McDermott International has announced the resignation of CFO Stuart Spence, effectively immediately. Chris Krummel, currently the Chief Accounting Officer, has been promoted to the CFO position.
It’s been approximately two weeks since the company announced that it had obtained $1.7 billion in additional financing (at 12% interest rates) to tackle its liquidity crisis. In the same press release, the company also announced that the senior management were granted retention bonuses. Mr Spence was granted $1.3 million, with a third of that payable immediately.
McDermott announced third quarter results even worse than forecast last month in its refinancing presentation. Free cash flow for the quarter was a negative $146 million compared with negative $86 million in the presentation.
The SEC filing by the company makes no mention of the severance package, if any, that would be granted to Mr Spence. If he has truly resigned voluntarily he would be required to repay the retention bonus already paid out.
Interestingly, the company has signed contracts with the senior executives that only spell out severance payments in the event of a change in control. There is no formal provision for severance in the event of an involuntary termination without cause. When the predecessor to Mr Spence left in 2014 he received a lump sum payment of $640,000. His salary at the time was $515,000.
Mr Krummel joined the company in October 2016. He was previously the Chief Accounting Officer of Cameron International. No compensation was disclosed for Mr Krummel.
[Update 11-13-19 : McDermott has filed another 8-K. Mr Spence will receive a severance of $866,666.67. That’s the balance of the $1.3 million retention bonus not already paid out. His restricted stock units will also vest. They are valued at less than $100,000 with the stock price currently at 67 cents. His deferred consideration will also fully vest (worth approx $70,000).
Mr Krummel will be paid $600,000 a year.]