LONG-TERM INCENTIVE PLAN
 
                                       OF
 
                                 TRANSOCEAN INC.
 
             (As Amended and Restated Effective February 12, 2004)
 
                                   I. GENERAL
 
1.1      PURPOSE OF THE PLAN
 
         The Long-Term Incentive Plan (the "Plan") of Transocean Inc., a Cayman
Islands exempted company (the "Company"), is intended to advance the best
interests of the Company and its subsidiaries by providing Directors and
employees with additional incentives through the grant of options ("Options") to
purchase ordinary shares, par value US $0.01 per share of the Company ("Ordinary
Shares"), share appreciation rights ("SARs"), restricted Ordinary Shares
("Restricted Shares"), deferred stock units ("Deferred Units"), cash performance
awards ("Cash Awards") and performance awards ("Performance Awards"), thereby
increasing the personal stake of such Directors and employees in the continued
success and growth of the Company.
 
1.2      ADMINISTRATION OF THE PLAN
 
         (a)      With respect to awards to employees, the Plan shall be
administered by the Executive Compensation Committee or other designated
committee (the "Committee") of the Board of Directors of the Company (the
"Board"). The Committee shall have authority to interpret conclusively the
provisions of the Plan, to adopt such rules and regulations for carrying out the
Plan as it may deem advisable, to decide conclusively all questions of fact
arising in the application of the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. All decisions and
acts of the Committee, with respect to employees, shall be final and binding
upon all affected Plan participants.
 
         (b)      With respect to awards to Eligible Directors (as defined in
Section 1.3), the Plan shall be administered by the Board. The Board shall have
authority to interpret conclusively the provisions of the Plan, to adopt such
rules and regulations for carrying out the Plan as it may deem advisable, to
decide conclusively all questions of fact arising in the application of the
Plan, and to make all other determinations necessary or advisable for the
administration of the Plan. All decisions and acts of the Board, with respect to
Eligible Directors, shall be final and binding upon all affected Plan
participants.
 
1.3      ELIGIBLE PARTICIPANTS
 
         Employees, including officers, of the Company and its subsidiaries, and
of partnerships or joint ventures in which the Company and its subsidiaries have
a significant ownership interest as determined by the Committee (all of such
subsidiaries, partnerships and joint ventures being referred to as
"Subsidiaries") shall be eligible for awards under the Plan.
 
         Each Director of the Company who is not an officer or employee of the
Company or any of its Subsidiaries (an "Eligible Director") shall be eligible
for awards under the Plan. Notwithstanding the foregoing, any Eligible Director
may decline any such award. Eligible Directors shall not be entitled to receive
awards under Section 2.6 or Article IV.
 
         An employee or Eligible Director to whom an award is granted under the
Plan may be hereinafter referred to as a "Participant."
 
                                       41
<PAGE>
 
1.4      AWARDS UNDER THE PLAN
 
         Awards to eligible employees under the Plan may be in the form of (a)
Options to purchase Ordinary Shares, (b) SARs which may be either freestanding
or issued in tandem with Options, (c) Restricted Shares, (d) Deferred Units, (e)
Supplemental Payments (as defined in Section 2.4) which may be awarded with
respect to Options, SARs, Restricted Shares and Deferred Units, (f) Cash Awards,
(g) Performance Awards, or (h) any combination of the foregoing.
 
         Awards to Eligible Directors under the Plan may be in the form of (a)
Options to purchase Ordinary Shares, (b) SARs which may be either freestanding
or issued in tandem with Options, (c) Restricted Shares, (d) Deferred Units, (e)
Supplemental Payments (as defined in Section 2.4) which may be awarded with
respect to Options, SARs, Restricted Shares and Deferred Units, (f) Performance
Awards, or (g) any combination of the foregoing.
 
1.5      SHARES SUBJECT TO THE PLAN
 
         (a)      The aggregate number of Ordinary Shares which may be issued
with respect to Option and SAR awards (including those designated as Performance
Awards) to employees under the Plan shall not exceed 22,900,000 shares. Of such
22,900,000 shares, the aggregate number of shares which may be issued pursuant
to awards of Restricted Shares and Deferred Units (including those designated as
Performance Awards) granted to employees under the Plan from and after January
31, 2001, shall not exceed 6,000,000 shares. All shares available for awards
under the Plan may be issued pursuant to statutory stock options as described in
Section 2.6. In addition, the aggregate number of Ordinary Shares which may be
issued with respect to awards to Eligible Directors under the Plan shall not
exceed 600,000.
 
         At no time shall the number of shares issued plus the number of shares
estimated by the Committee (or the Board, with respect to Eligible Directors) to
be ultimately issued with respect to outstanding awards under the Plan exceed
the number of shares that may be issued under the Plan. Shares distributed
pursuant to the Plan may consist of authorized but unissued shares or treasury
shares of the Company, as shall be determined from time to time by the Board.
 
         (b)      If any Option under the Plan shall expire, terminate or be
canceled (including cancellation upon the Participant's exercise of a related
SAR) for any reason without having been exercised in full, or if any Restricted
Shares or Deferred Units shall be forfeited to the Company, the unexercised
Options and forfeited Restricted Shares and Deferred Units shall not count
against the above limit and shall again become available for grants under the
Plan (regardless of whether the Participant received dividends or other economic
benefits with respect to such Options, shares or units). Ordinary Shares equal
in number to the shares surrendered in payment of the option price, and Ordinary
Shares which are withheld or surrendered in order to satisfy federal, state or
local tax liability, shall not count against the above limit and shall again
become available for grants under the Plan of any award other than a statutory
stock option. If the option price per share with respect to any Option granted
under the Plan is satisfied by a payment of cash to the Company by the
Participant or by or for the account of the Participant, the number of Ordinary
Shares equal to the cash payment to the Company divided by the fair market value
of the Ordinary Shares on the payment date shall be added to the number of
shares available for future grants under the Plan of any award other than a
statutory stock option. Ordinary Shares delivered under the Plan as an award or
in settlement of an award issued or made (a) upon the assumption, substitution,
conversion or replacement of outstanding awards under a plan or arrangement of
an entity acquired in a merger or other acquisition or (b) as a post-transaction
grant under such a plan or arrangement of an acquired entity shall not reduce or
be counted against the maximum number of Ordinary Shares available for delivery
under the Plan, to the extent that the exemption for transactions in connection
with mergers or acquisitions from the shareholder approval requirements of the
New York Stock Exchange for equity compensation plans applies. Only the number
of Ordinary Shares actually issued upon the exercise of an SAR or the payment of
a Supplemental Payment shall count against the above limit, and any shares which
were estimated to be used for such purposes and were not in fact so used shall
again become available for grants under the Plan.
 
         (c)      No Participant shall be granted, in any fiscal year, Options,
freestanding SARs, Restricted Shares, or Deferred Units, or any combination of
the foregoing, covering or relating to more than 600,000 Ordinary Shares
(subject to adjustment as provided in Section 6.2). No Participant shall be
granted a Supplemental Payment in any
 
                                       42
<PAGE>
 
fiscal year with respect to more than the number of Ordinary Shares covered by
or relating to Options, freestanding SARs, Restricted Shares, or Deferred Units
granted to such Participant in such fiscal year.
 
         (d)      The Committee may from time to time adopt and observe such
rules and procedures concerning the counting of shares against the Plan maximum
or any sublimit as it may deem appropriate, including rules more restrictive
than those set forth above to the extent necessary to satisfy the requirements
of any national stock exchange on which the Ordinary Shares are listed or any
applicable regulatory requirement.
 
1.6      OTHER COMPENSATION PROGRAMS
 
         The existence and terms of the Plan shall not limit the authority of
the Board in compensating Directors and employees of the Company and its
Subsidiaries in such other forms and amounts, including compensation pursuant to
any other plans as may be currently in effect or adopted in the future, as it
may determine from time to time.
 
                              II. OPTIONS AND SARS
 
2.1      TERMS AND CONDITIONS OF OPTIONS
 
         Subject to the following provisions, all Options granted under the Plan
shall be in such form and shall have such terms and conditions as the Committee,
in its discretion, may from time to time determine.
 
         (a)      Option Price. The option price per share shall not be less
than the fair market value of the Ordinary Shares (as determined by the
Committee) on the date the Option is granted.
 
         (b)      Term of Option. The term of an Option shall not exceed ten
years from the date of grant, except as provided pursuant to Section 2.1(g) with
respect to the death of a Participant. No Option shall be exercised after the
expiration of its term.
 
         (c)      Exercise of Options. Options shall be exercisable at such time
or times and subject to such terms and conditions as the Committee shall specify
in the Option grant. The Committee shall have discretion to, at any time,
declare all or any portion of the Options held by any Participant to be
immediately exercisable. An Option may be exercised in accordance with its terms
as to any or all shares purchasable thereunder.
 
         (d)      Payment for Shares. The Committee may authorize payment for
shares as to which an Option is exercised to be made in cash, in Ordinary Shares
or in such other manner as the Committee in its discretion may provide. The
Committee may provide for procedures to permit the payment for Ordinary Shares
as to which an Option is exercised to be made by use of proceeds to be received
from the sale of Ordinary Shares issuable pursuant to an award under the Plan.
 
         (e)      Nontransferability of Options. No Option or any interest
therein shall be transferable by the Participant other than by will, by the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined in the Code or Title I of the Employee Retirement Income Security Act
("ERISA"), or the rules thereunder. During a Participant's lifetime, all Options
shall be exercisable only by such Participant or by the guardian or legal
representative of the Participant.
 
         (f)      Shareholder Rights. The holder of an Option shall, as such,
have none of the rights of a shareholder.
 
         (g)      Termination of Employment. The Committee shall have discretion
to specify in the Option grant or an amendment thereof, provisions with respect
to the period during which the Option may be exercised following the
Participant's termination of employment. Notwithstanding the foregoing, the
Committee shall not permit any Option to be exercised beyond the term of the
Option established pursuant to Section 2.1(b), except that the Committee may
provide that, notwithstanding such Option term, an Option which is outstanding
on the date of a Participant's death shall remain outstanding and exercisable
for up to one year after the Participant's death.
 
                                       43
<PAGE>
 
         (h)      Change of Control. Notwithstanding the exercisability schedule
governing any Option, upon the occurrence of a Change of Control (as defined in
Section 6.10) all Options outstanding at the time of such Change of Control and
held by a Participant who is an employee of the Company or its Subsidiaries or a
Director of the Company at the time of such Change of Control shall become
immediately exercisable and, unless the Participant agrees otherwise in writing,
shall remain exercisable for the remainder of the Option term.
 
2.2      SARS IN TANDEM WITH OPTIONS
 
         The Committee may, either at the time of grant of an Option or at any
time during the term of the Option, grant tandem SARs with respect to all or any
portion of the Ordinary Shares covered by such Option.
 
         (a)      Exercise of SARs. A tandem SAR may be exercised at any time
the Option to which it relates is then exercisable, but only to the extent the
Option to which it relates is exercisable, and shall be subject to the
conditions applicable to such Option. When a tandem SAR is exercised, the Option
to which it relates shall cease to be exercisable to the extent of the number of
shares with respect to which the tandem SAR is exercised. Similarly, when an
Option is exercised, the tandem SARs relating to the shares covered by such
Option exercise shall terminate. Any tandem SAR which is outstanding on the last
day of the term of the related Option (as determined pursuant to Section 2.1(b))
shall be automatically exercised on such date for cash without any action by the
Participant.
 
         (b)      Appreciation. Upon exercise of a tandem SAR, the Participant
shall receive, for each share with respect to which the tandem SAR is exercised,
an amount (the "Appreciation") equal to the amount by which the fair market
value (as defined below) of an Ordinary Share on the date of exercise of the SAR
exceeds the option price per share of the Option to which the tandem SAR
relates. For purposes of the preceding sentence, the fair market value of an
Ordinary Share shall be the average of the high and low prices of such share as
reported on the consolidated reporting system. The Appreciation shall be payable
in cash, Ordinary Shares, or a combination of both, at the option of the
Committee, and shall be paid within 30 days of the exercise of the tandem SAR.
 
         (c)      Change of Control. Notwithstanding the foregoing, if a tandem
SAR is exercised within 60 days of the occurrence of a Change of Control, (i)
the Appreciation and any Supplemental Payment (as defined in Section 2.4) to
which the Participant is entitled shall be payable solely in cash, and (ii) in
addition to the Appreciation and the Supplemental Payment (if any), the
Participant shall receive, in cash, (1) the amount by which the greater of (a)
the highest market price per Ordinary Share during the 60-day period preceding
exercise of the tandem SAR or (b) the highest price per Ordinary Share (or the
cash-equivalent thereof as determined by the Board) paid by an acquiring person
during the 60-day period preceding a Change of Control, exceeds the fair market
value of an Ordinary Share on the date of exercise of the tandem SAR, plus (2)
if the Participant is entitled to a Supplemental Payment, an additional payment,
calculated under the same formula as used for calculating such Participant's
Supplemental Payment, with respect to the amount referred to in clause (1) of
this sentence.
 
2.3      FREESTANDING SARS
 
         The Committee may grant freestanding SARs in such form and having such
terms and conditions as the Committee, in its discretion, may from time to time
determine, subject to the following provisions.
 
         (a)      Base Price and Appreciation. Each freestanding SAR shall be
granted with a base price, which shall not be less than the fair market value of
the Ordinary Shares (as determined by the Committee) on the date the SAR is
granted. Upon exercise of a freestanding SAR, the Participant shall receive, for
each share with respect to which the SAR is exercised, an amount (the
"Appreciation") equal to the amount by which the fair market value (as defined
below) of an Ordinary Share on the date of exercise of the SAR exceeds the base
price of the SAR. For purposes of the preceding sentence, the fair market value
of an Ordinary Share shall be the average of the high and low prices of such
share as reported on the New York Stock Exchange composite tape. The
Appreciation shall be payable in cash and shall be paid within 30 days of the
exercise of the SAR.
 
         (b)      Term of SAR. The term of a freestanding SAR shall not exceed
ten years from the date of grant, except as provided pursuant to Section 2.3(f)
with respect to the death of the Participant. No SAR shall be exercised
 
                                       44
<PAGE>
 
after the expiration of its term. Any freestanding SAR which is outstanding on
the last day of its term (as such term may be extended pursuant to Section
2.3(f)) and as to which the Appreciation is a positive number on such date shall
be automatically exercised on such date for cash without any action by the
Participant.
 
         (c)      Exercise of SARs. Freestanding SARs shall be exercisable at
such time or times and subject to such terms and conditions as the Committee may
specify in the SAR grant. The Committee shall have discretion to at any time
declare all or any portion of the freestanding SARs then outstanding to be
immediately exercisable. A freestanding SAR may be exercised in accordance with
its terms in whole or in part.
 
         (d)      Nontransferability of SARs. No SAR or any interest therein
shall be transferable by the Participant other than by will, by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of ERISA, or the rules thereunder. During a
Participant's lifetime, all SARs shall be exercisable only by such Participant
or by the guardian or legal representative of the Participant.
 
         (e)      Shareholder Rights. The holder of an SAR shall, as such, have
none of the rights of a shareholder.
 
         (f)      Termination of Employment. The Committee shall have discretion
to specify in the SAR grant or an amendment thereof, provisions with respect to
the period during which the SAR may be exercised following the Participant's
termination of employment. Notwithstanding the foregoing, the Committee shall
not permit any SAR to be exercised beyond the term of the SAR established
pursuant to Section 2.3(b), except that the Committee may provide that,
notwithstanding such SAR term, an SAR which is outstanding on the date of a
Participant's death shall remain outstanding and exercisable for up to one year
after the Participant's death.
 
         (g)      Change of Control. Notwithstanding the exercisability schedule
governing any SAR, upon the occurrence of a Change of Control (as defined in
Section 6.10) all SARs outstanding at the time of such Change of Control and
held by a Participant who is an employee of the Company or its Subsidiaries or a
Director of the Company at the time of such Change of Control shall become
immediately exercisable and, unless the Participant agrees otherwise in writing,
shall remain exercisable for the remainder of the SAR term. In addition, the
Committee may provide that if a freestanding SAR is exercised within 60 days of
the occurrence of a Change of Control, in addition to the Appreciation the
Participant shall receive, in cash, the amount by which the greater of (a) the
highest market price per Ordinary Share during the 60-day period preceding
exercise of the SAR or (b) the highest price per Ordinary Share (or the cash
equivalent thereof as determined by the Board) paid by an acquiring person
during the 60-day period preceding a Change of Control, exceeds the fair market
value of an Ordinary Share on the date of exercise of the SAR.
 
2.4      SUPPLEMENTAL PAYMENT ON EXERCISE OF OPTIONS OR SARS
 
         The Committee, either at the time of grant or at the time of exercise
of any Option or tandem SAR, may provide for a supplemental payment (the
"Supplemental Payment") by the Company to the Participant with respect to the
exercise of any Option or tandem SAR. The Supplemental Payment shall be in the
amount specified by the Committee, which shall not exceed the amount necessary
to pay the income tax payable to the national government with respect to both
exercise of the Option or tandem SAR and receipt of the Supplemental Payment,
assuming the Participant is taxed at the maximum effective income tax rate
applicable thereto. Supplemental Payments shall be paid in cash within 30 days
of the date of exercise of an Option or SAR (or, if later, within 30 days of the
date on which income is recognized for federal income tax purposes with respect
to such exercise).
 
2.5      ELIGIBLE DIRECTOR AWARDS
 
         With respect to Options, SARs and Supplemental Payment awards to
Eligible Directors, the Board shall make all determinations otherwise assigned
to the Committee under Article II and any reference to "employment" shall be
changed to "service."
 
                                       45
<PAGE>
 
2.6      STATUTORY OPTIONS
 
         Subject to the limitations on Option terms set forth in Section 2.1,
the Committee shall have the authority to grant (a) incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and (b) Options containing such terms and conditions as
shall be required to qualify such Options for preferential tax treatment under
the Code as in effect at the time of such grant. Options granted pursuant to
this Section 2.6 may contain such other terms and conditions permitted by
Article II of the Plan as the Committee, in its discretion, may from time to
time determine (including, without limitation, provision for SARs and
Supplemental Payments), to the extent that such terms and conditions do not
cause the Options to lose their preferential tax treatment. To the extent the
Code and regulations promulgated thereunder require a plan to contain specified
provisions in order to qualify options for preferential tax treatment, such
provisions shall be deemed to be stated in the Plan. Eligible Directors shall
not be entitled to receive incentive stock options as defined in Section 422 of
the Code.
 
                    III. RESTRICTED SHARES AND DEFERRED UNITS
 
3.1      TERMS AND CONDITIONS OF RESTRICTED SHARE AWARDS
 
         Subject to the following provisions, all awards of Restricted Shares
under the Plan shall be in such form and shall have such terms and conditions as
the Committee, in its discretion, may from time to time determine.
 
         (a)      A Restricted Share award shall specify the number of
Restricted Shares to be awarded, the price, if any, to be paid by the recipient
of the Restricted Shares, and the date or dates on which the Restricted Shares
will vest. The vesting of Restricted Shares may be conditioned upon the
completion of a specified period of employment with the Company or its
Subsidiaries, upon the attainment of specified performance goals, or upon such
other criteria as the Committee may determine in its sole discretion.
 
         (b)      Notwithstanding the provisions of subsection (a) above, any
Restricted Share award which is a Performance Award shall not vest earlier than
the first anniversary of the initial date of such award, provided that the
Committee may provide for earlier vesting upon a termination of employment by
reason of death, disability or retirement. Any Restricted Share award which is
not a Performance Award shall not vest earlier than one-third on each of the
first three anniversaries of the date of grant of such award, provided that (i)
the Committee may provide for earlier vesting upon termination of employment by
reason of death, disability or retirement and (ii) such restriction on vesting
shall not apply to a Restricted Share award that is granted in lieu of salary or
bonus. Notwithstanding the foregoing, a Restricted Share award shall fully vest
upon a Change of Control of the Company (as defined in Section 6.10).
 
         (c)      Share certificates representing the Restricted Shares granted
to a Participant shall be registered in the Participant's name. Such
certificates shall either be held by the Company on behalf of the Participant,
or delivered to the Participant bearing a legend to restrict transfer of the
certificate until the Restricted Shares have vested, as determined by the
Committee. The Committee shall determine whether the Participant shall have the
right to vote and/or receive dividends on the Restricted Shares before they have
vested. No Restricted Shares may be sold, transferred, assigned, or pledged by
the Participant until they have vested in accordance with the terms of the
Restricted Share award. In the event of a Participant's termination of
employment before all of his Restricted Shares have vested, or in the event
other conditions to the vesting of Restricted Shares have not been satisfied
prior to any deadline for the satisfaction of such conditions set forth in the
award, the Restricted Shares which have not vested shall be forfeited and any
purchase price paid by the Participant shall be returned to the Participant. At
the time Restricted Shares vest (and, if the Participant has been issued
legended certificates of Restricted Shares, upon the return of such certificates
to the Company), a certificate for such vested shares shall be delivered to the
Participant (or the Beneficiary designated by such Participant in the event of
death), free of all restrictions.
 
                                       46
<PAGE>
 
3.2      TERMS AND CONDITIONS OF DEFERRED UNITS
 
         (a)      A "Deferred Unit" is a unit that is equal to one Ordinary
Share which is used to measure the benefits payable to a Participant under a
Deferred Unit award. Each Deferred Unit award shall be subject to such terms and
conditions as the Committee, in its discretion, may from time to time determine.
 
         (b)      The Deferred Unit award shall specify the number of Deferred
Units awarded, the price, if any, to be paid by the recipient of the Deferred
Units and the date or dates on which the Deferred Units will vest. The vesting
of Deferred Units may be conditioned upon the completion of a specified period
of employment with the Company or its Subsidiaries, upon the attainment of
specified performance goals, or upon such other criteria as the Committee may
determine in its sole discretion.
 
         (c)      Notwithstanding the provisions of subsection (b) above, any
Deferred Unit award which is a Performance Award shall not vest earlier than the
first anniversary of the initial date of such award, provided that the Committee
may provide for earlier vesting upon a termination of employment by reason of
death, disability or retirement. Any Deferred Unit award which is not a
Performance Award shall not vest earlier than one-third on each of the first
three anniversaries of the date of grant of such award, provided that (i) the
Committee may provide for earlier vesting upon termination of employment by
reason of death, disability or retirement and (ii) such restriction on vesting
shall not apply to a Deferred Unit award that is granted in lieu of salary or
bonus. Notwithstanding the foregoing, a Deferred Unit Award shall fully vest
upon a Change of Control of the Company (as defined in Section 6.10).
 
         (d)      The Company shall set up an appropriate record (the "Deferred
Unit Ledger") that shall from time to time reflect the name of each Participant,
the number of Deferred Units awarded to him and the date or dates on which the
Deferred Units will vest.
 
         (e)      The Committee shall determine whether the Participant shall
have the right to receive dividends on the Deferred Units before they have
vested. In such cases, it is intended that the amount of the payment shall be
equal to the dividend that the Participant would have received had he been the
owner of a number of Ordinary Shares equal to the number of Deferred Units
credited to him in the Deferred Unit Ledger as of the dividend record date.
Notwithstanding the foregoing, no amount shall be paid to a Participant with
respect to Deferred Units held by such Participant on a dividend record date but
forfeited by him prior to the dividend payment date. No Ordinary Shares subject
to a Deferred Unit award may be sold, transferred, assigned or pledged by the
Participant until the Deferred Units have vested in accordance with the terms of
the Deferred Unit award. In the event of a Participant's termination of
employment before all of his Deferred Units have vested, or in the event other
conditions to the vesting of the Deferred Units have not been satisfied prior to
any deadline for the satisfaction of such conditions set forth in the award, the
Deferred Units which have not vested shall be forfeited and any purchase price
paid by the Participant shall be returned to such Participant.
 
         (f)      Upon the vesting of the Deferred Units, as determined by the
Committee in accordance with this Section 3.2, a certificate for the number of
Ordinary Shares equal to the number of vested Deferred Units held by the
Participant shall be delivered to such Participant (or the Beneficiary
designated by such Participant in the event of death), free of all restrictions.
 
3.3      SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED SHARES AND DEFERRED UNITS
 
         The Committee, either at the time of grant or at the time of vesting of
Restricted Stock or Deferred Units, may provide for a Supplemental Payment by
the Company to the Participant in an amount specified by the Committee which
shall not exceed the amount necessary to pay the federal income tax payable with
respect to both the vesting of the Restricted Shares or Deferred Units and
receipt of the Supplemental Payment, assuming the Participant is taxed at the
maximum effective federal income tax rate applicable thereto and has not elected
to recognize income with respect to the Restricted Shares or Deferred Units
before the date such Restricted Shares or Deferred Units vest. The Supplemental
Payment shall be paid within 30 days of each date that the Restricted Shares or
Deferred Units vest. Supplemental Payments shall be paid in cash.
 
                                       47
<PAGE>
 
3.4      ELIGIBLE DIRECTOR AWARDS
 
         With respect to Restricted Shares, Deferred Units and Supplemental
Payment awards to Eligible Directors, the Board shall make all determinations
otherwise assigned to the Committee under this Article III and any reference to
"employment" shall be changed to "service." In addition, with respect to
Eligible Directors, clause (i) of Section 3.1(b) and 3.2(c) shall include a
termination of service for the convenience of the Company (as determined by the
Board).
 
                                 IV. CASH AWARDS
 
         A "Cash Award" is a cash bonus paid solely on account of the attainment
of one or more objective performance goals that have been preestablished by the
Committee. Each Cash Award shall be subject to such terms and conditions,
restrictions and contingencies, if any, as the Committee shall determine.
Restrictions and contingencies limiting the right to receive a cash payment
pursuant to a Cash Award shall be based on the achievement of single or multiple
performance goals over a performance period established by the Committee. No
employee shall receive payment for Cash Awards during any calendar year
aggregating in excess of $2 million. Eligible Directors shall not be entitled to
receive Cash Awards under this Plan.
 
                              V. PERFORMANCE AWARDS
 
5.1      TERMS AND CONDITIONS OF PERFORMANCE AWARDS
 
         The Committee shall have the right to designate any Option, SAR,
Supplemental Payment, Restricted Share award, Deferred Unit award or Cash Award
as a Performance Award. The grant or vesting of a Performance Award shall be
subject to the achievement of performance objectives (the "Performance
Objectives") established by the Committee based on one or more of the following
business criteria that apply to the employee, one or more business units or
divisions of the Company or the applicable sector, or the Company as a whole,
and if so desired by the Committee, by comparison with a peer group of
companies: increased revenue; net income measures (including but not limited to
income after capital costs and income before or after taxes); Ordinary Share
price measures (including but not limited to growth measures and total
shareholder return); price per Ordinary Share; market share; earnings per share
(actual or targeted growth); earnings before interest, taxes, depreciation, and
amortization ("EBITDA"); economic value added (or an equivalent metric); market
value added; debt to equity ratio; cash flow measures (including but not limited
to cash flow return on capital, cash flow return on tangible capital, net cash
flow and net cash flow before financing activities); return measures (including
but not limited to return on equity, return on average assets, return on
capital, risk-adjusted return on capital, return on investors' capital and
return on average equity); operating measures (including operating income, funds
from operations, cash from operations, after-tax operating income; sales
volumes, production volumes and production efficiency); expense measures
(including but not limited to overhead cost and general and administrative
expense); margins; shareholder value; total shareholder return; proceeds from
dispositions; total market value and corporate values measures (including ethics
compliance, environmental, and safety). Unless otherwise stated, such a
Performance Objective need not be based upon an increase or positive result
under a particular business criterion and could include, for example,
maintaining the status quo or limiting economic losses (measured, in each case,
by reference to specific business criteria).
 
         The Committee shall have the authority to determine whether the
Performance Objectives and other terms and conditions of the award are
satisfied, and the Committee's determination as to the achievement of
Performance Objectives relating to a Performance Award shall be made in writing.
Notwithstanding the foregoing provisions, if the Committee intends for a
Performance Award to be granted and administered in a manner designed to
preserve the deductibility of the compensation resulting from such award in
accordance with Section 162(m) of the Code, then the Performance Objectives for
such particular Performance Award relative to the particular period of service
to which the Performance Objectives relate shall be established by the Committee
in writing (a) no later than 90 days after the beginning of such period and (b)
prior to the completion of 25% of such period. The Committee shall have no
discretion to modify or waive the Performance Objectives or conditions to the
grant or vesting of a Performance Award unless such award is not intended to
qualify as qualified performance-based compensation under Section 162(m) of the
Code and the relevant award agreement provides for such discretion.
 
                                       48
<PAGE>
 
                            VI. ADDITIONAL PROVISIONS
 
6.1      GENERAL RESTRICTIONS
 
         Each award under the Plan shall be subject to the requirement that, if
at any time the Committee shall determine that (a) the listing, registration or
qualification of the Ordinary Shares subject or related thereto upon any
securities exchange or under any state or federal law, or (b) the consent or
approval of any government regulatory body, or (c) an agreement by the recipient
of an award with respect to the disposition of Ordinary Shares is necessary or
desirable (in connection with any requirement or interpretation of any federal
or state securities law, rule or regulation) as a condition of, or in connection
with, the granting of such award or the issuance, purchase or delivery of
Ordinary Shares thereunder, such award may not be consummated in whole or in
part unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee.
 
         Notwithstanding the foregoing, with respect to awards to Eligible
Directors, the Board shall have the authority and discretion otherwise assigned
to the Committee under this Section 6.1.
 
6.2      ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
 
         In the event of a scheme of arrangement, reorganization,
recapitalization, Ordinary Share split, Ordinary Share dividend, combination of
shares, rights offer, liquidation, dissolution, merger, consolidation, spin-off,
sale of assets, payment of an extraordinary cash dividend, or any other change
in or affecting the corporate structure or capitalization of the Company, the
Committee (or the Board, with respect to Eligible Directors) shall make
appropriate adjustment in the number and kind of shares authorized by the Plan
(including any limitations on individual awards), in the number, price or kind
of shares covered by the awards and in any outstanding awards under the Plan;
provided, however, that no such adjustment shall increase the aggregate value of
any outstanding award.
 
6.3      AMENDMENTS
 
         (a)      The Board may amend, alter, or discontinue the Plan from time
to time, but no amendment, alteration or discontinuation shall be made which
would impair the rights of a Participant under any award theretofore granted
without the Participant's consent, except such an amendment made to cause the
Plan to comply with applicable law, stock exchange rules or accounting rules. In
addition, no such amendment shall be made without the approval of the Company's
shareholders to the extent such approval is required to satisfy Rule 16b-3 under
the Securities Exchange Act or 1934, as amended (the "Exchange Act") or Section
162(m) of the Code, or required by applicable law, agreement or stock exchange
requirements or if such amendment would:
 
                  (i)      expand the classes of persons to whom awards may be
                           made under Section 1.3 of the Plan;
 
                  (ii)     increase the number of Ordinary Shares authorized for
                           grant under Section 1.5 of the Plan;
 
                  (iii)    increase the number of Ordinary Shares which may be
                           granted pursuant to awards to any one Participant
                           under Section 1.5(c) of the Plan;
 
                  (iv)     increase the number of shares available for
                           Restricted Share or Deferred Unit awards;
 
                  (v)      permit unrestricted Ordinary Shares to be granted
                           other than in lieu of cash payments under other
                           incentive plans and programs of the Company and its
                           Subsidiaries;
 
                  (vi)     allow the creation of additional types of awards;
 
                                       49
<PAGE>
 
                  (vii)    permit shortening the minimum restriction periods
                           with respect to Restricted Share awards, the minimum
                           vesting periods with respect to Deferred Unit awards
                           or removing or waiving Performance Objectives except
                           to the extent permitted under Articles II and III and
                           Section 6.3(c) of the Plan; or
 
                  (viii)   change any of the provisions of this Section 6.3(a).
 
         Subject to the above provisions, the Board shall have the authority to
amend the Plan to take into account changes in law and tax and accounting rules
as well as other developments, and to grant awards which qualify for beneficial
treatment under such rules without shareholder approval.
 
         (b)      The Committee (or the Board, with respect to Eligible
Directors) shall have the authority to amend any grant, prospectively or
retroactively, to include any provision which, at the time of such amendment, is
authorized under the terms of the Plan; however, no such amendment (i) shall
cause a Performance Award intended to qualify for the Section 162(m) exemption
to cease to qualify for the Section 162(m) exemption or (ii) impair the rights
of any Participant without the Participant's written consent except such
amendment made to cause the award to comply with applicable law, stock exchange
rules or accounting rules.
 
         (c)      If a Participant has ceased or will cease to be a Director of
the Company for the convenience of the Company (as determined by the Board), the
Board may amend all or any portion of such Participant's awards so as to make
such awards fully vested and exercisable and/or to specify a schedule upon which
they become vested and exercisable, and/or to permit all or any portion of such
awards to remain exercisable for such period as designated by the Board, but not
beyond the expiration of the term established pursuant to Section 2.1(b) or
2.3(b), whichever is applicable. A Participant shall not participate in any
deliberations or vote by the Board under this Section 6.3(c) with respect to his
awards. The vesting schedule and exercise period for awards established by the
Board pursuant to this Section 6.3(c) shall override the applicable provisions
of Articles II and III to the extent inconsistent therewith.
 
6.4      CANCELLATION OF AWARDS
 
         Any award granted under the Plan may be canceled at any time with the
consent of the Participant and a new award may be granted to such Participant in
lieu thereof, which award may, in the discretion of the Committee, be on more
favorable terms and conditions than the canceled award; provided, however, that
the exercise price or base price of the new award shall not be less than (a) the
original exercise price or base price of the Option or SAR that is relinquished
in connection with the grant of such new award or (b) the then current market
price of the Ordinary Shares on the date of grant of any outstanding Option or
SAR that is relinquished in connection with the grant of such new award.
 
         Notwithstanding the foregoing, with respect to awards to Eligible
Directors, the Board shall have the authority and discretion otherwise assigned
to the Committee under this Section 6.4.
 
6.5      BENEFICIARY
 
         A Participant may file with the Company a written designation of
Beneficiary, on such form as may be prescribed by the Committee (or the Board,
with respect to Eligible Directors), to receive any Options, SARs, Restricted
Shares, Deferred Units, Ordinary Shares, Supplemental Payments or any other
payments that become deliverable to the Participant pursuant to the Plan after
the Participant's death. A Participant may, from time to time, amend or revoke a
designation of Beneficiary. If no designated Beneficiary survives the
Participant, the executor or administrator of the Participant's estate shall be
deemed to be the Participant's Beneficiary.
 
6.6      WITHHOLDING
 
         (a)      Whenever the Company proposes or is required to issue or
transfer Ordinary Shares under the Plan, the Company shall have the right to
require the Participant to remit to the Company an amount sufficient to satisfy
any applicable withholding tax liability prior to the delivery of any
certificate for such shares. Whenever
 
                                       50
<PAGE>
 
under the Plan payments are to be made in cash, such payments shall be net of an
amount sufficient to satisfy any withholding tax liability.
 
         (b)      An employee entitled to receive Ordinary Shares under the Plan
who has not received a cash Supplemental Payment may elect to have the minimum
statutory withholding tax liability (or a specified portion thereof) with
respect to such Ordinary Shares satisfied by having the Company withhold from
the shares otherwise deliverable to the employee Ordinary Shares having a fair
market value equal to the amount of the tax liability to be satisfied with
respect to the Ordinary Shares. An election to have all or a portion of the tax
liability satisfied using Ordinary Shares shall comply with such requirements as
may be imposed by the Committee.
 
6.7      NON-ASSIGNABILITY
 
         Except as expressly provided in the Plan, no award under the Plan shall
be assignable or transferable by the Participant thereof except by will, by the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined in the Code or Title I of ERISA, or the rules thereunder.
During the life of the Participant, awards under the Plan shall be exercisable
only by such Participant or by the guardian or legal representative of such
Participant.
 
6.8      NON-UNIFORM DETERMINATIONS
 
         Determinations by the Committee or the Board under the Plan (including,
without limitation, determinations of the persons to receive awards under the
Plan; the form, amount and timing of such awards; the terms and provisions of
such awards and the agreements evidencing same; and provisions with respect to
termination of employment or service) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards under
the Plan, whether or not such persons are similarly situated.
 
6.9      NO GUARANTEE OF EMPLOYMENT OR DIRECTORSHIP
 
         The grant of an award under the Plan shall not constitute an assurance
of continued employment for any period or any obligation of the Board to
nominate any Director for re-election by the Company's shareholders.
 
6.10     CHANGE OF CONTROL
 
         A "Change of Control" means:
 
         (a)      The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding ordinary shares
of the Company (the "Outstanding Company Ordinary Shares") or (ii) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation or other entity controlled by
the Company or (iv) any acquisition by any corporation or other entity pursuant
to a transaction which complies with clauses (i), (ii) and (iii) of subsection
(c) of this Section 6.10; or
 
         (b)      Individuals who, as of the date hereof, constitute the Board
of the Company (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of the Company; provided, however, that for
purposes of this Section 6.10 any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of the Company; or
 
                                       51
<PAGE>
 
         (c)      Consummation of a scheme of arrangement, reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Ordinary Shares and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding ordinary shares
or shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation or other entity resulting from such Business
Combination (including, without limitation, a corporation or other entity which
as a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Ordinary Shares and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation or other entity resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation or
other entity resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
ordinary shares or shares of common stock of the corporation or other entity
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation or other entity except to
the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the action of the Board of the Company providing
for such Business Combination; or
 
         (d)      Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
 
6.11     DURATION AND TERMINATION
 
         (a)      The Plan was originally effective May 1, 1993. The Plan was
amended and/or  restated effective March 13, 1997, March 12, 1998, January 1,
2000 and May 8, 2003. This amendment and restatement of the Plan was adopted by
the Executive Compensation Committee effective January 1, 2004, subject to the
approval by the holders of a majority of outstanding Ordinary Shares (the
"Majority Shareholders") at the shareholder's meeting to be held on May 13,
2004. If the Majority Shareholders of the Company should fail so to approve this
amendment and restatement of the Plan, then this amendment and restatement shall
be null and void.
 
         (b)      The Board may discontinue or terminate the Plan at any time.
Such action shall not impair any of the rights of a Participant who has an award
outstanding on the date of the Plan's discontinuance or termination without the
Participant's written consent.
 
         (c)      Unless terminated earlier by the Board pursuant to subsection
(b), no awards may be made under the Plan after the tenth (10th) anniversary of
the date on which the Plan is approved by the Majority Shareholders in
accordance with subsection (a) of this Section 6.11.
 
         IN WITNESS WHEREOF, this document has been executed effective as of
February 12, 2004.
 
                                        TRANSOCEAN INC.
 
                                        By: /s/ Eric B. Brown
                                            ------------------------------------
                                            Eric B. Brown
                                            Corporate Secretary
 
                                       52
<PAGE>

--------------------------------------------------------------------------------