Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On November 10, 2016, Cobalt International Energy, Inc. (the
Company
) entered into a Separation and Consulting Agreement (the
Consulting Agreement
) with James W. Farnsworth, President, Exploration. The Consulting Agreement provides that
Mr. Farnsworths employment will terminate on the earlier of (i) December 30, 2016 or (ii) date that the Company provides written notice to Mr. Farnsworth of his earlier termination (other than for cause or disability)
(the
Employment Termination Date
). The Consulting Agreement also satisfies the notice of non-renewal required under the Employment Agreement between Mr. Farnsworth and the Company, dated as of November 3, 2014
(the
Farnsworth Employment Agreement
). Mr. Farnsworth is not entitled to any severance benefits under the Farnsworth Employment Agreement.
Subject to Mr. Farnsworths execution and non-revocation of a general release of claims satisfactory to the Company, he will serve
as a consultant from the Employment Termination Date through December 31, 2017 providing consulting services for an average of 20 hours per week in exchange for the following benefits: (i) a pro rata bonus for 2016, payable to
Mr. Farnsworth in early 2017 based on individual performance and the achievement of the Companys key performance indicators, (ii) a monthly consulting fee of $42,267; and (iii) access to an office and administrative support as
Mr. Farnsworth may reasonably request. In addition, if a sale of a material portion of the Companys Angolan assets (an
Angola Sale
) occurs during the consulting period such that all transactions and approvals
necessary to complete such Angola Sale have occurred or been obtained, as applicable, but does not require the transaction to close, prior to the end of the consulting period, the Company will pay Mr. Farnsworth an additional one-time, lump sum
payment equal to $300,000, which amount shall be paid to Mr. Farnsworth within 30 days following the consummation of such Angola Sale.
Mr. Farnsworths outstanding unvested time-based equity awards will immediately become fully vested as of December 30, 2016 so
long as Mr. Farnsworth remains employed by the Company through such date. Such awards (and any shares of the Companys common stock acquired thereunder) will remain subject to all of the other applicable terms and conditions set forth in
the Farnsworth Employment Agreement, the Companys Long Term Incentive Plan (
LTIP
) and the applicable award agreements thereunder. With respect to any outstanding awards granted to Mr. Farnsworth pursuant to the
LTIP that are subject to a performance requirement (other than continued service by Mr. Farnsworth), only the service condition under such awards shall be deemed satisfied, and the performance conditions set forth in the applicable award
agreements must be satisfied in order for such awards to vest.
The foregoing description of the Consulting Agreement does not purport to
be complete and is qualified in its entirety by reference to the Consulting Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
During the consulting period, Mr. Farnsworth will remain subject to the restrictive covenants set forth in the Farnsworth Employment
Agreement, including perpetual restrictions against disclosure of confidential information and against disparagement of the Company and any of its directors, officers, partners and stockholders, and a one-year post-employment restriction against
competition with the Company, which such one-year period will commence as of December 30, 2016.
On November 10, 2016, the
Company provided notice of non-renewal of the employment agreement between James H. Painter and the Company, dated as of November 3, 2014 (the
Painter Employment Agreement
), which will expire on December 31, 2016.
On the same day, Mr. Painter was appointed as President, Exploration and Appraisal of the Company, effective as of January 1, 2017, replacing Mr. Farnsworth. Mr. Painter, 59, has served as Executive Vice President of the Company
since April 2013. Mr. Painter previously served as Executive Vice President, Gulf of Mexico from the Companys inception in November 2005 until April 2013. The Company has eliminated the position of Executive Vice President, Gulf of
Mexico.
In connection with Mr. Painters appointment as President, Exploration, Mr. Painter will be paid an annual base
salary of $625,000. Mr. Painter will be eligible to receive a discretionary annual bonus with a target value of 75% of his base salary and a discretionary annual incentive plan award with a target value of 150% of his base salary. Effective as
of his appointment, Mr. Painter will be eligible to participate in the Companys Executive
Severance and Change in Control Benefit Plan (
Severance Plan
), which provides participants with certain payments and benefits upon a qualifying termination of such
participants employment, including in connection with a change in control of the Company. Additionally, Mr. Painters outstanding unvested time-based equity awards will immediately become fully vested as of December 30, 2016 so
long as Mr. Painter remains employed by the Company through such date. Such awards (and any shares of the Companys common stock acquired thereunder) will remain subject to all of the other applicable terms and conditions set forth in the
Painter Employment Agreement, the Companys LTIP and the applicable award agreements thereunder. With respect to any outstanding awards granted to Mr. Painter pursuant to the LTIP that are subject to a performance requirement (other than
continued service by Mr. Painter), only the service condition under such awards shall be deemed satisfied, and the performance conditions set forth in the applicable award agreements must be satisfied in order for such awards to vest.
The foregoing description of the Severance Plan does not purport to be complete and is qualified in its entirety by reference to the Severance
Plan, a copy of which is incorporated herein by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q, filed August 2, 2016.