def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule
14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
ULTRA PETROLEUM CORP.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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ULTRA
PETROLEUM CORP.
363 N. Sam Houston Pkwy
E., Suite 1200
Houston, Texas 77060
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 14, 2010
To the Shareholders of Ultra Petroleum Corp:
You are cordially invited to attend the Annual Meeting of
Shareholders of Ultra Petroleum Corp. (the
Company) which will be held at the Crowne
Plaza Hotel, 425 N. Sam Houston Pkwy E., Houston,
Texas on Monday, June 14, 2010 at
10:00 a.m. Central Daylight time (CDT), for the
following purposes:
1. To elect the Board of Directors to serve until their
successors are duly elected and qualified;
2. To appoint Ernst & Young LLP as the
independent auditor of the Company for the fiscal year ending
December 31, 2010;
3. To receive the financial statements of the Company for
the fiscal year ended December 31, 2009 together with the
auditors report thereon;
4. If presented, to consider and vote upon a shareholder
proposal regarding hydraulic fracturing which is opposed by the
Board of Directors of the Company; and
5. To transact such other business as may properly be
brought before the Annual Meeting or any adjournments or
postponements thereof.
The specific details of the matters proposed to be put before
the Annual Meeting are set forth in the proxy statement
accompanying and forming part of this notice.
Only shareholders of record at the close of business on
April 23, 2010, the Record Date, are
entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof. Each common share is
entitled to one vote per share. Whether or not you plan to
attend the Annual Meeting, the Company requests that you sign
and date the enclosed proxy card and mail it in the stamped,
pre-addressed envelope provided or deposit it with the transfer
agent, Computershare Investor Services Inc., Proxy Dept.,
100 University Avenue, 9th Floor, Toronto, Ontario,
M5J 2Y1. In order to be valid and acted upon at the Annual
Meeting, forms of proxy must be received at the aforesaid
address by 11:00 a.m. Eastern Daylight Time (EDT) on
Thursday, June 10, 2010. As an alternative, you can vote
your shares by telephone or over the Internet according to the
instructions on the proxy card.
Sincerely,
MICHAEL D. WATFORD
Chairman, President and
Chief Executive Officer
April 28, 2010
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
2010 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 14,
2010
The Companys Proxy Statement for the 2010 Annual Meeting
of Shareholders and Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 are available
at www.ultrapetroleum.com.
TABLE OF CONTENTS
Proxy
Statement Questions
WHO IS
ENTITLED TO VOTE AT THE ANNUAL MEETING?
Shareholders who own shares of common stock as of April 23,
2010 may vote at the meeting.
WHEN WERE
THE ENCLOSED SOLICITATION MATERIALS FIRST GIVEN TO
SHAREHOLDERS?
This Proxy Statement and accompanying proxy are first being
sent, or given, to shareholders on or about May 11, 2010.
WHAT AM I
VOTING ON, AND WHAT ARE THE BOARDS
RECOMMENDATIONS?
You are voting on the following:
1. The election of five directors;
2. The appointment of Ernst & Young LLP as the
independent auditor of the Company for the fiscal year ending
December 31, 2010;
3. If presented, a shareholder proposal which is opposed by
the Board of Directors; and
4. Such other business as may properly be brought before
the Annual Meeting or any adjournments or postponements thereof.
The Board recommends a vote FOR the election
of the five directors, FOR the appointment of
Ernst & Young LLP as the Companys independent
registered public accounting firm for 2010, and, if presented,
AGAINST the shareholder proposal.
WHAT
CONSTITUTES A QUORUM OF SHAREHOLDERS?
A quorum must be present for the Company to conduct the meeting.
A quorum is the presence at the Annual Meeting in person or by
proxy of one or more shareholders holding 5% of the total common
shares issued and outstanding on the Record Date. For purposes
of determining whether a quorum is present under Yukon law,
broker non-votes and abstentions count towards the establishment
of a quorum.
HOW DO I
VOTE?
You may vote your shares in person at the Annual Meeting or by
proxy. Since many of the Companys shareholders are unable
to attend the meeting in person, the Company sends forms of
proxies and offers electronic and telephone voting to all of its
shareholders to enable them to direct the voting of their
shares. If your shares are held by your broker in street
name, your broker will provide you with materials and
instructions for voting your shares.
IF MY
SHARES ARE HELD IN STREET NAME BY MY BROKER, WILL MY
BROKER VOTE FOR ME?
Under New York Stock Exchange rules, if your shares are held by
your broker in street name and you do not vote your
shares by following the instructions provided by your broker,
your broker can vote your shares on Proposal 2 but not with
respect to the election of directors or other non-routine
matters, including the shareholder proposal, if presented
(Proposals 1, 3 and 4). If you do not instruct your broker
how to vote your shares, and if your broker is not permitted to
vote on the proposals without instructions from you, then your
shares will be counted as broker non-votes for those
proposals, which will have the same effect as votes against the
proposals.
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WHAT IS A
PROXY?
A proxy is a person you appoint to vote on your behalf. When you
vote by completing and returning the enclosed proxy card, you
will be designating Michael D. Watford and Kelly L. Whitley as
your proxies. Management of the Company is soliciting the
proxies so that all common shares may be voted at the Annual
Meeting. You must complete and return the enclosed form of
proxy or vote by phone or Internet.
CAN I
APPOINT SOMEONE OTHER THAN THE INDIVIDUALS NAMED IN THE ENCLOSED
PROXY CARD TO VOTE MY SHARES?
Yes, you have the right to appoint another person of your
choice, who need not be a shareholder, to attend and act on your
behalf at the Annual Meeting. If you wish to appoint a person
other than those named in the enclosed proxy card, then draw a
line through the printed names appearing on the proxy card and
insert the name of your chosen proxyholder in the space
provided. This can also be accomplished via the Internet.
It is important for you to ensure that any other person you
appoint as your proxyholder will attend the Annual Meeting and
is aware that his or her appointment has been made to vote your
shares. Proxyholders should, on arrival, present themselves to a
representative of the inspector of election.
WHO MAY
SIGN THE PROXY CARD?
For a shareholder who is an individual, the form of proxy may be
signed either by the individual or by his or her authorized
attorney if accompanied by the original power of attorney or a
notarially certified copy. In the case of a shareholder which is
a corporation or an association, the form of proxy must be
signed by a duly authorized officer or by an authorized
attorney. Persons signing as officers, executors, administrators
or trustees should so indicate and must provide a true copy of
the document establishing their authority. An authorized person
of a partnership should sign in the partnership name. The
Chairman of the Annual Meeting has discretionary authority to
accept or reject proxies which do not strictly conform to the
foregoing requirements.
HOW WILL
MY PROXY VOTE MY SHARES?
Your proxies will vote in accordance with your instructions if
duly completed and deposited. If you complete and return your
proxy card but do not provide instructions on how to vote, your
proxies will vote FOR the five director nominees,
FOR the appointment of Ernst & Young LLP
as the independent registered public accounting firm for fiscal
year 2010 and AGAINST the shareholder proposal
described in this proxy statement. Also, your proxy card or
a vote by you via phone or the Internet will give your proxies
authority to vote, using their best judgment, on any other
business that properly comes before the meeting.
The accompanying form of proxy also confers discretionary
authority on the persons named therein to vote shares and
otherwise act in the proxyholders discretion with respect
to any amendments or variations to matters identified in the
Notice of Meeting and with respect to any other matters that may
properly come before the Annual Meeting or any adjournment
thereof.
HOW DO I
VOTE USING MY PROXY CARD?
There are three steps:
Step
1
Election
of a board of five directors to serve until the next Annual
Meeting or until their successors are duly elected and
qualified.
To vote for a director, you check the box marked FOR
opposite the name of the director. To withhold a vote from a
director, mark the box WITHHELD opposite the name of
the director.
3
To
appoint Ernst & Young LLP as the independent auditor
of the Company for the fiscal year ended December 31,
2010.
To vote for Proposal No. 2, you check the box marked
FOR. To withhold your vote, mark the box
WITHHELD opposite the proposal.
For the shareholder proposal to be considered and voted upon at
the meeting, a representative of the shareholder submitting the
shareholder proposal must be present at the meeting. To vote for
Proposal No. 3, you check the box marked
FOR. If you are opposed to the proposal, check the
box marked, AGAINST. If you are unsure how to vote,
check the box marked ABSTAIN. If the shareholder
representative is not present at the meeting, all votes relating
to the proposal will be discarded.
Step
2
Sign and date your proxy card.
IF YOU DO NOT SIGN AND DATE YOUR PROXY CARD, YOUR VOTES CANNOT
BE COUNTED. EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN THE
MANNER DIRECTED. IF NO DIRECTION IS MADE, EACH SUCH PROXY WILL
BE VOTED AS FOR PROPOSALS NO. 1 AND 2, AND
AGAINST PROPOSAL NO. 3.
Step
3
Mail your proxy card in the pre-addressed, postage-paid envelope.
WHERE DO
I SEND MY PROXY CARD?
Please return your properly completed proxy card to the
Companys transfer agent in the postage paid envelope
provided or mail it to Computershare Investor Services Inc.,
Proxy Dept., 100 University Avenue, 9th Floor, Toronto,
Ontario, M5J 2Y1. If you vote by telephone or the Internet as
described below, please do not send a proxy card to the
Companys transfer agent.
WHAT IS
THE DEADLINE FOR SUBMITTING MY PROXY CARD?
To be effective, your proxy card must be received by
Computershare Investor Services Inc. at the above address before
11:00 a.m., EDT, on Thursday, June 10, 2010.
CAN I
CHANGE MY MIND ONCE I HAVE SUBMITTED MY PROXY CARD TO THE
COMPANY?
Yes, if you complete another proxy card prior to the submission
deadline, the later-dated proxy card will replace the one
submitted earlier. If you are a registered shareholder,
you can revoke your proxy by stating clearly, in writing, that
you want to revoke your proxy. This statement should be
delivered:
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To the Corporate Secretary of the Company by mail at
363 N. Sam Houston Pkwy E., Suite 1200, Houston,
Texas 77060, or by fax at
(281) 876-2831
at any time up to and including the last business day preceding
the day of the Annual Meeting or any adjournment thereof,
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To the Chairman of the Annual Meeting prior to the commencement
of the meeting on the day of the meeting or any adjournment
thereof,
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In any other manner permitted by law.
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If you are a non-registered shareholder, you should
contact your nominee for instructions to revoke your proxy.
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HOW DO I
VOTE BY TELEPHONE?
Record holders may submit proxies by following the To Vote
Using the Telephone instructions on their proxy cards.
Call toll-free at 1-866-732-VOTE (8683). To vote your shares,
you must use the control number printed on your proxy/voting
instruction card. Telephone voting is accessible 24 hours a
day, seven days a week until 11:00 a.m. EDT on
Thursday, June 10, 2010. If you vote by telephone, please
do not return your proxy/voting instruction card to the
Companys transfer agent.
Shareholders who hold shares beneficially in street
name may vote by telephone by calling the number specified
on the voting instruction card provided by their brokers,
trustee or nominees. Please check the voting instruction card
for telephone voting availability.
HOW DO I
VOTE ON THE INTERNET?
Record holders with Internet access may submit proxies by
following the To Vote Using the Internet
instructions on their proxy cards.
Visit the website at
http://www.investorvote.com
and follow the on-screen instructions. To vote your shares, use
the control number printed on your proxy/voting instruction
card. Website voting is available 24 hours a day, seven
days a week, and will be accessible until
11:00 a.m. EDT on Thursday, June 10, 2010. If you
vote through the internet, please do not return your
proxy/voting instruction card to the Companys transfer
agent.
Shareholders who hold shares beneficially in street
name may vote by accessing the website specified on the
voting instruction cards provided by their brokers, trustees or
nominees. Please check the voting instruction card for Internet
voting availability.
CAN I
VOTE BY PROXY EVEN IF I PLAN TO ATTEND THE ANNUAL
MEETING?
Yes. If you vote by proxy, you do not need to fill out a ballot
at the Annual Meeting unless you want to change your vote.
WHO IS
SOLICITING MY PROXY, HOW IS IT BEING SOLICITED, AND WHO PAYS THE
COSTS?
Ultra Petroleum Corp., on behalf of the Board of Directors,
through its officers and employees, is soliciting proxies
primarily by mail. Solicitations may be supplemented by
telephone or other personal contact without special compensation
by regular officers and employees of the Company. No
solicitation will be made by specifically engaged employees or
soliciting agents.
VOTING
RESULTS
The report of the inspector of elections will be included in a
Current Report on
Form 8-K
and published on the Companys website
(www.ultrapetroleum.com) within four business days following the
Annual Meeting. Copies of the report of the inspector of
elections and the Current Report on
Form 8-K
with respect thereto may be accessed through
www.ultrapetroleum.com or obtained by writing to the Manager of
Investor Relations, Ultra Petroleum Corp., 363 N. Sam
Houston Pkwy E, Houston, Texas 77060.
BENEFICIAL
OWNERSHIP OF SECURITIES
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of April 23, 2010,
certain information with respect to ownership of the
Companys common shares as to (a) all persons known to
the Company to be the beneficial owners of more than five
percent of the Companys outstanding common shares,
(b) each director (including the nominees), (c) each
of the executive officers named in the Summary Compensation
Table, and (d) all executive officers
5
and directors of the Company as a group. Unless otherwise
indicated, all common shares are owned directly and each owner
has sole voting and investment power with respect to such shares
listed next to their names in the following table.
The information as to shares beneficially owned has been
obtained from filings made by the named beneficial owners with
the Securities and Exchange Commission and Canadian regulatory
authorities as of April 23, 2010, or, in the case of
executive officers and directors of the Company information that
has been furnished by such individuals.
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Number of
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Percent of
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Name of Beneficial Owner
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Common Shares
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Class(a)
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Directors and Executive Officers:
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Michael D. Watford(b)
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4,154,737
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2.7
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%
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W. Charles Helton(c)
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787,005
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0.5
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%
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Robert E. Rigney(d)
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1,156,840
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0.8
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%
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Stephen J. McDaniel
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10,703
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*
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Roger A. Brown
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7,201
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*
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William R. Picquet(e)
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222,398
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*
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Marshall D. Smith(f)
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247,833
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*
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Stuart E. Nance(g)
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74,310
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*
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Common shares all directors and executive officers own as a
group (8 persons)(h)
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6,661,027
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4.4
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%
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Blackrock Inc.(i)
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7,317,592
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4.8
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%
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55 East 52nd Street
New York, NY 10055
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FMR LLC(j)
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7,573,357
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5.0
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%
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82 Devonshire Street
Boston, MA 02109
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Janus Capital Management LLC(k)
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8,002,278
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5.3
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%
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151 Detroit Street
Denver, CO 80206
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Morgan Stanley(l)
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16,887,289
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11.1
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%
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1585 Broadway
New York, NY 10036
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UBS Global Asset Management (Americas) Inc.(m)
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9,019,924
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5.9
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%
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One North Wacker Drive
Chicago, IL 60606
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Wellington Management Company, LLP(n)
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8,313,808
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5.5
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%
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75 State Street
Boston, MA 02109
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Less than 1% |
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(a) |
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As of April 23, 2010 there were 152,195,397 common shares
outstanding. |
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Includes 162,703 common shares issuable upon exercise of vested
options; 780,312 common shares issuable upon exercise of vested
options owned by Watford Interests Ltd.; and
2,308,536 shares owned by Watford Interests, Ltd. directly.
Watford Interests Ltd. is a family partnership in which
Mr. Watford has a beneficial interest. |
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Includes 103,220 shares owned by the Helton Family
Foundation in which Mr. Helton has shared voting power. |
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Includes 300,000 shares owned by Mr. Rigneys
family limited partnership and 100,000 shares owned by
Mr. Rigneys Grantor Retained Annuity Trust. |
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Includes 216,605 common shares issuable upon exercise of vested
options. |
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(f) |
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Includes 241,245 common shares issuable upon exercise of vested
options owned by VMS Interests, Ltd. VMS Interests, Ltd. is a
family partnership in which Mr. Smith has a beneficial
interest. |
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Includes 71,289 common shares are issuable upon exercise of
vested options and 2,000 shares held in childrens
trust. |
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Includes 1,472,154 common shares issuable upon exercise of
vested options. |
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(i) |
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Information is based on a
Schedule 13G-A
filed with the Securities and Exchange Commission on
February 10, 2010 by Blackrock Inc. Blackrock Inc.
represents that it has the sole voting power over
7,317,592 shares and sole dispositive power over
7,317,592 shares of the Companys common stock. |
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Information is based on a
Schedule 13G-A
filed with the Securities and Exchange Commission on
February 16, 2010 by FMR LLC. FMR LLC represents that it
has the sole voting power over 294,783 shares and the sole
dispositive power over 7,573,357 shares of the
Companys common stock. |
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(k) |
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Information is based on a Schedule 13G filed with the
Securities and Exchange Commission on February 16, 2010 by
Janus Capital Management LLC. Janus Capital Management LLC
represents that it has the sole voting power over
6,256,112 shares, shared voting power over
1,746,166 shares, sole dispositive power over
6,256,112 shares, and shared dispositive power over
1,746,166 shares of the Companys common stock. |
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(l) |
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Information is based on a
Schedule 13G-A
filed with the Securities and Exchange Commission
February 12, 2010 by Morgan Stanley. Morgan Stanley
represents that it has the sole voting power over
16,582,033 shares, shared voting power over
17,100 shares, and sole dispositive power over
16,887,289 shares of the Companys common stock. |
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(m) |
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Information is based upon a Schedule 13G filed with the
Securities and Exchange Commission on February 11, 2010 by
UBS Global Asset Management Americas Inc. UBS Global Asset
Management Americas Inc. represents that it has sole voting
power over 7,125,728 shares and shared dispositive power
over 9,019,924 shares of the Companys common stock. |
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(n) |
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Information is based upon a Schedule 13G (Amendment
No. 2) filed with the Securities and Exchange
Commission on February 12, 2010 by Wellington Management
Company, LLP. Wellington Management Company, LLP represents that
it has shared voting power over 5,307,104 shares and shared
dispositive power over 8,313,808 shares of the
Companys common stock. |
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys directors and executive
officers, and persons who own more than ten percent of a
registered class of the Companys equity securities, to
file with the Securities and Exchange Commission and any
exchange or other system on which such securities are traded or
quoted, initial reports of ownership and reports of changes in
ownership of common shares and other equity securities of the
Company.
To the Companys knowledge, based solely on a review of the
copies of such Section 16(a) reports furnished to the
Company and written representations that no other reports were
required, the Company believes that all reporting obligations of
the Companys officers, directors and greater than ten
percent shareholders under Section 16(a) were satisfied
during the year ended December 31, 2009.
7
EXECUTIVE
COMPENSATION
Compensation Discussion and Analysis
This section discusses the Companys compensation
objectives, outlines the Companys decisions regarding 2009
compensation for its named executive officers and outlines the
rationales behind those decisions.
Objectives
of the Companys compensation program
The Companys business strategy is to enhance shareholder
value through sustained growth in its reserve base, production
levels and resulting cash flows from operations. The
Companys compensation program is designed to attract,
retain, and motivate employees in order to effectively execute
its business strategy.
What the
Companys compensation program is designed to
reward
The Companys compensation program is designed to reward
performance that contributes to the achievement of its business
strategy on both a short-term and long-term basis. The Company
believes compensation should:
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relate to the value created for shareholders by being directly
tied to the financial performance and condition of the Company
and the particular executive officers contribution thereto,
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reward individuals who help the Company achieve its short-term
and long-term objectives and thereby contribute significantly to
the Companys success,
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help to attract and retain the most qualified individuals in the
oil and gas industry by being competitive with compensation paid
to persons having similar responsibilities and duties in other
companies in the same and closely related industries, and
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reflect the qualifications, skills, experience and
responsibilities of the particular executive officer.
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Elements
of the Companys compensation program and why the Company
pays each element
The Companys compensation program is comprised of four
elements: base salary, cash bonus, long-term equity-based
compensation and benefits.
The Company pays base salary:
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in order to recognize each executive officers unique value
and historical contributions to the Companys success in
light of salary norms in the industry and the general
marketplace,
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to match competitors for executive talent,
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to provide executives with sufficient, regularly-paid
income, and
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to reflect position and level of responsibility.
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The Company includes an annual bonus as part of its compensation
program because the Company believes this element of
compensation helps to motivate management to achieve key
shorter-term corporate objectives and aligns executives
interests with shareholder interests.
Long-term equity-based incentive compensation is an element of
the Companys compensation policy because the Company
believes it:
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aligns executives interests with the interests of the
Companys shareholders,
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rewards long-term performance,
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is required in order for the Company to be competitive from a
total remuneration standpoint,
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encourages executive retention, and
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gives executives the opportunity to share in the long-term
performance of the Company.
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The Company offers benefits such as matching 401(k)
contributions and payment of insurance premiums in order to
provide a competitive remuneration package.
How the
Company determines each element of compensation
The Compensation Committee of the Companys Board of
Directors oversees the Companys compensation programs. The
Compensation Committees primary purpose is to assist the
Board of Directors in the discharge of its fiduciary
responsibilities relating to the fair and competitive
compensation of the Companys executive officers.
Consistent with the listing requirements of the New York Stock
Exchange, the Compensation Committee is composed entirely of
independent members of the Companys Board of Directors.
Generally, as compared to its competitors in the industry, the
Company targets the 50th percentile for base salary and a
higher 75th percentile for total compensation based on
performance metrics being satisfied. As a part of evaluating its
competitive position relative to those targets, every other year
the Company retains a compensation consultant to advise it as to
the market and as to appropriate benchmarks, and in years that
the Company does not retain a compensation consultant, like
2009, the Company independently reviews survey information (for
example as part of its compensation decision-making process, in
2008, the Compensation Committee engaged Stone Partners and
reviewed the analysis Stone Parents presented, and in 2009, the
Company reviewed the ECI 2009 Oil and Gas E&P Compensation
Survey and the Mercer 2009 US MTCS for the Energy Sector). The
companies referenced in the survey data reviewed by the Company
in 2009 included: Anadarko Petroleum, Apache Corporation, Bill
Barrett Corporation, Cabot Oil & Gas, Chesapeake
Energy, Devon Energy, EnCana Oil & Gas (USA) Inc., EOG
Resources, Forest Oil Corporation, Fortuna Energy, Newfield
Exploration Company, Noble Energy, Petrohawk Energy, Plains
Exploration & Production Company, Questar Corporation,
Quicksilver Resources, Range Resources, Southwestern Energy,
Whiting Petroleum, and XTO Energy.
Although the Company periodically retains a consultant for
benchmarking and advice and also reviews survey information as a
frame of reference, ultimately the Companys compensation
decisions are qualitative, not quantitative, and take into
consideration in material part factors such as: the age of the
data in surveys the Company reviews; the size, geographic focus,
nature of operations, and business complexity of applicable peer
group companies; the particular officers contribution to
the financial performance and condition of the Company; and such
officers qualifications, skills, experience and
responsibilities. Outside factors are also considered, such as
industry shortages of qualified employees for comparable
positions, recent experience in the marketplace, as well as time
lapse between the surveys used and the time the Companys
compensation decisions are being made. Therefore, the final base
salary of a particular officer may be greater or less than the
50th percentile and targeted total compensation may be
greater or less than the 75th percentile.
Role of CEO. Through an iterative process,
Mr. Watford along with other members of executive
management develop preliminary recommendations for compensation
actions, including recommendations for performance targets to be
used to determine compensation for the named executive officers,
including Mr. Watford. The Compensation Committee reviews
and considers these preliminary recommendations, accepts or
modifies them based on their respective independent business
judgments, and makes final recommendations for Board approval.
Base salary. With respect to base salary, the
Company targets by position the market 50th percentile.
With respect to Mr. Watfords base salary,
historically this has been based on an employment agreement
between the Company and Mr. Watford which was approved by
the Compensation Committee and the Board of Directors. Under the
agreement, Mr. Watfords base salary for 2009 is
$725,000 and is reviewed annually by the Compensation Committee.
Mr. Watfords salary was increased in 2009 based on
Mr. Watfords performance and the then current market
conditions for comparable positions.
Bonus Compensation. The Companys bonus
compensation is divided into two parts: cash bonus under an
Annual Incentive Plan (AIP) and long-term incentives
under the Long Term Incentive Plan (LTIP) and Best
in Class programs described below.
9
AIP. In 2005, the Company adopted the AIP
whereby executive officers, senior management and other
non-management personnel have the potential to receive a
meaningful cash bonus based on annual performance metrics
pre-established by the Compensation Committee as well as
discretionary factors. Historically, at the first
regularly-scheduled board meeting each year, the Compensation
Committee approves the amount to be paid with respect to the
prior years AIP, all of which will be paid out by the
Company after the meeting, and establishes the threshold, target
and maximum performance measures such as net income, EBITDA, and
production for the ensuing year. Threshold levels are set below
those expected to be achieved, target levels are set at levels
that are reasonably possible to be achieved, and maximum levels
are set at levels that are considered difficult to be achieved.
Because unanticipated events, some of which are beyond the
control of the Companys employees, may affect the
Companys attainment of the goals established by the
Committee, the final determination of actual awards under the
AIP is discretionary so that at the end of the performance
period, the Compensation Committee may adjust the targets,
taking into account factors such as commodity prices and
significant corporate transactions, to determine the actual
amount of bonus compensation, if any. For instance, a large
acquisition or divestiture may substantially change the
Companys budget and forecast, thereby affecting the
performance metrics. Also, the Compensation Committee encourages
the Companys executives to pursue long-term goals, even if
these long-term goals may result in a reduction in the
Companys near-term performance. There is no maximum
incentive award amount that may be recommended for any
individual; the total of all individual incentive awards,
however, may not exceed the funded and approved incentive pool.
The Compensation Committee may adjust the initial incentive pool
by 20% to reflect their overall assessment of Company results at
the end of the year. Awards under the AIP are payable in cash,
provided that the Company reserves the right to pay amounts in
its common shares.
In 2009, target levels under the AIP for employee levels were as
follows: Level I: from 100% to 200% of base salary;
Level II: from 60% to 120% of base salary; and
Level III: from 50% to 100% of base salary. These target
levels were expected to contribute to aligning the
Companys total compensation level at the
75th percentile when performance metrics are satisfied.
In February 2009, the Compensation Committee established net
income, cash flow from operations and production metrics,
weighted approximately equal, for the ensuing year and the
associated funding. All performance measures were met at the
maximum level. The Compensation Committee awarded a bonus to
Mr. Watford for 2009 of $2.0 million, representing
276% of his 2009 base salary. Mr. Smith was awarded a bonus
for 2009 of $550,000, representing 200% of his 2009 base salary,
Mr. Picquet was awarded a bonus for 2009 of $600,000,
representing 200% of his 2009 base salary, and Mr. Nance
was awarded a bonus for 2009 of $180,000 representing 95% of his
2009 base salary.
Long-Term Equity-Based Incentives. In 2009, as
it has in each year since 2005, the Company adopted a Long-Term
Incentive Plan (LTIP) in order to further align the
interests of key employees with shareholders and give key
employees the opportunity to share in the long-term performance
of the Company by achieving specific corporate financial and
operational goals. Officers, managers, and other key employees
of the Company who are recommended by the CEO and approved by
the Compensation Committee are eligible to participate in the
LTIPs.
All LTIP common stock awards and all LTIP awards of contingent
restricted stock units are performance-based and are measured
over a three-year performance period. The performance period for
the 2009 LTIP is January 2009 through December 2011, the
performance period for the 2008 LTIP is January 2008 through
December 2010, and the performance period for the 2007 LTIP
common stock award was January 2007 through December 2009. The
Compensation Committee established the following performance
measures for the 2009 LTIP, the 2008 LTIP and the 2007 LTIP
common stock award: return on equity, reserve replacement ratio,
and production growth.
Under the 2009 LTIP, the Compensation Committee established a
percentage of base salary for each participant, based on the
role performed by such participant for the Company, which
percentage is multiplied by the participants base salary
to derive a Long Term Incentive Value (LTI Value).
The LTI Value is the target value amount which was
awarded to each 2009 LTIP participant in the form of contingent
restricted
10
stock units and which corresponds to the number of shares of the
Companys common stock such participant is eligible to
receive if the target level for all performance
measures is met. The Compensation Committee also assigned to
each participant in the 2009 LTIP threshold and maximum award
levels for each performance measure in the event that actual
Company performance is below or above the applicable target
level. As with the AIP, threshold levels are set below those
expected to be achieved, target levels are set at levels that
are reasonably possible to be achieved, and maximum levels are
set at levels that are considered difficult to be achieved.
In February 2009 the Compensation Committee approved the award
of an aggregate of 477,634 contingent restricted stock units to
the Companys officers and employees for the 2009 LTIP,
representing 0.32% of the outstanding common shares on the date
of the grant. A total of 69 employees and no non-employee
directors received contingent awards of restricted stock units,
including all four of the named executive officers who received
an aggregate of 241,647 units or 46% of the total
restricted stock units granted in fiscal 2009.
Under the 2007 LTIP common stock award, the value of the awards
were expressed as dollar targets and became payable in common
shares equal to a percentage of the dollar target at the end of
the performance period based on the Companys overall
performance during such period. With respect to the 2008 LTIP,
during the third quarter of 2008, the Board of Directors
modified the LTIP such that the dollar target was converted to a
target number of shares on the date the Board approved the
modification. The awards were converted to grants of the
corresponding number of contingent restricted stock units
because the Compensation Committee believes awards of contingent
restricted stock units are a better way to align executive
compensation with the long-term interests of the Companys
stockholders.
With respect to all LTIPs adopted, the contingent awards vest at
the time the awards are paid, and participants must be employed
by the Company when the awards are distributed in order to
receive the award. If the participant is not employed on the
distribution date, then
he/she will
not receive the award.
Best in Class Program. In 2008, the
Company established the Best in Class Program
for all permanent full time employees. Under the Best in
Class Program, participants are eligible to receive a
number of shares of the Companys common stock based on the
performance of the Company. As with the LTIP, the Best in
Class Program is measured over a three year performance
period.
The Best in Class Program recognizes and financially
rewards the collective efforts of all of the Companys
employees in achieving sustained industry leading performance
and the enhancement of shareholder value. Under the Best in
Class Program, on January 1, 2008 or the employment
date if subsequent to January 1, 2008, eligible employees
received a contingent award of restricted stock units equal to
$60,000 worth of the Companys common stock based on the
average high and low share price on the first day of the
performance period. Employees joining the Company after
January 1, 2008 participate on a pro rata basis based on
their length of employment during the performance period.
The number of contingent units that will vest and become payable
under the 2008 Best in Class Program is based on the
Companys performance relative to the industry during a
three-year performance period beginning January 1, 2008,
and ending December 31, 2010, and are set at threshold
(50%), target (100%) and maximum (150%) levels. For each vested
unit, the participant will receive one share of common stock.
The contingent restricted stock units vest on the date the
awards are distributed, and the participant must be employed on
the date the awards are distributed in order to receive the
award. For example, at a conversion price of $71.61 per share
(average high and low stock price per share on the first day of
the performance period), the $60,000 award is equal to 838
contingent units. If the participant was employed from the
beginning of the performance period and the participant is
employed on the date the award is distributed: 419 (50% of
838) contingent restricted stock units will vest and the
participant will receive 419 shares of the Companys
common stock if the threshold level for all
performance measures is met; 838 (100% of 838) contingent
restricted stock units will vest and the participant will
receive 838 shares of the Companys common stock in
the target level for all performance measures is
met; and 1,257 (150% of 838) contingent restricted stock
units will vest and the participant will receive
1,257 shares of the Companys common stock if
11
the maximum level for all performance measures is
met. If the participant is not employed on the distribution
date, then
he/she will
not receive the award.
The performance measures are all sources finding and development
cost and full cycle economics. Performance results are
determined after the end of the performance period and
publication of the applicable industry reports.
Benefits. The Company provides benefits, or
perquisites, that it believes are standard in the industry to
all of its employees. These benefits consist of a group medical
and dental insurance program for employees and their qualified
dependents, group life insurance for employees and their
spouses, accidental death and dismemberment coverage for
employees, a Company sponsored cafeteria plan and a
401-K
employee savings and protection plan. The costs of these
benefits are paid for largely by the Company. The Company also
matches employee deferral amounts up to a total of 5% of
eligible compensation. The Companys discretionary
401-K
contribution to each qualified participant was calculated based
on 8% of the employees eligible salary during 2009. The
Company pays all administrative costs to maintain the plan.
How
elements of the Companys compensation program are related
to each other
The Company views the various components of compensation as
related but distinct and believes the components emphasize
pay for performance with a significant portion of
total compensation reflecting a risk aspect tied to long- and
short-term financial and strategic goals. The Companys
compensation philosophy is to foster entrepreneurship at all
levels of the organization by making long-term equity-based
incentives a significant component of executive compensation.
The Company determines the appropriate level for each
compensation component based in part, but not exclusively, on
its view of internal equity and consistency, and other
considerations the Company deems relevant, such as rewarding
extraordinary performance. The Companys Compensation
Committee has not adopted any formal or informal policies or
guidelines for allocating compensation between long-term and
currently paid out compensation, between cash and non-cash
compensation, or among different forms of non-cash compensation.
Accounting
and tax considerations
The Company has structured its compensation program to comply
with Internal Revenue Code Sections 162(m) and 409A. Under
Section 162(m) of the Internal Revenue Code, a limitation
was placed on tax deductions of any publicly-held corporation
for individual compensation to certain executives of such
corporation exceeding $1,000,000 in any taxable year, unless the
compensation is performance-based. If an executive is entitled
to nonqualified deferred compensation benefits that are subject
to Section 409A, and such benefits do not comply with
Section 409A, then the benefits are taxable in the first
year they are not subject to a substantial risk of forfeiture.
In such case, the service provider is subject to regular federal
income tax, interest and an additional federal income tax of 20%
of the benefit includible in income.
The Company has no employees who are currently receiving
non-performance based compensation paid in excess of the
Internal Revenue Code Section 162(m) tax deduction limit;
however, the Company reserves the right to use its judgment to
authorize compensation payments that do not comply with the
exemptions in Section 162(m) when the Company believes that
such payments are appropriate and in the best interest of the
shareholders, after taking into consideration changing business
conditions or the executives individual performance
and/or
changes in specific job duties and responsibilities.
All equity awards to the Companys employees, including
executive officers, and to the Companys directors have
been granted and reflected in the Companys consolidated
financial statements, based upon the applicable accounting
guidance, at fair market value on the grant date in accordance
with Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 718,
Compensation Stock Compensation (FASB ASC
718).
12
Compensation
Practices and Enterprise Risk
The Company does not believe its compensation policies and
practices create risks that are reasonably likely to have a
material adverse effect on the Company.
Stock
Ownership Policy
Currently the Company does not have a stock ownership policy
that applies to its employees.
Compensation
Committee Report
The Company has reviewed and discussed with management certain
compensation discussion and analysis provisions to be included
in the Companys 2010 proxy statement filed pursuant to
Section 14(a) of the Securities Exchange Act of 1934. Based
on the reviews and discussions referred to above, the Company
recommends to the Board of Directors that the compensation
discussion and analysis referred to above be included in the
Companys proxy statement.
Compensation Committee:
Mr. W. Charles Helton (Chairman)
Mr. Robert E. Rigney
Mr. Stephen J. McDaniel
Summary
Compensation Table
The following table shows compensation information for the
fiscal years ended December 31, 2009, 2008 and 2007, for
the Companys principal executive officer, principal
financial officer, and two additional executive officers. The
Company refers to these persons as named executive
officers.
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Change in
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Pension
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Non-
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Value and
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Equity
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Nonqualified
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Incentive
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Deferred
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All
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Stock
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Option
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Plan
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Compensation
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Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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(1)($)
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(2)($)
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(3)($)
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($)
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(4)($)
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(5)($)
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($)
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Michael D. Watford,
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2009
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$
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725,000
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$
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2,000,000
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$
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3,800,000
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$
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$
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31,989
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$
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6,556,989
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Chairman, Chief Executive
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2008
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$
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600,000
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$
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1,750,000
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$
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960,000
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$
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900,000
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$
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29,670
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$
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4,239,670
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Officer and President
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2007
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$
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587,500
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$
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1,500,000
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$
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900,000
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$
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900,000
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$
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29,420
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$
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3,916,920
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Marshall D. Smith,
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2009
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$
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275,000
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$
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550,000
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$
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2,417,500
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$
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$
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31,989
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$
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3,274,489
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Chief Financial Officer
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2008
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$
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230,000
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$
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350,000
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$
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290,000
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$
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230,000
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$
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29,670
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$
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1,129,670
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2007
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$
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230,000
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$
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300,000
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$
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230,000
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$
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230,000
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$
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29,870
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$
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1,019,870
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William R. Picquet,
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2009
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$
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300,000
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$
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600,000
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$
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2,515,000
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$
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$
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31,989
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$
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3,446,989
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Vice President Operations
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2008
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$
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265,000
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$
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400,000
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$
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325,000
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$
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265,000
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$
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30,070
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$
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1,285,070
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2007
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$
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235,000
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$
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325,000
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$
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235,000
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$
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235,000
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$
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28,770
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$
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1,058,770
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Stuart E. Nance,
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2009
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$
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190,000
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$
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180,000
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$
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450,000
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$
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$
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31,989
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$
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851,989
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Vice President Marketing
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2008
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$
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180,000
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$
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144,000
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$
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172,500
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$
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112,500
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$
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23,570
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$
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632,570
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2007
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$
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160,000
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$
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128,000
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$
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100,000
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$
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100,000
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$
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20,970
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$
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508,970
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(1) |
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The amounts in this column represent bonuses earned in 2009,
2008 and 2007, respectively, under the AIP. |
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(2) |
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The amounts in this column relate to total estimated payouts
earned during 2009, 2008 and 2007, respectively, under the
Companys LTIP described in Compensation Discussion
and Analysis. Actual awards under the LTIP are not payable
to the named executive officers until after the end of the
three-year performance cycle and adequate time has elapsed to
allow for performance measurement. The dollar amounts stated for
stock awards are based on the probable outcome at the grant date
and reflect the aggregate compensation cost to be recognized
over the service period determined at the grant date in
accordance with FASB ASC 718. The assumptions utilized in the
calculation of these amounts are set forth in Footnote 6 to the
Companys consolidated financial statements included in the
Annual Report on
Form 10-K
for the year-ended December 31, 2009. |
13
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The amounts reflected for the years ended December 31,
2009, 2008 and 2007 assume that the target level of performance
conditions will be achieved. If the Company ultimately attains
the maximum or threshold performance objectives, the associated
aggregate compensation, estimated at the grant date, is
estimated in the table below. If the actual performance is below
the threshold performance objectives, the resulting award may be
zero. |
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2009 LTIP
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2008 LTIP
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2008 BIC
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2007 LTIP
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($)
|
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($)
|
|
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($)
|
|
|
($)
|
|
|
Michael D. Watford
|
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Threshold
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$
|
1,900,000
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|
$
|
270,000
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|
|
$
|
30,000
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|
|
$
|
270,000
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Maximum
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$
|
5,700,000
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$
|
1,350,000
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$
|
90,000
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$
|
1,350,000
|
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Marshall D. Smith
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Threshold
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$
|
1,208,750
|
|
|
$
|
69,000
|
|
|
$
|
30,000
|
|
|
$
|
69,000
|
|
Maximum
|
|
$
|
3,626,250
|
|
|
$
|
345,000
|
|
|
$
|
90,000
|
|
|
$
|
345,000
|
|
William R. Picquet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
$
|
1,257,500
|
|
|
$
|
79,500
|
|
|
$
|
30,000
|
|
|
$
|
70,500
|
|
Maximum
|
|
$
|
3,772,500
|
|
|
$
|
397,500
|
|
|
$
|
90,000
|
|
|
$
|
352,500
|
|
Stuart E. Nance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
$
|
225,000
|
|
|
$
|
33,750
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
Maximum
|
|
$
|
675,000
|
|
|
$
|
168,750
|
|
|
$
|
90,000
|
|
|
$
|
150,000
|
|
|
|
|
(3) |
|
Represents LTIP stock options granted to the named executive
officers in 2008 and 2007. No options were granted to the named
executive officers during 2009. The dollar amounts stated for
stock awards reflect the aggregate compensation cost to be
recognized over the service period determined at the grant date
in accordance with FASB ASC 718. The fair value of each share
option award is estimated on the date of grant using a Black
Scholes pricing model based on assumptions set forth in
Note 6 to the Companys consolidated financial
statements included in the Annual Report on
Form 10-K
for the year-ended December 31, 2009. The grant date fair
value of the share option awards is $33.90 and $24.60 per share
for options granted on February 18, 2008 and
February 16, 2007, respectively. |
|
(4) |
|
The named executive officers receive no benefits from the
Company under defined pension or defined contribution plans. |
|
(5) |
|
Unless otherwise indicated, the amounts in this column consist
of matching and profit sharing contributions under the
Companys 401(k) plan and the value of certain other
benefits received by the named executive officer. These other
benefits include life insurance premiums paid on behalf of the
named executive officers. |
14
Grants of
Plan-Based Awards
The following table sets forth specific information with respect
to each equity grant made under any Company plan to a named
executive officer in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise or
|
|
|
Grant
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Number of
|
|
|
Base
|
|
|
Date Fair
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Under Equity Incentive
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
Value of
|
|
|
|
|
|
|
Plan Awards
|
|
|
Plan Awards(1)
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Stock and
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards(1)
|
|
|
Option
|
|
Name
|
|
Grant Date
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
Awards(1)
|
|
|
Michael D. Watford
|
|
|
02-16-2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,800,000
|
|
Marshall D. Smith
|
|
|
02-16-2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,809
|
|
|
|
63,618
|
|
|
|
95,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,417,500
|
|
William R. Picquet
|
|
|
02-16-2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,092
|
|
|
|
66,184
|
|
|
|
99,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,515,000
|
|
Stuart E. Nance
|
|
|
02-16-2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,921
|
|
|
|
11,842
|
|
|
|
17,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
450,000
|
|
|
|
|
(1) |
|
All RSUs granted to the named executive officers in 2009
were awarded under the 2005 Stock Incentive Plan and have an
award price based on the fair market value of the Companys
common stock on the date of grant. The fair market value, as
described in the 2005 Stock Incentive Plan, is the average high
and low price of the Companys stock on the date of grant. |
|
|
|
Represents potential payouts under the Companys 2009 LTIP
common stock awards for the three-year period ending December
2011. Pursuant to the 2009 LTIPs, the Compensation Committee
determined target payout amounts for each named executive
officer in February 2009. Awards are paid after the end of the
three-year period based on the attainment of pre-established
performance measures. The LTIP is discussed in further detail
under the heading Compensation Discussion and
Analysis. The assumptions utilized in the calculation of
these amounts are set forth in Footnote 6 to the Companys
consolidated financial statements included in the Annual Report
on
Form 10-K
for the year ended December 31, 2009. |
Employment
Agreements
The Company is party to an employment agreement with
Mr. Watford, the Companys Chairman, President and
Chief Executive Officer, which became effective February 1,
2007. The agreement had an initial term of three years, which
automatically extends for successive one-year periods unless the
Company notifies Mr. Watford at least ninety days before
the term ends of its intention not to renew the agreement. For
each one-year extension, the terms of employment are subject to
approval by the Company and Mr. Watford. The Company and
Mr. Watford agreed to terms of employment for a one-year
period starting February 2010.
Under the agreement, Mr. Watfords base salary is
reviewed by the Companys compensation committee annually
for appropriate increases based on Mr. Watfords
performance and the then current market conditions for
comparable positions. Mr. Watford also participates in the
Companys long-term incentive compensation plans. In
addition, the agreement provides that any such plans the Company
adopts in the future will be at least as favorable to
Mr. Watford as the plans in effect when the agreement was
signed. Mr. Watford prepares the applicable performance
targets, goals and rewards under such plans, for review and
approval by the Companys Compensation Committee. The
Company provides Mr. Watford an automobile and reimburses
him for reasonable business expenses. Mr. Watford is also
entitled to participate in any life insurance, disability and
health insurance plans maintained by the Company during the term
of the agreement.
The Company may terminate the agreement at any time for any
reason or for just cause. Just cause is defined as a breach of
the agreement by Mr. Watford or the commission by
Mr. Watford of certain illegal acts. Additionally,
Mr. Watford may terminate the agreement within two years
after any of the following: (i) assignment to
Mr. Watford of duties inconsistent with his position at the
Company as of the date of the agreement; (ii) a change of
control of the Company; (iii) the Companys failure to
continue to provide Mr. Watford the level of compensation
to which he is entitled as of the date of the agreement;
(iv) the
15
Company requiring Mr. Watford to relocate outside of
Houston, Texas; or (v) breach of the agreement by the
Company.
If the agreement is terminated other than for just cause, if the
Company fails to extend it at the end of the initial term or any
one-year extension, or if the Company and Mr. Watford are
unable to agree on the terms of employment for any one-year
extension, the Company is required to pay Mr. Watford a
lump sum equal to his most recent annual salary plus his most
recent bonus under the AIP. In addition, all of
Mr. Watfords unvested equity awards will immediately
vest upon such termination (or expiration), and be exercisable
for one year. The Company has also agreed to indemnify
Mr. Watford for liabilities to which he may be subject as a
result of acting as an officer of the Company or any of its
subsidiaries, and to maintain director and officer liability
insurance coverage.
Equity
Incentive Plan Awards
Terms
of Stock Option Grants
The Companys Stock Incentive Plans are administered by the
Compensation Committee of the Board of Directors as the
Plan Administrator. The Plan Administrator may make
awards of stock to employees, directors, officers and
consultants of the Company as long as the aggregate number of
common shares issuable to any one person pursuant to incentives
does not exceed 5% of the number of common shares outstanding at
the time of the award. In addition, no participant may receive
during any fiscal year awards of incentives covering an
aggregate of more than 500,000 common shares. The Plan
Administrator determines the vesting requirements and any
vesting restrictions or forfeitures that occur in certain
circumstances. Incentives may not have an exercise period longer
than 10 years. The exercise price of the stock may not be
less than the fair market value of the common shares at the time
of award, where fair market value means the average
high and low trading price of the common shares on the date of
the award. In the event of a change of control or termination
upon change of control of the Company, all outstanding awards
are paid at maximum levels in cash.
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth specific information with respect
to unexercised options, unvested stock and equity incentive plan
awards for each named executive officer outstanding as of
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
Units or
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Units or
|
|
|
Other
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Other
|
|
|
Rights
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights
|
|
|
That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That
|
|
|
Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Have Not
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
Options (#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Vested (#)
|
|
|
($)
|
|
|
Michael D. Watford
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1.49
|
|
|
|
01-16-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.43
|
|
|
|
05-07-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.83
|
|
|
|
04-25-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
$
|
11.68
|
|
|
|
02-06-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
25.68
|
|
|
|
02-07-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,118
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,585
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,557
|
|
|
|
|
|
|
$
|
75.18
|
|
|
|
02-18-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
838
|
(2)
|
|
$
|
60,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,587
|
(3)
|
|
$
|
900,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,038
|
(4)
|
|
$
|
900,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(5)
|
|
$
|
3,800,000
|
(5)
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
Units or
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Units or
|
|
|
Other
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Other
|
|
|
Rights
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights
|
|
|
That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That
|
|
|
Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Have Not
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
Options (#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Vested (#)
|
|
|
($)
|
|
|
Marshall D. Smith
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
$
|
33.57
|
|
|
|
07-18-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,895
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,350
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,787
|
|
|
|
|
|
|
$
|
75.18
|
|
|
|
02-18-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
838
|
(2)
|
|
$
|
60,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,217
|
(3)
|
|
$
|
230,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,332
|
(4)
|
|
$
|
230,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,618
|
(5)
|
|
$
|
2,417,500
|
(5)
|
William R. Picquet
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
40.34
|
|
|
|
08-16-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,052
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,553
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,819
|
|
|
|
|
|
|
$
|
75.18
|
|
|
|
02-18-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
838
|
(2)
|
|
$
|
60,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,287
|
(3)
|
|
$
|
235,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,839
|
(4)
|
|
$
|
265,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,184
|
(5)
|
|
$
|
2,515,000
|
(5)
|
Stuart E. Nance
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
3.91
|
|
|
|
07-01-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.83
|
|
|
|
04-25-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
$
|
16.97
|
|
|
|
04-26-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200
|
|
|
|
|
|
|
|
|
|
|
$
|
25.68
|
|
|
|
02-07-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,024
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,065
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,320
|
|
|
|
|
|
|
$
|
75.18
|
|
|
|
02-18-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
838
|
(2)
|
|
$
|
60,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,399
|
(3)
|
|
$
|
100,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,630
|
(4)
|
|
$
|
112,500
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,842
|
(5)
|
|
$
|
450,000
|
(5)
|
|
|
|
(1) |
|
LTIP options granted on February 18, 2008 will vest on
February 18, 2011. |
|
(2) |
|
Under the Best in Class program, on January 1, 2008 or the
employment date if subsequent to January 1, 2008, all
employees received a contingent award of restricted stock units
equal to $60,000 worth of the Companys common stock based
on the average high and low share price on the date of grant.
Employees joining the Company after January 1, 2008
participate on a pro rata basis based on their length of
employment during the performance period. The number of units
that will vest and become payable is based on the Companys
performance relative to the industry during a three-year
performance period beginning January 1, 2008, and ending
December 31, 2010, and are set at threshold (50%), target
(100%) and maximum (150%) levels. For each vested unit, the
participant will receive one share of common stock. Currently,
the Company anticipates that results will be paid at the target
level. |
|
(3) |
|
Represents payouts under the Companys 2007 LTIP for the
three-year period ended December 31, 2009. Pursuant to the
2007 LTIP, the Compensation Committee determined target payout
amounts for each named executive officer in February 2007.
Awards vested and were paid in shares of the Companys
common stock to employees, including each named executive
officer, during the first quarter of 2010 based on the
attainment of pre-established performance measures. The LTIP is
discussed in further detail under the heading Compensation
Discussion and Analysis. The awards were paid at the
maximum level. |
|
(4) |
|
Represents potential payouts under the Companys 2008 LTIP
for the three-year period ending December 31, 2010.
Pursuant to the 2008 LTIP, the Compensation Committee determined
target payout amounts |
17
|
|
|
|
|
for each named executive officer in February 2008. Awards vest
and are paid after the end of the three-year period based on the
attainment of pre-established performance measures. The LTIP is
discussed in further detail under the heading Compensation
Discussion and Analysis. Currently, the Company
anticipates that awards will be paid at the maximum level. |
|
(5) |
|
Represents potential payouts under the Companys 2009 LTIP
for the three-year period ending December 2011. Pursuant to the
2009 LTIP, the Compensation Committee determined target payout
amounts for each named executive officer in February 2009.
Awards vest and are paid after the end of the three-year period
based on the attainment of pre-established performance measures.
The LTIP is discussed in further detail under the heading
Compensation Discussion and Analysis. Currently, the
Company anticipates that awards will be paid at the maximum
level. |
Option
Exercises and Stock Vested
The following table sets forth specific information with respect
to each exercise of stock options and each vesting of stock
during 2009 for each named executive officer on an aggregated
basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards(2)
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value Realized
|
|
|
Shares
|
|
|
Value Realized
|
|
|
|
Acquired
|
|
|
on Exercise
|
|
|
Acquired
|
|
|
on Vesting
|
|
Name
|
|
on Exercise
|
|
|
($)(1)
|
|
|
on Vesting
|
|
|
($)
|
|
|
Michael D. Watford
|
|
|
500,000
|
|
|
$
|
26,340,000
|
|
|
|
24,671
|
|
|
$
|
937,500
|
|
Marshall D. Smith
|
|
|
|
|
|
$
|
|
|
|
|
6,513
|
|
|
$
|
247,500
|
|
William R. Picquet
|
|
|
|
|
|
$
|
|
|
|
|
6,661
|
|
|
$
|
253,125
|
|
Stuart E. Nance
|
|
|
|
|
|
$
|
|
|
|
|
3,357
|
|
|
$
|
127,575
|
|
|
|
|
(1) |
|
Reflects the difference between the market value of the shares
at the exercise date and the option exercise price multiplied by
the number of shares acquired on exercise, regardless of whether
the shares were held. |
|
(2) |
|
Relates to the payout of the 2006 LTIP in shares of the
Companys stock during the first quarter of 2009. |
Potential
Payouts Upon Change of Control and Termination
The Companys named executive officers are entitled to
severance benefits in the event their employment with the
Company is involuntarily terminated other than for cause or is
voluntarily terminated for good reason within two years of a
change of control. Based on a hypothetical termination date of
December 31, 2009, the change of control payments to the
Companys named executive officers would have been as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Watford(2)
|
|
|
Mr. Smith
|
|
|
Mr. Picquet
|
|
|
Mr. Nance
|
|
|
Base Salary
|
|
$
|
1,812,500
|
|
|
$
|
550,000
|
|
|
$
|
600,000
|
|
|
$
|
380,000
|
|
Bonus
|
|
|
5,000,000
|
|
|
|
1,100,000
|
|
|
|
1,200,000
|
|
|
|
360,000
|
|
Health & Welfare Benefits
|
|
|
6,799
|
|
|
|
5,000
|
|
|
|
5,120
|
|
|
|
5,120
|
|
Additional Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$
|
6,819,299
|
|
|
$
|
1,655,000
|
|
|
$
|
1,805,120
|
|
|
$
|
745,120
|
|
Fair market value of accelerated equity compensation(1)
|
|
|
8,490,000
|
|
|
|
4,406,250
|
|
|
|
4,612,500
|
|
|
|
1,083,750
|
|
Tax gross-up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
15,309,299
|
|
|
$
|
6,061,250
|
|
|
$
|
6,417,620
|
|
|
$
|
1,828,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes the 2007, 2008 and 2009 LTIP amounts and the 2008 Best
in Class estimated at maximum levels. |
|
(2) |
|
The base salary and bonus are calculated based on
Mr. Watfords employment agreement which was in effect
on December 31, 2009. See Employment
Agreements. The health and welfare benefits are |
18
|
|
|
|
|
assumed to continue for three years as provided in the
employment agreement and are calculated using 2009 amounts. |
For the Companys executive officers (other than the
Companys CEO whose severance benefits are set forth in his
employment agreement) the Company provides for: (i) a lump
sum severance payment equal to two times the executives
base salary plus the maximum bonus opportunity under the AIP;
(ii) continuation of life and health insurance benefits for
two years at existing group rates; (iii) immediate vesting
of all stock options awards which are exercisable for one year
following termination; and (iv) immediate vesting of all
LTIP and Best in Class awards at maximum levels.
A change of control is generally defined as:
|
|
|
|
|
The acquisition by an individual, entity or group of beneficial
ownership of 35% or more of either (x) the then outstanding
shares of common stock of the Company, or (y) the combined
voting power of the then outstanding voting securities of the
Company. An acquisition directly from the Company, by the
Company or by an employee benefit plan sponsored by the Company
would not constitute a change of control.
|
|
|
|
Where individuals who constitute the Board of Directors of the
Company, including new board members approved by the incumbent
Board, cease for any reason to constitute at least a majority of
the Board.
|
|
|
|
The consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the
acquisition of assets of another corporation, unless following
such business combination current beneficial owners own at least
50.1% of the combined voting power of the combined company.
|
|
|
|
Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
|
Good reason includes a reduction in the officers base
salary, diminution of duties or relocation greater than
50 miles without consent.
Director
Compensation
Non-employee directors were paid an annual retainer of $75,000
and received common shares equivalent to $175,000 granted under
the 2005 Stock Incentive Plan. Directors who are also officers
or employees of the Company do not receive any compensation for
duties performed as directors. The following table shows
compensation paid to each director of the Company during the
fiscal year ended December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)
|
|
|
($)
|
|
|
W. Charles Helton
|
|
$
|
75,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,000
|
|
Robert E. Rigney
|
|
$
|
75,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,000
|
|
Roger A. Brown
|
|
$
|
75,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,000
|
|
Stephen J. McDaniel
|
|
$
|
90,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
265,000
|
|
|
|
|
(1) |
|
Represents the grant date fair value of 3,797 shares of
common stock on the grant date of May 21, 2009. |
|
(2) |
|
At December 31, 2009, none of the Companys outside
directors had stock or option awards outstanding. |
19
CORPORATE
GOVERNANCE
Statement
of Corporate Governance Practices
The Company has long believed that good corporate governance is
important to ensure that the Company is managed for the
long-term benefit of the Companys shareholders. The
Company periodically reviews its corporate governance policies
and practices and compares them to those suggested by various
authorities in corporate governance and to the practices of
other public companies. The Company also continuously reviews
the rules and regulations promulgated under the Sarbanes-Oxley
Act of 2002, all new and proposed rules of the Securities and
Exchange Commission and all new and proposed listing and
compliance standards of the New York Stock Exchange.
Corporate Governance Guidelines. The
Companys Board adopted the Corporate Governance Guidelines
to assist the Board of Directors in the exercise of its
responsibilities. These Guidelines are interpreted in the
context of all applicable laws and the Companys
Certificate of Continuance, Articles of Incorporation, By-laws
and other corporate governance documents. The Guidelines are
intended to serve as a flexible framework within which the Board
may conduct its business and not as a set of legally binding
obligations. The Guidelines are available free of charge to the
public on the Companys website at
http//www.ultrapetroleum.com.
You may also request a copy of these Guidelines at no cost by
making a written or telephone request for copies to Ultra
Petroleum Corp., Corporate Secretary, 363 N. Sam
Houston Pkwy E., Suite 1200, Houston, TX 77060,
(281) 876-0120.
Code of Business Conduct and Ethics. In
February 2003, the Companys Board adopted a Code of
Business Conduct and Ethics which applies to all of its
directors, officers and employees. In connection with the
listing of the Companys shares on the New York Stock
Exchange, the Code of Business Conduct and Ethics was amended by
the Board in August 2008 to comply with the requirements of the
New York Stock Exchange. The Board has not granted any waivers
to the Code of Business Conduct and Ethics. The Code of Business
Conduct and Ethics is available free of charge on the
Companys website at
http://www.ultrapetroleum.com.
You may also request a copy of the Code of Business Conduct and
Ethics at no cost by making a written or telephone request for
copies to Ultra Petroleum Corp., Corporate Secretary,
363 N. Sam Houston Pkwy E., Suite 1200, Houston,
TX 77060,
(281) 876-0120.
Any amendments to or waivers of the Code of Conduct and Business
Ethics will also be posted on the Companys website.
Mandate
of the Board and Role in Risk Oversight
The Companys Board of Directors has explicitly
acknowledged responsibility for the management of the business
and affairs of, and to act with a view to the best interests of,
the Company. The mandate of the Board includes, among other
matters: (a) the adoption of a strategic planning process;
(b) the assessment of management performance, considering
succession planning, and taking responsibility for appointing,
training and monitoring senior management; (c) establishing
a policy to facilitate communications with shareholders and
others involved with the Company; and (d) addressing the
integrity of the Companys internal control and management
information systems.
While the Companys full board of directors, with input
from each of its committees, oversees the Companys
management of risks, the Companys management team is
responsible for the day-to-day risk management process. The
audit committee reviews with management, as well as internal and
external auditors, the Companys business risk management
process, including the adequacy of its overall control
environment and controls in selected areas representing
significant financial and business risk. The audit committee
receives reports from management at least quarterly regarding
managements assessment of various risks and considers the
impact of risk on the Companys financial position and the
adequacy of its risk-related internal controls. In addition,
each of the committees of the Board of Directors as well as
senior management reports regularly to the full Board regarding
risks facing the Company and the steps taken to mitigate those
risks.
The Companys Board of Directors met formally five times
during the last fiscal year. During the last fiscal year, all
directors attended 100% of the total number of meetings of the
Board of Directors, except that
20
Mr. Helton was not present at one meeting of the Board of
Directors, and each committee member attended 100% of the total
number of meetings held by all committees on which he served.
Board
Composition and Independence from Management
The Board has determined that four of the five current
directors, Mr. Helton, Mr. Rigney, Mr. McDaniel
and Mr. Brown, and four of the five nominated directors,
Mr. Helton, Mr. Rigney, Mr. McDaniel and
Mr. Brown, are independent directors pursuant
to the corporate governance standards for companies listed on
the New York Stock Exchange. It is a policy of the Board of
Directors that a majority of the members of the Board be
independent of the Companys management. For a director to
be independent, the Board affirmatively determines
that the director has no material relationship with the Company
that would interfere with the exercise of independent judgment.
The director may not be an officer or other employee of the
Company or any parent or subsidiary and may not have not served
in such capacity during the past three years. In addition, a
director will not be deemed independent if he or she:
|
|
|
|
|
Has accepted or has an immediate family member who has accepted
any payments from the Company or any parent or subsidiary of the
Company in excess of $120,000 during the current or any of the
past three years. Compensation for board service, payments
arising solely from investments in the Companys
securities, compensation paid to an immediate family member who
is a non-executive employee of the Company or of a parent or
subsidiary of the Company, compensation received for former
service as an interim Chairman or CEO, or benefits under a
tax-qualified retirement plan or non-discretionary compensation
are not included in the $120,000.
|
|
|
|
Is an employee of, or has an immediate family member who is an
executive officer of, any organization to which the Company
made, or from which the Company received, payments (other than
those arising solely from investments in the Companys
securities or payments under non-discretionary charitable
contribution matching programs) that exceed 2% of the
organizations consolidated gross revenues for that year,
or $1,000,000, whichever is more, in any of the most recent
three fiscal years.
|
|
|
|
Is an immediate family member of an individual who is or has
been employed by the Company or any parent or subsidiary of the
Company as an executive officer during any of the past three
years.
|
|
|
|
Is an executive officer of another entity where any of the
Companys executive officers serve on the compensation
committee.
|
|
|
|
Is or has an immediate family member who is a current partner of
the Companys outside auditor, or was a partner or employee
of the Companys outside auditor who worked on the
Companys audit at any time during any of the past three
years.
|
Consistent with NYSE requirements and to promote open discussion
among the Companys non-management directors, the
Companys non-management directors meet in separate
executive (private) sessions following each regularly scheduled
meeting of the Board. The Chairman of such executive sessions,
as elected by the independent directors, is Mr. Helton, and
he presides at executive sessions of the Companys Board.
Board of
Directors Leadership Structure
Michael D. Watford is Chief Executive Officer, and Chairman of
the Board of Directors of the Company. He has served the Company
in those positions since January 1999, during which period the
Company and its shareholders have enjoyed tremendous success.
Mr. Watford is also the Companys largest individual
shareholder, controlling in excess of 4.1 million shares of
the Companys common stock. It is Mr. Watfords
opinion, an opinion shared by the Companys full Board of
Directors, that the Companys largest individual
shareholder and chief executive who is active in the business,
as is currently the case and has been the case with
Mr. Watford for more than the past 10 years, should
hold both roles. In addition, the Board of Directors believes
the Company benefits because the Companys leadership
structure (combined Chairman/CEO position, experienced
independent directors and Board committees, and regular
executive sessions of the non-management directors) provides a
strong, unified leadership for the Companys management
team and the Board. The Board of Directors has not named a lead
independent director.
21
Communication
with the Board of Directors
In order to provide the Companys shareholders and other
interested parties with a direct and open line of communication
to the Board of Directors, the Board of Directors has adopted
the following procedures for communications to directors.
Shareholders and other interested persons may communicate with
the Chairman of the Companys Audit Committee or with the
non-management directors of the Company as a group by written
communications addressed in care of Corporate Secretary, Ultra
Petroleum Corp., 363 N. Sam Houston Pkwy E.,
Suite 1200, Houston, Texas 77060.
All communications received in accordance with these procedures
will be reviewed initially by senior management of the Company.
Senior management will relay all such communications to the
appropriate director or directors unless it is determined that
the communication (i) does not relate to the business or
affairs of the Company or the functioning or constitution of the
Board of Directors or any of its committees; (ii) relates
to routine or insignificant matters that do not warrant the
attention of the Board of Directors; (iii) is an
advertisement or other commercial solicitation or communication;
(iv) is frivolous or offensive; or (v) is otherwise
not appropriate for delivery to directors.
The director or directors who receive any such communication
will have discretion to determine whether the subject matter of
the communication should be brought to the attention of the full
Board of Directors or one or more of its committees and whether
any response to the person sending the communication is
appropriate. Any such response will be made only in accordance
with applicable law and regulations relating to the disclosure
of information.
The Corporate Secretary will retain copies of all communications
received pursuant to these procedures for a period of at least
one year. The Board of Directors will review the effectiveness
of these procedures from time to time and, if appropriate,
recommend changes.
Board
Committees
The Companys Board of Directors has three committees: the
Audit Committee, the Compensation Committee, and the Nominating
and Corporate Governance Committee. The Board may add new
committees or remove existing committees as it deems advisable
for purposes of fulfilling its primary responsibilities. Each
committee will perform its duties as assigned by the Board of
Directors in compliance with the Companys by-laws. The
committees and their mandates are outlined below.
Audit Committee. The purpose of the Audit
Committee is to oversee (i) the integrity of the
Companys financial statements and disclosures,
(ii) the Companys compliance with legal and
regulatory requirements, (iii) the qualifications,
independence and performance of the Companys independent
auditors, (iv) the performance of the Companys
internal audit function and independent auditors, (v) the
Companys internal control systems, and (vi) the
Companys procedures for monitoring compliance with the
Companys Code of Business Conduct and Ethics.
The principal function of the Audit Committee is to assist the
Board of Directors in the areas of financial reporting and
accounting integrity. As such, it meets periodically with the
independent auditors and management, including each in executive
session. Management is solely responsible for the financial
statements and the financial reporting process, including the
system of internal controls. The Companys independent
auditors are responsible for expressing an opinion on the
conformity of these financial statements, in all material
respects, with accounting principles generally accepted in the
United States of America.
The Audit Committee has sole responsibility for retaining,
dismissing and compensating the Companys independent
auditors. The Audit Committee annually reviews and pre-approves
the audit, review, attest and permitted non-audit services to be
provided during the next audit cycle by the independent auditor.
To the extent practicable, at the same meeting the Audit
Committee also reviews and approves a budget for each of such
services. Services proposed to be provided by the independent
auditor that have not been pre-approved during the annual review
and the fees for such proposed services must be pre-approved by
the Audit Committee.
22
All requests or applications for the independent auditor to
provide services to the Company must be submitted to the Audit
Committee by the independent auditor and management and must
state whether, in the view of the submitting party, the request
or application is consistent with applicable laws, rules and
regulations relating to auditor independence. In the event that
any member of management or the independent auditor becomes
aware that any services are being, or have been, provided by the
independent auditor to the Company without the requisite
pre-approval, such individual must immediately notify the Chief
Financial Officer, who must promptly notify the Chairman of the
Audit Committee and appropriate management so that prompt action
may be taken to the extent deemed necessary or advisable.
The Audit Committee is comprised of Messrs. McDaniel,
Helton and Brown. The Board of Directors has affirmatively
determined that each of the members is financially literate and
is independent for purposes of New York Stock
Exchange rules applicable to members of the audit committee,
meaning that the director has no relationship to the Company
that may interfere with the exercise of their independence from
management and the Company. Additionally, the Board of Directors
has determined that Mr. McDaniel is an audit
committee financial expert.
The Audit Committee held four meetings during 2009. All members
of the Audit Committee attended the meetings. The Audit
Committee Charter is available free of charge to the public on
the Companys website at http//www.ultrapetroleum.com. You
may also request a copy of the Audit Committee Charter at no
cost by making a written or telephone request for copies to
Ultra Petroleum Corp., Corporate Secretary, 363 N. Sam
Houston Pkwy E., Suite 1200, Houston, TX 77060,
(281) 876-0120.
Compensation Committee. The purpose of the
Compensation Committee is to (i) assist the Board of
Directors in the discharge of its fiduciary responsibilities
relating to the compensation of the Companys Chief
Executive Officer and other executives, (ii) approve and
administer the Companys long-term incentive compensation
plans, (iii) establish targets and measure performance
against those targets, and (iv) prepare an annual report on
executive compensation. The members of this Committee are
Messrs. Helton, McDaniel and Rigney. The Board of Directors
has determined that each of the members is independent for
purposes of New York Stock Exchange rules. The Compensation
Committee held four meetings during 2009. All members of the
Compensation Committee attended the meetings. The Compensation
Committee Charter is available free of charge to the public on
the Companys website at http//www.ultrapetroleum.com. You
may also request a copy of the Compensation Committee Charter at
no cost by making a written or telephone request for copies to
Ultra Petroleum Corp., Corporate Secretary, 363 N. Sam
Houston Pkwy E., Suite 1200, Houston, TX 77060,
(281) 876-0120.
Nominating and Corporate Governance
Committee. The purpose of the Nominating and
Corporate Governance Committee (Nominating
Committee) is to (i) identify and recommend to the
Board individuals qualified to be nominated for election to the
Board, (ii) recommend to the Board the members and
Chairperson for each Board committee, (iii) periodically
review and assess the Companys Corporate Governance
Principles and the Companys Code of Business Conduct and
Ethics and make recommendations for changes thereto to the
Board. The Board of Directors has determined that each of the
members is independent for purposes of New York Stock Exchange
rules. This Committee is comprised of Messrs. Brown,
McDaniel and Helton. The Nominating Committee met one time
during 2009 and all members of the committee attended the
meeting. In accordance with the Companys Corporate
Governance Principles and with the Nominating Committees
Charter, the Nominating Committee performs the functions listed
above, which includes an assessment of whether the Board of
Directors of the Company has the necessary diversity of skills,
backgrounds, and experiences to meet the Companys ongoing
needs. The Nominating Committee Charter is available free of
charge to the public in print or on the Companys website
at
http://www.ultrapetroleum.com.
You may also request a copy of the Nominating Committee Charter
at no cost by making a written or telephone request for copies
to Ultra Petroleum Corp., Corporate Secretary,
363 N. Sam Houston Pkwy E., Suite 1200, Houston,
TX 77060,
(281) 876-0120.
23
Identifying
and Evaluating Nominees for Directors.
The Board of Directors has established certain criteria that it
and the Nominating Committee use as guidelines in considering
nominations to the Companys Board of Directors. The
criteria include: (i) personal characteristics, including
such matters as integrity, age, education, financial
independence, diversity of background, skills and experience,
absence of potential conflicts of interest with the Company or
its operations, willingness to exercise independent judgment,
and the availability and willingness to devote sufficient time
to the duties of a director of the Company; (ii) experience
in corporate management; (iii) experience as a board member
of another company; (iv) practical and mature business
judgment; and (v) in the case of an incumbent director,
such directors past performance on the Board. The criteria
are not exhaustive and the Board of Directors and the Nominating
Committee may consider other qualifications and attributes which
they believe are appropriate in evaluating the ability of an
individual to serve as a member of the Board of Directors. The
Companys goal is to assemble a Board of Directors that
brings to the Company a variety of perspectives and skills
derived from high quality business and professional experience.
In doing so, the Board of Directors and the Nominating Committee
also consider candidates with appropriate non-business
backgrounds.
The Board of Directors and the Nominating Committee believe
that, based on their knowledge of the Companys corporate
governance principles and the needs and qualifications of the
Board at any given time, the Board, with the help of the
Nominating Committee, is best equipped to select nominees that
will result in a well-qualified and well-rounded board of
directors. Accordingly, it is the policy of the Board not to
accept unsolicited nominations from shareholders. In making its
nominations, the Board and the Nominating Committee identify
nominees by first evaluating the current members of the Board
willing to continue their service. Current members with
qualifications and skills that are consistent with the criteria
for Board service are re-nominated. As to new candidates, the
Board and the Nominating Committee members discuss among
themselves and members of management their respective
recommendations. The Board and the Nominating Committee may also
review the composition and qualification of the boards of
directors of the Companys competitors, and may seek input
from industry experts or analysts. The Board and the Nominating
Committee review the qualifications, experience and background
of the candidates. Final candidates are interviewed by the
independent directors and executive management. In making its
determinations, the Board and the Nominating Committee evaluate
each individual in the context of the Board as a whole, with the
objective of assembling a group that can best represent
shareholder interests through the exercise of sound judgment.
After review and deliberation of all feedback and data, the
Board of Directors slates the nominees. The Nominating
Committee, and the Board as a whole, believes each slated
nominee possesses some or all of the desired qualifications and
attributes.
In the section below entitled Proposal 1
Election of Directors, biographical information is
furnished with respect to each of the nominees for election at
the 2010 Annual Meeting, together with a discussion of each
nominees experience, qualifications and attributes or
skills that led the Company to conclude such nominee should
serve the Company as a director.
Compensation
Committee Interlocks and Insider Participation
There were no Compensation Committee interlocks nor insider
(employee) participation during 2009.
Certain
Transactions
In the ordinary course of the Companys business, the
Company purchases products or services from, or engages in other
transactions with, various third parties. Occasionally, these
transactions may involve entities that are affiliated with one
or more members of the Companys Board. When they occur,
these transactions are conducted in the ordinary course and on
an arms-length basis.
Review
and Approval of Related Party Transactions.
The Company reviews all relationships and transactions in which
the Company and its directors and executive officers or their
immediate family members are participants to determine whether
such persons have
24
a direct or indirect material interest. The Company has
developed and implemented processes and controls to obtain
information from its directors and executive officers with
respect to related person transactions and for then determining,
based on the facts and circumstances, whether the Company or a
related person has a direct or indirect material interest in the
transaction. As required under SEC rules, transactions that are
determined to be directly or indirectly material to the Company
or a related person are disclosed in the Companys annual
proxy statement. In addition, the Companys Nominating and
Corporate Governance Committee or the Board (if appropriate)
reviews and approves or ratifies any related person transaction
that is required to be disclosed. In the course of its review
and approval or ratification of a disclosable related person
transaction, consideration is given to:
|
|
|
|
|
the nature of the related persons interest in the
transaction;
|
|
|
|
the material terms of the transaction, including, without
limitation, the amount and type of transaction;
|
|
|
|
the importance of the transaction to the related person;
|
|
|
|
the importance of the transaction to the Company;
|
|
|
|
whether the transaction would impair the judgment of a director
or executive officer to act in the best interest of the
Company; and
|
|
|
|
any other matters deemed appropriate.
|
Any director who is a related person with respect to a
transaction under review may not participate in the
deliberations or vote respecting approval or ratification of the
transaction; provided, however, that such director may be
counted in determining the presence of a quorum at the meeting
where the transaction is considered.
Related
Party Transactions.
Other than as described below, since the beginning of fiscal
year 2009, there have been no transactions in excess of $120,000
between the Company and a related person in which the related
person had a direct or indirect material interest.
Because of the remoteness of the Companys properties and
the lack of timely commercial air flights, in 2008, the
Companys wholly-owned subsidiary, Ultra Resources, Inc.
joined a limited liability company, Falcon Point Aviation, LLC,
formed by one of the Companys directors, Robert E. Rigney,
for the purpose of purchasing an aircraft. As a result of its
investment of $2.65 million, Ultra Resources owns a 50%
interest in Falcon Point. Mr. Rigney owns the remaining 50%
of Falcon Point and is the controlling member. Under the terms
of the limited liability company agreement for Falcon Point,
each member pays a usage fee and a portion of the fixed costs
associated with the ownership of the airplane based on its
respective usage. The usage fee and fixed costs assessed
includes the cost of fuel consumed, state use tax, pilot
expenses, landing fees, maintenance expenses, and any other
miscellaneous expenses incurred by the member incident to its
use of the aircraft. During 2009, the Company paid $411,421 for
these expenses.
PROPOSAL I
ELECTION
OF DIRECTORS
Each director of the Company is elected annually and holds
office until the next annual meeting of the shareholders unless
that person ceases to be a director before then. In the
absence of instructions to the contrary, the shares represented
by a properly completed and deposited proxy will be voted for
the nominees herein listed. Each incumbent director
identified in the table below was nominated by the Nominating
and Corporate Governance Committee of the Companys Board
of Directors as a nominee for election as director of the
Company. Each of the nominees has consented to be nominated and
have expressed their intention to serve if elected. Management
does not contemplate that any of the nominees set out below will
be unable to serve as a director.
25
Directors
and Executive Officers
The following table provides information with respect to the
directors and nominees for director and present executive
officers of the Company. Please refer to the table under the
heading Beneficial Ownership of Securities
Security Ownership of Certain Beneficial Owners and
Management for a summary of the number of common shares
owned by each of the Companys directors and executive
officers. Each executive officer has been elected to serve until
his successor is duly appointed or elected by the Board of
Directors or his earlier removal or resignation from office.
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|
|
|
|
|
Position
|
|
Name
|
|
Age
|
|
|
Position with the Company
|
|
Since
|
|
|
Michael D. Watford
|
|
|
56
|
|
|
Chairman of the Board, CEO, President and Director (Nominee)
|
|
|
1999
|
|
W. Charles Helton
|
|
|
68
|
|
|
Director (Nominee)
|
|
|
1994
|
|
Robert E. Rigney
|
|
|
78
|
|
|
Director (Nominee)
|
|
|
2001
|
|
Stephen J. McDaniel
|
|
|
48
|
|
|
Director (Nominee)
|
|
|
2006
|
|
Roger A. Brown
|
|
|
65
|
|
|
Director (Nominee)
|
|
|
2007
|
|
Marshall D. Smith
|
|
|
50
|
|
|
Chief Financial Officer
|
|
|
2005
|
|
William R. Picquet
|
|
|
58
|
|
|
VP Operations
|
|
|
2005
|
|
Stuart E. Nance
|
|
|
50
|
|
|
VP Marketing
|
|
|
2002
|
|
Mr. Michael D. Watford was appointed Chairman,
President and Chief Executive Officer of Ultra Petroleum Corp.
in January 1999. In his eleven year tenure with the Company, he
led a successful restructuring of the Company and has
subsequently grown its reserve asset base from 0.5 Tcfe to
4 Tcfe while the market value of the enterprise has
increased from $50.0 million to over $8.0 billion with
consistent growth in profits. Mr. Watford has enjoyed a
full range of industry experiences while working over his
36 year career for a number of energy companies including
Shell Oil, Superior Oil, Meridian Oil (Burlington Resources),
Torch Energy and Nuevo Energy. Prior to joining Ultra Petroleum,
Mr. Watford was Chief Executive Officer of Nuevo Energy for
three and one-half years where he led the companys growth
in market value from $200 million to over $1 billion.
Previously, Mr. Watford served as a Director on the Boards
of Southern Minerals, Nuevo Energy, and Belwether Exploration.
Mr. Watford attended the University of Florida where he
earned his undergraduate degree in finance in 1975. While
working for Shell Oil, he attended night school at the
University of New Orleans where he earned his MBA in 1978.
Mr. Watford has broad industry experience and is the
largest individual shareholder of Company stock.
Mr. W. Charles Helton has been a director of the
Company since August 1994. Mr. Helton is a medical doctor
and has been the President, Chief Financial Officer and a
director of Enterprise Exploration & Production Inc.,
a private oil and gas exploration and development company, for
more than the past five years. Mr. Helton has extensive
historical knowledge about the Company. The Company believes
Mr. Helton is a valuable member of the Board because of the
valuable business skills and insights he has acquired as a
result of his broad and diverse success in a variety of business
activities throughout his career and because of his strong
leadership skills resulting from his serving in many different
operational, management and governance roles in the health care
industry.
Mr. Stephen J. McDaniel has been a director of the
Company since July 2006. For more than the past five years,
Mr. McDaniel has been the President and a director of
Midstates Petroleum, a privately held exploration and production
company, after spending seven years with Merrill Lynch in the
oil and gas investment banking group in Houston, Texas. He began
his investment banking career with Gordon Capital Corporation
and Midland Walwyn Capital, Inc. both Canadian firms.
Mr. McDaniel started his career with Conoco, Inc. in 1983
in various engineering, operations and business development
positions in domestic and international operations. Because of
his extensive oil and gas, investment banking, and engineering
experience, including his financial and management expertise,
the Company believes Mr. McDaniel is a valuable member of
the Board.
26
Mr. Robert E. Rigney has been a director of the
Company since June 2001, and was a consultant to the Company
from January 2001 to December 2003. Mr. Rigney is currently
retired. Prior to 2003, Mr. Rigney was the Chief Executive
Officer and Chairman of Pendaries Petroleum Ltd. since its
inception in 1996. The Company believes Mr. Rigney is a
valuable member of the Board because through his long career in
the oil and gas industry, including activities as a diplomat,
oil company executive and consultant in Asia for over
22 years, he provides the Board the benefit of his
leadership skills, international experience, and knowledge of
the Companys business environment.
Mr. Roger A. Brown has been a director of the
Company since October 2007. Prior to his retirement in 2007,
Mr. Brown was Vice President Strategic
Initiatives for Smith International, Inc. from 2005 to 2007 and
President of Smith Technologies, a division of Smith
International, Inc., from 1998 to 2005. Prior to his thirty year
career in oilfield services, Mr. Brown was a practicing
attorney for eight years. He holds a Bachelor of Science,
Economics, History and Political Science and a Juris Doctorate
all from the University of Oklahoma. Mr. Brown currently
serves as a director of McDermott International, Inc., where he
is a member of its Compensation Committee and the Chairman of
its Governance Committee. The Company believes Mr. Brown is
a valuable member of the Board because of his background working
as both a practicing attorney and his public company board and
extensive and successful oil and gas services company executive
experience.
Mr. Marshall D. Smith has been Chief Financial
Officer since July 2005. Mr. Smith has over 25 years
of progressive experience in a multitude of disciplines within
the energy industry including operations, strategic planning,
corporate finance and business development. Early in his career,
Mr. Smith was a practicing Petroleum Engineer for both
major and independent oil companies and later focused his career
on mergers, acquisitions and corporate finance advisory
assignments in the energy sector. From 2001 to 2002,
Mr. Smith served as the Chief Financial Officer at Gulf
Liquids, Inc. Mr. Smith was the Vice President of Business
Development at J.M. Huber Energy from 2002 to 2004. From 2004
until joining the Company in July 2005, Mr. Smith served as
the Vice President of Upstream Business Development at
Constellation Energy.
Mr. William R. Picquet has been Vice
President Operations since August 2005.
Mr. Picquet has over 30 years of industry experience
in all aspects of operations and engineering in major North
American producing basins. He has worked for various exploration
and production companies serving in engineering and management
capacities. Mr. Picquet served as the President and Chief
Executive Officer of Advantage Energy Services Ltd. from 1997 to
2001 and as the Managing Director of Waterous & Co.
from 2002 to 2003. From 2003 to March 2005, Mr. Picquet
served as the Chief Executive Officer and was on the Board of
Governors of M3 Energy, LLC. Just prior to joining the Company,
Mr. Picquet was the Senior Vice President of Operations and
Engineering at Mission Resources Company, serving in that role
from March 2005 to August 2005.
Mr. Stuart E. Nance has been employed by Ultra since
July 2002 and has been Vice President Marketing
since 2006. Mr. Nance has over 25 years of experience
in product marketing and land management. His prior experience
includes positions with MCN Energy Group, Torch Energy Advisors,
Inc., American Oil & Gas Corp., Meridian Oil, Inc. and
Texas Oil & Gas Corp.
All officers and directors of the Company, including the
nominees, are United States citizens.
The Companys Board recommends that shareholders vote
FOR the five nominees for director herein listed. In the absence
of instructions to the contrary, the shares represented by a
properly completed and deposited proxy will be voted for the
nominees herein listed at the Annual Meeting.
PROPOSAL II
APPOINTMENT
OF INDEPENDENT AUDITORS
On February 10, 2010, the Audit Committee of the Board of
Directors voted to appoint Ernst & Young LLP to serve
as the Companys independent auditor for the fiscal year
ending December 31, 2010. Under Yukon law, the appointment
of the independent auditor is subject to shareholder approval
and, accordingly, the Audit Committees appointment is
subject to the receipt of such approval at the Annual Meeting.
27
Representatives of Ernst & Young LLP are expected to
attend the Annual Meeting. The representatives will have the
opportunity to make a statement if they so desire and will be
available to respond to appropriate questions of the
shareholders.
The Companys Board recommends that shareholders vote
FOR the appointment of Ernst & Young LLP as the
Companys independent auditor for the fiscal year ending
December 31, 2010. In the absence of instructions to the
contrary, the shares represented by a properly completed and
deposited proxy will be voted for the appointment of
Ernst & Young LLP as the auditors of the Company at
the Annual Meeting.
Principal
Accountants Fees and Services
The following table presents aggregate fees for professional
audit services rendered by Ernst & Young LLP for the
audit of the Companys annual financial statements for each
of the years ended December 31, 2009 and 2008, and fees
billed for other services rendered by Ernst & Young
LLP during those years.
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2009
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2008
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Audit Fees
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$
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1,067,753
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$
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1,186,130
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Audit-Related Fees
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Tax Fees
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All Other Fees
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Total
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$
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1,067,753
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$
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1,186,130
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Audit Fees. Fees paid for professional
services rendered by Ernst & Young LLP related to the
audit of the Companys annual financial statements and
review of the quarterly financial statements, including
out-of-pocket expenses, as well as the related attestation of
internal controls as required by the Sarbanes-Oxley Act of 2002,
Section 404.
Audit Related Fees. There were no audit
related fees paid to Ernst & Young LLP in 2009 or 2008.
Tax Fees. The Company has elected not to use
its current principal accountant for tax services.
All Other Fees. The fees for products and
services provided by Ernst & Young LLP, other than
those reported above.
All of the services provided by the Companys independent
auditors during 2009 and 2008 were pre-approved by the Audit
Committee. The Audit Committee has adopted a policy that
requires advance approval of all audit, audit-related, tax, and
other services performed by the Companys independent
registered public accounting firm. The policy provides for
pre-approval by the Audit Committee of specifically defined
audit and permitted non-audit services. Unless the specific
service has been previously pre- approved with respect to that
year, the Audit Committee must approve the permitted service
before the Companys independent registered public
accounting firm is engaged to perform it. The Audit Committee
has delegated to the Chair of the Audit Committee authority to
approve permitted services provided that the Chair reports any
decisions to the Committee at its next scheduled meeting.
Audit
Committee Report
Acting pursuant to its Charter, the Audit Committee reviewed and
discussed the Companys audited financial statements at,
and for the year ended, December 31, 2009 with management
and the Companys independent auditors and recommended to
the Companys Board of Directors that the financial
statements be included in the Companys Annual Report on
Form 10-K
for 2009. This recommendation was based on: the Audit
Committees review of the audited financial statements;
discussion of the financial statements with management;
discussion with the Companys independent auditors,
Ernst & Young LLP, of the matters required to be
discussed by auditing standards generally accepted in the United
States of America, including the matters required to be
discussed by SAS 61; receipt from Ernst & Young LLP of
the written disclosures and letter required by Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit
28
Committees); discussions with Ernst & Young LLP
regarding its independence from the Company and its management;
and Ernst & Young LLPs confirmation that it
would issue its opinion that the consolidated financial
statements present fairly, in all material respects, the
financial position of the Company and its consolidated
subsidiaries and the results of their operations and cash flows
for the periods presented in conformity with accounting
principles generally accepted in the United States of America.
Mr. Stephen J. McDaniel, Chairman
Mr. W. Charles Helton
Mr. Roger A. Brown
PROPOSAL III
SHAREHOLDER
PROPOSAL ON HYDRAULIC FRACTURING
The proponents of the following shareholder proposal have stated
that they intend to present the proposal at the Annual Meeting.
In accordance with applicable proxy regulations, the following
proposal and supporting statement, as submitted by the
proponents, are set forth below verbatim. The Company is not
responsible for the content of the proposal or supporting
statement. The Board of Directors has recommended a vote
AGAINST the proposal for the reasons set forth
below. In the absence of instructions to the contrary, if the
shareholder proposal is presented, the shares represented by a
properly completed and delivered proxy will be voted against the
shareholder proposal at the Annual Meeting.
Shareholder
Proposal
The following proposal was submitted to the Company by Green
Century Equity Fund.(1)
Whereas,
Onshore unconventional natural gas production
requiring hydraulic fracturing, which injects a mix of water,
chemicals, and particles underground to create fractures through
which gas can flow for collection, is estimated to increase by
45% between 2007 and 2030. An estimated
60-80% of
natural gas wells drilled in the next decade will require
hydraulic fracturing.
Fracturing operations can have significant impacts on
surrounding communities including the potential for increased
incidents of toxic spills, impacts to local water quantity and
quality, and degradation of air quality. Government officials in
Ohio, Pennsylvania and Colorado have documented methane gas
linked to fracturing operations in drinking water. In Wyoming,
the US Environmental Protection Agency (EPA) recently found a
chemical known to be used in fracturing in at least three wells
adjacent to drilling operations.
There is virtually no public disclosure of chemicals used at
fracturing locations. The Energy Policy Act of 2005 stripped EPA
of its authority to regulate fracturing under the Safe Drinking
Water Act and state regulation is uneven and limited. But
recently, some new federal and state regulations have been
proposed. In June 2009, federal legislation to reinstate EPA
authority to regulate fracturing was introduced. In September
2009, the New York State Department of Environmental
Conservation released draft permit conditions that would require
disclosure of chemicals used, specific well construction
protocols, and baseline pre-testing of surrounding drinking
water wells. New York sits above part of the Marcellus Shale,
which some believe to be the largest onshore natural gas reserve.
Media attention has increased exponentially. A
search of the Nexis Mega-News library on November 11, 2009
found 1807 articles mentioning hydraulic fracturing
and environment in the last two years, a 265 percent
increase over the prior three years.
Because of public concern, in September 2009, some natural gas
operators and drillers began advocating greater disclosure of
the chemical constituents used in fracturing.
In the proponents opinion, emerging technologies to track
chemical signatures from drilling activities
increase the potential for reputational damage and vulnerability
to litigation. Furthermore, we believe uneven
29
regulatory controls and reported contamination incidents compel
companies to protect their long-term financial interests by
taking measures beyond regulatory requirements to reduce
environmental hazards.
Therefore
be it resolved,
Shareholders request that the Board of Directors prepare a
report by October 1, 2010, at reasonable cost and omitting
proprietary information, summarizing 1. the environmental impact
of fracturing operations of Ultra Petroleum; 2. potential
policies for the company to adopt, above and beyond regulatory
requirements, to reduce or eliminate hazards to air, water, and
soil quality from fracturing.
Supporting
statement:
Proponents believe the policies explored by the report should
include, among other things, use of less toxic fracturing
fluids, recycling or reuse of waste fluids, and other structural
or procedural strategies to reduce fracturing hazards.
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(1) |
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Green Century Equity Fund represented to the Company that it
owns 1,474 shares of the Companys common stock.
According to the funds website, as of December 31,
2009, total net assets held by the fund were $47.8 million.
The funds holdings of the Companys common stock
represented 0.14% of the total net assets held by the fund. |
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According to its website, Green Century also delivered proposals
regarding hydraulic fracturing to the following other oil and
gas companies of which it is a shareholder (the parentheses
after each company name represent Green Centurys published
percentage of its net assets invested in those companies): EOG
Resources (0.47%), Williams Companies, Inc. (0.24%), Chesapeake
Energy Corporation (0.32%), and XTO Energy (0.52%). |
END OF
SHAREHOLDER PROPOSAL
*****
30
Board of
Directors Statement in Opposition
THE
COMPANYS BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS
PROPOSAL
It is hard to overstate the importance of natural gas to
America, on the one hand, and to the Company and its
shareholders, on the other. Natural gas is abundant, efficient,
and versatile energy. It is also clean and reliable: natural gas
has lower carbon emissions than coal and provides a reliable
fuel stock for power generation. Natural gas also improves
Americas energy and economic security: millions of
Americans work at good-paying jobs producing Americas
abundant natural gas supplies. Finally, all of the
Companys revenues result from sales of natural gas and
related hydrocarbons.
It is also hard to overstate the importance of hydraulic
fracturing (HF) to Americas natural gas exploration and
development activities. The vast majority of Americas new
natural gas wells would not produce gas at economic rates
without HF. Similarly, HF is essential for the production of
natural gas from the formations targeted by the Companys
exploration activities: the Company anticipates conducting HF
operations on substantially all of its future wells.
Unfortunately, HF has attracted considerable attention in recent
months, including shareholder proposals like the proposal above.
However, the Company believes: (i) there is much more
public discussion about HF than there are actual risks to human
health and the environment related to HF; and (ii) much of
the public discussion critical of HF operations is incomplete
(at best) and intentionally misleading (at worst).
For example, contrary to assertions made by the proponent in its
proposal:
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HF is acknowledged as a safe and non-threatening procedure
that poses little or no risk to underground sources of drinking
water according to studies performed and published by respected
regulators and authorities, including the
U.S. Environmental Protection Agency, the Ground Water
Protection Council, and the Interstate Oil and Gas Compact
Commission.
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A report from the Groundwater Protection Council in May 2009
concluded that most additives contained in fluids used in HF
pose low to very low risks to human health and the environment.
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During a December 2009 hearing before the U.S. Senate
Committee on the Environment and Public Works, three officials
from the U.S. Environmental Protection Agency testified
that they were not aware of any verifiable instances of
groundwater contamination caused by HF.
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There is widespread public disclosure of additives used in HF
operations.
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Free websites and other publications sponsored by oil and gas
companies and trade associations provide detailed descriptions
of HF and the additives contained in fluids used in HF.
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Material safety data sheets describing the characteristics of
the additives to be used in HF operations are maintained on
every well-site location.
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HF does not lead to groundwater contamination.
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Current regulations covering well design requirements and HF
operations are specifically intended to protect ground and
drinking water. For example, steel pipe called casing is
required to be cemented into place at the uppermost portion of
each well the Company drills, installing an impermeable barrier
between isolated formations containing hydrocarbons that are
thousands of feet below the surface and the much shallower
underground water reservoirs.
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There is no record of groundwater contamination from any of the
Companys operations. Moreover, based on information that
the Company considers reliable, there have been no verified
incidents of groundwater contamination resulting from HF by any
other operators during the more than 60 years that HF
technology has been used by the oil and gas industry.
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31
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HF operations by the Company are already subject to extensive
regulations.
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For the past several decades, state agencies charged with
protecting public and private water supplies have implemented a
system of environmental and operational regulations addressing
oil and gas activities, including HF.
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Federal agencies control any adverse impacts of HF through the
Clean Water Act (protects groundwater from
environmentally-harmful activities), the Safe Drinking Water Act
(prohibits pollution of drinking water, though it does not
authorize regulation of injection of fracturing fluids), and
CERCLA.
|
In addition: the Company already strives to conduct its
operations in a manner that prevents pollution (including the
Companys well casing and cementing and water handling
programs), conserves resources and energy, minimizes the use of
hazardous materials (the Companys HF fluids are at least
99% water), reduces waste (including reducing and reusing water
used in its HF operations), and implements new technologies that
meet or exceed current regulatory requirements; the Company is
already committed to safeguarding the environment and conducting
its business in a manner designed to comply with all applicable
environmental laws and regulations; and the Company already
monitors regulatory and scientific developments regarding the
environment in order to meet or exceed its compliance
obligations.
The Company has determined that its HF operations, which are
already subject to extensive state and local laws and state and
federal oversight, pose minimal risks to the environment and
human health, and the Company is taking such steps as it deems
prudent to minimize future associated risks. Additional
information about the Companys environmental and other
compliance activities is available in its annual reports on
Form 10-K.
As a result, the Company and the Board of Directors believe
adopting additional policies or procedures or preparing reports
of the sort sought by the subject proposal is unnecessary and
would serve no useful purpose but rather would serve, at best,
only to increase administrative burdens and costs on the Company.
Accordingly, the Companys Board of Directors
unanimously recommends that you vote AGAINST the
proposal.
SHAREHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
Any shareholder who intends to present a proposal at the 2011
Annual Meeting of Shareholders for inclusion in the proxy
statement and proxy card relating to that meeting is advised
that the proposal must be received by the Company at its
principal executive offices not later than December 29,
2010. The Company will not be required to include in its proxy
statement or proxy card a shareholder proposal which is received
after that date or which otherwise fails to meet requirements
for shareholder proposals established by regulations of the
Securities and Exchange Commission. If the date of the 2011
Annual Meeting is changed by more than 30 days from the
first anniversary of the date of the 2010 Annual Meeting, the
deadline for submitting proposals to be included in
managements 2011 proxy statement is a reasonable time
before the Company begins to print and mail its proxy materials
for its 2011 Annual Meeting.
The persons named in the Companys proxy card for the 2010
Annual Meeting of Shareholders will have discretionary authority
to vote any proxies they hold at such meeting on any matter for
which the Company does not receive notice by March 12,
2010. If the Company changes the date of its 2011 Annual Meeting
by more than 30 days from the first anniversary of the date
of the 2010 Annual Meeting, the persons named in the
Companys 2011 proxy statement will be able to exercise
discretionary authority if notice of the matter has not been
received in a reasonable time before the Company mails its proxy
materials for the 2011 Annual Meeting of Shareholders.
If the date of the 2011 Annual Meeting is advanced or delayed by
more than 30 calendar days from the first anniversary of the
date of the 2010 Annual Meeting, the Company shall, in a timely
manner, inform shareholders of such change, by including a
notice, under Item 5, in its earliest possible quarterly
report on
Form 10-Q.
The notice will include the new deadline for submitting
proposals to be included in the Companys
32
2011 proxy statement and the new date for determining whether
the Company may exercise discretionary voting authority because
it has not received timely notice of a matter.
In order to avoid controversy as to the date on which the
Company receives any such proposal, it is suggested that
shareholders submit their proposals by certified mail, return
receipt requested, or other means that permit them to prove the
date of delivery.
DELIVERY
OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
In some cases, only one copy of this proxy statement or annual
report is being delivered to multiple shareholders sharing an
address. The Company will deliver promptly, upon written or oral
request, a separate copy of this proxy statement or annual
report to a shareholder at a shared address to which a single
copy of the document was delivered. To request separate or
multiple delivery of these materials now or in the future, a
shareholder may submit a written request to the Corporate
Secretary, Ultra Petroleum Corp., 363 N. Sam Houston
Pkwy E., Suite 1200, Houston, Texas 77060 or an oral
request by calling the Corporate Secretary at
(281) 876-0120.
OTHER
MATTERS
At the Annual Meeting, shareholders will receive and consider
the consolidated financial statements of the Company for the
year ended December 31, 2009 and the auditors report
thereon, but no vote by the shareholders with respect thereto is
required or proposed to be taken.
Management knows of no amendment or other matters to come before
the Annual Meeting other than the matters referred to in the
Notice of Annual Meeting. However, if any other matter properly
comes before the Annual Meeting, the accompanying proxy will be
voted on such matter at the discretion of the person or persons
voting the proxy.
All information contained in this proxy statement relating to
the occupations, affiliations and securities holdings of
directors and officers of the Company and their relationship and
transactions with the Company is based upon information received
from the individual directors and officers.
By Order of the Board of Directors
Chairman, President and Chief Executive Officer
Houston, Texas
April 28, 2010
33
Security Class Holder Account Number Fold Form of Proxy Annual Meeting of
Shareholders to be held on June 14, 2010 This Form of Proxy is solicited by and on behalf of
Management. Notes to proxy 1. Every holder has the right to appoint some other person or company of
their choice, who need not be a holder, to attend and act on their behalf at the meeting or any
adjournment or postponement thereof. If you wish to appoint a person or company other than the
persons whose names are printed herein, please insert the name of your chosen proxyholder in the
space provided (see reverse). 2. If the securities are registered in the name of more than one
owner (for example, joint ownership, trustees, executors, etc.), then all those registered should
sign this proxy. If you are voting on behalf of a corporation or another individual you must sign
this proxy with signing capacity stated, and you may be required to provide documentation
evidencing your power to sign this proxy. 3. This proxy should be signed in the exact manner as the
name(s) appear(s) on the proxy. 4. If this proxy is not dated, it will be deemed to bear the date
on which it is mailed by Management to the holder. 5. The securities represented by this proxy will
be voted as directed by the holder, however, if such a direction is not made in respect of any
matter, this proxy will be voted as recommended by Management. 6. The securities represented by
this proxy will be voted in favour or withheld from voting or voted against each of the matters
described herein, as applicable, in accordance with the instructions of the holder, on any ballot
that may be called for and, if the holder has specified a choice with respect to any matter to be
acted on, the securities will be voted accordingly. 7. This proxy confers discretionary authority
in respect of amendments or variations to matters identified in the Notice of Meeting or other
matters that may properly come before the meeting or any adjournment or postponement
thereof. Fold 8. This proxy should be read in conjunction with the accompanying documentation
provided by Management. Proxies submitted must be received by 11:00 a.m., Eastern Daylight Time, on
June 10, 2010. VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK! To Vote Using the
Telephone To Vote Using the Internet Call the number listed BELOW from a touch tone Go to the
following web site: telephone. www.investorvote.com 1-866-732-VOTE (8683) Toll Free If you vote by
telephone or the Internet, DO NOT mail back this proxy. Voting by mail may be the only method for
securities held in the name of a corporation or securities being voted on behalf of another
individual. Voting by mail or by Internet are the only methods by which a holder may appoint a
person as proxyholder other than the Management nominees named on the reverse of this proxy.
Instead of mailing this proxy, you may choose one of the two voting methods outlined above to vote
this proxy. To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER
listed below. CONTROL NUMBER 19FE10083.E.SEDAR/000001/000001/i |
Appointment of Proxyholder I/We, being holder(s) of Ultra Petroleum Corp., hereby appoint: Michael
D. Print the name of the person you are Watford, or failing him, Kelly L. Whitley, appointing if
this person is someone OR other than the Chairman of the Meeting. as my/our proxyholder with full
power of substitution and to attend, act and to vote for and on behalf of the shareholder in
accordance with the following direction (or if no directions have been given, as the proxyholder
sees fit) and all other matters that may properly come before the Annual Meeting of Shareholders of
Ultra Petroleum Corp. to be held at Crowne Plaza Hotel, 425 N. Sam Houston Pkwy E., Houston, Texas,
on June 14, 2010 at 10:00 a.m., Central Daylight Time, and at any adjournment or postponement
thereof. VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES. 1. Election of
Directors For Withhold For Withhold For Withhold 01. Michael D. Watford 02. W. Charles Helton 03.
Robert E. Rigney 04. Stephen J. McDaniel 05. Roger A. Brown Fold For Withhold 2.
Appointment of Auditors Appointment of Ernst & Young, LLP as Auditors of the Company for the
ensuing year and authorizing the Directors to fix their remuneration. For Against 3. Shareholder
Proposal If presented, to consider and vote upon a shareholder proposal regarding hydraulic
fracturing which is opposed by the Board of Directors. Fold Authorized Signature(s) This
section must be completed for your Signature(s) Date instructions to be executed. I/We authorize
you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy
previously given with respect to the Meeting. If no voting instructions are indicated above, this
Proxy will be voted as recommended by Management. Interim Financial Statements You can access
quarterly financial statements and Annual Financial Statements You can access Annual Reports
managements discussion and analysis (10-Q) on our website at www.ultrapetroleum.com, on our
website at www.ultrapetroleum.com, or by registering at or by registering at
www.computershare.com/mailinglist. If you would like to receive them by
www.computershare.com/mailinglist. If you would like to receive mail, mark this box. them by mail,
mark this box. If you are not mailing back your proxy, you may register online to receive the above
financial report(s) by mail at www.computershare.com/mailinglist. 0 9 1 9 3 1 A R 1 U P Q Q |