Exhibit 10.2

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is entered into by John M. Vecchio (“Employee”) and Diamond Offshore Management Company and its parent, subsidiaries and affiliated companies (collectively the “Company”).

WHEREAS, Employee and Company entered into that certain Employment Agreement dated December 15, 2006 (“Employment Agreement”); and

WHEREAS, Employee’s employment with the Company shall terminate effective on April 30, 2015;

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations contained herein, Employee and Company agree as follows:

1. Separation of Employment. Employee’s employment with the Company shall end at the close of business on April 30, 2015 (“Separation Date”). Employee shall resign all officer positions with the Company at or before the Separation Date.

2. Benefits. Subject to any applicable requirements of Section 17 below, the Company shall pay or provide Employee the following:

3. Full General Release. Employee makes the following promises, commitments and representations to the Company in consideration for the Company’s execution of this Agreement and the performance of its terms and conditions:

Employee, on behalf of himself and his spouse, family members, heirs, successors, and assigns, hereby voluntarily, irrevocably, and unconditionally releases and forever discharges the Released Parties (defined below), individually and collectively, from any and all claims, complaints, demands, liabilities, or causes of action, of whatever kind or character, whether known or unknown or whether in law or in equity, which he now has or ever had against any of the Released Parties, in their individual, corporate of official capacities, including: (i) those claims arising out of or in any way connected with his employment by the Company and/or the Separation of that employment, (ii) those claims arising prior to the date of this Agreement, regardless of whether such claims relate to Employee’s employment by the Company, and (iii) those claims arising out of or in any way connected with any employment relationship that he now has or ever had with any of the other Released Parties and/or the Separation of any such employment relationship. Without limiting the generality of the foregoing, the claims being released by Employee include the following: any claim against any of the Released Parties under the Civil Rights Act of 1866, the Civil Rights Act of 1871, the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Worker Adjustment and Retraining Notification Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, the Fair Labor Standards Act, the Texas Labor Code, any other federal, state or local statute, regulation, ordinance, law, or common law relating to employment or employment discrimination, any alleged violation of any federal, state or local statutes, ordinances or common laws, tortious or contractual wrongful discharge or conduct, fraud, negligence, gross negligence, breach of express or implied contract, vicarious liability for the torts of others. breach of the covenant of good faith and fair dealing, violation of public policy, tortious interference with contract or prospective business relations, intentional or negligent infliction of emotional distress, fraud or misrepresentation, battery or assault, invasion of privacy, failure to pay wages, stock awards, bonuses, commissions, incentive pay, benefits, vacation pay, profit sharing, severance or other compensation of any sort, and harassment, retaliation or discrimination on the basis of race, color, national original, religion, sex, sexual preference/orientation, age, handicap or disability.

This Release is not intended to apply to any pension or insured benefits, or any other equity grant for which Employee is eligible, pursuant to the terms of any employee benefit plan or stock/share option plan in which Employee is, or has been, a participant. The claims released in this Section 3 include any that Employee may have or assert against the Released Parties in any jurisdiction whatsoever.

By signing this Agreement, it is Employee’s intent to waive and release all claims and potential claims against the Released Parties, save and except a claim for unemployment benefits or any other claim that Employee cannot waive or release as a matter of law. In the unlikely event that a claim or potential claim (save and except a claim that cannot be waived or released) has been omitted from this Release, Employee hereby assigns and conveys said claims and potential claims to the Company in exchange for the Company’s obligations in this Agreement.

4. No Admission of Wrongdoing. The existence and execution of this Agreement shall not be considered as an admission of any wrongdoing liability, violation, error, or omission by Employee or the Company.

5. Knowing and Voluntary Agreement. Employee acknowledges and agrees that:

6. Effective Date. Employee has seven (7) days following his execution of this Agreement to revoke this Agreement. This Agreement will not become effective or enforceable until the seven (7) day revocation period has expired (the “Effective Date”). In the event that Employee exercises the right to revoke this Agreement, neither the Company nor Employee will have any obligations under this Agreement. If Employee chooses to revoke this Agreement, he must do so in writing addressed and delivered by email to Aaron Sobel at asobel@dodi.com and by certified mail, return receipt requested to him at the Company’s corporate address in Houston, Texas.

7. Released Parties. As used in this Agreement, the term “Released Parties” means Diamond Offshore Management Company, Diamond Offshore Drilling, Inc. and its/their past and present parent, subsidiary and affiliate companies and its and their respective: (i) predecessors and successors; and (ii) past and present employees, owners, partners, shareholders, members, directors, officers, attorneys, assigns, agents, and representatives, both individually and in their official capacities.

8. Return of Property. Employee represents that on or before the Separation Date, he shall return all Company property and documents (including copies of any documents) in his possession or control, including any building keys, laptop computer, personal digital assistant, telephone calling card(s), credit card(s), forms, files, manuals, correspondence, memoranda, notes, e-mail, plans, business records, reports, financial data or records, personnel data, contracts, contract information, training materials,

product mix or recipes, lists of employees, salary and benefits information (except relating to Employee), lists of suppliers and vendors, brochures, catalogs, computer tapes and diskettes or other portable media, computer-readable files and data stored on any hard drive anywhere or other installed or portable device, passwords, data processing reports, reports or recordings in any electronic or physical format, and any and all other documents or property which Employee has obtained pursuant to or by virtue of his employment with the Company. Notwithstanding the foregoing, the Company agrees that Employee shall be entitled to: (1) keep his cell phone and current cell phone number and (2) retain personal mementos. Employee will take reasonable steps to return all paper files and delete all electronic files containing non-public Company documents, but the Company acknowledges that, given Employee’s tenure with the Company, Employee might later discover documents or data at his residence and/or on his personal computer(s), which he agrees not to use for any purpose and to immediately destroy or delete.

9. Nondisparagement.

10. Cooperation/Transition.

11. Confidential Information. Employee agrees that, unless otherwise required by law, Employee will forever keep secret and inviolate all Confidential Information which has come into Employee’s possession, and Employee will not use the same for Employee’s own private benefit, or directly or indirectly for the benefit of others, and Employee will not disclose such Confidential Information to any other person. If Employee is legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, Employee shall provide the Company with prompt prior written notice of such legal requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the terms of this Section 11. In any event, Employee may furnish only that portion of the Confidential Information which Employee is advised by legal counsel is required, and Employee shall exercise Employee’s best efforts to obtain an order or assurance that confidential treatment will be accorded such Confidential Information that is disclosed. For purposes of this Agreement, all confidential or proprietary information concerning the business and affairs of the Company, including all trade secrets, knowhow and other information generally retained on a confidential basis by the Company concerning its products, methods, know-how, techniques, systems, software codes and specifications, formulae, inventions and discoveries, business plans, pricing, product plans and the identities of and the nature of the Company’s dealings with its employees, suppliers and customers, whether or not such information shall, in whole or in part, be subject to or capable of being protected by patent, copyright or trademark laws, shall constitute “Confidential Information.” Notwithstanding anything contained herein which may be to the contrary, the term “Confidential Information” does not include any information which is excluded or excepted from the Employee’s obligations in Article 4.6 of the Employment Agreement. Consultant will not disclose to any person (other than his tax, legal and financial advisers who have a need to know) the terms of this Agreement without the prior written consent of the Company.

12. Agreement Not to Solicit Employees/Former Employees. Employee acknowledges and re-affirms his agreement in Article 4.7 of his Employment Agreement that for a period of two (2) years after his Separation Date, Employee shall not, directly or knowingly indirectly, either as an executive, employer, independent contractor, consultant, agent, principal, partner, stockholder, officer, director, or in any other individual or representative capacity, either for his own benefit or the benefit of any other person or entity: (a) solicit, recruit, induce, entice, encourage or in any way cause any officer, or manager reporting to such officer, holding such position at the time Employee ceases to be an employee of Company and who is or was an employee of Company (or affiliate) within the six (6) months prior to Employee’s Separation of employment with Company or thereafter to terminate his/her employment with Company (or such affiliate); or (b) directly solicit for hire, directly entice for hire, hire, or directly recruit any officer, or manager reporting to such officer, toolpusher, rig superintendent or offshore installation manager (OIM) holding such position at the time Employee ceases to be an employee of Company and who is or was an employee of Company within the six (6) months prior to Employee’s separation of employment with Company or thereafter.

13. Agreement Not to Compete. Employee covenants and agrees that for a period of one (1) year after his Separation Date, Employee shall not, individually or jointly with others, directly or indirectly, perform services for, prepare or take steps to prepare to perform services for, or otherwise have any involvement with, in each case, whether as an officer, director, partner, consultant, security holder, owner, employee, independent contractor or otherwise, any entity that competes (whether directly or indirectly) with the Company or its Subsidiaries in the Business (as hereinafter defined) in the world as of the date of the Separation Date (any such entity, a “Competitor”); provided, however, that Employee may in any event own up to a 2% passive ownership interest in any public entity or through a private, non-operating investment vehicle and may become employed by or otherwise affiliated with a Competitor if Employee works in a business unit thereof that does not compete with the Company or any Subsidiary in connection with the Business and Employee does not communicate about the Business with any employee in a business unit of such Competitor that does so compete with the Company or any of its Subsidiaries. For purposes hereof, the term “Business” shall mean the offshore oil and gas drilling business. Upon the written request of Employee, the Company’s President will reasonably determine whether a business or other entity constitutes a “Competitor” for purposes of this Section 13; provided that the President may require Employee to provide such information as the Company reasonably determines to be necessary to make such determination; and provided, further that the current and continuing effectiveness of such determination may be conditioned upon the accuracy of such information, and upon such other factors as the Company may reasonably determine.

14. Breach Causing Irreparable Harm. The terms of this Agreement are contractual and not merely recitals. Employee agrees that a breach by Employee of Sections 11, 12 or 13 of this Agreement will result in irreparable harm to the Company, and as such, upon such breach, without limiting the Company’s right to seek injunctive relief allowed by law in a court of competent jurisdiction, the Company may pursue a claim against Employee for any damages suffered by Company as a result of such breach. Employee’s agreements in Section 12 and 13 shall be extended for the period of time which Employee violates one or more of these agreements and/or during any period during which the Company appeals from an order refusing to enforce any of these agreements or covenants. The tolling or extension period shall not exceed twelve (12) months under any circumstances.

15. Reliance; Complete Agreement; Modification. Employee and the Company acknowledge that in executing this Agreement they have not relied on any statements, promises or representations made by the other party except as specifically memorialized in this Agreement. This Agreement constitutes the complete agreement of the parties on or in any way related to the subject matter addressed herein. The parties further agree that this Agreement supersedes the Employment Agreement unless otherwise stated herein. Additionally, Article 5.11 of the Employment Agreement is incorporated by reference into this Agreement only insofar as it prohibits employee from seeking employment with the Company in the future. This Agreement cannot be modified or rescinded except upon the written consent of both Employee and the Company.

16. Severability. If any provision of this Agreement is held to be unenforceable, such provision shall be considered to be distinct and severable from the other provisions of this Agreement, and such unenforceability shall not affect the validity and enforceability of the remaining provisions. If any provision of this Agreement is held to be unenforceable as written but may be made enforceable by limitation, then such provision shall be enforceable to the maximum extent permitted by applicable law. No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

17. Governing Law; Venue; Jury Waiver. The Company and Employee agree that the law of Texas, without regard to conflicts of law principles, shall exclusively govern any disputes between the parties, including the validity, interpretation, and effect of this Agreement, as well as any other disputes arising out of or relating to the employment of Employee by the Company. In the event of any dispute between them, including any disputes arising out of this Agreement, Employee’s employment with the Company, and work for the Company, the parties agree to exclusive, mandatory and sole jurisdiction and venue in Houston, Texas. The parties agree and consent to have all such disputes resolved by a judge in the courts of Harris County, Texas. The Company and Employee hereby consent to the exclusive jurisdiction and venue there. The Parties hereby waive all challenges to personal jurisdiction and venue of such courts, including the claim or defense that such courts or locale constitute an inconvenient forum. The parties agree that any disputes between them shall be adjudicated by a judge and, therefore, the parties waive a trial by jury.

18. Code Section 409A.

All payments considered nonqualified deferred compensation under Section 409A and the regulations thereunder will be made on the date(s) provided herein and no request to accelerate or defer any payment under this Section will be considered or approved for any reason whatsoever, except as permitted under Section 409A. Notwithstanding the foregoing, amounts payable hereunder which are not nonqualified deferred compensation, or which may be accelerated pursuant to Section 409A, such as distributions for applicable tax payments, may be accelerated, but not deferred, at the sole discretion of Company.

To the extent required to comply with Section 409A, all references in this Agreement to Separation of employment or Separation mean Employee’s “separation from service” as that term is defined in Section 1.409A-1(h) of the Treasury Regulations.

Each of the undersigned acknowledges that he/it (a) has read and fully understands all the terms and conditions of this Agreement, (b) has had sufficient time to consider this Agreement and to consult about it with an attorney, and (c) is signing it knowingly, voluntarily and willingly. This Agreement is effective once signed by all the parties and can be executed in multiple identical counterparts and via email and fax. Unless the context expressly requires otherwise, when used in this Agreement, the words “includes” and “including” are not limiting and shall be interpreted as if the phrase “without limitation” immediately followed any such word.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date specified below.