Item 10.
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Directors, Executive Officers and Corporate Governance
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The names of our directors
and executive officers, their ages as of April 15, 2014 and certain other information about them are set forth below:
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Name
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Age
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Position Held
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Gary C. Hanna
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56
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Chairman of the Board of Directors, President and Chief Executive Officer
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Tiffany J. Thom
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41
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Executive Vice President, Chief Financial Officer
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David P. Cedro
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46
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Senior Vice President, Chief Accounting Officer and Corporate Secretary
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Chad E. Williams
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46
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Senior Vice President, Production
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Andre J. Broussard
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53
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Senior Vice President, Geosciences
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W. Mac Jensen
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56
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Senior Vice President, Business Development
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Charles O. Buckner
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69
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Director
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Scott A. Griffiths
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59
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Director
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Steven J. Pully
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54
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Director
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William F. Wallace
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74
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Director
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Gary C. Hanna
, age 56, joined the Company in September 2009 as Chief Executive Officer and was named
President and Chief Executive Officer in 2011. He was elected Chairman of the Board in May 2013 and was previously elected as a director in June 2010. He has nearly 30 years of executive experience in the energy sector. From 2008 to 2009,
Mr. Hanna served as President and Chief Executive Officer for Admiral Energy Services, a start-up company focused on the development of offshore energy services. From 1999 to 2007, Mr. Hanna served in various capacities at Tetra
Technologies, Inc., an international oil and gas services production company, including serving as Senior Vice President from 2002 to 2007. Prior to 2002, Mr. Hanna served as President and Chief Executive Officer for Tetras affiliate,
Maritech Resources, Inc., and as President of Tetra Applied Technologies, Inc., another Tetra affiliate. From 1996 to 1998, Mr. Hanna served as the President and Chief Executive Officer for Gulfport Energy Corporation, a public oil and gas
exploration company. From 1995 to 1998, he also served as the Chief Operations Officer for DLB Oil & Gas, Inc., a mid-continent exploration public company. From 1982 to 1995, Mr. Hanna served as President and Chief Executive Officer of
Hanna Oil Properties, Inc., a company engaged in the development of mid-continent oil and gas prospects. On April 6, 2009, Mr. Hanna and an ad hoc committee of the Companys senior unsecured noteholders (the Ad Hoc
Committee) entered into a consulting agreement
2
whereby Mr. Hanna was retained to provide certain advisory services to the Ad Hoc Committee. On June 7, 2009, Mr. Hanna and the Ad Hoc Committees successor-in-interest, the
Official Committee of Unsecured Noteholders (the Noteholders Committee), as the United States Bankruptcy Courts appointed representative of the Companys unsecured noteholders, entered into an amendment to
Mr. Hannas consulting agreement (the Amendment) in which Mr. Hanna and the Noteholders Committee agreed to use a non-binding term sheet attached to the Amendment as the basis for the preparation of an employment agreement
(the Employment Agreement) pursuant to which the Company would hire Mr. Hanna as Chief Executive Officer of the Company upon the Companys exit from its Chapter 11 reorganization. According to the terms of the Amendment, the
Companys hiring of Mr. Hanna as Chief Executive Officer of the Company was subject to the United States Bankruptcy Courts approval of the Companys plan of reorganization and the execution of a definitive Employment Agreement
between the Company and Mr. Hanna. Mr. Hanna and the Company executed the Employment Agreement on October 1, 2009.
Tiffany J. Thom
, age 41, joined the Company as a senior asset management engineer in October 2000, and has since held various positions
with the Company: Director of Corporate Reserves (September 2001 to March 2006), Director of Investor Relations (April 2006 to June 2008) and Vice President, Treasurer and Director of Investor Relations (July 2008 to June 2009). In July 2009, she
was designated as the Companys principal financial officer, and, in September 2009, she was appointed to be a Senior Vice President. Ms. Thom was appointed Chief Financial Officer in June 2010 and was appointed to be Executive Vice
President in January 2014. Prior to joining the Company, Ms. Thom was a senior reservoir engineer with Exxon Production Company and ExxonMobil Company and held operational roles, including reservoir engineering and subsurface completion
engineering, for numerous offshore Gulf of Mexico properties. Ms. Thom holds a B.S. in Engineering from the University of Illinois and an M.B.A. in Management with a concentration in Finance from Tulane University.
David P. Cedro
, age 46, joined the Company in October 2008 as its Vice President, Controller and principal accounting officer. In
September 2009, Mr. Cedro was appointed to be a Senior Vice President of the Company. In June 2010, Mr. Cedro was appointed Chief Accounting Officer. Mr. Cedro served as the Companys Treasurer from 2011 until 2013. In 2012, he
was appointed to the additional position of Corporate Secretary. Immediately prior to joining the Company, he was Corporate Controller for Bayou Steel, LLC, a steel manufacturing company acquired by ArcelorMittal, SA in 2008. From March 2003 to
March 2008, Mr. Cedro held various positions with The Shaw Group Inc., a Fortune 500 public company and global provider of engineering and construction, procurement and construction management services to a broad range of industrial clients:
Vice President Financial Reporting (October 2004 to March 2007, August 2007 to March 2008); Vice President and Chief Financial Officer Power Group (March 2007 to August 2007); and Vice President and Controller Engineering,
Construction and Maintenance Segment (March 2003 to October 2004). Prior to joining The Shaw Group Inc., Mr. Cedro was a Senior Manager with Ernst & Young LLP after serving in Big 4 audit practices from 1992 to 2003. He is a Certified
Public Accountant in the State of Louisiana and holds a B.S. and M.S. in Accounting from the University of New Orleans.
Chad E.
Williams
, age 46, joined the Company in November 2000 as our Production Superintendent. He was promoted to Production Manager in April 2002 and Vice President, Production in July 2008. He is currently serving as Senior Vice President, Production
and is responsible for overseeing all aspects of the Companys field production, construction, and plugging, abandonment and decommissioning activities. Prior to joining the Company, he worked with Chevron USA in positions of increasing
responsibilities ranging from offshore drilling and workover supervisory roles to production and reservoir engineering leadership roles within offshore asset management teams. Mr. Williams holds a B.S. in Petroleum Engineering from Marietta
College, Ohio.
Andre J. Broussard
, age 53, joined the Company in February 2011 as Senior Vice President, Geosciences. Most
recently he was with Probe Resources serving as Vice President, Exploration from March 2008 to February 2011. From April 2006 to October 2007, he served as Hydro GOMs Exploration and Development Manager, GOM Shelf and from October 2007 to
February 2008 he served as Shelf, Technology, and Eastern Gas Manager with StatoilHydro. Mr. Broussard was with Spinnaker Exploration Company from 1997 until April 2006 as an explorationist focused on that companys portfolio in the GOM
shelf. He began his career in 1984 at CNG Producing Company working on a variety of GOM shelf exploration and development projects. Mr. Broussard worked at CNG Producing until he joined Spinnaker Exploration in 1997. Mr. Broussard earned a
Bachelors degree in Geology from the University of Southwestern Louisiana.
W. Mac Jensen,
age 56, joined the Company
in May 2011 as Senior Vice President, Business Development. From December 2008 through April 2011, he was President of Jensen Energy Advisors LLC, providing acquisition and capital formation advisory services to oil and gas companies, including the
Company since June 2010. From January 2007 to November 2008, Mr. Jensen served as a Managing Director for FBR Capital Markets Corporation in its energy investment banking group. From 2002 until 2006, he was with Capital C Energy, LLC as a
principal and for a portion of that time served as the Senior Vice President of Belden & Blake Corporation, which had been acquired by Capital C Energy Holdings, LLC. Prior to that, Mr. Jensen spent a significant part of his career
executing public offerings and mergers and acquisitions. From 1981 to 2002, he served at various investment banking and consulting firms, including more recently as an Executive Director at CIBC World Markets and a Managing Director at the
predecessor to RBC Capital Markets. Mr. Jensen holds a Master of Business Administration degree from the University of Kansas and a Bachelor of Science degree in Accounting from the University of Tulsa.
3
Charles O. Buckner
, age 69, has been a director since September 2009. Mr. Buckner, a
private investor, retired from the public accounting firm of Ernst & Young LLP in 2002 after 35 years of service in a variety of client service and administrative roles, including chairmanship of Ernst & Youngs United States
energy practice. Mr. Buckner is a director of Patterson-UTI Energy, Inc. Mr. Buckner also served on the board of directors of Global Industries, Ltd. from May 2010 to November 2011; Gateway Energy Corporation from June 2008 to September
2010; Whittier Energy Inc. from June 2003 to December 2007; and Horizon Offshore Inc. from December 2003 to December 2007. Mr. Buckner is a Certified Public Accountant in the State of Texas and holds a B.B.A. in Accounting from The University
of Texas and an M.B.A. from the University of Houston.
Scott A. Griffiths
, age 59, has been a director since September 2009.
Mr. Griffiths has almost 30 years of experience in the energy sector. Mr. Griffiths served as Senior Vice President and Chief Operating Officer of Hydro Gulf of Mexico, L.L.C. from December 2005 to December 2006. Subsequent to leaving
Hydro Gulf of Mexico, Mr. Griffiths has been involved in certain energy investments for his own account. From 2003 through December 2005, Mr. Griffiths served as Executive Vice President and Chief Operating Officer of Spinnaker Exploration
Company. From 2002 to 2003, Mr. Griffiths served as Senior Vice President, Worldwide Exploration for Ocean Energy, Inc. Mr. Griffiths joined Ocean following the 1999 merger of Ocean and Seagull Energy Corporation, where he began working in
1997. At Seagull, Mr. Griffiths served as Vice President, Domestic Exploration. From 1984 to 1997, Mr. Griffiths was with Global Natural Resources, Inc. where he served in various capacities, including Vice President for Domestic
Exploration, before Global merged with Seagull in 1997. Mr. Griffiths was also an Exploration Geologist with Shell Oil Company from 1981 to 1984. Mr. Griffiths is a director of Enlink Midstream GP, LLC. Mr. Griffiths served as a director
of Copano Energy, LLC from 2002 until 2013 when Copano Energy, LLC was sold to Kinder Morgan. He holds a B.S. in Geology from the University of New Mexico, an M.A. in Geology from Indiana University and completed the Advanced Management Program at
Harvard Business School.
Steven J. Pully
, age 54, has been a director since April 2008. Mr. Pully has served since July 2008
as the General Counsel of Carlson Capital, L.P., an asset management firm. Mr. Pully also worked for almost twelve years as an energy investment banker at various major investment banks and worked for four years at a Houston-based law firm. In
addition to his service as a director of the Company, Mr. Pully has served on several public-company boards of directors during the past five years: Cano Petroleum, Inc., from June 2009 to August 2010; Ember Resources Inc., from September 2008
to June 2011; Peerless Systems Corporation from February 2008 to June 2008; and New Century Equity Holdings Corp., from June 2004 to February 2009. Mr. Pully is licensed as an attorney and Certified Public Accountant in the State of Texas and
is also a Chartered Financial Analyst. He holds a B.S. with honors in Accounting from Georgetown University and a J.D. degree from The University of Texas.
William F. Wallace,
age 74, has been a director since May 2011. Since 2008, Mr. Wallace has been a director of Western Zagros
Resources Ltd., where he serves on the Health, Safety, Environment and Security Committee, as well as on the Governance Committee. Since 2007, Mr. Wallace has been a director, as well as advisor to the Chairman and Chief Executive Officer, of
Taylor Energy Company LLC. From 2004 through 2006, Mr. Wallace served as a director of Markwest Hydrocarbon, Inc. and the Kerr-McGee Corporation; he was a member of both the Audit Committee and the Compensation Committee of each board. From
1999 until its merger with the Kerr-McGee Corporation in 2004, Mr. Wallace served on the board of Westport Resources Corp., where he chaired both the Governance and Compensation Committees and was a member of the Audit Committee.
Mr. Wallace has 48 years of experience in the oil and gas industry and has served on numerous boards of directors in addition to those mentioned above, including as a member of the board of directors of each of Khanty Mansiysk Oil Corporation,
Input/Output, Inc., Vessels Energy Inc., Forcenergy Inc. and Barrett Resources Corporation/Plains Petroleum Company. Mr. Wallace has also worked as a consultant to The Beacon Group, an energy venture capital fund, where he advised on
identifying energy investment opportunities. Prior to 1994, Mr. Wallace spent 23 years with Texaco Inc., an integrated oil and gas company, including six years as Vice President of Exploration for Texaco USA and as Regional Vice President of
Texacos Eastern Region prior to his retirement. Mr. Wallace holds a B.A. in Geology from Middlebury College and an M.S. in Geology from Stanford University and completed the Advanced Management Program at the University of Illinois.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own more than 10% of our
outstanding common stock, par value $0.001 per share (the Common Stock) to file initial reports of ownership and changes in ownership of common stock with the SEC. Reporting persons are required by the SEC to furnish us with copies of
all Section 16(a) forms they file. Based solely on our review of the copies of reports we received and written representations from our directors and officers, we believe that all filings required to be made under Section 16(a) for the
year ended December 31, 2013 were timely made, except for the following: (i) Messrs. Broussard, Cedro, Jensen and Williams and Ms. Thom each reported one late filing reflecting a grant of restricted shares and a grant of stock
options; and (ii) Mr. Hanna reported one late filing reflecting a grant of stock options.
4
CORPORATE GOVERNANCE
The Board of Directors
On May 4,
2013, the leadership structure of the board of directors (the Board) was changed to combine the Chief Executive Officer (the CEO) and Chairman of the Board (the Chairman) positions. The Board also designated an
independent director to serve as the lead independent director (the Lead Director) on the Board. The Board believes that, at this stage in the Companys development, this leadership structure is the most effective for the Company.
Combining the Chairman and CEO roles promotes decisive leadership, fosters clear accountability and enhances the Companys ability to communicate its message and strategy clearly and consistently to our stockholders, employees and business
partners. The Board believes this new leadership structure contains an effective balance between strong company leadership and appropriate safeguards and oversight by the Lead Director and the other independent directors.
The Board is responsible for the oversight of the Company and its business, including risk management. Together with the Boards standing
committees, the Board is responsible for ensuring that material risks are identified and managed appropriately. The Board and its committees regularly review material strategic, operational, financial, compensation and compliance risks with our
senior management. The Environmental, Health and Safety Committee (EH&S Committee) has oversight responsibility for health, environmental and safety risks, as well as other operational risks. The EH&S Committee also monitors the
application, effectiveness and performance of the Companys Environmental, Health & Safety Policies (EH&S Policies), as well as health, environmental and safety issues that could affect the Companys business. The
Audit Committee has oversight responsibility for financial risk (such as accounting and finance), and also oversees compliance with and enforcement of the Companys Corporate Code of Business Conduct and Ethics (the Code of Ethics).
The Compensation Committee oversees compliance with our compensation plans, and the Nominating & Governance Committee oversees compliance with our corporate governance practices. Each of the committees reports to the Board regarding the
areas of risk it oversees.
The directors hold regular meetings, attend special meetings as required and spend such time on the affairs of
the Company as their duties require. The Companys Corporate Governance Guidelines provide that directors are expected to attend regular Board meetings and are encouraged to attend the Annual Meeting of Stockholders in person and to spend the
time needed, and meet as frequently as necessary, to properly discharge their responsibilities. During calendar year 2013, the Board held a total of 9 meetings. All directors of the Company attended at least seventy-five percent (75%) of the
meetings of the Board and of the committees on which they served during 2013. As Chairman , Mr. Hanna presides at regularly scheduled executive sessions at which the Board meets without management participation. As the Lead Director,
Mr. Pully presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors.
The EH&S Committee
The Board has a
standing EH&S Committee, the current members of which are Messrs. Griffiths (chairman), Hanna and Wallace. In addition, Chad Williams, the Companys Senior Vice President, Production serves as an ex-officio, non-voting member of the
EH&S Committee. The EH&S Committee is responsible for, among other things, reviewing the Companys EH&S Policies and the Companys compliance with such policies by way of management reports and identifying and monitoring
emerging health, safety and environmental trends and legislative and regulatory issues that could affect the Companys business. Additionally, the EH&S Committee is responsible for appointing an independent advisor to prepare a report on
the Companys EH&S Policies, as well as overseeing such advisors work. Formed in May 2013, the EH&S Committee held three quarterly meetings during 2013.
The Audit Committee
The Board has a
standing Audit Committee established in accordance with Section (3)(a)(58)(A) of the Exchange Act, the current members of which are Messrs. Buckner (chairman), Pully and Wallace. The Board, in its business judgment, has determined that each
Audit Committee member is independent, as defined by the Companys categorical standards on independence as well as the listing standards of the NYSE and the rules of the SEC applicable to audit committee members. Further, the
Board, in its business judgment, has determined that Mr. Buckner and Mr. Pully each qualifies as an audit committee financial expert as described in Item 407(d)(5) of Regulation S-K. During 2013, the Audit Committee held
four meetings.
5
Nominating & Governance Committee
The Board has a standing Nominating & Governance Committee, the current members of which are Messrs. Wallace (chairman), Griffiths and
Buckner. When seeking candidates for director, the Nominating & Governance Committee has a policy whereby it may solicit suggestions from incumbent directors, management, stockholders or others. The Nominating & Governance
Committee treats recommendations for directors that are received from the Companys stockholders equally with recommendations received from any other source as long as the recommendations comply with the procedures for stockholder
recommendations outlined in the Companys bylaws. In addition, the Nominating & Governance Committee has authority under its charter to retain a search firm to identify potential candidates. After conducting an initial evaluation of a
potential candidate, the Nominating & Governance Committee will interview that candidate if it believes such candidate might be suitable to be a director. The Nominating & Governance Committee may also ask the candidate to meet
with management. If the Nominating & Governance Committee believes a candidate would be a valuable addition to the Board, it will recommend to the full Board that candidates election.
The Nominating & Governance Committee selects each nominee based on the nominees skills, achievements and experience. The
Nominating & Governance Committee considers a variety of factors in selecting candidates, including, but not limited to, the following: independence, wisdom, integrity, an understanding and general acceptance of the Companys corporate
philosophy, valid business or professional knowledge and experience, a proven record of accomplishment with excellent organizations, an inquiring mind, a willingness to speak ones mind, an ability to challenge and stimulate management and a
willingness to commit time and energy. As required by its charter, the Nominating & Governance Committee considers the diversity of, and the optimal enhancement of the current mix of talent and experience on the Board. In this regard, the
factors to be considered include the nominees range of skills, industry knowledge, expertise and diversity of geographic location, experience, age, gender, race and ethnicity. During 2013, the Nominating & Governance Committee held
five meetings.
The Compensation Committee
The Board has a standing Compensation Committee, the current members of which are Messrs. Pully (chairman), Buckner and Griffiths. The
Compensation Committee has a charter under which its responsibilities and authorities include reviewing the Companys compensation strategy, reviewing the performance of and approving the compensation for the senior management (other than the
CEO), evaluating the CEOs performance and, either as a committee or together with the other independent directors, determining and approving the CEOs compensation level. In addition, the Compensation Committee approves and administers
employee benefit plans and takes such other action as may be appropriate or as directed by the Board to ensure that the compensation policies of the Company are reasonable and fair. The Compensation Committee has the authority to delegate to its
chairman, any of its members or any subcommittee it may form, the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. Furthermore, the Compensation Committees decisions
regarding the compensation of senior management (other than the CEO) are made in consultation with the CEO. The Board has determined that each member of the Compensation Committee is independent as defined by NYSE listing standards.
During 2013, the Compensation Committee held five meetings.
Code of Ethics
The Company has adopted the Code of Ethics, which applies to all directors and employees, including the principal executive officer, principal
financial officer and principal accounting officer. A copy of the Code of Ethics is available on the Companys website at www.eplweb.com. A copy of the Code of Ethics is also available, at no cost, by writing to the Companys Corporate
Secretary at 201 St. Charles Avenue, Suite 3400, New Orleans, Louisiana 70170. The Company will post on its website any waiver of the Code of Ethics granted to any of its directors or executive officers promptly following the date of the amendment
or waiver. No such waiver has ever been sought or granted.
Website Access to Corporate Governance Documents
Copies of the charters for the Audit Committee, the Nominating & Governance Committee, the Compensation Committee and the EH&S
Committee are available free of charge on the Companys website at www.eplweb.com. Also available free of charge on our website are the Companys Corporate Governance Guidelines and the Code of Ethics, which applies, among others, to the
Companys principal executive officer, principal financial officer and principal accounting officer. Copies of each of these documents may be obtained, free of charge, by writing to the Corporate Secretary, EPL Oil & Gas, Inc., 201 St.
Charles Avenue, Suite 3400, New Orleans, Louisiana 70170. The Company will also post on its website any amendment to the Code of Ethics and any waiver of the Code of Ethics granted to any of its directors or executive officers to the extent required
by applicable rules.
6
Item 11.
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Executive Compensation
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DIRECTOR COMPENSATION
General
The following table sets forth a
summary of the compensation the Company paid to its non-employee directors during the year ended December 31, 2013.
Director
Compensation for the Year Ended December 31, 2013
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Name
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Fees Earned
or Paid in
Cash
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Stock Awards
(1)
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Option
Awards
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Non-Equity
Incentive Plan
Compensation
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Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
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All Other
Compensation
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Total
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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Charles O. Buckner (2)
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42,500
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144,088
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186,588
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Scott A. Griffiths
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75,000
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100,000
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175,000
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Marc McCarthy (3)
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89,767
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89,767
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Steven J. Pully (2)
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89,884
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100,000
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|
|
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|
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189,884
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William F. Wallace
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75,000
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100,000
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|
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|
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|
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|
|
|
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175,000
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(1)
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Amounts in this column reflect the aggregate grant date fair value of the awards computed in accordance with Accounting Standards Codification (ASC) Topic 718, Stock Compensation. The grant date fair value
has been calculated using the assumptions disclosed in Note 12 in Part II, Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2013. These amounts reflect grant date fair values and do not correspond to the actual
value that might be realized by the directors. These amounts include a stock award of 3,061 shares per director with a grant date fair value of $32.67 per share, of which 1,531 remained unvested as of December 31, 2013. These amounts also
include 1,856 shares with a weighted average grant date fair value of $21.43 per share for Mr. McCarthy representing fees that he elected to receive in stock and 1,435 shares with a weighted average grant date fair value of $30.72 per share for
Mr. Buckner representing 50% of his fees that he elected to receive in stock. See Director Compensation Program below for a description of the material features of these awards.
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(2)
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Messrs. Buckner and Pully have each elected to defer receipt of his stock award pursuant to the Second Amended and Restated Stock and Deferral Plan for Non-Employee Directors. See Deferred Plan and Deferred
Share Agreement for a description of these provisions.
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(3)
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On June 18, 2013, Mr. McCarthy resigned from the Board. Mr. McCarthys stock awards were paid to Wexford Capital LP (Wexford Capital).
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Director Compensation Program
In May
2011, the Compensation Committee of the Board of Directors adopted an amended compensation program (the Director Compensation Program) for each non-employee director of the Company. Under the amended program, directors became eligible to
receive a fixed amount per year, with no separate payment of Board or committee meeting fees.
For 2014, the Director Compensation Program
includes annual compensation in the amount of $95,000 with no separate payments of meeting fees. For 2013, the Director Compensation Program included annual compensation in the amount of $70,000 with no separate payments of meeting fees. The Lead
Director and the chairman of the Audit Committee are each entitled to receive an additional $15,000 each year. The chairman of the Compensation Committee is entitled to receive an additional $10,000 each year. The chairman of the
Nominating & Governance Committee is entitled to receive an additional $5,000 per year. The chairman of the EH&S Committee is entitled to receive an additional $5,000 each year. Each such annual fee is payable in quarterly installments
in cash, shares of Common Stock, or a combination thereof, at the election of each director.
Prior to February 2014, the Director
Compensation Program provided for the annual grant of a stock award to each non-employee director with a market value of $100,000 (as measured on the date of the grant and prorated from the date of the grant, if applicable). Pursuant to the terms of
the Director Compensation Program, one-half of each stock award vests immediately on the date of the grant, and the remaining one-half vests immediately prior to the next annual meeting of stockholders held after the grant date. In February 2014,
the amount of the annual stock award increased from a market value of $100,000 to a market value of $125,000 (as measured on the date of the grant and prorated from the date of the grant, if applicable), effective on the date of the 2014 Annual
Meeting of Stockholders. Because the Company has suspended its plans for the 2014 Annual Meeting of Stockholders pending the closing of the Merger, the Company plans to make the annual grant of stock awards for non-employee directors on May 1,
2014, the date on which the 2014 Annual
7
Meeting of Stockholders was scheduled to occur. The agreements underlying the grants of stock awards to the Directors provide that upon a change of control, all equity awards granted to Directors
will become fully vested, all stock options and share appreciation rights will become fully exercisable, and all restrictions on restricted shares and restricted share units will lapse.
Deferral Plan and Deferred Share Agreement
On November 6, 2009, the Compensation Committee adopted the Second Amended and Restated Stock and Deferral Plan for Non-Employee Directors
(the Deferral Plan), which Deferral Plan is administered by the Compensation Committee and is available to all eligible Board members. Under the Deferral Plan, each eligible director may defer all or a portion of such directors
compensation and fees to either a future date or the date the individual ceases to be a director for any reason, at the election of such director and in accordance with the form of Director Deferred Share Agreement adopted by the Compensation
Committee in connection with the adoption of the Deferral Plan (the Deferred Agreement). Such compensation and fees may be deferred in the form of cash or in the form of shares of Common Stock, at the election of the director. Each
director must make any deferral election according to the deferral election options presented to the directors by the Compensation Committee on an annual basis. In the event that a director has elected to receive settlement of his or her account in
the form of Common Stock, all shares shall be granted pursuant to the Companys 2009 Long Term Incentive Plan (the 2009 LTIP).
The Deferral Plan is an unfunded plan, and each directors compensation and fees that are deferred in cash are credited to a bookkeeping
account in that directors name. Pursuant to the Deferral Plan, any portion of a directors account to be settled in cash is credited during the deferral period with interest equivalents at the end of each calendar quarter at an interest
rate determined by the Compensation Committee in its sole discretion. Any portion of the directors account to be settled in Common Stock is satisfied when the director ceases to be a director by the issuance of the number of shares of Common
Stock that were deferred (subject to any adjustments for stock splits, stock dividends, recapitalizations or similar events). If any cash dividends would have been paid on such shares during the deferral period, then the amount of such dividends is
credited to the directors account.
The Deferred Agreement will be governed pursuant to the terms and conditions of the 2009 LTIP
and the Deferral Plan, as applicable, including, but not limited to, the 2009 LTIP provisions regarding the Companys repurchase rights and share adjustment provisions. The Deferred Agreement states the number of shares of Common Stock to be
deferred, the treatment of dividend equivalents on such shares of Common Stock during the deferral period, the length of the deferral period and the vesting schedule for the shares of Common Stock, where applicable. The Deferred Agreement limits the
transfer of any deferred shares of Common Stock (other than by will or the laws of descent and distribution) to transactions between the director and the Company, or the director and an institutional investor of the Company that has designated the
director to serve as a member of the Board.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
General Compensation Philosophy
. The Companys compensation philosophy is to reward performance with competitive
compensation in order to attract and retain highly qualified executives and to motivate them to maximize stockholder return. The Companys executive compensation program is designed to provide overall competitive fixed and incentive-based pay
levels that vary based on the achievement of company-wide performance objectives and individual performance. The Compensation Committee spent a significant amount of time in 2011 evaluating and modifying the overall design of the Companys
executive compensation program, with a view toward ensuring that executive performance was rewarded in a way that was aligned with the interests of the Companys stockholders. Among other things, the Compensation Committee conducted a thorough
review of the equity component of executive compensation because the Committee believed that equity compensation is best suited to aligning the executives interests with the stockholders interests. As part of its actions, the
Compensation Committee adjusted the annual incentive plan for 2012 so that the company-wide performance objectives played a larger role than individual performance in the calculation of cash bonuses and also increased the transparency of the
criteria for long-term incentive compensation. The Compensation Committee maintained the same philosophy for 2013 and 2014.
Market Compensation Data
. The Compensation Committee compares each element of total compensation against a peer group of
publicly-traded energy companies. The peer group, which is periodically reviewed and updated by the Compensation Committee, consists of companies that the Compensation Committee believes are reference points, in part because the Company competes for
employees and stockholder investment with these peers. However, the Compensation Committee recognizes that some of the companies in the peer group may be larger than the Company or have compensation philosophies tailored to those companies
specific circumstances. Furthermore, given the nature of the oil and gas industry,
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most members of any peer group selected by the Compensation Committee will have different asset profiles than the Company, both in terms of the location of primary basins, onshore versus
offshore, deepwater versus shallow Gulf of Mexico and oil versus natural gas. Therefore, the peer group comparison is used by the Compensation Committee as a general guide to evaluate the competitiveness of the Companys compensation policies,
rather than as a benchmark according to which the Company establishes its varying levels of compensation.
The Companys current peer
group consists of the following companies:
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Contango Oil & Gas Company
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Energy XXI (Bermuda) Limited
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Gulfport Energy Corporation
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PetroQuest Energy, Inc.
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Stone Energy Corporation
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Compensation Consultant.
For 2012, the Compensation
Committee retained Longnecker & Associates (Longnecker) to review the Companys compensation practices as compared to our peer group and within the broader oil and gas marketplace. In 2013, the Compensation Committee
purchased from Longnecker its proprietary 2013 Energy Industry Long-Term Incentive Survey for $2,500 but did not utilize Longneckers compensation consulting services in 2013.
In connection with the Companys consideration of a potential business combination with EXXI and other potential counterparties, the
Company engaged Longnecker in early 2014 to provide the Companys senior management with a survey of industry practices relating to change of control severance and compensation arrangements. The Companys senior management team referred to
these materials in its discussions with the Compensation Committee regarding appropriate change of control severance and compensation arrangements in connection with a proposed change of control transaction. The Company paid Longnecker a fee of
$8,500 for these services.
Executive Review Process
. The Compensation Committee conducts an annual review of the base
salary, bonus and equity awards made to each executive officer. In each case, the Compensation Committee takes into account the executives scope of responsibilities and experience and balances these against competitive compensation levels,
including retention requirements and succession planning with respect to each executive. The Companys chief executive officer (CEO) makes recommendations to the Compensation Committee regarding compensation for each executive
officer other than the CEO based on an evaluation of each executives contribution and performance, strengths, weaknesses, development plans, succession potential, as well as the extent to which the executive achieved his or her personal goals
and helped the Company achieve the corporate goals described below. Personal goals are established for each executive, with an emphasis on the aspects of that executives performance that will most likely drive the Company to achieve the
Companys corporate goals.
Components of Executive Compensation
. The primary elements of annual compensation for
executive officers are base salary, bonuses and equity awards. Each component is evaluated in the context of individual and Company performance, as well as competitive conditions. In determining competitive compensation levels, the Company analyzes
data from the peer group, as well as other information regarding the general oil and gas exploration and production industry. Executive officers also receive other forms of compensation, including various benefit plans made available to all of the
Companys employees. Given the nature of these benefit plans, benefits under these plans are not independently evaluated for each individual in connection with the annual determination of executive compensation. With the exception of
Mr. Hanna, none of the Companys executive officers has an employment agreement.
Base Salary
. The
Compensation Committee determines base salaries for executive officers by evaluating the responsibilities of the position, the experience of the individual, the performance of the individual, and the competitive market for similar management talent.
The Compensation Committees salary review process includes a comparison of base salaries for comparable positions at companies of similar type, size and financial performance, as well as an evaluation of individual performance.
Bonuses
. All executives are eligible to receive a cash bonus tied directly to the Companys achievement of
financial, operational, and strategic objectives and the executives individual performance metrics. Bonuses and individual target bonus potentials are determined by the Compensation Committee on an annual basis. The performance of each
executive is discussed with such executive during semi-annual performance reviews.
For 2013, the Company performance
metrics accounted for two-thirds of the cash bonus, and individual performance metrics accounted for the remaining one-third, which is consistent with the relative weights assigned to these metrics in 2012. Although individual performance is
important for achieving the Companys goals, the Compensation Committee believes that ultimately the real driver to improving stockholder value is the Companys performance. Additionally, for 2013, the Compensation Committee modified the
annual incentive plan in order to take into account the increased size of the Companys asset base as a result of organic growth, the October 2012 acquisition of Hilcorp Energy GOM, LLC (Hilcorp) and other smaller acquisitions.
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The Company performance metrics for 2013 are described below. Each of these
metrics was set with minimum, target and stretch amounts that scale an executives bonus from 50% to 150% of the target weighting for that metric, except that the range of minimum to stretch amount for the Total Shareholder Return metric was
90% to 150%. For performance of a metric between the minimum and stretch levels, the amount of weighting for that particular metric was determined by linear interpolation. The 2013 performance metrics were:
(i)
Safety
, measured by (A) total recordable incidents per 200,000 man hours, with a midpoint goal of 1.0 (5.0%
target weighting), (B) the ratio of Incidents of Non-Compliance issued by the Bureau of Safety and Environmental Enforcement (the BSEE) (or its predecessors), with a midpoint goal of 0.05 (5.0% target weighting) and
(C) elimination of preventable significant events, with a goal of zero (5.0% target weighting). During 2013, the Company achieved total recordable incidents of 0.91 per 200,000 man hours, a 0.042 ratio of Incidents of Non-Compliance, and
zero preventable significant events, resulting in the maximum weighting of 22.0%;
(ii)
Growth in average oil
production
, excluding the impact of acquisitions, divestitures and storm-related downtime, with a midpoint goal of 17,500 barrels per day (20% target weighting). During 2013, the Company achieved growth in average oil production to 17,363
barrels per day, resulting in 93.2% of the 20% total target weighting, or 18.6%;
(iii)
Target aggregate lease operating
expenses
, normal LOE items only (excluding the impact of acquisitions, divestitures and storm-related LOE), with a midpoint goal of $160.0 million (7.5% target weighting). During 2013, the Company achieved aggregate LOE of $157.7 million,
which resulted in 111.5% of the target weighting, or 8.4%;
(iv)
Target aggregate cash general and administrative
expenses
, excluding the impact of acquisitions and divestitures, as well as cash bonuses, with a midpoint goal of $18.0 million (7.5% target weighting). During 2013, the Company achieved aggregate cash general and administrative expenses of
$17.3 million, which resulted in 133.5% of the target weighting, or 10.0%;
(v)
Growth in discretionary cash
flow
, measured by the Companys EBITDAX, equal to earnings before interest, taxes, depreciation, amortization and exploration expenses, with a midpoint goal of $475.0 million (5.0% target weighting). During 2013, the Company achieved
EBITDAX of $481.0 million, resulting in 106.1% of the target weighting, or 5.3%;
(vi)
Reductions in capital
expenditure overages
, measured as a percentage of the applicable authorization for expenditure (AFE) (5.0% target weighting). During 2013, the Companys spending experience was within 15.0% of its AFEs, which did not achieve the
minimum amount, resulting in no bonus for this metric;
(vii)
Total Shareholder Return
, measured by total
shareholder return for the year compared to that years peer groups average total shareholder return for the year (TSR Percentage). However, because of the strong performance of the Companys Common Stock in 2012 relative
to the Companys peer group, the Compensation Committee modified this metric so that target would also be achieved if the year-end 2013 price per share for the Common Stock is at least equal to $21.76, which was the weighted average price per
share for the month of December 2012 (8.0% target weighting). During 2013, the Company achieved TSR Percentage of 104.0%, resulting in 104% of the target weighting, or 8.3%.
(viii)
Project finding and development costs
, measured by total net capital expenditures on all projects divided by
total net reserves converted by those projects from proved not producing to proved developed producing, plus reserves converted from proved undeveloped reserves to proved developed reserves and proved not producing reserves, with a midpoint goal of
$30.00 per Boe (7.0% target weighting). During 2013, the Company achieved finding and development cost of $25.91 per Boe, resulting in 140.9% of the target weighting, or 9.9%;
(ix)
Organic reserve growth
, which includes all new proved and probable reserve additions from the Companys
existing asset base, with a midpoint goal of 6.5 MMBoe (10.0% target weighting). During 2013, the Company achieved organic reserve growth of 10.3 MMBoe, which was better than the stretch 150% goal of 8.0 MMBoe, resulting in the maximum
weighting of 15%; and
(x)
Acquisition and Divestitures.
Because of the total size of the Companys 2012
acquisitions, the Compensation Committee removed the 2012 metric that addressed reserve additions solely by acquisitions and included a metric that measures both acquisitions and divestitures, as well as metrics that look back at the performance of
the Companys recent acquisitions (15.0% total target weighting):
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(1)
2013 Acquisitions and/or Divestitures
, which includes the total
amount of cash proceeds paid by the Company (in a purchase) or received by the Company (in a sale), in each case together with any undiscounted plugging and abandonment liability transferred, with a midpoint goal of $50 million (5.0% target
weighting). During 2013, the Companys acquisition and divestiture activities achieved 136.4% of the target weighting for this metric, or 6.8%;
(2)
Prior Acquisition Lookback (Proved IRR)
, which is measured by the average internal rate of return
(IRR), based on net cash flow from properties acquired in pre-2013 acquisitions (Pre-2013 Acquired Properties), plus proved reserve cash flows from those Pre-2013 Acquired Properties. Cash flow is measured by EBITDAX,
butin order to measure the performance of the properties on a commodity price-neutral basisthe cash flows are adjusted for each acquisition to use the same pricing assumptions that were used in managements final presentation of the
acquisition in which approval of the Board was sought. The midpoint goal for 2013 was a 13.3% IRR (5.0% target weighting). During 2013, the Company achieved a 21.4% IRR, which was better than the stretch 150% goal of 16.3% IRR, resulting in the
maximum weighting of 7.5%;
(3)
Prior Acquisition Lookback (Liquids Production)
, which is measured by liquids
production from the Pre-2013 Acquired Properties. The midpoint goal for this metric in 2013 was 12,400 barrels, which was based on the Companys budget for the year (2.5% target weighting). During 2013, the Companys Pre-2013 Acquired
Properties produced 13,082 barrels, resulting in 148.7% of the target, or 3.7%; and
(4)
Prior Acquisition Lookback
(Hilcorp Probable Reserves)
, which is based on the year-end 2012 probable reserves attributable to the Hilcorp properties acquired in October 2012, relative to the year-end 2012 proved reserves for these properties. Both the probable and
proved reserves are determined by the Companys third-party reserve engineers. The midpoint goal for this metric in 2013 is that the probable reserves were at least 10% of the proved reserves (2.5% target weighting). During 2013, the probable
reserves were 14.1% of the proved reserves, resulting in 140.8% of the target, or 3.5%.
During 2013, the Company had
thirteen of the fifteen performance metrics exceed the target goal. Three of the fifteen performance metrics exceeded the stretch goal, although the weighting was capped for those three metrics. As a result of these calculations, the Companys
management and employees achieved 119.1% of the Company goals for 2013.
The Company performance metrics for 2014 are
described below. Each of these metrics was set with minimum, target and stretch amounts that scale an executives bonus from 50% to 150% of the target weighting for that metric, except for the Total Shareholder Return metric. For 2014, each
metric uses these target and stretch amounts, except that the range of minimum to stretch amount for the Total Shareholder Return metric was set at 90% to 150%. For performance of a metric between the minimum and stretch levels, the amount of
weighting for that particular metric will be determined by linear interpolation. For a discussion of the impact on the annual incentive plan of the proposed Merger with EXXI, see Impact of EXXI Merger on Annual Incentive Plan and Equity
Awards below.
(i)
Safety
, which is measured in the same manner as for 2013, as described above (15.0% total
target weighting);
(ii)
Growth in average oil production
, which uses the same methodology as for 2013, but with an
increased midpoint goal of 19,500 barrels per day (up from the 2013 midpoint of 17,500 barrels per day) to reflect the Companys increased asset base. This metric excludes the impact of acquisitions, divestitures and storm-related downtime
(20.0% target weighting);
(iii)
Target aggregate lease operating expenses
, which uses the same methodology as for
2013, but with an increased midpoint target of $190.0 million (up from the 2013 target of $160.0 million) to reflect the Companys increased asset base. This metric measures normal LOE items only (excluding the impact of acquisitions,
divestitures and storm-related LOE) (7.5% target weighting);
(iv)
Target aggregate cash general and administrative
expenses
, which uses the same methodology as for 2013, but with an increased midpoint target of $23.5 million (up from the 2013 midpoint target of $18.0 million) to reflect the Companys increased asset base. This metric excludes
the impact of acquisitions and divestitures, as well as cash bonuses (5.0% target weighting);
(v)
Growth in
discretionary cash flow
, which uses the same methodology as for 2013, but with a decreased midpoint target of $465 million (down from the 2013 midpoint target of $475 million). This metric is measured by the Companys EBITDAX,
equal to earnings before interest, taxes, depreciation, amortization and exploration expenses (5.0% target weighting);
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(vi)
Reductions in capital expenditure overages
, which uses the same
methodology as for 2013, measured as a percentage of the applicable AFE (7.5% target weighting);
(vii)
Total
Shareholder Return
, which uses the same methodology as for 2013, but with the year-end 2014 price per share for the Common Stock to be at least equal to $27.40, which is the average price per share for the month of December 2013 (8.0% target
weighting).
(viii)
Project finding and development costs
, which uses the same methodology as for 2013 with a
midpoint goal of $30.00 per barrel of oil equivalent (which is consistent with the 2013 midpoint goal) (7.0% target weighting);
(ix)
Organic reserve growth
, which includes all new proved reserve additions from the Companys existing asset
base, with a midpoint goal of 10.0 million barrels of oil equivalent (which is changed from the 2013 midpoint goal of 6.5 million barrels of oil equivalent for all new proved and probable reserve additions from the Companys existing
asset base) (10.0% target weighting);
(x)
Acquisition and Divestitures,
which includes a metric that measures both
acquisitions and divestitures, as well as metrics that look back at the performance of the Companys recent acquisitions (15.0% total target weighting). Because of the passage of time since the Companys 2012 acquisition of Hilcorp, the
Compensation Committee removed the 2013 metric that specifically addressed Hilcorp probable reserves:
(1)
2014
Acquisitions and/or Divestitures
, which includes the total amount of cash proceeds paid by the Company (in a purchase) or received by the Company (in a sale), in each case together with any undiscounted plugging and abandonment liability
transferred, with a midpoint goal of $50 million (which is consistent with the 2013 midpoint goal) (5.0% target weighting);
(2)
Prior Acquisition Lookback (Proved IRR)
, which is measured by the average IRR, based on net cash flow from
properties acquired in pre-2014 acquisitions (Pre-2014 Acquired Properties), plus proved reserve cash flows from those Pre-2014 Acquired Properties. Cash flow is measured by EBITDAX, butin order to measure the performance of the
properties on a commodity price-neutral basis, the cash flows are adjusted for each acquisition to use the same pricing assumptions that were used in managements final presentation of the acquisition in which approval of the Board was sought.
The midpoint goal for 2014 is a 13.7% IRR (5.0% target weighting); and
(3)
Prior Acquisition Lookback (Liquids
Production)
, which is measured by liquids production from Pre-2014 Acquired Properties. The midpoint goal for this metric in 2014 is 15,400 barrels, (up from the 2013 midpoint goal of 12,400 barrels) which is based on the Companys budget
for the year (5.0% target weighting).
Equity Awards
. The Companys equity compensation program for executive
officers includes two forms of long-term incentives: restricted stock and stock options. Award size and frequency are based on each executives demonstrated level of performance and Company performance over time. The Compensation Committee
annually reviews award levels to ensure their competitiveness. In making individual awards, the Compensation Committee considers industry practices, the recent performance of each executive, the value of the executives previous awards and the
Companys views on executive retention and succession. In 2011 and 2012, the Compensation Committees approach was to structure the equity awards so that the higher the amount of the award, the greater the percentage of that award will be
in the form of options (as opposed to restricted stock). Starting in 2013, the Compensation Committee decided that the non-discretionary grants described below under Equity Award Mechanics would be made 50% in stock options and 50% in
restricted stock. If discretionary grants are made, the Compensation Committee would determine the mix between stock options and restricted stock at that time, based on the equity award factors described above, though to date discretionary grants
have been made entirely in restricted stock. For a discussion of the impact on the Companys equity awards of the proposed Merger with EXXI, see Impact of EXXI Merger on Annual Incentive Plan and Equity Awards below.
Equity Award Mechanics
. Equity awards are granted pursuant to the 2009 LTIP. Awards are made by the Board, at the
recommendation of the Compensation Committee. Awards typically fall into two categories: semi-annual awards, which are made at mid-year and shortly after the end of the year, and new hire and promotion awards, which are made on the date of hire or
promotion. The Board or the Compensation Committee may make grants at other times, in its discretion, in connection with employee retention or otherwise.
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All stock option awards have a per share exercise price at least equal to the
closing price of the Common Stock on the grant date. Stock option awards and restricted stock awards generally vest upon the passage of time, in one-third increments on each of the first three anniversaries of the date of grant.
Severance Plan and Change of Control Plans
. Our Change of Control Severance Plan for certain designated officers and
employees of the Company, effective as of March 24, 2005 (as amended from time to time, the EPL COC Plan), is designed to facilitate our ability to attract and retain executives as we compete for talented employees in a
marketplace where such protections are commonly offered. We believe that providing consistent, competitive levels of severance protection to executive officers helps minimize distraction during times of uncertainty and helps to retain key employees.
As explained more fully below in Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table, the EPL COC Plan provides certain cash payments and other benefits to eligible employees if, under certain
circumstances, such employees employment is terminated following a change of control. The Compensation Committee is responsible for administering these policies and the EPL COC Plan. The Companys proposed Merger with EXXI would, if
consummated, constitute a change of control for purposes of the EPL COC Plan.
Treatment of Equity
. Upon
a change of control under the EPL COC Plan, all equity awards granted to participants will become fully vested, all stock options will become fully exercisable, and all restrictions on restricted shares and restricted share units will lapse. Upon a
change of control, a participant receives these acceleration benefits regardless of whether the participants employment is terminated.
Severance Payments
. The EPL COC Plan also provides that, if a participants employment with EPL terminates within
one year of a change of control, either by EPL without cause or by the participant for good reason (a Qualifying Termination), the participant will be eligible to receive certain severance benefits, awarded based on the
participants designated multiple. The designated multiples for the Named Executive Officers are:
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Gary C. Hanna
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2.99x
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T.J. Thom
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2.5x
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Andre J. Broussard
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2.5x
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W. Mac Jensen
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1.5x
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Chad E. Williams
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1.5x
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If a Qualifying Termination occurs, a participant is entitled to receive a cash payment within
30 days of termination in an amount equal to (a) that participants designated multiple, multiplied by (b) the sum of that participants (i) annual rate of base salary for the year of the Qualifying Termination, plus
(ii) average annual bonus for the three preceding years.
Health and Life Insurance Benefits
Continuation
. In addition, the participant is entitled to receive the same level of medical, dental and life insurance benefits for a certain period following the date of a Qualifying Termination (the Designated Period) as that
participant was receiving immediately prior to the date of the Qualifying Termination. However, in order to receive these benefits, the participant must pay for the same portion of the required premium for the benefits that the participant was
required to pay immediately before termination of employment. The Designated Period is 12 months for participants with a designated multiple of 1.0, and 18 months for participants with a designated multiple of 1.5, 2.0, 2.5 or 2.99. Accordingly,
each of the Named Executive Officers has a Designated Period of 18 months.
Bonus
. Furthermore, if a
participant has not yet received a bonus under EPLs incentive bonus plan for the calendar year preceding the calendar year of such participants Qualifying Termination, the participant shall receive a bonus for that calendar year in an
amount equal to the participants target bonus. All bonuses under the EPL 2013 annual incentive plan were paid in December 2013, so no additional payments would be due under this provision of the EPL COC Plan if the Qualifying Termination
occurs in 2014.
Excise Taxes
. EPL does not provide any Named Executive Officer or any other employee with a
gross-up payment for any taxes that may be assessed against any compensation paid to such executive officer, including any income taxes or any excise tax under Section 4999 of the Internal Revenue Code of 1986. If any payments under the EPL COC
Plan are subject to the excise tax on excess parachute payments under Section 280G of the Internal Revenue Code of 1986, payments to the participant will be reduced until no amount payable to the participant would constitute an
excess parachute payment, provided that no such reduction will be made if the net after-tax payment to which the participant would otherwise be entitled without such reduction would be greater than the net after-tax payment, in each
case, after taking into account federal, state, local or other income and excise taxes, to the participant resulting
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from the receipt of such payments with such reduction. In connection with the proposed Merger, Mr. Hanna would have been entitled to benefits under the EPL COC Plan that exceeded his
Section 280G safe harbor amount. However, Mr. Hanna has informed the Company and EXXI that he intends to waive his right to receive any amounts he would be entitled to receive over the Section 280G safe harbor. Because the
partial-year payments under the annual incentive plan are payments for services rendered and are consistent with past practice, EPL does not believe these payments would be treated as parachute payments under Section 280G of the Internal
Revenue Code of 1986.
Deferred Compensation and Retirement Plans
. The Company does not have a deferred compensation
program for its executive officers, pension benefits, a retirement plan, or any type of post-retirement healthcare plan.
Perquisites and Other Benefits
. In general, the Company provides no benefits to its executive officers that are not
otherwise available to all of its employees.
Long Term Incentive Program
. As indicated above, the amount of restricted
stock and option grants is determined by the Board, based on recommendations from the Compensation Committee. Prior to 2011, the recommended amounts were at the discretion of the Compensation Committee. In 2011, the Compensation Committee conducted
a thorough review of the equity component of executive compensation. As a result of this review, the Compensation Committee determined that it was important to provide more transparency about the level of equity grants to the Companys
management team. Therefore, the Compensation Committee adopted a new long term incentive program to provide this transparency. Under this plan, equity grants under the 2009 LTIP are divided into three categories: Base, Performance and Discretionary.
Base Grant
. The base grant is made in or around June of each year. The value of the base grant is determined by the
Compensation Committee as a percentage of an executives base salary (Equity Value Percentage), depending on the executives level in the management team. For the senior members of the management team other than the CEO, the
Equity Value Percentages range from 40% to 75% of base salary. The CEOs Equity Value Percentage for the 2012 long term incentive program was 100% of base salary. The base grants are made generally using a combination of restricted stock and
options, with the percentage mix between the two forms of equity grant being set by the Compensation Committee for each employee. For 2013, for each employee the percentage of base equity grants that were stock options was 50% and the percentage
that were restricted stock was 50%. We expect that this mix will remain consistent for the 2014 base grant.
Performance
Grant
. The target amount of each employees performance equity grant is determined by the Compensation Committee as a percentage of an employees target bonus, depending on the employees level in the organization. For the most
senior members of the management team, this percentage is 100% of the target bonus. For all other executives, it is 50% of the target bonus. Each employees mix of options and restricted stock is the same as that employees mix for the
base grant described above. The performance equity grant is made in or around the January following the end of the performance year. The Companys TSR Percentage (i.e., the same metric that is now used for the stock performance measure for the
2013 and 2014 cash bonus programs) is used to determine the percentage of the target performance grant to which the employees are entitled. If the Companys TSR Percentage is less than 80%, then no performance grants are made for that year. If
the TSR Percentage is more than 120%, then each employee receives a performance equity grant equal to 120% of that employees target grant. For TSR Percentages between 80% and 120%, the performance grant is determined by linear interpolation.
For 2013, for each employee the percentage of performance equity grants that were stock options was 50% and the percentage that were restricted stock was 50%. We expect that this mix will remain consistent for the 2014 performance grant.
Discretionary Grant
. This grant is discretionary and will be awarded by the Compensation Committee to recognize
individual performance, motivate employees and drive retention. The discretionary equity award is determined and awarded in or around January following the end of the performance year. If discretionary grants are made, the Compensation Committee
will determine the mix between stock options and restricted stock at that time, though to date discretionary grants have been made entirely of restricted stock.
Regulatory Considerations
. It is the Companys policy to make reasonable efforts to cause executive compensation to be
eligible for deductibility under Section 162(m) of the Internal Revenue Code of 1986. Under Section 162(m), the federal income tax deductibility of compensation paid to the Companys CEO and to each of its four other most highly
compensated executive officers may be limited to the extent that such compensation exceeds $1 million in any one year. Under Section 162(m), the Company may deduct compensation in excess of $1 million if it qualifies as performance-based
compensation, as defined in Section 162(m). Equity awards under the 2009 LTIP qualify for this performance-based compensation exception because the awards made to the Companys employees and directors are within the
limits previously approved by the Companys stockholders. During 2013, Mr. Hanna received total compensation of $1.7 million, as a result of which approximately $0.7 million is not deductible by the Company for federal income tax purposes.
During 2013, Ms. Thom received total compensation of $1.3 million, as a result of which approximately $0.3 million is not deductible by the Company for federal income tax purposes. No other executive officers of the Company received
compensation in excess of $1 million in 2013.
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Stock Ownership Guidelines
. The Companys Executive Stock Ownership Guidelines
require executives to retain 50% of the profit shares acquired under equity compensation programs of the Company. Profit shares are defined as those shares of Common Stock held by an executive as a result of the exercise of
options, the lapsing of restrictions on restricted stock and restricted stock units (but not including any shares that are awarded as unrestricted, fully vested shares) and the earning of performance shares, in each instance after shares are sold or
netted to pay the exercise price of an option (for options) and tax withholding amounts (for all types of awards made under the Companys equity compensation programs, such as withholding amounts associated with the exercise of stock options,
the lapsing of restrictions on restricted stock and restricted stock units and the earning of performance shares). Profit shares do not include any equity based consideration received as acquisition consideration in connection with an
acquisition made by the Company.
Impact of EXXI Merger on Annual Incentive Plan and Equity Awards.
Upon the completion of
the Merger, the Company would become an indirect wholly owned subsidiary of EXXI. If consummated, the Merger would constitute a change of control for purposes of the Companys employee benefit plans, including its change of control
severance plans and the 2009 LTIP. However, the completion of the Merger is subject to approval by the Companys stockholders and by EXXIs shareholders, as well as certain other customary closing conditions. The discussion and analysis of
the Companys compensation philosophy set forth above is based on the operation of the compensation arrangements, without giving effect to the impact of the Merger. The primary impact on the Companys annual incentive plan is described
below. For additional information, the Joint Proxy Statement/Prospectus for the special meeting at which the Companys stockholders will vote on the adoption of the Merger Agreement will describe in more detail the interests of the
Companys directors and executive officers in the Merger, including the compensation payable as a result of the Merger.
Partial-Year Cash Bonuses
.
In connection with the Compensation Committees review of the impact of the Merger on the Companys executive
officers and other employees, the Compensation Committee discussed that the metrics used for the Companys annual incentive plan (i.e., cash bonuses and equity grants, as described above) are year-long metrics, and that those metrics would not
be possible to measure on a full year basis if the Merger occurred during 2014. The Compensation Committee also discussed that EXXIs current fiscal year ends on June 30, 2014, which both the Company and EXXI believe would be within the
range of the parties expectations as to when the Merger would be consummated. Furthermore, the Compensation Committee noted that the goal of the annual incentive plan is to drive value for the Companys stockholders, and that the Merger
and the officers and employees in executing and consummating the Merger would enhance stockholder value.
Taking these
considerations into account, in connection with the Boards approval of the Merger Agreement, the Compensation Committee established two cash bonus pools under the Company annual incentive plan to cover the period from January 1, 2014
until the effective date of the Merger. The two bonus pools were established by the Compensation Committee: a $5 million aggregate bonus pool for the Companys ten most highly-compensated officers and a $2 million aggregate bonus pool for the
Companys other employees. The $5 million bonus pool was established based upon a calculation of the achievement by the ten most highly-compensated executive officers of 150% of target under the Company annual incentive plan, and then dividing
that calculation in half to take into account the expected mid-year Merger consummation date. The $2 million bonus pool for the Companys other employees was allocated among those employees generally in proportion to the target or three-year
average bonus amounts, whichever was higher, for those employees.
The following table sets forth the partial-year bonuses
under the annual incentive plan that the Companys Named Executive Officers would receive for services rendered to the Company from January 1, 2014 until the effective date of the Merger.
|
|
|
|
|
|
|
|
|
Gary C. Hanna
|
|
$ 1,640,000
|
|
|
|
|
T. J. Thom
|
|
$ 740,000
|
|
|
|
|
Andre J. Broussard
|
|
$ 590,000
|
|
|
|
|
W. Mac Jensen
|
|
$ 390,000
|
|
|
|
|
Chad E. Williams
|
|
$ 390,000
|
|
|
In order to receive this payment under the annual incentive plan, a participant must perform
services for the Company up through the effective date of the Merger. If a participant is not an employee of the Company on the effective date of the Merger, then no annual incentive payment will be made to that participant. Under the annual
incentive plan, participants would typically receive their bonus values in a combination of stock options, restricted stock and cash. However, in light of the impact of the Merger on the Companys equity awards, the Compensation Committee
determined that these two bonus pools should consist entirely of cash.
15
Equity Awards.
No Base Grants for 2014.
In light of the partial-year cash bonuses described above, the Company will not make the equity
grants it would typically make in June, as described above under Long Term Incentive PlanBase Grants. However, if the Merger Agreement is terminated and the Merger does not occur, then the Base Grants will be made in accordance
with the normal operation of the plan.
Acceleration of Vesting for Outstanding Stock Options.
The Merger Agreement
provides that each option to purchase shares of Common Stock that is outstanding immediately prior to the effective date of the Merger, whether or not then exercisable or vested, will be deemed exercised pursuant to a cashless exercise for that
number of shares of Common Stock (the net exercise shares) equal to (i) the number of shares of Common Stock subject to such stock option immediately prior to the effective date minus (ii) the number of whole and partial shares
of Common Stock subject to such stock option that, when multiplied by $39.00 per share, is equal to the aggregate exercise price of such stock option. Each net exercise share deemed to be an outstanding share of Common Stock will receive merger
consideration of $39.00 in cash and will not be subject to proration like other holders of Common Stock that elect to receive all cash in the Merger.
Acceleration of Vesting for Existing Restricted Stock Grants.
The Merger Agreement provides that each outstanding
restricted stock award granted by the Company will become fully vested and each holder will have the right to make an election to receive the same types of merger consideration that each other holder of Common Stock has the right to receive.
Compensation Committee Report
The
Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this Annual Report with management. Based on the Compensation Committees review of and discussions with management with respect to the
Compensation Discussion and Analysis, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Amendment.
The Compensation Committee,
Steven J. Pully, Chairman
Charles O. Buckner
Scott A. Griffiths
Compensation Committee Interlocks and Insider Participation
The members of our Compensation Committee are set forth above. No member of the Compensation Committee is now, or at any time since the
beginning of 2013 has been, employed by or served as an officer of the Company or any of its subsidiaries or had any relationships requiring disclosure with the Company or any of its subsidiaries. See the disclosures regarding the transactions
between the Company and Carlson Capital, L.P., for which Mr. Pully serves as General Counsel, below under the heading Certain Relationships and Related Transactions. The Company has made the determination that Mr. Pully does
not have an indirect material interest in such transactions. In addition, none of the Companys executive officers now serves, or at any time since the beginning of 2013 has served, as a member of the board of directors or compensation
committee of any entity that has one or more of its executive officers serving as a member of our Board of Directors or Compensation Committee.
16
Summary Compensation Table
The following table summarizes, with respect to the Companys principal executive officer, principal financial officer, and the three
other most highly compensated executive officers (the Named Executive Officers), information relating to the compensation earned for services rendered in all capacities.
Summary Compensation Table for the Year Ended December 31, 2013
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|
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Name and Principal Position
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|
Year
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|
|
Salary
|
|
|
Bonus(1)
|
|
|
Stock
Awards
(2)
|
|
|
Option
Awards
(2)
|
|
|
Non-Equity
Incentive Plan
Compensation
(3)
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
(4)
|
|
|
Total
|
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Gary C. Hanna
|
|
|
2013
|
|
|
|
553,750
|
|
|
|
30,000
|
|
|
|
954,632
|
|
|
|
1,364,840
|
|
|
|
855,143
|
|
|
|
|
|
|
|
21,311
|
|
|
|
3,779,676
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|
President and Chief Executive
|
|
|
2012
|
|
|
|
466,667
|
|
|
|
|
|
|
|
199,999
|
|
|
|
1,123,120
|
|
|
|
790,546
|
|
|
|
|
|
|
|
19,686
|
|
|
|
2,600,018
|
|
Officer
|
|
|
2011
|
|
|
|
447,917
|
|
|
|
|
|
|
|
343,761
|
|
|
|
1,004,774
|
|
|
|
506,250
|
|
|
|
|
|
|
|
17,796
|
|
|
|
2,320,498
|
|
Tiffany J. Thom (5)
|
|
|
2013
|
|
|
|
327,500
|
|
|
|
30,000
|
|
|
|
503,252
|
|
|
|
465,601
|
|
|
|
398,325
|
|
|
|
|
|
|
|
16,408
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|
|
|
1,741,086
|
|
Executive Vice President, Chief
|
|
|
2012
|
|
|
|
287,500
|
|
|
|
|
|
|
|
236,263
|
|
|
|
288,828
|
|
|
|
138,875
|
|
|
|
|
|
|
|
173,457
|
|
|
|
1,124,923
|
|
Financial Officer
|
|
|
2011
|
|
|
|
273,958
|
|
|
|
|
|
|
|
202,815
|
|
|
|
396,253
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|
|
|
160,875
|
|
|
|
|
|
|
|
79,601
|
|
|
|
1,113,502
|
|
Andre J. Broussard (6)
|
|
|
2013
|
|
|
|
313,750
|
|
|
|
30,000
|
|
|
|
525,239
|
|
|
|
350,346
|
|
|
|
288,895
|
|
|
|
|
|
|
|
16,809
|
|
|
|
1,525,039
|
|
Senior Vice President, Geosciences
|
|
|
2012
|
|
|
|
277,500
|
|
|
|
|
|
|
|
222,493
|
|
|
|
132,530
|
|
|
|
245,836
|
|
|
|
|
|
|
|
16,387
|
|
|
|
894,746
|
|
|
|
|
2011
|
|
|
|
238,118
|
|
|
|
|
|
|
|
147,002
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|
|
|
195,470
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|
|
|
119,250
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|
|
|
|
|
|
|
13,139
|
|
|
|
712,979
|
|
W. Mac Jensen (7)
|
|
|
2013
|
|
|
|
270,000
|
|
|
|
30,000
|
|
|
|
299,763
|
|
|
|
174,801
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|
|
|
204,238
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|
|
|
|
|
|
|
18,246
|
|
|
|
997,048
|
|
Senior Vice President, Business
|
|
|
2012
|
|
|
|
245,000
|
|
|
|
|
|
|
|
217,494
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|
|
|
122,536
|
|
|
|
158,109
|
|
|
|
|
|
|
|
16,970
|
|
|
|
760,109
|
|
Development
|
|
|
2011
|
|
|
|
163,333
|
|
|
|
|
|
|
|
150,495
|
|
|
|
201,916
|
|
|
|
110,801
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|
|
|
|
|
|
|
164,427
|
|
|
|
790,972
|
|
Chad E. Williams
|
|
|
2013
|
|
|
|
268,750
|
|
|
|
30,000
|
|
|
|
354,021
|
|
|
|
229,062
|
|
|
|
194,128
|
|
|
|
|
|
|
|
18,064
|
|
|
|
1,094,025
|
|
Senior Vice President, Production
|
|
|
2012
|
|
|
|
238,333
|
|
|
|
|
|
|
|
184,990
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|
|
|
115,033
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|
160,258
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|
|
|
|
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|
18,454
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|
|
|
717,068
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|
|
2011
|
|
|
|
230,000
|
|
|
|
|
|
|
|
139,997
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|
|
|
187,695
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|
|
|
99,418
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|
|
|
|
|
|
|
16,311
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|
|
|
673,421
|
|
(1)
|
Bonus payments to the Named Executive Officers for 2013 which were paid in cash in addition to the incentive plan compensation. These payments were made in recognition of the officers contribution to the Company
achieving a market capitalization of over $1 billion.
|
(2)
|
Amounts in this column reflect the aggregate grant date fair value of the awards computed in accordance with ASC Topic 718, Stock Compensation. The grant date fair value was calculated using the assumptions disclosed in
Notes 1 and 12 in Part II, Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2013. These amounts reflect grant date fair values and do not correspond to the actual value that might be realized by the Named Executive
Officers. See Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table below for a description of the material features of these awards.
|
(3)
|
Bonus payments to the Named Executive Officers for 2013, 2012 and 2011, which were paid in cash pursuant to the incentive bonus plan adopted by the Compensation Committee in March 2010 and described under
Bonuses in the CD&A included in this Amendment.
|
(4)
|
Amounts reflected in this column represent the dollar value of term life insurance premiums paid by the Company for the benefit of the Named Executive Officers, the dollar value of the company match to the
Companys 401(k) Plan on the employees behalf and payments made to certain Named Executive Officers pursuant to severance or other arrangements (if applicable) as described in Narrative Disclosure to Summary Compensation Table
and Grants of Plan-Based Awards Table below. For 2013, (a) the life insurance premiums for Messrs. Hanna, Broussard, Jensen and Williams and Ms. Thom were $4,386, $1,509, $2,496, $1,919 and $1,108, respectively; and (b) the
value of the 401(k) match for Messrs. Hanna, Broussard and Jensen and Williams and Ms. Thom were $15,300 each. For 2012, (a) the life insurance premiums for Messrs. Hanna, Broussard, Jensen and Williams and Ms. Thom were $2,346,
$1,387, $2,270, $1,814 and $1,101, respectively; and (b) the value of the 401(k) match for Messrs. Hanna, Broussard and Jensen and Williams and Ms. Thom were $15,000, $15,000, $14,700, $14,300 and $15,000, respectively. For 2011,
(a) the life insurance premiums for Messrs. Hanna, Broussard, Jensen and Williams and Ms. Thom were $2,346, $1,214, $810, $1,541 and $984, respectively; and (b) the value of the 401(k) match for Messrs. Hanna, Broussard, Jensen and
Williams and Ms. Thom were $14,700, $11,925, $7,350, $13,800 and $14,700, respectively.
|
(5)
|
Amounts reflected for 2011 in the All Other Compensation column include $63,077 paid in connection with Ms. Thoms relocation to the Houston office, including moving expenses and closing costs on
the sale of her prior residence. Under the terms of her relocation package, on May 16, 2012 Ms. Thom received an additional payment of $100,000 to assist her with the cost of the down payment on her new residence, together with an
additional payment of $57,356 to pay the income taxes on such payment. Ms. Thom was not required to repay the Company for any of the relocation payments (even if her 2012 cash bonus had been zero). However, the amount of her 2012 cash bonus
under the Companys incentive bonus plan was reduced dollar-for-dollar by an amount equal to the down payment assistance and related tax payment.
|
(6)
|
Not included in the table is $26,922, the value realized on the immediate vesting of 1,667 restricted shares granted on the date Mr. Broussard joined the Company as an executive officer in February 2011.
|
(7)
|
Mr. Jensen became an executive officer of the Company in May 2011. From June 2010 until he joined the Company as an executive officer, Mr. Jensen served as a business development consultant. In
Mr. Jensens role as a consultant, he received consulting fees from the Company of $156,267 in 2011 which is included in the All Other Compensation column.
|
17
Grants of Plan-Based Awards Table
The following table provides information concerning each grant of an award made to our Named Executive Officers under any plan, including
awards, if any, that have been transferred during the year ended December 31, 2013.
Grants of Plan-Based Awards for the Year Ended
December 31, 2013
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1)
|
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards (1)
|
|
|
All Other
Stock
Awards
Number
of Shares
of Stock
|
|
|
All Other
Option
Awards
Number of
Securities
Underlying
|
|
|
Exercise
or Base
Price of
Option
|
|
|
Grant
Date Fair
Value of
Stock and
Option
|
|
Name
|
|
Grant Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum(2)
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards (3)
|
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
Gary C. Hanna
|
|
|
January 7, 2013
|
|
|
|
|
|
|
|
718,750
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,445
|
|
|
|
23.25
|
|
|
|
734,945
|
|
|
|
|
February 4, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,153
|
|
|
|
|
|
|
|
|
|
|
|
325,011
|
|
|
|
|
June 19, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,271
|
|
|
|
40,206
|
|
|
|
29.60
|
|
|
|
1,259,516
|
|
Tiffany J. Thom
|
|
|
January 7, 2013
|
|
|
|
|
|
|
|
335,000
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,952
|
|
|
|
16,931
|
|
|
|
23.25
|
|
|
|
274,496
|
|
|
|
|
February 4, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,082
|
|
|
|
|
|
|
|
|
|
|
|
174,996
|
|
|
|
|
June 19, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,771
|
|
|
|
16,579
|
|
|
|
29.60
|
|
|
|
519,361
|
|
Andre J. Broussard
|
|
|
January 7, 2013
|
|
|
|
|
|
|
|
240,000
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,948
|
|
|
|
9,462
|
|
|
|
23.25
|
|
|
|
230,089
|
|
|
|
|
February 4, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,082
|
|
|
|
|
|
|
|
|
|
|
|
174,996
|
|
|
|
|
June 19, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,946
|
|
|
|
15,019
|
|
|
|
29.60
|
|
|
|
470,500
|
|
W. Mac Jensen
|
|
|
January 7, 2013
|
|
|
|
|
|
|
|
162,000
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,161
|
|
|
|
6,045
|
|
|
|
23.25
|
|
|
|
146,993
|
|
|
|
|
February 4, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,059
|
|
|
|
|
|
|
|
|
|
|
|
125,008
|
|
|
|
|
June 19, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,421
|
|
|
|
6,466
|
|
|
|
29.60
|
|
|
|
202,563
|
|
Chad E. Williams
|
|
|
January 7, 2013
|
|
|
|
|
|
|
|
165,000
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,226
|
|
|
|
6,168
|
|
|
|
23.25
|
|
|
|
150,001
|
|
|
|
|
February 4, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,059
|
|
|
|
|
|
|
|
|
|
|
|
125,008
|
|
|
|
|
June 19, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,203
|
|
|
|
9,834
|
|
|
|
29.60
|
|
|
|
308,074
|
|
(1)
|
Amounts actually paid are reflected in the column titled Non-Equity Incentive Plan Compensation found on the Summary Compensation Table above. For additional information see
Compensation Discussion and AnalysisBonuses.
|
(2)
|
While Named Executive Officers may earn up to a certain maximum percentage of each quantitative target under our annual incentive bonus program, the Committee retains discretion to award officers additional amounts
based on external factors beyond the control of the officers as well as individual performance by the officers.
|
(3)
|
Amounts reflect the grant date fair value of the respective awards computed in accordance with ASC Topic 718, Stock Compensation. Please refer to Notes 1 and 12 in Part II, Item 8 of the Annual Report on Form
10-K for the year ended December 31, 2013 for a discussion of the assumptions used in computing the grant date fair value of stock based compensation awards. These amounts reflect our accounting expense for these awards and do not correspond to
the actual value that might be realized by the Named Executive Officer.
|
Narrative Disclosure to Summary Compensation Table and Grants of
Plan-Based Awards Table
The following is a discussion of material factors necessary to an understanding of the information disclosed
in the Summary Compensation Table and the Grants of Plan-Based Awards Table above.
Bonuses
All bonuses paid to Mr. Hanna are pursuant to the Employment Agreement dated October 1, 2009, between Mr. Hanna and
the Company. Under the terms of the Employment Agreement, Mr. Hannas bonuses are specified as stock bonuses, but the Compensation Committee elected for Mr. Hannas bonus for 2011, 2012 and 2013 to be paid fully in cash. In
addition, the Compensation Committee elected to award Mr. Hanna a special cash bonus of $30,000 during 2013 in recognition of his contribution to the Company achieving a market capitalization of over $1 billion.
Stock Awards
In
2013 and 2012, pursuant to the 2009 LTIP, the Company awarded restricted shares to Messrs. Hanna, Broussard, Jensen, and Williams and Ms. Thom.
Option Awards
In
2013, 2012 and 2011, pursuant to Mr. Hannas Employment Agreement and in accordance with the 2009 LTIP, the Company awarded stock options to Mr. Hanna. In 2013, 2012 and 2011, pursuant to the 2009 LTIP, the Company also awarded stock
options to Ms. Thom and Messrs. Broussard, Jensen and Williams.
18
Employment Agreements
On October 1, 2009, the Company entered into an employment agreement with our Chief Executive Officer, Mr. Hanna, which employment
agreement was amended on April 12, 2010 (as amended, the Employment Agreement). The Employment Agreement has a term of three years, which term is automatically extended for an additional month at the end of each month unless either
the Company or Mr. Hanna gives notice to discontinue the automatic extensions. Under the Employment Agreement, Mr. Hanna, is entitled to a base salary (Base Salary) at an annual rate, to be determined by the Board of Directors
of the Company (the Board), of not less than $400,000 per year and is entitled to receive, in addition to his Base Salary, an annual bonus (each, an Annual Bonus) awarded at the discretion of the Board upon recommendation of
the Compensation Committee of the Board of Directors based upon Mr. Hannas performance. The Employment Agreement provides that the Annual Bonus is to be paid in a grant of Common Stock, but Mr. Hannas Annual Bonus for 2013,
2012 and 2011 was paid in cash at the election of the Compensation Committee. Mr. Hannas target Annual Bonus for each year is between 25% and 125% (inclusive) of his Base Salary in effect for the calendar year to which such Annual Bonus
relates. For any partial year of employment, the amount of such Annual Bonus is prorated for the portion of the year that Mr. Hanna was in the employ of the Company.
Pursuant to Mr. Hannas Employment Agreement, upon termination of Mr. Hannas employment by the Company for
cause (as defined below) or by Mr. Hanna without good reason (as defined below), Mr. Hanna is entitled to receive: (i) the amount of his Base Salary through the date of termination; (ii) any Annual Bonus
earned but unpaid as of the date of termination for any year completed prior to the date of termination; (iii) reimbursement of any unreimbursed business expenses properly incurred by him prior to the date of termination in accordance with his
Employment Agreement; and (iv) such other employee benefits, if any, as to which he may be entitled pursuant to the terms governing such employment benefits and any applicable law.
Upon termination of Mr. Hannas employment by the Company in an involuntary termination (i.e., without cause) or by Mr. Hanna
for good reason, or upon Mr. Hannas death or disability, Mr. Hanna is entitled to receive: (i) his Base Salary through the date of termination; (ii) any Annual Bonus earned but unpaid as of the date of termination for any
year completed prior to the date of termination; (iii) reimbursement of any unreimbursed business expenses properly incurred by him prior to the date of termination in accordance with his Employment Agreement; (iv) such other employee
benefits, if any, as to which he may be entitled pursuant to the terms governing such employment benefits and any applicable law; (v) a severance amount equal to his aggregate Base Salary for the lesser of (i) 18 months and (ii) the
remainder of the term of his Employment Agreement (the Severance Period); and (vi) for the duration of the Severance Period, Mr. Hanna, his spouse and his dependents shall be entitled to continuation coverage under the
Companys group medical, dental and vision insurance plans comparable to the level of coverage in effect at the time of termination, provided he, his spouse and such dependents were enrolled in such plans immediately prior to his termination.
Mr. Hanna is not entitled to receive duplicative or overlapping change of control benefits under his Employment Agreement and the COC Plan.
For the purposes of Mr. Hannas Employment Agreement, cause means (i) Mr. Hannas material breach of the
Employment Agreement, (ii) Mr. Hannas willful failure to perform his required duties and responsibilities (if such failure to perform has not been cured within ten business days following receipt of notice from the Company),
(iii) Mr. Hannas indictment for, or conviction of (A) a misdemeanor involving fraud, dishonest or moral turpitude or (B) any felony, (iv) dishonesty on the part of Mr. Hanna directly related to the performance of his
duties, (v) Mr. Hannas wrongful and intentional disclosure of confidential information, (vi) a conflict of interest on the part of Mr. Hanna that is undisclosed and not approved by the Board, (vii) Mr. Hannas material
violation of any Company policy applicable to all employees that materially and adversely affects the Company (if such material violation has not been cured within ten business days following receipt of notice from the Company) or (viii) Mr.
Hannas engaging in any manner, directly or indirectly, in a business that competes with the business of the Company, unless first disclosed to and approved by the Board in all material respects. Good reason means the occurrence of
any of the following: (i) the Companys material breach of the Employment Agreement, (ii) a material reduction in Mr. Hannas Base Salary, (iii) a material diminution in Mr. Hannas authority, duties or
responsibilities that are normally associated with the position of Chief Executive Officer, (iv) a requirement by the Company that Mr. Hanna be required to relocate outside of New Orleans or Houston, or (v) a change of control of the
Company. Under the Employment Agreement, any termination of Mr. Hannas employment will not be deemed to be for good reason unless (i) the condition giving rise to Mr. Hannas termination has arisen without his
consent, and (ii) (A) Mr. Hanna must have provided written notice to the Company of such condition within 90 days of the initial existence of the condition, (B) such condition must have remained uncorrected for a period of 30 days
after the Companys receipt of such notice and (C) Mr. Hannas termination of employment must have occurred within 30 days after the expiration of such 30-day cure period.
Pursuant to his Employment Agreement and the Companys 2009 LTIP, on September 30, 2009, Mr. Hanna was granted an initial award
of stock options to purchase 68,116 shares of Common Stock, which was memorialized in an option award agreement dated as of October 1, 2009 (the Option Agreement). The terms of the Option Agreement provide for an exercise price
equal to $10.00 per share. The closing price of the Common Stock on the NYSE on September 30, 2009 was
19
$7.46 per share. The option vested ratably on a monthly basis over a 36-month period from the date of grant. Vested stock options under the original terms of the Option Agreement were to expire
30 months following the applicable vesting date of such stock options. On May 1, 2012, the Compensation Committee modified the terms of the Option Agreement to extend the expiration of the stock options granted thereunder to September 30,
2019, which is the last day prior to the tenth anniversary of the initial grant of these options. This extension resulted in additional fair value of the award of $0.1 million, which is included in option awards in the year 2012 in the Summary
Compensation Table for the year ended December 31, 2013. Upon a change of control (as defined in the 2009 LTIP), all remaining stock options under the Option Agreement remain exercisable for a period of not less than 30 months following a
change of control. Mr. Hanna is entitled to participate annually in any additional awards of stock options as determined by the Board in its discretion.
The Company does not have employment agreements with any of the other Named Executive Officers.
20
Outstanding Equity Awards at Fiscal Year-End Table
The following table provides information concerning unexercised options, stock that has not vested, and equity incentive plan awards for the Companys
Named Executive Officers.
Outstanding Equity Awards as of December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
|
|
|
Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
|
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
|
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
Gary C. Hanna
|
|
|
68,116
|
|
|
|
|
(1)
|
|
|
|
|
|
$
|
10.00
|
|
|
|
9/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
(2)
|
|
|
|
|
|
$
|
13.59
|
|
|
|
4/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,667
|
|
|
|
20,833
|
(3)
|
|
|
|
|
|
$
|
16.50
|
|
|
|
1/18/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,248
|
|
|
|
22,124
|
(4)
|
|
|
|
|
|
$
|
13.68
|
|
|
|
11/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,803
|
|
|
|
43,604
|
(5)
|
|
|
|
|
|
$
|
16.45
|
|
|
|
2/3/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,752
|
|
|
|
35,502
|
(6)
|
|
|
|
|
|
$
|
16.23
|
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,445
|
(7)
|
|
|
|
|
|
$
|
23.25
|
|
|
|
1/7/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,206
|
(8)
|
|
|
|
|
|
$
|
29.60
|
|
|
|
6/19/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,945
|
(12)
|
|
$
|
197,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,105
|
(13)
|
|
$
|
230,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,153
|
(14)
|
|
$
|
374,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,271
|
(15)
|
|
$
|
606,224
|
|
|
|
|
|
|
|
|
|
Tiffany J. Thom
|
|
|
16,667
|
|
|
|
|
(9)
|
|
|
|
|
|
$
|
8.90
|
|
|
|
1/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333
|
|
|
|
9,167
|
(3)
|
|
|
|
|
|
$
|
16.50
|
|
|
|
1/18/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,210
|
|
|
|
7,605
|
(4)
|
|
|
|
|
|
$
|
13.68
|
|
|
|
11/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,197
|
|
|
|
10,392
|
(5)
|
|
|
|
|
|
$
|
16.45
|
|
|
|
2/3/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,102
|
|
|
|
12,204
|
(6)
|
|
|
|
|
|
$
|
16.23
|
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,931
|
(7)
|
|
|
|
|
|
$
|
23.25
|
|
|
|
1/7/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,579
|
(8)
|
|
|
|
|
|
$
|
29.60
|
|
|
|
6/19/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,056
|
(12)
|
|
$
|
87,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,256
|
(16)
|
|
$
|
35,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,485
|
(13)
|
|
$
|
213,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,118
|
(17)
|
|
$
|
60,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,952
|
(18)
|
|
$
|
84,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,082
|
(14)
|
|
$
|
201,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,771
|
(15)
|
|
$
|
249,974
|
|
|
|
|
|
|
|
|
|
Andre J. Broussard
|
|
|
10,000
|
|
|
|
5,000
|
(10)
|
|
|
|
|
|
$
|
16.15
|
|
|
|
2/7/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,514
|
|
|
|
3,257
|
(4)
|
|
|
|
|
|
$
|
13.68
|
|
|
|
11/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,568
|
|
|
|
5,135
|
(5)
|
|
|
|
|
|
$
|
16.45
|
|
|
|
2/3/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,614
|
|
|
|
5,226
|
(6)
|
|
|
|
|
|
$
|
16.23
|
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,462
|
(7)
|
|
|
|
|
|
$
|
23.25
|
|
|
|
1/7/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,019
|
(8)
|
|
|
|
|
|
$
|
29.60
|
|
|
|
6/19/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,614
|
(16)
|
|
$
|
45,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,332
|
(13)
|
|
$
|
180,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,721
|
(17)
|
|
$
|
77,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,948
|
(18)
|
|
$
|
141,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,082
|
(14)
|
|
$
|
201,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,946
|
(15)
|
|
$
|
226,461
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
|
|
|
Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
|
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
|
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
W. Mac Jensen
|
|
|
|
|
|
|
5,000
|
(11)
|
|
|
|
|
|
$
|
17.85
|
|
|
|
5/2/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,623
|
|
|
|
3,011
|
(4)
|
|
|
|
|
|
$
|
13.68
|
|
|
|
11/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,374
|
|
|
|
4,748
|
(5)
|
|
|
|
|
|
$
|
16.45
|
|
|
|
2/3/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,417
|
|
|
|
4,832
|
(6)
|
|
|
|
|
|
$
|
16.23
|
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,045
|
(7)
|
|
|
|
|
|
$
|
23.25
|
|
|
|
1/7/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,466
|
(8)
|
|
|
|
|
|
$
|
29.60
|
|
|
|
6/16/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667
|
(19)
|
|
$
|
47,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,492
|
(16)
|
|
$
|
42,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,332
|
(13)
|
|
$
|
180,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,516
|
(17)
|
|
$
|
71,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,161
|
(18)
|
|
$
|
90,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,059
|
(14)
|
|
$
|
144,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,421
|
(15)
|
|
$
|
97,499
|
|
|
|
|
|
|
|
|
|
Chad E. Williams
|
|
|
25,000
|
|
|
|
|
(9)
|
|
|
|
|
|
$
|
8.90
|
|
|
|
1/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
5,000
|
(3)
|
|
|
|
|
|
$
|
16.50
|
|
|
|
1/18/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,654
|
|
|
|
2,827
|
(4)
|
|
|
|
|
|
$
|
13.68
|
|
|
|
11/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,229
|
|
|
|
4,457
|
(5)
|
|
|
|
|
|
$
|
16.45
|
|
|
|
2/3/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,269
|
|
|
|
4,536
|
(6)
|
|
|
|
|
|
$
|
16.23
|
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,168
|
(7)
|
|
|
|
|
|
$
|
23.25
|
|
|
|
1/7/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,834
|
(8)
|
|
|
|
|
|
$
|
29.60
|
|
|
|
6/19/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667
|
(12)
|
|
$
|
47,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,401
|
(16)
|
|
$
|
39,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,166
|
(13)
|
|
$
|
147,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,362
|
(17)
|
|
$
|
67,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,226
|
(18)
|
|
$
|
91,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,059
|
(14)
|
|
$
|
144,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,203
|
(15)
|
|
$
|
148,286
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the underlying option shares for unexercisable stock options that were granted on September 30, 2009. The option vested ratably on a monthly basis over a 36-month period from the date of grant; provided,
however, that the vesting for the Initial Period was deferred until the end of the Initial Period and any remaining unvested portion vested ratably on a monthly basis over the remainder of the 36-month vesting period, subject to the executive
remaining continuously employed. Vested stock options under the Option Agreement expire on September 30, 2019.
|
(2)
|
Represents the underlying option shares for unexercisable stock options that were granted on April 5, 2010. The option vested ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(3)
|
Represents the underlying option shares for unexercisable stock options that were granted on January 18, 2011. The option vests ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(4)
|
Represents the underlying option shares for unexercisable stock options that were granted on November 1, 2011. The option vests ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(5)
|
Represents the underlying option shares for unexercisable stock options that were granted on February 3, 2012. The option vests ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(6)
|
Represents the underlying option shares for unexercisable stock options that were granted on June 27, 2012. The option vests ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(7)
|
Represents the underlying option shares for unexercisable stock options that were granted on January 7, 2013. The option vests ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(8)
|
Represents the underlying option shares for unexercisable stock options that were granted on June 19, 2013. The option vests ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(9)
|
Represents the underlying option shares for unexercisable stock options that were granted on January 5, 2010. The option vested ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
22
(10)
|
Represents the underlying option shares for unexercisable stock options that were granted on February 7, 2011. The option vests ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(11)
|
Represents the underlying option shares for unexercisable stock options that were granted on May 2, 2011. The option vests ratably on an annual basis over a 3-year period from the date of grant. Vested stock
options under the Option Agreement expire 10 years following the date of grant.
|
(12)
|
Represents unvested restricted shares that were granted on January 18, 2011, which shares vest ratably on an annual basis over a 3-year period from the date of grant.
|
(13)
|
Represents unvested restricted shares that were granted on February 3, 2012, which shares vest ratably on an annual basis over a 3-year period from the date of grant.
|
(14)
|
Represents unvested restricted shares that were granted on February 4, 2013, which shares vest ratably on an annual basis over a 3-year period from the date of grant.
|
(15)
|
Represents unvested restricted shares that were granted on June 19, 2013, which shares vest ratably on an annual basis over a 3-year period from the date of grant.
|
(16)
|
Represents unvested restricted shares that were granted on November 1, 2011, which shares vest ratably on an annual basis over a 3-year period from the date of grant.
|
(17)
|
Represents unvested restricted shares that were granted on June 27, 2012, which shares vest ratably on an annual basis over a 3-year period from the date of grant.
|
(18)
|
Represents unvested restricted shares that were granted on January 7, 2013, which shares vest ratably on an annual basis over a 3-year period from the date of grant.
|
(19)
|
Represents unvested restricted shares that were granted on May 2, 2011, which shares vest ratably on an annual basis over a 3-year period from the date of grant.
|
The following table provides information concerning the number of shares acquired by our Named Executive Officers upon option exercises and
vesting of restricted share awards.
Option Exercises and Stock Vested During the Year Ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
|
|
|
Value Realized
on Exercise
|
|
|
Number of
Shares
Acquired on
Vesting
(1)
|
|
|
Value Realized
on Vesting
|
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
Gary C. Hanna
|
|
|
|
|
|
|
|
|
|
|
6,944
|
|
|
$
|
166,587
|
|
|
|
|
|
|
|
|
|
|
|
|
4,053
|
|
|
|
100,595
|
|
Tiffany J. Thom
|
|
|
8,333
|
|
|
$
|
149,612
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
143,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,055
|
|
|
$
|
73,289
|
|
|
|
|
|
|
|
|
|
|
|
|
1,256
|
|
|
$
|
39,627
|
|
|
|
|
|
|
|
|
|
|
|
|
3,743
|
|
|
|
92,901
|
|
|
|
|
|
|
|
|
|
|
|
|
1,059
|
|
|
|
30,849
|
|
Andre J. Broussard
|
|
|
|
|
|
|
|
|
|
|
1,667
|
|
|
$
|
42,292
|
|
|
|
|
|
|
|
|
|
|
|
|
1,614
|
|
|
$
|
50,922
|
|
|
|
|
|
|
|
|
|
|
|
|
3,166
|
|
|
|
78,580
|
|
|
|
|
|
|
|
|
|
|
|
|
1,361
|
|
|
|
39,646
|
|
W. Mac Jensen
|
|
|
10,000
|
|
|
$
|
136,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,666
|
|
|
$
|
55,411
|
|
|
|
|
4,400
|
|
|
$
|
75,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,492
|
|
|
$
|
47,073
|
|
|
|
|
|
|
|
|
|
|
|
|
3,166
|
|
|
|
78,580
|
|
|
|
|
|
|
|
|
|
|
|
|
1,258
|
|
|
|
36,646
|
|
Chad E. Williams
|
|
|
|
|
|
|
|
|
|
|
1,666
|
|
|
$
|
39,967
|
|
|
|
|
|
|
|
|
|
|
|
|
1,401
|
|
|
$
|
44,202
|
|
|
|
|
|
|
|
|
|
|
|
|
2,584
|
|
|
|
64,135
|
|
|
|
|
|
|
|
|
|
|
|
|
1,181
|
|
|
|
34,403
|
|
(1)
|
Represents one-third of the restricted share award.
|
23
Potential Payments Upon Termination or Change of Control
Change of Control Plans
. Our COC Plan for certain designated officers and key employees of the Company (Participants)
provides certain cash payments and other benefits to eligible employees if, under certain circumstances, such employees employment is terminated following a change of control. All of the Companys Named Executive Officers are Participants
in the COC Plan. The COC Plan may be amended or terminated by the Board in its sole discretion prior to the occurrence of a change of control of the Company. The Compensation Committee is responsible for administering the COC Plan.
The COC Plan provides that upon a change of control, all equity awards granted to Participants will become fully vested, all stock options and
share appreciation rights will become fully exercisable, and all restrictions on restricted shares and restricted share units will lapse. With respect to performance shares or other awards contingent on the satisfaction of performance measures, the
performance cycle will end upon a change of control, and the Participant will vest in the number of shares that the Participant would have earned if the performance cycle had ended as of the end of the period covered by the most recently issued
year-end financial statement, plus such additional number of shares or units as the Compensation Committee shall determine in respect of any period of the performance cycle not covered by such year-end statement. Upon a change of control, a
Participant receives the benefits described in this paragraph regardless of whether the Participants employment is terminated.
The
COC Plan also provides that, if a Participants employment with the Company terminates within one year of a change of control of the Company (either by the Company without cause or by the Participant for good reason), the Participant will be
eligible to receive certain severance benefits. These benefits are awarded based on the Participants Designated Multiple (as defined in the COC Plan). If a Participants employment is terminated, that Participant is entitled to receive a
cash payment within 30 days of termination in an amount equal to (a) that Participants Designated Multiple, multiplied by (b) the sum of that Participants (i) base salary for the year of termination, plus (ii) average
annual bonus for the three preceding years. In addition, the Participant is entitled to receive the same level of medical, dental and life insurance benefits for a certain period following the date of termination (the Designated Period)
as that Participant was receiving immediately prior to the date of termination. Furthermore, if a Participant is terminated and has not yet received a bonus under the Companys annual bonus plan for the calendar year preceding the calendar year
of such termination of the Participants employment, the Participant shall receive a bonus for that calendar year in an amount equal to the Participants target bonus.
Under the COC Plan, a Participant may have a Designated Multiple of 1.0, 1.5, 2.0, 2.5 or 2.99, as determined by the Compensation Committee.
The Designated Multiples for Messrs. Hanna, Broussard, Jensen and Williams are 2.99, 2.5, 1.5 and 1.5, respectively, and the Designated Multiple for Ms. Thom is 2.5. The COC Plan provides that the Designated Period is 12 months for Participants
with a Designated Multiple of 1.0, and 18 months for Participants with a Designated Multiple of 1.5, 2.0, 2.5 or 2.99.
If any payments
under the COC Plan are subject to the excise tax on excess parachute payments under Section 280G of the Internal Revenue Code of 1986, payments to the Participant will be reduced until no amount payable to the Participant would
constitute an excess parachute payment, provided that no such reduction will be made if the net after-tax payment to which the Participant would otherwise be entitled without such reduction would be greater than the net after-tax
payment, in each case, after taking into account federal, state, local or other income and excise taxes, to the Participant resulting from the receipt of such payments with such reduction. The Company does not provide any executive officer with a
gross-up payment for any taxes that may be assessed against any compensation paid to such executive officer, including any income taxes or any excise tax under Section 4999 of the Internal Revenue Code of 1986.
Additionally, with respect to any awards granted to participants under the 2009 LTIP, in the case of a change of control of the Company, the
Compensation Committee, in its sole discretion without the approval or consent of any holder of an award, may (i) accelerate the time at which any award may be exercised; (ii) require the mandatory surrender to the Company by selected
holders of some or all of the outstanding awards held by such holders, before or after the change of control, in which the Compensation Committee will cancel such awards and pay to the holder thereof a cash payment; (iii) make adjustments to
the terms of outstanding awards; or (iv) remove any restrictions or portions thereof associated with such awards.
For purposes of
the COC Plan and awards under the 2009 LTIP, a change of control generally includes any of the following events: (1) an acquisition by any person of 25% or more (40% or more under the 2009 LTIP) of the securities entitled to vote in
the election of directors, (2) the current directors, or their approved successors, no longer constitute a majority of the Board, (3) a merger or similar transaction is consummated which results in the holders of the Common Stock owning
50% or less of the surviving or transferee entitys securities entitled to vote generally in the election of directors, or (4) approval of a plan of liquidation or disposition of all or substantially all of the Companys assets. A
termination for cause includes an individuals termination due to a conviction of a felony, dishonesty, failure to perform duties, insubordination, theft, wrongful disclosure of confidential information, undisclosed conflicts of
interest, violation of the Companys employee policies, or competing with the Company for personal benefit. Good reason may exist if the Company reduces an individuals base salary, eliminates or significantly reduces a
material benefit under any of its employee benefit plans, takes away an individuals titles or positions or significantly reduces the individuals duties and responsibilities, or requires the individual to relocate to an office which is
more than 35 miles driving distance from the office at which the Participant is employed immediately prior to the applicable change of control event.
24
The COC Plan was amended effective as of April 29, 2009 to modify the definition of a change
of control. The events that generally constitute a change of control were not changed, but due to the Companys unique financial situation pending the Companys Chapter 11 reorganization, the Board determined that various transactions
related to the Companys filing should not trigger the change of control definition in the COC Plan. Therefore, the Board amended the definition of change of control to expressly exclude the filing of a voluntary petition for bankruptcy, an
exit from bankruptcy, or any transaction related to the Companys filing for bankruptcy. Consequently, no events relating to the Companys Chapter 11 reorganization triggered the one-year protection period that otherwise immediately
follows a change of control under the COC Plan.
Payments Upon Certain Terminations of Employment
Pursuant to Mr. Hannas Employment Agreement, upon termination of Mr. Hannas employment by the Company for cause or by
Mr. Hanna without good reason, Mr. Hanna is entitled to receive: (i) the amount of his Base Salary through the date of termination; (ii) any Annual Bonus earned but unpaid as of the date of termination for any year completed
prior to the date of termination; (iii) reimbursement of any unreimbursed business expenses properly incurred by him prior to the date of termination in accordance with his Employment Agreement; and (iv) such other employee benefits, if
any, as to which he may be entitled pursuant to the terms governing such employment benefits and any applicable law.
Upon termination of
Mr. Hannas employment by the Company in an involuntary termination or by Mr. Hanna for good reason, or upon Mr. Hannas death or disability, Mr. Hanna is entitled to receive: (i) his Base Salary through the date
of termination; (ii) any Annual Bonus earned but unpaid as of the date of termination for any year completed prior to the date of termination; (iii) reimbursement of any unreimbursed business expenses properly incurred by him prior to the
date of termination in accordance with his Employment Agreement; (iv) such other employee benefits, if any, as to which he may be entitled pursuant to the terms governing such employment benefits and any applicable law; (v) a severance
amount equal to his aggregate Base Salary for the Severance Period; and (vi) for the duration of the Severance Period, Mr. Hanna, his spouse and his dependents shall be entitled to continuation coverage under the Companys group
medical, dental and vision insurance plans comparable to the level of coverage in effect at the time of termination, provided he, his spouse and such dependents were enrolled in such plans immediately prior to his termination. Mr. Hanna is not
entitled to receive duplicative or overlapping change of control benefits under his Employment Agreement and the COC Plan.
The following
table reflects the estimated values that each of the Named Executive Officers currently employed by the Company would receive if such Named Executive Officers employment were terminated following a change of control (not taking into account
the effects of the Merger or any arrangements made with any Named Executive Officers in connection with the Merger). For purposes of these calculations, the Company has made certain assumptions that the Company considers reasonable, such as all
legitimate business expenses are current, and that all earned salary payments are current as of the date of the potential termination scenario. The Company has assumed that each of the events that constitutes a termination of employment following a
change of control of the Company has occurred on December 31, 2013, on which day the closing sales price of Common Stock was $28.50. The actual amount of payments that each such Named Executive Officer could receive may not be determined with
complete accuracy until such time as an actual termination following a change of control occurs, but the values below are the Companys best estimate as to the potential payments each such Named Executive Officer would receive as of
December 31, 2013.
Potential Payments Upon Termination Following a Change of Control
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Name
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Lump Sum
Severance
Payments
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|
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Continuation
of Medical,
Dental and
Life
Insurance
Benefit
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|
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Accelerated
Vesting of
Stock
Options
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Accelerated Vesting
of Restricted
Shares Restricted
Share Units and
Cash Settled
Restricted Share
Unit
|
|
|
Accelerated
Vesting of
Performance
Shares
|
|
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Total
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|
($)
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|
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($)
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($)
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($)
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($)
|
|
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($)
|
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Gary C. Hanna
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|
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3,864,016
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19,548
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1,856,248
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|
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1,410,009
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|
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|
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7,149,821
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Tiffany J. Thom
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1,550,359
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|
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23,997
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|
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586,565
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|
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932,520
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3,093,441
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Andre J. Broussard
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1,344,984
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23,868
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285,694
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873,326
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2,527,872
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W. Mac Jensen
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641,574
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|
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23,436
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|
|
|
246,111
|
|
|
|
673,968
|
|
|
|
|
|
|
|
1,585,089
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|
Chad E. Williams
|
|
|
639,402
|
|
|
|
23,479
|
|
|
|
243,642
|
|
|
|
686,394
|
|
|
|
|
|
|
|
1,592,917
|
|
Narrative Disclosure of Our Compensation Policies and Practices as They Relate to our Risk Management
We do not believe that there are any risks arising from our compensation policies and practices for employees, including officers, that are
reasonably likely to have a material adverse effect on the Company. By establishing a balanced set of corporate and individual performance objectives based on the same metrics that the Company believes investors use in
25
determining whether to purchase the Companys stock, the Compensation Committee believes that our executive compensation program effectively manages risk by aligning our managements
incentives with our stockholders interests in the long-term performance of the Company. The Compensation Committee and the Board are aware of the need to routinely assess our compensation policies and practices and will make a determination on
an annual basis regarding the necessity of this particular disclosure.
26