Schlumberger-Private

 

 

EXHIBIT 10.2

 

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Draft

 

2019 PERFORMANCE SHARE UNIT AWARD AGREEMENT

(WITH RELATIVE TSR MODIFIER)

under the

SCHLUMBERGER 2017 OMNIBUS STOCK INCENTIVE PLAN

(Includes Confidentiality, Intellectual Property, Non-Competition, and
Non-Solicitation Provisions in  Section 9 and Attachment II)

 

Performance Period:  2019, 2020 and 2021

 

This Performance Share Unit Award Agreement (as may be amended, the “Agreement”)
is granted effective as of January 16, 2019 (the “Grant Date”) by Schlumberger
Limited (the “Company”), for the benefit of ___________ (“Employee”), pursuant
to the Schlumberger 2017 Omnibus Stock Incentive Plan, as may be amended (the
“Plan”).

1.Award.  In consideration of Employee’s continued employment as hereinafter set
forth, the Company hereby grants to Employee an award of “Performance Share
Units,” provided that (except as otherwise provided in Section 2(c)) the final
number of Performance Share Units will be determined in accordance with the
performance criteria set forth on Attachment I to this Agreement.  The target
Performance Share Units subject to this award is set forth in an award letter
previously delivered to Employee and the Notice of Grant of Award of Performance
Share Units attached hereto. The Performance Share Units are notional units of
measurement denominated in shares of common stock of the Company, $.01 par value
per share (“Common Stock”). Each Performance Share Unit represents a right to
receive one share of Common Stock or equivalent value, subject to the conditions
and restrictions on transferability set forth herein and in the Plan.  

2.Vesting of Performance Share Units.  The period of time from and including
January 1, 2019 to December 31, 2021 is the “Performance Period.” The
Performance Share Units will vest as follows:

(a)On the first Friday following the first meeting of the Compensation Committee
of the Board of Directors of the Company (the “Committee”) in 2022 (the “First
Committee Meeting”), or as soon thereafter as reasonably practicable (such date,
the “initial Vesting Date”), a number of Performance Share Units will vest based
on the extent to which the Company has satisfied the performance conditions set
forth on Attachment I, provided that Employee is continuously employed by the
Company or any of its Subsidiaries from the Grant Date through the initial
Vesting Date and has not experienced a Termination of Employment (as defined in
Section 12(y) below) as of such date. If, immediately following the First
Committee Meeting, not all companies comprising the ROCE Peer Group (as defined
in Attachment I) have publicly disclosed the full-year financial information
required to determine the number of shares of Schlumberger common stock earned,
the Committee may elect, at its discretion, to award to Employee a specified
percentage of the number of such shares initially determined to be earned.

 

Active 38494275.8

 

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The percentage of shares initially issued to Employee will be based on available
reported results of the ROCE Peer Group as of the First Committee Meeting, and
the issuance of the shares will occur as soon after the First Committee Meeting
as reasonably practicable.  Any additional shares earned will be issued to
Employee as soon as reasonably practicable following the public release by all
ROCE Peer Group companies of the requisite full-year financial results necessary
to determine the final number of shares earned. The date of the issuance of such
additional shares will be a “subsequent Vesting Date” for purposes of this
Agreement). Except as provided in Sections 2(b) and 2(c) below, if there is any
Termination of Employment during the period from and between the Grant Date
until and including the initial Vesting Date, Employee will immediately and
automatically forfeit all Performance Share Units.  The Committee may delegate,
to an officer of the Company or to a subcommittee of the Committee, its
authority to determine whether Employee has incurred a Termination of
Employment, the cause of such termination or any related issue, and any such
determination by the Committee or its delegate will be final and binding on all
parties.

(b)If Employee’s Termination of Employment occurs due to Retirement (as defined
in Section 12(q) below) or Special Retirement (as defined in Section 12(t)
below), the Performance Share Units will vest in accordance with Section 2(a)
above as if Employee had remained continuously employed by the Company or any of
its Subsidiaries from the Grant Date through the initial Vesting Date.

(c)If Employee’s Termination of Employment occurs due to Disability (as defined
in Section 12(h) below) or death, then immediately on the occurrence of such
Termination of Employment, the target number of Performance Share Units will
vest, and the date of such Termination of Employment will be considered the
initial Vesting Date.

3.Settlement of Performance Share Units.  Payment of vested Performance Share
Units will be made in shares of Common Stock as soon as administratively
practicable, but in no event later than 2-1/2 months following the end of the
Performance Period (the date of any such payment, the “Settlement Date”);
provided, however, that the Committee may, in its sole and absolute discretion,
settle the vested Performance Share Units in cash based on the Fair Market Value
of the shares of Common Stock on the Settlement Date.

4.Forfeiture of Performance Share Units.

(a)At any time during the Performance Period and up to and including the initial
Vesting Date, upon a Termination of Employment for any reason that does not
result in a continuation or acceleration of vesting pursuant to Section 2,
Employee will immediately and automatically forfeit all unvested Performance
Share Units, without the payment of any consideration.  Upon forfeiture, neither
Employee nor any successors, heirs, assigns or legal representatives of Employee
will thereafter have any further rights or interest in the unvested Performance
Share Units.

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(b)Notwithstanding any provision in this Agreement to the contrary, if at any
time during the Performance Period and up to and including the subsequent
Vesting Date, Employee engages in Detrimental Activity (as defined in Section
12(f) below), Employee will immediately and automatically forfeit all
Performance Share Units without the payment of any consideration. Upon
forfeiture, neither Employee nor any successors, heirs, assigns or legal
representatives of Employee will thereafter have any further rights or interest
in the unvested Performance Share Units.

5.Restrictions on Transfer of Performance Share Units.  

(a)Performance Share Units granted hereunder to Employee may not be sold,
assigned, transferred, pledged or otherwise encumbered, whether voluntarily or
involuntarily, by operation of law or otherwise (any of the foregoing, a
“Transfer”), other than (i) to the Company as a result of the forfeiture of
Performance Share Units, or (ii) by will or applicable laws of descent and
distribution.  Payment of Performance Share Units after Employee’s death will be
made to Employee’s estate or, in the sole and absolute discretion of the
Committee, to the person or persons entitled to receive such payment under
applicable laws of descent and distribution.

(b)Consistent with the foregoing, no right or benefit under this Agreement will
be subject to Transfer, and any such attempt to Transfer will have no effect and
be void.  No right or benefit hereunder will in any manner be liable for or
subject to any debts, contracts, liabilities or torts of the person entitled to
such benefits.  If Employee attempts to Transfer any right or benefit hereunder
or if any creditor attempts to subject the same to a writ of garnishment,
attachment, execution, sequestration, or any other form of process or
involuntary lien or seizure, then such attempt will have no effect and be void
and immediately upon any such attempt the Performance Share Units will terminate
and become of no further effect.

6.Rights as a Stockholder.  Employee will have no rights as a stockholder of the
Company with regard to the Performance Share Units.  Rights as a stockholder of
the Company will arise only if the Performance Share Units are settled in shares
of Common Stock pursuant to Section 3 above.

7.Tax and Social Insurance Withholding.

(a)Regardless of any action the Company takes with respect to any or all income
tax (including foreign, federal, state and local taxes), social insurance,
payroll tax, payment on account or other tax-related items related to Employee’s
participation in the Plan and legally applicable to him or her (“Tax-Related
Items”), Employee acknowledges that the ultimate liability for all Tax-Related
Items legally due by Employee is and remains his or her responsibility and may
exceed the amount actually withheld by the Company.  Employee further
acknowledges that the Company (i) makes no representations or undertakings
regarding the treatment of any Tax-Related Items in connection with any aspect
of the Performance Share Units, including the grant of the Performance Share
Units, the vesting of the Performance Share Units, the conversion of the
Performance Share Units into shares of Common Stock or the receipt of any
equivalent cash payment, or the subsequent sale of any shares of Common Stock
acquired at vesting, and (ii) does not commit to structure the terms of the
grant or any aspect of the Performance Share Units to reduce or eliminate
Employee’s liability for the Tax-Related Items.

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(b)Prior to any relevant taxable or tax withholding event (“Tax Date”), as
applicable, Employee will pay or make adequate arrangements satisfactory to the
Company to satisfy all Tax-Related Items.  In this regard, Employee authorizes
the Company or its respective agents, at their discretion, to satisfy the
obligations with regard to all Tax-Related Items by one or a combination of the
following:  (i) accept a cash payment in U.S. dollars in the amount of the
Tax-Related Items, (ii) withhold whole Shares which would otherwise be delivered
to Employee having an aggregate Fair Market Value, determined as of the Tax
Date, or (iii) withhold an amount of cash from Employee’s wages or other cash
compensation which would otherwise be payable to Employee by the Company or from
any equivalent cash payment received upon vesting of the Performance Share
Units, equal to the amount necessary to satisfy any such obligation.  

(c)The Company shall withhold or account for Tax-Related Items by considering
applicable minimum statutory withholding rates, unless Employee elects, pursuant
to the Company’s prescribed procedures as in effect from time to time, to have
withholding for Tax Related Items based on the maximum withholding rate
applicable to Employee.  If the obligation for Tax-Related Items is satisfied by
withholding in shares of Common Stock, for tax purposes, Employee is deemed to
have been issued the full number of shares of Common Stock due to him or her at
vesting, notwithstanding that a number of shares of Common Stock are held back
solely for the purpose of paying the Tax-Related Items due as a result of any
aspect of Employee’s participation in the Plan.  Finally, Employee shall pay to
the Company any amount of Tax-Related Items that the Company may be required to
withhold as a result of Employee’s participation in the Plan that cannot be
satisfied by the means previously described.  The Company may refuse to issue
shares of Common Stock to Employee if Employee fails to comply with his or her
obligations in connection with the Tax-Related Items as described herein. The
Performance Share Units are intended to be “short-term deferrals” exempt from
Section 409A of the Internal Revenue Code and shall be construed and interpreted
accordingly.

8.Changes in Capital Structure.  As more fully described in the Plan, if the
outstanding shares of Common Stock at any time are changed or exchanged by
declaration of a stock dividend, stock split, combination of shares, or
recapitalization, the number and kind of Performance Share Units will be
appropriately and equitably adjusted so as to maintain their equivalence to the
proportionate number of shares.

9.Confidential Information, Intellectual Property and Noncompetition. Employee
acknowledges that Employee is in possession of and has access to confidential
information of the Company and its Subsidiaries, including material relating to
the business, products and services of the Company and its Subsidiaries, and
that he or she will continue to have such possession and access during
employment by the Company and its Subsidiaries. Employee also acknowledges that
the business, products and services of the Company and its Subsidiaries are
highly specialized and that it is essential that they be protected. Accordingly,
Employee agrees to be bound by the terms and conditions set forth on Attachment
II, which is incorporated herein by reference, including all rules, procedures,
policies and requirements that the Company may promulgate consistent with
Attachment II.

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10.Compliance with Securities Laws.  The Company will not be required to deliver
any shares of Common Stock pursuant to this Agreement if, in the opinion of
counsel for the Company, such issuance would violate the Securities Act of 1933,
as amended, or any other applicable federal or state securities laws or
regulations or the laws of any other country.  Prior to the issuance of any
shares of Common Stock pursuant to this Agreement, the Company may require that
Employee (or Employee’s legal representative upon Employee’s death or
Disability) enter into such written representations, warranties and agreements
as the Company may reasonably request in order to comply with applicable
securities laws or with this Agreement.

11.Limitation of Rights.  Nothing in this Agreement or the Plan may be construed
to:

(a)give Employee or any other person or entity any right to be awarded any
further Performance Share Units (or other form of stock incentive awards) other
than in the sole discretion of the Committee;

(b)give Employee or any other person or entity any interest in any fund or in
any specified asset or assets of the Company (other than the Performance Share
Units); or

(c)confer upon Employee or any other person or entity the right to continue in
the employment or service of the Company or any Subsidiary.

12.Definitions.    

(a)“Agreement” is defined in the introduction.

(b)“Clawback Policy” is defined in Section 13(i).

(c)“Committee” is defined in Section 2(a).

(d)“Common Stock” is defined in Section 1.

(e)“Company” is defined in the introduction.

(f)“Detrimental Activity” means activity that is determined by the Committee in
its sole and absolute discretion to be detrimental to the interests of the
Company or any of its Subsidiaries, including but not limited to any breach of
Attachment II or any situations where Employee: (i) divulges trade secrets,
proprietary data or other confidential information relating to the Company or to
the business of the Company or any Subsidiaries; (ii) enters into employment
with or otherwise provides services to (A) any company listed, as of the date of
Employee’s Termination of Employment, on the Philadelphia Oil Service Sector
Index (or any successor index) or (B) any affiliate of any such listed company,
in either case under circumstances suggesting that Employee will be using
confidential information or unique or special knowledge gained as a Company
employee or Subsidiary employee with the effect of competing with the Company or
its Subsidiaries; (iii) enters into employment with or otherwise provides
services to any Direct Competitor (as defined in Section 12(g) below); (iv)
engages or employs, or solicits or contacts with a view to the engagement or
employment of, any employee of the Company or its Subsidiaries; (v) canvasses,
solicits, approaches or entices away or causes to be canvassed, solicited,
approached or enticed away from the Company or its Subsidiaries any customer of
any of such entities during the Performance Period and up to and including the
subsequent Vesting Date; (vi) is determined to have engaged (whether or not
prior to termination of employment) in either gross misconduct or criminal
activity that is, or that could reasonably be expected to be, harmful to the
Company or a Subsidiary; or (vii) takes any action that otherwise harms, or that
could reasonably be expected to harm, the business interests, reputation, or
goodwill of the Company or its Subsidiaries. The Committee may delegate, to an
officer of the Company or to a subcommittee of the Committee, its authority to
determine whether Employee has engaged in “Detrimental Activity,” and any such
determination by the Committee or its delegate will be final and binding on all
parties.

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(g)“Direct Competitor” means any of the following: (i) Halliburton Company,
Weatherford International plc, and Baker Hughes, a GE company, and any other
oilfield equipment and services company; and (ii) any entity engaged in seismic
data acquisition, processing and reservoir geosciences services to the oil and
natural gas industry, including in all cases in (i) and (ii) above, any and all
of their parents, subsidiaries, affiliates, joint ventures, divisions,
successors, or assigns.

(h)“Disability” means such disability (whether physical or mental impairment)
which totally and permanently incapacitates Employee from any gainful employment
in any field which Employee is suited by education, training, or experience, as
determined by the Committee in its sole and absolute discretion.

(i)“Employee” is defined in the introduction.

(j)“Fair Market Value” means, with respect to a share of Common Stock on a
particular date, the mean between the highest and lowest composite sales price
per share of the Common Stock, as reported on the consolidated transaction
reporting system for the New York Stock Exchange for that date, or, if there is
no such reported prices for that date, the reported mean price on the last
preceding date on which a composite sale or sales were effected on one or more
of the exchanges on which the shares of Common Stock were traded will be the
Fair Market Value.

(k)“Grant Date” is defined in the introduction.

(l)“initial Vesting Date” is defined in Section 2(a).

(m)“Performance Period” is defined in Section 2.

(n)“Performance Share Units” is defined in Section 1.

(o)“Plan” is defined in the introduction.

(p)“Qualifying Termination” means a Termination of Employment due to Employee’s
death, Disability, Retirement or Special Retirement.

(q)“Retirement” means either: (i) Employee’s voluntary election to retire from
employment with the Company and its Subsidiaries at any time after Employee has
reached both the age of 60 and 25 years of service, or (ii) Employee’s voluntary
election to retire from employment with the Company and its Subsidiaries at any
time after Employee has reached both the age of 55 and 20 years of service,
subject, however, to the approval of either (A) the Committee, if Employee is an
executive officer of the Company at the time of Employee’s election to retire,
or (B) the Retirement Committee, if Employee is not an executive officer of the
Company at the time of Employee’s election to retire, which approval under
clauses (A) or (B) may be granted or withheld in the sole discretion of the
Committee or the Retirement Committee, as applicable.

(r)“Retirement Committee” means a committee consisting of the Company’s Vice
President of Human Resources, the Director of HR Operations and the HR Director
of Compensation & Benefits.

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(s)“Settlement Date” is defined in Section 3.

(t)“Special Retirement” means the Termination of Employment of Employee with the
Company and all Subsidiaries at or after (i) age 55 or (ii) age 50 and
completion of at least 10 years of service with the Company and any of its
Subsidiaries.

(u)“subsequent Vesting Date” is defined in Section 2(a).

(v)“Subsidiary” means (i) in the case of a corporation, a “subsidiary
corporation” of the Company as defined in Section 424(f) of the Internal Revenue
Code and (ii) in the case of a partnership or other business entity not
organized as a corporation, any such business entity of which the Company
directly or indirectly owns 50% or more of the voting, capital or profits
interests (whether in the form of partnership interests, membership interests or
otherwise).

(w)“Tax Date” is defined in Section 7(b).

(x)“Tax-Related Items” is defined in Section 7(a).

(y)“Termination of Employment” means the termination of Employee’s employment
with the Company and its Subsidiaries; provided, however, that temporary
absences from employment because of illness, vacation or leave of absence and
transfers among the Company and its Subsidiaries will not constitute a
Termination of Employment.

(z)“Transfer” is defined in Section 5(a).

13.Miscellaneous.

(a)Employee hereby acknowledges that he or she is to consult with and rely upon
only Employee’s own tax, legal, and financial advisors regarding the
consequences and risks of this Agreement and any award of Performance Share
Units.

(b)This Agreement will bind and inure to the benefit of and be enforceable by
Employee, the Company and their respective permitted successors or assigns
(including personal representatives, heirs and legatees).  Employee may not
assign any rights or obligations under this Agreement except to the extent, and
in the manner, expressly permitted herein.  

(c)The invalidity or unenforceability of any provision of this Agreement will
not affect the validity or enforceability of any other provision of this
Agreement.

(d)This Agreement may not be amended or modified except by a written agreement
executed by the Company and Employee or their respective heirs, successors,
assigns and legal representatives.  The captions of this Agreement are not part
of the provisions hereof and are of no force or effect.

(e)The failure of Employee or the Company to insist upon strict compliance with
any provision of this Agreement or the failure to assert any right Employee or
the Company may have under this Agreement will not be deemed to be a waiver of
such provision or right or any other provision or right herein.

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(f)Employee and the Company agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent
of this Agreement.

(g)This Agreement, including all Attachments hereto, and the Plan (i) constitute
the entire agreement among Employee and the Company with respect to the subject
matter hereof and this Agreement supersedes all prior agreements and
understandings, both written and oral, with respect to the subject matter
hereof; and (ii) are not intended to confer upon any other Person any rights or
remedies hereunder.  Employee and the Company agree that (A) no other party
(including its agents and representatives) has made any representation,
warranty, covenant or agreement to or with such party relating to the
Performance Share Units other than those expressly set forth herein or in the
Plan, and (B) such party has not relied upon any representation, warranty,
covenant or agreement relating to the Performance Share Units, other than those
referred to in clause (A) above.  All references herein to “Agreement” will
include all Attachments hereto.

(h)As Employee may work in various locations and to eliminate potential
uncertainty over the governing law, this Agreement (including, for the sake of
clarity, all Attachments) will be interpreted and construed exclusively in
accordance with the laws of the State of Texas. Employee agrees that Texas, as
the Company’s United States headquarters, has a greater legal interest in
matters relating to this Agreement than any other state, has a greater public
policy interest in matters relating to this Agreement than any other state, and
has a greater factual relationship to matters relating to this Agreement than
any other state. The sole, mandatory, and exclusive venue for any dispute
arising from or related to Employee’s employment with the Company and its
Subsidiaries, and this Agreement (including, for the sake of clarity, all
Attachments) will lie and be deemed as convenient, in Fort Bend County, Texas,
state or federal court without regard to the conflict of law provisions thereof,
or, at the Company’s option, any venue in which personal jurisdiction over
Employee may be established.  Employee waives any objection he or she may have
to the venue of any such proceeding being brought in Fort Bend County, Texas
courts and waives any claim that any such action or proceeding brought in the
Fort Bend County, Texas courts has been brought in an inconvenient forum.  In
addition, Employee irrevocably and unconditionally submits to the exclusive
personal jurisdiction of the Fort Bend County, Texas courts in any such suit,
action or proceeding.  Employee acknowledges and agrees that a judgment in any
such suit, action or proceeding brought in the Fort Bend County, Texas courts
will be conclusive and binding on Employee and may be enforced in any other
courts to whose jurisdiction the Company or Employee is or may be subject to, by
suit upon such judgment.  Employee consents to the choice of law, jurisdiction
and venue provisions of this Agreement and agrees that Employee will not contest
these provisions in any future proceeding(s). EMPLOYEE AND THE COMPANY HEREBY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF THIS AGREEMENT OR ANY
ATTACHMENT THERETO.

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(i)Clawback Policy. The Company’s policy on recoupment of performance-based
bonuses, as amended from time to time (its “Clawback Policy”), will apply to the
Performance Share Units, any shares of Common Stock delivered hereunder, and any
profits realized on the sale of such shares, to the extent that Employee is
covered by the Clawback Policy. Employee acknowledges that if Employee is
covered by such policy, the policy may result in the recoupment of Performance
Share Units awarded, any shares of Common Stock delivered hereunder and profits
realized on the sale of such shares either before, on or after the date on which
Employee becomes subject to such policy.

14.Acceptance of Award.  Employee is deemed to accept the award of Performance
Share Units under this Agreement and to agree that such award is subject to the
terms and conditions set forth in this Agreement and the Plan unless Employee
provides the Company written notification not later than 30 days after
Employee’s receipt of this Agreement of Employee’s rejection of this award of
Performance Share Units (in which case such awards will be forfeited and
Employee will have no further right or interest therein as of such date).
Employee hereby accepts such terms and conditions, subject to the provisions of
the Plan and administrative interpretations thereof.  Employee further agrees
that such terms and conditions will control this Agreement, notwithstanding any
provisions in any employment agreement or in any prior awards.

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ATTACHMENT I

Performance Conditions

Subject to the provisions of the Agreement and this Attachment I, vesting of the
Performance Share Units is conditioned upon the delta between:

(a)Schlumberger’s average annual return on capital employed (as further
described below, “ROCE”) over the three-year performance period beginning on
January 1, 2019 and ending on December 31, 2021 (the “Performance Period”), and

(b)the average annual ROCE of the following companies taken together
(collectively, the “ROCE Peer Group”) over the Performance Period: Halliburton
Company, Weatherford International plc, National Oilwell Varco, TechnipFMC and
Baker Hughes, a GE company, in each case with appropriate adjustments for
mergers, acquisitions and dispositions, as well as any adjustment for the
Company’s relative total shareholder return (as further described below).

“ROCE” is equal to the sum of (i) income from continuing operations, before
charges and credits, and (ii) the after-tax impact of net interest expense,
divided by the sum of (x) the average quarterly equity, including noncontrolling
interests, and (y) the average quarterly net debt.

Schlumberger’s “average annual ROCE” means the average of the three annual ROCE
achievements during the Performance Period. The ROCE Peer Group’s “average
annual ROCE” means the average of the three annual ROCE achievements during the
Performance Period for the ROCE Peer Group as a whole.

The number of Performance Share Units that will vest will be equal to the
product of (i) the target Performance Share Units and (ii) the Payout Factor
(with any fractional shares rounded up to the next whole share).

The average annual ROCE achieved by the Company over the Performance Period, and
the average annual ROCE achieved by the ROCE Peer Group over the Performance
Period, will be certified by the Committee. The Committee is authorized to vest
the number of Performance Share Units at the Payout Factor based on the chart
below, subject to adjustment as set forth below. The Payout Factor for ROCE
achievement levels between points on this chart will be determined by linear
interpolation between the values listed.  The maximum payout of Performance
Share Units is 250% of the Target Performance Share Units.

 

ROCE Delta (bps)

Payout Factor for Vested Performance

Share Units

(before Relative TSR Adjustment)

Less than or equal to -600 bps

0% of Target

Equal to 0 bps

100% of Target

Greater than or equal to 600 bps

250% of Target

 

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Adjustment for Relative TSR during Performance Period

 

At the conclusion of the Performance Period, the Committee will certify the
Company’s cumulative shareholder return (“TSR”) over the Performance Period,
determine the percentile ranking of the Company’s TSR relative to the cumulative
TSR of the companies comprising the Philadelphia Oil Service Sector Index (or
any successor index) as of the first day of the Performance Period (the “OSX
Index”) (the “Relative TSR Performance”), and determine the amount, if any, by
which the Payout Factor will be adjusted (the “Relative TSR Modifier”).  If the
Company’s Relative TSR Performance during the Performance Period is in the
bottom 33rd percentile relative to the cumulative TSR of the companies
comprising the OSX Index over the same period, the number of shares earned
according to the Payout Factor will be reduced by 25 percentage points (e.g., if
the Payout Factor from the table above was 110%, the reduced Payout Factor would
be 85%). The Relative TSR Modifier will only reduce the number of shares earned
under a PSU award, but will not increase the number of shares otherwise earned.

 

TSR for the Company or any other member of the Index means the annualized rate
of return reflecting price appreciation plus reinvestment of dividends
(calculated monthly) and the compounding effect of dividends paid on reinvested
dividends.  The Committee will utilize Standard & Poor’s Compustat Database (or
any successor database), or such other database or method as the Committee
determines is appropriate in its discretion, to calculate any company’s TSR.

 

In the event that any member of the OSX Index ceases to be publicly-traded
during the Performance Period or is otherwise removed from the OSX Index prior
to the end of the Performance Period, then such member will be removed from the
OSX Index for purposes of the Relative TSR Performance calculation. No company
that was not a member of the OSX Index as of the first day of the Performance
Period will be added to the Index for purposes of the Relative TSR Performance
calculation.  

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ATTACHMENT II

Confidential Information, Intellectual Property,

and Non-Compete Agreement

1.Definitions.  

(a)“Affiliate” means any entity that now or in the future directly or indirectly
controls, is controlled by, or is under common control with the Company, where
“control” in relation to a company means the direct or indirect ownership of at
least fifty percent of the voting securities or shares.

(b)“Company Confidential Information” is any and all information in any form or
format relating to the Company or any Affiliate (whether communicated orally,
electronically, visually, or in writing), including but is not limited to
technical information, software, databases, methods, know-how, formulae,
compositions, drawings, designs, data, prototypes, processes, discoveries,
machines, inventions, well logs or other data, equipment, drawings, notes,
reports, manuals, business information, compensation data, clients lists, client
preferences, client needs, client designs, financial information, credit
information, pricing information, information relating to future plans,
marketing strategies, new product research, pending projects and proposals,
proprietary design processes, research and development strategies, information
relating to employees, consultants and independent contractors including
information relating to salaries, compensation, contracts, benefits, inceptive
plans, positions, duties, qualifications, project knowledge, other valuable
confidential information, intellectual property considered by the Company or any
of its Affiliates to be confidential, trade secrets, patent applications, and
related filings and similar items regardless of whether or not identified as
confidential or proprietary. For the purposes of this Attachment II, Company
Confidential Information also includes any type of information listed above
generated by the Company or any of its Affiliates for client or that has been
entrusted to the Company or any of its Affiliates by a client or other third
party.

(c)“Company Intellectual Property” is all Intellectual Property that was
authored, conceived, developed, or reduced to practice by Employee (either
solely or jointly with others), in the term of his/her employment: (a) at the
Company’s expense or the expense of any Affiliate; (b) using any of the
Company’s materials or facilities or the materials or facilities of any
Affiliate; (c) during Employee’s working hours; or (d) that is applicable to any
activity of the Company or any of its Affiliates, including but not limited to
business, research, or development activities. Company Intellectual Property may
be originated or conceived during the term of Employee’s employment but
completed or reduced to practice thereafter. Company Intellectual Property will
be deemed a “work made for hire” as that term is defined by the copyright laws
of the United States. Company Intellectual Property includes any Pre-existing
Intellectual Property assigned, licensed, or transferred to the Company, and any
Pre-existing Intellectual Property in which the Company has a vested or
executory interest.

(d)“Intellectual Property” is all patents, trademarks, copyrights, trade
secrets, Company Confidential Information, new or useful arts, ideas,
discoveries, inventions, improvements, software, business information, lists,
designs, drawings, writings, contributions, works of authorship, findings or
improvements, formulae, processes, product development, manufacturing
techniques, business methods, information considered by the Company to be
confidential, tools, routines and methodology, documentation, systems,
enhancements or modifications thereto, know-how, and developments, any
derivative works and ideas whether or not patentable, and any other form of
intellectual property.

(e)“Pre-existing Intellectual Property” is all Intellectual Property that was
authored, conceived, developed, or reduced to practice by Employee before the
term of Employee’s employment with the Company or any Affiliate began.

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2.Codes of Conduct.  Employee agrees to comply with all of the Company’s
policies and codes of conduct as it may promulgate from time to time, including
those related to confidential information and intellectual property. Nothing in
those policies will be deemed to modify, reduce, or waive Employee’s obligations
in this Attachment II. In the event of any conflict or ambiguity, this
Attachment II prevails.

3.Confidential Information.

(a)The Company does not wish to receive from Employee any confidential or
proprietary information of a third party to which Employee owes an obligation of
confidence. Employee will not disclose to the Company or any of its Affiliates
or use while employed by the Company or any of its Affiliates any information
for which he or she is subject to an obligation of confidentiality to any former
employer or other third party. Employee represents that his or her duties as an
employee of the Company and Employee’s performance of this Attachment II do not
and will not breach any agreement or duty to keep in confidence information,
knowledge, or data acquired by Employee outside of Employee’s employment with
the Company or any of its Affiliates.

(b)During Employee’s term of employment, the Company or, if applicable its
Affiliate, will provide Employee and Employee will receive access to Company
Confidential Information that is proprietary, confidential, valuable, and
relates to the Company’s business.

(c)Other than in the proper performance of Employee’s duties for the Company or
any of its Affiliates, Employee agrees not publish, disclose or transfer to any
person or third party, or use in any way other than in the Company’s business or
that of or any of its Affiliates, any confidential information or material of
the Company or any of its Affiliates, including Company Confidential Information
and Company Intellectual Property, either during or after employment with the
Company.

(d)Except as required in performing Employee's duties for the Company or any of
its Affiliates, Employee agrees not remove from the Company premises or its
control any Company Confidential Information including but not limited to
equipment, drawings, notes, reports, manuals, invention records, software,
customer information, well logs or other data, or other material, whether
produced by Employee or obtained from the Company. This includes copying or
transmitting such information via personal digital devices, mobile phones,
external hard drives, USB “flash” drives, USB storage devices, FireWire storage
devices, floppy discs, CD’s, DVD’s, personal email accounts, online or cloud
storage accounts, memory cards, Zip discs, and any other similar media or means
of transmitting, storing or archiving data outside systems supported by the
Company or its Affiliate.

(e)Employee agrees to deliver all Company Confidential Information and materials
to the Company immediately upon request, and in any event upon termination of
employment. If any such Company Confidential Information has been stored on any
personal electronic data storage device, including a home or personal computer,
or personal email, online or cloud storage accounts, Employee agrees to notify
the Company and its Affiliates and make available the device and account to the
Company for inspection and removal of the information.

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(f)Employee will not destroy, modify, alter, or secret any document, tangible
thing, or information relating to Company Intellectual Property or Company
Confidential Information except as occurs in the ordinary performance of
Employee’s employment.

4.Disclosure of Intellectual Property.  

(a)Employee agrees to promptly disclose in writing to Company all Company
Intellectual Property conceived, developed, improved or reduced to practice by
Employee during Employee’s employment with the Company and its Affiliates, by
completing and submitting an IP Disclosure Form. Employee must complete and
submit an IP Disclosure Form at conception of the invention, any derivative
ideas or works, and any improvements or changes to existing knowledge or
technology, or as soon as possible thereafter. Employee has a continuing
obligation to update the IP Disclosure Form to maintain the form’s completeness
and correctness. Employee may obtain an IP Disclosure Form from the Intellectual
Property Department. Employee will submit the completed form to the Intellectual
Property Department. If desired, Employee may request waiver any time after
submitting the IP Disclosure Form.

(b)Employee will disclose to the Company Employee’s complete written record of
any Company Intellectual Property, including any patent applications,
correspondence with patent agents and patent offices, research, written
descriptions of the technology, test data, market data, notes, and any other
information relating to Company Intellectual Property. Employee will also
identify all co-inventors, co-authors, co-composers, partners, joint venture
partners and their employees, assistants, or other people to whom the Company
Intellectual Property was disclosed in whole or in part, who participated in
developing the Company Intellectual Property, or who claim an interest in the
Company Intellectual Property. Employee’s disclosure will conform to the
policies and procedures in place at the time governing such disclosures.

(c)The Company’s receipt or acceptance of an IP Disclosure Form does not
constitute an admission or agreement to any responses contained therein, does
not waive or modify any terms of any agreement between Employee and the Company,
and does not obligate or bind the Company.  

(d)Employee must retain and prevent destruction of any material referenced in
the IP Disclosure Form, including and not limited to photographs, drawings,
schematics, diagrams, figures, testing and development logs, notes, journals,
and results, applications to, correspondence with, or registrations from, any
patent office, trademark office, copyright office, customs office, or other
authority, contracts, licenses, assignments, liens, conveyances, pledges, or
other documentation potentially affecting your ownership rights, marketing
materials, web sites, press releases, brochures, or other promotional or
informational material, any materials evidencing or related to reduction to
practice, and other related documentation.

(e)During and after employment with the Company, Employee will assist the
Company in establishing and enforcing intellectual property protection,
including obtaining patents, copyrights, or other protections for inventions and
copyrightable materials, including participating in, or, if necessary, joining
any suit (for which Employee’s reasonable expenses will be reimbursed), or
including completing and any signing documents necessary to secure such
protections, such contracts, assignments, indicia of ownership, agreements, or
any other related documents pertaining to Company Intellectual Property which
the Company may, in its sole discretion, determine to obtain.

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5.Assignment of Intellectual Property.

(a)Employee agrees to assign and hereby assigns to the Company all Company
Intellectual Property including any and all rights, title, and ownership
interests that Employee may have in or to Company Intellectual Property patent
application, including copyright and any tangible media embodying such Company
Intellectual Property, during and subsequent to Employee’s employment. The
Company has and will have the royalty-free right to use or otherwise exploit
Company Intellectual Property without any further agreement between the Company
and Employee. Company Intellectual Property remains the exclusive property of
the Company whether or not deemed to be a “work made for hire” within the
meaning of the copyright laws of the United States. For clarity, Employee does
not hereby assign or agree to assign any Pre-existing Intellectual Property to
the Company.

(b)Employee is hereby notified that certain statutes in some U.S. states relate
to ownership and assignment of inventions.  At relevant locations and in
accordance with those statutes, the Company agrees that this Attachment II does
not apply to an invention developed by Employee entirely on his or her own time
without use of the Company Group’s equipment, supplies, facilities, systems, or
confidential information, except for inventions that relate to the Company
Group’s business, or actual or anticipated research or development of the
Company Group or work performed by Employee for the Company Group. For this
purpose, the “Company Group” means the Company and all Affiliates.

(c)The Company may, in its sole discretion, waive the automatic assignment
provisions of Section 5(a) using such criteria as the Company, in its sole
discretion, may decide to use. No waiver of the automatic assignment provision
is effective unless in a writing signed by a person authorized by the Company.

(d)No waiver of the automatic assignment provision of any Company Intellectual
Property relating to the business of the Company or arising out of Employee’s
employment with the Company will be effective without the submission of a
complete and correct IP Disclosure Form. No waiver of the automatic assignment
provision is effective if Employee’s IP Disclosure Form is incomplete,
incorrect, otherwise defective, or if any misrepresentation has been made.
Employee is estopped from asserting waiver, and any waiver will be void and/or
voidable, if the waiver is obtained in violation of this Attachment II, or
obtained through fraud, negligence, failure to disclose, or incorrect,
incomplete, or defective information on an IP Disclosure Form.

6.Non-Competition.

(a)During the term of employment with the Company or any of its Affiliates,
Employee agrees not to engage, as an employee, officer, director, consultant,
partner, owner or another capacity, in any activity or business competitive to
that of the Company or any of its Affiliates.

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(b)Employee recognizes and acknowledges that Company Confidential Information
constitutes protectable information belonging to the Company and its Affiliates,
including deemed trade secrets defined under applicable laws. In order to
protect the Company and its Affiliates against any unauthorized use or
disclosure of Company Confidential Information and in exchange for the Company's
promise to provide Employee with access to Company Confidential Information and
other consideration during employment with the Company and its Affiliates,
Employee agrees that for a period of one year following the end of employment
with the Company, Employee will not within the Restricted Territory directly or
indirectly work for or assist (whether as an owner, employee, consultant,
contractor or otherwise) any business or commercial operation whose business
directly or indirectly competes with any area of the Company’s business in which
Employee was employed by the Company. Moreover, Employee agrees that the Company
may provide a copy of this Attachment II to any entity for whom Employee
provides services in the one-year period following the date of termination of
Employee's employment with the Company and its Affiliates. In the event of
breach by Employee, the specified period will be extended by the period of time
of the breach.

Employee recognizes and acknowledges that the business, research, products, and
services of the Company and its Affiliates are by nature worldwide in scope, and
that the Company and its Affiliates are not required to maintain a physical
location in close proximity to its customers. Employee agrees that in order to
protect Company Confidential Information, business interests and goodwill, the
“Restricted Territory” includes any county, parish, borough, or foreign
equivalent: (1) in which the Company has customers or service assignments about
which Employee received or obtained Company Confidential Information during
his/her employment with the Company; (2) in which Employee had a customer or
service assignment for the Company in the one-year period preceding Employee's
termination; or (3) in which the Company had a work site, job site, facility, or
office, at which Employee had a work activity for the Company in the one-year
period preceding Employee’s termination. With respect to competitive activities
in Louisiana, the Restricted Territory will be limited to the following
parishes: Acadia, Allen, Bossier, Caddo, Calcasieu, Cameron, Claiborne, De Soto,
Evangeline, Iberia, Jefferson, Lafayette, Lafourche, Orleans, Ouachita,
Plaquemines, Red River, Sabine, St. Charles, St. Landry, St. Mary’s, Tangipahoa,
Terrebonne, Union, Vermillion, and West Baton Rouge.

(c)The Company has attempted to place the most reasonable limitations on
Employee’s subsequent employment opportunities consistent with the protection of
the Company’s and its Affiliates’ valuable trade secrets, Company Confidential
Information, business interests, and goodwill. Employee acknowledges that the
limitations contained herein, especially limitations as to time, scope, and
geography, are reasonable. In order to accommodate Employee in obtaining
subsequent employment, the Company and its Affiliates may, in their discretion,
grant a waiver of one or more of the restrictions on subsequent employment
herein. A request for a waiver must be in writing and must be received by the
Company at least 45 days before the proposed starting date of the employment for
which Employee is seeking a waiver. The request must include the full name and
address of the organization with which Employee is seeking employment; the
department or area in which Employee proposes to work; the position or job title
to be held by Employee; and a complete description of the duties Employee
expects to perform for such employer. The decision to grant a waiver will be in
the Company’s discretion. If the Company decides to grant a waiver, the waiver
may be subject to such restrictions or conditions as the Company may impose and
will not constitute a waiver of any other term.

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7.Non-Solicitation.

(a)While employed by the Company and its Affiliates, and during the 18-month
period or after employment with the Company and its Affiliates ends, Employee
will not directly nor indirectly, on Employee’s own behalf or on behalf of any
person or entity, recruit, hire, solicit, or assist others in recruiting,
hiring, or soliciting any person, who is, at the time of the recruiting, hiring,
or solicitation, an employee, consultant, or contractor of the Company to leave
the Company and its Affiliates, diminish their relationship with the Company and
its Affiliates, or work for a competing business. This restriction will be
limited to persons: (1) with whom Employee had contact or business dealings
while employed by the Company and its Affiliates; (2) who worked in Employee’s
business unit (Group); or (3) about whom Employee had access to confidential
information. In the event of breach by Employee, the specified period will be
extended by the period of time of the breach.

(b)While employed by the Company and its Affiliates, and during the 18-month
period after employment with the Company and its Affiliates ends, Employee will
not, directly or indirectly, on behalf of himself or others, contact for
business purposes, solicit or provide services to clients, or entities
considered prospective clients, of the Company and its Affiliates for the
purpose of selling products or services of the types for which Employee had
responsibility or knowledge, or for which Employee had access to Company
Confidential Information while employed by the Company and its Affiliates. This
restriction applies only to clients of the Company and its Affiliates and
entities considered prospective clients by the Company and its Affiliates with
whom Employee had contact during the two years prior to the end of his/her
employment with the Company and its Affiliates.

8.Remedies for Employee’s Breach.

(a)Employee acknowledges that the Company has agreed to provide Employee with
Company Confidential Information during Employee's employment with the Company
and its Affiliates. Employee further acknowledges that, if Employee was to leave
the employ of the Company and its Affiliates for any reason and use or disclose
Company Confidential Information, that use or disclosure would cause the Company
and its Affiliates irreparable harm and injury for which no adequate remedy at
law exists. Therefore, in the event of the breach or threatened breach of the
provisions of this Attachment II by Employee, the Company and its Affiliates
will be entitled to: (i) recover from Employee the value of any portion of the
Award that has been paid or delivered; (ii) seek injunctive relief against
Employee pursuant to the provisions of subsection (b) below; (iii) recover all
damages, court costs, and attorneys’ fees incurred by the Company or its
Affiliates in enforcing the provisions of this Award, and (iv) set-off any such
sums to which the Company or any of its Affiliates may be entitled hereunder
against any sum which may be owed Employee by the Company and its Affiliates.

(b)Because of the difficulty of measuring economic losses to the Company or
Employer as a result of a breach of the foregoing covenants, and because of the
immediate and irreparable damage that could be caused to the Company or its
Affiliates for which it would have no other adequate remedy, Employee agrees
that the foregoing covenants may be enforced by the Company or its Affiliates in
the event of breach by him/her by injunction relief and restraining order,
without the necessity of posting a bond, and that such enforcement will not be
the Company’s or its Affiliates’ exclusive remedy for a breach but instead will
be in addition to all other rights and remedies available to the Company or any
Affiliate.

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(c)Each of the covenants in this Attachment II will be construed as an agreement
independent of any other provision in this Attachment II, and the existence of
any claim or cause of action of Employee against the Company or any Affiliate,
whether predicated on this Attachment II or otherwise, will not constitute a
defense to the enforcement by the Company or any Affiliate of such covenants or
provisions.

(d)Employee acknowledges that the remedies contained in the Attachment II for
violation of this Attachment II are not the exclusive remedies that the Company
or an Affiliate may pursue.

9.Waiver.  Waiver of any term of this Attachment II by the Company will not
operate as a waiver of any other term of this Attachment II. A failure to
enforce any provision of this Attachment II will not operate as a waiver of the
Company’s right to enforce any other provision of this Attachment II.

10.Miscellaneous.  

(a)Employee represents and warrants that Employee is not a party to any other
agreement that will interfere with Employee’s full compliance with this
Attachment II or that otherwise may restrict Employee’s employment by the
Company or its Affiliates or the performance of Employee’s duties for the
Company or its Affiliates. Employee agrees not to enter into any agreement,
whether oral or written, in conflict with this Attachment II.  

(b)This Attachment II may be enforced by, will inure to the benefit of, and be
binding upon the Company, its successors, and assigns. This Agreement will also
inure to the benefit of, and may be enforced by, the Company’s Affiliates. This
Attachment II is binding upon Employee’s heirs and legal representatives.

(c)Nothing in this Attachment II prohibits Employee from reporting possible
violation of federal law or regulation to any governmental agency or entity, or
making disclosures that are protected under a “whistleblower” provision of
federal law or regulation.

(d)If Employee is employed by an Affiliate of the Company or by accepting a
transfer to an Affiliate of the Company, Employee agrees to the automatic
application of all of the terms of this Attachment II to said Affiliate
contemporaneously with the acceptance of such transfer, subject to subsequent
agreements, if any, executed by Employee and the Affiliate of the Company or the
Company, and to the fullest extent allowed by law.

(e)Should any portion of this Attachment II be held invalid, unenforceable, or
void, such holding will not have the effect of invalidating or voiding the other
portions of this Attachment II. The parties hereby agree that any portion held
to be invalid, unenforceable, or void will be deemed amended, reduced in scope
or deleted to the extent required to be valid and enforceable in the
jurisdiction of such holding. The parties agree that, upon a judicial finding of
invalidity, unenforceability, or void, the court so finding may reform the
agreement to the extent necessary for enforceability, and enter an order
enforcing the reformed Attachment II. No court ordered reformation or amendment
will give rise to a finding of knowing, willful, or bad faith unreasonableness
against the Company regarding this Attachment II.

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(f)The terms and conditions of this Attachment II supersedes any previous
agreement, oral or written, between Employee and the Company relating to the
subject matter thereof[; provided, however, that nothing herein will limit
Employee’s obligations to the Company or any Affiliate under any prior agreement
containing restrictions related to intellectual property, confidential
information, solicitation or competition.]1

 

1 

NTD: Consider whether we want to supersede agreements signed at commencement of
employment regarding invention assignment, confidentiality, etc.

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