemployeessubjecttoaminimumvestingperiodofoneyearfromthedateofgrant,subjecttoanexceptionforupto5%ofthesharesreserved.Allawards(includingdirectorawards)willhaveaminimumvestingperiodofoneyearfromthedateofgrant,subjecttoexceptionsforupto5%ofthesharesreservedaswellasfordirectorgrantsthatvestatthenextannualmeeting.OurBoardbelievesincentiveawardsarecriticaltoattracting,retainingandengaginghighlyqualifiedemployeesandtoaligningtheirfinancialinterestswiththefinancialinterestsofourstockholdersKeyChangesfrom2016LTIPKeyhistoricalstockusagedataunderthe2016LTIPAdviceofMeridianCompensationPartners,LLC,theindependentcompensationconsultantExpecteddilutionresultingfromthe2019LTIP2016LTIP2019LTIP