Transocean Proxy Statement and 2010 Annual Report

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TRANSOCEAN LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued Note 17—Share-Based Compensation Plans Overview—We have (i) a long-term incentive plan (the “Long-Term Incentive Plan”) for executives, key employees and outside directors under which awards can be granted in the form of stock options, restricted shares, deferred units, SARs and cash performance awards and (ii) other incentive plans under which awards are currently outstanding. Awards that may be granted under the Long-Term Incentive Plan include traditional time-vesting awards (“time-based awards”) and awards that are earned based on the achievement of certain performance criteria (“performance-based awards”) or market factors (“market-based awards”). Our executive compensation committee of our board of directors determines the terms and conditions of the awards granted under the Long-Term Incentive Plan. As of December 31, 2010, we had 36 million shares authorized and 16 million shares available to be granted under the Long-Term Incentive Plan. Time-based awards typically vest either in three equal annual installments beginning on the first anniversary date of the grant or in an aggregate installment at the end of the stated vesting period. Performance-based and market-based awards are typically awarded subject to either a two-year or a three-year measurement period during which the number of options, shares or deferred units remains uncertain. At the end of the measurement period, the awarded number of options, shares or deferred units is determined (the “determination date”) subject to the stated vesting period. The two-year awards generally vest in three equal installments beginning on the determination date and on January 1 of each of the two subsequent years. The three-year awards generally vest in one aggregate installment following the determination date. Once vested, options and SARs generally have a 10-year term during which they are exercisable. In connection with the Redomestication Transaction, we adopted and assumed the Long-Term Incentive Plan and other employee benefit plans and arrangements of Transocean Inc., and those plans and arrangements were amended as necessary to give effect to the Redomestication Transaction, including to provide (1) that our shares will be issued, held, available or used to measure benefits as appropriate under the plans and arrangements, in lieu of Transocean Inc. ordinary shares, including upon exercise of any options or SARs issued under those plans and arrangements; and (2) for the appropriate substitution of us for Transocean Inc. in those plans and arrangements. Additionally, we issued 16 million of our shares to Transocean Inc., 13 million of which remained available as of December 31, 2010, for future use to satisfy our obligations to deliver shares in connection with awards granted under incentive plans, warrants or other rights to acquire our shares (see Note 16—Shareholders’ Equity). As of December 31, 2010, total unrecognized compensation costs related to all unvested share-based awards totaled $99 million, which is expected to be recognized over a weighted-average period of 1.8 years. During the years ended December 31, 2010 and 2009, we recognized additional share-based compensation expense of $12 million and $8 million, respectively, in connection with modifications of share-based awards. During the year ended December 31, 2008, we did not recognize a significant amount of additional share-based compensation expense in connection with modifications of share-based awards. Option valuation assumptions—We estimated the fair value of each option award under the Long-Term Incentive Plan on the grant date using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions: Years ended December 31, 2010 2009 2008 Dividend yield 4% — — Expected price volatility 39% 49% 36% Risk-free interest rate 2.30% 1.80% 3.00% Expected life of options 4.7 years 4.8 years 4.4 years Weighted-average fair value of options granted $ 30.03 $ 26.07 $ 49.32 We estimated the fair value of each option grant under the Employee Stock Purchase Plan (“ESPP”) using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions: Years ended December 31, 2010 (a) 2009 (a) 2008 Dividend yield — — — Expected price volatility — — 31% Risk-free interest rate — — 3.15% Expected life of options — — 1.0 year Weighted-average fair value of options granted ______________________________ (a) As of January 1, 2009, we discontinued offering the ESPP. $ — $ — $ 41.39 AR-110
TRANSOCEAN LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued Time-Based Awards Stock options—The following table summarizes vested and unvested time-based vesting stock option (“time-based options”) activity under our incentive plans during the year ended December 31, 2010: Number of shares under option AR-111 Weighted-average exercise price per share Weighted-average remaining contractual term (years) Aggregate intrinsic value (in millions) Outstanding at January 1, 2010 1,828,655 $ 60.69 4.96 $ 40 Granted 253,288 82.55 Exercised (289,445 ) 42.26 Forfeited (138,815 ) 71.37 Outstanding at December 31, 2010 1,653,683 $ 66.37 5.29 $ 5 Vested and exercisable at December 31, 2010 1,183,283 $ 61.28 3.99 $ 10 The weighted-average grant-date fair value of time-based options granted during the year ended December 31, 2010 was $30.03 per share. The total pretax intrinsic value of time-based options exercised during the year ended December 31, 2010 was $11 million. There were 470,400 unvested time-based options outstanding as of December 31, 2010. There were time-based options to purchase 597,898 and 276,281 shares granted during the years ended December 31, 2009 and 2008, respectively, with weighted-average grant-date fair values of $26.07 and $49.32 per share, respectively. There were 980,105 and 1,066,173 time-based options exercised during the years ended December 31, 2009 and 2008, respectively. The total pretax intrinsic value of time-based options exercised was $43 million and $101 million during the years ended December 31, 2009 and 2008, respectively. There were 656,790 and 273,314 unvested time-based options outstanding as of December 31, 2009 and 2008, respectively. Restricted shares—The following table summarizes unvested share activity for time-based vesting restricted shares (“time-based shares”) granted under our incentive plans during the year ended December 31, 2010: Number of shares Weighted-average grant-date fair value per share Unvested at January 1, 2010 98,386 $ 112.14 Vested (92,573 ) 111.32 Forfeited (1,874 ) 109.97 Unvested at December 31, 2010 3,939 $ 132.32 We did not grant any time-based shares during the years ended December 31, 2010 and 2009. There were 259,057 time-based shares granted during the year ended December 31, 2008. The weighted-average grant-date fair value of time-based shares granted was $126.26 per share for the year ended December 31, 2008. There were 320,782 and 129,979 time-based shares that vested during the years ended December 31, 2009 and 2008, respectively. The total grant-date fair value of time-based shares that vested was $10 million, $39 million and $14 million for the years ended December 31, 2010, 2009 and 2008, respectively. Deferred units—A deferred unit is a unit that is equal to one share but has no voting rights until the underlying shares are issued. The following table summarizes unvested activity for time-based vesting deferred units (“time-based units”) granted under our incentive plans during the year ended December 31, 2010: Number of units Weighted-average grant-date fair value per share Unvested at January 1, 2010 1,455,447 $ 76.58 Granted 1,055,367 76.83 Vested (559,339 ) 81.11 Forfeited (106,691 ) 78.65 Unvested at December 31, 2010 1,844,784 $ 75.23 The total grant-date fair value of the time-based units vested during the year ended December 31, 2010 was $45 million. There were 1,287,893 and 498,216 time-based units granted during the years ended December 31, 2009 and 2008, respectively. The weighted-average grant-date fair value of time-based units granted was $60.53 and $143.85 per share for the years ended December 31, 2009 and 2008, respectively. There were 282,543 and 25,740 time-based units that vested during the years ended
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Transocean Proxy Statement and 2010
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2010 LETTER TO THE SHAREHOLDERS We
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In addition to a focus on meeting o
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Agenda Items INVITATION TO ANNUAL G
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(9) Election of Three New Directors
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We may accept a proxy by any form o
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PROXY STATEMENT FOR ANNUAL GENERAL
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of the dividend reserve from capita
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You may revoke your proxy card at a
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AGENDA ITEM 2. Discharge of the Mem
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AGENDA ITEM 4. Reallocation of Free
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AGENDA ITEM 6. Conditional Agenda I
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Proposal of the Board of Directors
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AGENDA ITEM 8. Reduction of the Max
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Nominees for Director—Class III
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November 2007. Since August 2008, M
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The Board of Directors has conclude
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e disclosed and not whether a parti
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Submit nominations to our Corporate
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The Executive Compensation Committe
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Committee is ‘‘financially lite
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AUDIT COMMITTEE REPORT The Audit Co
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SECURITY OWNERSHIP OF DIRECTORS AND
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As a direct consequence of the Maco
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Executive Compensation Program—Gu
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$100,000. Accordingly, neither Long
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Element Targeted Position Comments
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In February 2010, the Committee rev
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Safety Performance. Our business in
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Timing of the system roll out compr
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total target value for stock option
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Executive Compensation Program—He
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Perquisites and Other Personal Bene
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• a cash severance benefit equal
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Summary Compensation Table EXECUTIV
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(17) In 2010, Mr. Toma’s base pay
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Outstanding Equity Awards at Fiscal
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Option Exercises and Shares Vested
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offset to allow for the fact that h
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Contributions are based on a partic
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(3) The terms and conditions of the
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(1) Based on the target (100%) payo
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Mr. Newman Mr. Rosa Mr. Brown Mr. B
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AGENDA ITEM 10 Appointment of Ernst
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Proposal AGENDA ITEM 11. Advisory V
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OTHER MATTERS Compensation Committe
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Annexes P-81
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(2) Shareholders may, upon the term
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3 Der Verwaltungsrat ist ermächtig
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Annex C Amended Article 22 of the A
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TRANSOCEAN LTD. AND SUBSIDIARIES IN
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Item 1. Business PART I Overview Tr
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Jackup rigs are mobile self-elevati
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Midwater Floaters The following tab
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Markets Our operations are geograph
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Integrated Services From time to ti
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Item 1A. Risk Factors Risks related
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Our business depends on the level o
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events” above. Our inability to r
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The application of the Working Time
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We are subject to litigation that,
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these tests, “passive income” i
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Item 2. Properties The description
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LDEQ would not rescind the enforcem
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Patent litigation—In 2007, severa
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Executive Officers of the Registran
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PART II Item 5. Market for Registra
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the “virtual second trading line
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Item 6. Selected Financial Data The
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payment of $453 million. In connect
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Midwater Floaters—For our Midwate
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Fleet average daily revenue—The f
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services operations and (d) approxi
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Depreciation, depletion and amortiz
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AR-49 Years ended December 31, 2010
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During the year ended December 31,
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applicable margin, ranging from 3.1
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Contractual obligations—As of Dec
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Plan assets—We review our investm
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Page 165 and 166: such U.S. business. In November 200
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Page 171 and 172: in partial exposure to foreign exch
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Page 227 and 228: (3) Exhibits The following exhibits
Page 229 and 230: 4.26 Third Supplemental Indenture,
Page 231 and 232: * 10.36 GlobalSantaFe Corporation 2
Page 233 and 234: SIGNATURES Pursuant to the requirem
Page 235: TRANSOCEAN LTD. STATUTORY FINANCIAL
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Page 240 and 241: Note 1—General TRANSOCEAN LTD. NO
Page 242 and 243: TRANSOCEAN LTD. NOTES TO STATUTORY
Page 244 and 245: Note 7—Board of Directors Compens
Page 250 and 251: As of December 31, 2009 Name TRANSO
Page 252 and 253: As of December 31, 2009 TRANSOCEAN
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3. Board of Directors 3.1/ The memb
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Corporation during 1994 and 1995 an
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� Members of Executive Management
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Long-Term Incentive Plan The annual
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Pension Benefits for Fiscal Year 20
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Our Articles of Association further
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7. Mandatory Offer Requirement / Ch
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Annex 1 Subsidiaries of Transocean
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Name Jurisdiction Registered Office
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Name Jurisdiction Registered Office
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Board Of Directors Robert E. Rose C
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Transocean Proxy Statement and 2010 Annual Report

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