def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
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SEC 1913 (02-02) |
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TABLE OF CONTENTS
ULTRA
PETROLEUM CORP.
363 North Sam Houston Parkway East, Suite 1200
Houston, Texas 77060
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 16,
2008
To the Shareholders of Ultra Petroleum Corp:
You are cordially invited to attend the Annual Meeting of
Shareholders (the Annual Meeting) of Ultra Petroleum
Corp. which will be held at the Crowne Plaza Hotel,
425 N. Sam Houston Parkway E., Houston Texas, on
Friday, May 16, 2008 at 10:00 a.m. 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, 2008;
3. To receive the financial statements of the Company for
the fiscal year ended December 31, 2007 together with the
auditors report thereon;
4. If presented, to consider and vote upon a shareholder
proposal regarding climate change which is opposed by the Board
of Directors; 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
March 18, 2008, 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, we request 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
9:00 a.m. EDT on May 14, 2008. As an alternative,
you can vote your shares by telephone or over the Internet.
Sincerely,
MICHAEL D. WATFORD
Chairman, President and
Chief Executive Officer
April 3, 2008
Proxy
Statement Questions
WHO IS
ENTITLED TO VOTE AT THE ANNUAL MEETING?
Shareholders who own shares of common stock as of March 18,
2008, 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 April 16, 2008.
WHAT AM I
VOTING ON, AND WHAT ARE THE BOARDS
RECOMMENDATIONS?
You are voting on the following:
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The election of five directors;
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The appointment of Ernst & Young LLP as the
independent auditor of the Company for the fiscal year ending
December 31, 2008;
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If presented, a shareholder proposal which is opposed by the
Board of Directors; and
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To transact such other business as may properly be brought
before the Annual Meeting or any adjournments or postponements
thereof.
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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 2008, and, if presented,
AGAINST the shareholder proposal.
WHAT
CONSTITUTES A QUORUM OF SHAREHOLDERS?
We must have a quorum 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 Territory 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 our shareholders are unable to attend the
meeting in person, we send forms of proxies and offer electronic
and telephone voting to all of our 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 A STREET NAME BY MY BROKER, WILL
MY BROKER VOTE FOR ME?
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 in the election of directors and the appointment of
Ernst & Young LLP as the independent registered public
accounting firm for fiscal year 2008. If you do not provide
instructions to you broker on how to vote your shares, and 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.
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
2
Annual Meeting. You must complete and return the enclosed
form of proxy or vote by phone or Internet to have your shares
voted by proxy.
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 be voted 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 2008 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
qualify.
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,
2008.
To vote for Proposal No. 2, you check the box marked
FOR. To withhold your vote, mark the box
WITHHELD opposite the 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, AGAINST. If you are
unsure how to vote, mark the box 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
PROPOSAL NO. 1 AND NO. 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 our 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 our transfer agent.
WHAT IS
THE DEADLINE FOR SUMBITTING MY PROXY CARD?
To be effective, your proxy card must be received by
Computershare Investor Services Inc. at the above address before
9:00 a.m., Eastern Daylight Time, on May 14, 2008.
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 Companys Secretary by mail at 363 North Sam Houston
Parkway East, 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 9:00 a.m. Eastern
Daylight Time on May 14, 2008. If you vote by telephone,
please do not return your
proxy/voting
instruction card.
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
9:00 a.m. Eastern Daylight Time on May 14, 2008.
If you vote by website, please do not return your proxy/voting
instruction card.
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.
BENEFICIAL
OWNERSHIP OF SECURITIES
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of March 18, 2008,
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 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.
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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 March 18, 2008, or, in the case of
executive officers and directors of the Company 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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5,416,576
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3.5
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%
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W. Charles Helton(c)
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978,762
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*
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Robert E. Rigney(d)
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1,518,897
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1.0
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%
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Stephen J. McDaniel
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2,307
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*
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Roger A. Brown
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2,258
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*
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William R. Picquet(e)
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233,052
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*
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Marshall D. Smith(f)
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231,895
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*
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Stuart E. Nance(g)
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69,438
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Common shares all directors and executive officers own as a
group (8 persons)(h)
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8,453,185
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5.5
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%
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Fidelity Management & Research Company(i)
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22,858,103
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15.0
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%
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82 Devonshire Street
Boston, MA 02109
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Morgan Stanley(j)
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19,636,934
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12.9
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%
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1585 Broadway
New York, NY 10036
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Wellington Management Company, LLP(k)
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8,643,255
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5.7
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%
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75 State Street
Boston, MA 02109
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As of March 18, 2008 there were 152,870,386 common shares
outstanding. |
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Includes 126,118 common shares issuable upon exercise of vested
options; 3,380,582 common shares issuable upon exercise of
vested options owned by Watford Interests Ltd.; and
1,683,980 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 160,000 common shares issuable upon exercise of vested
options and 104,720 shares owned by the Helton Family
Foundation in which Mr. Helton has shared voting power. |
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Includes 160,000 common shares issuable upon exercise of vested
options. |
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Includes 232,052 common shares issuable upon exercise of vested
options. |
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All 231,895 common shares are issuable upon exercise of vested
options. |
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Includes 67,224 common shares are issuable upon exercise of
vested options. |
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Includes 4,874,923 common shares issuable upon exercise of
vested options. |
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(i) |
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Information is based upon a Schedule 13G filed with the
Commission on February 13, 2008 by FMR LLC. FMR LLC
represents that it has sole voting power over
571,489 shares and sole dispositive power over
22,858,103 shares of Ultra common stock. |
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Information is based upon a Schedule 13G filed with the
Commission on February 14, 2008 by Morgan Stanley as a
parent company. Morgan Stanley represents that it has sole
voting power over 19,340,957 shares and sole dispositive
power over 19,636,934 shares of Ultra common stock and
shared voting power over 2,255 shares of Ultra common stock. |
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(k) |
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Information is based upon a Schedule 13G filed with the
Commission on February 14, 2008 by Wellington Management
Company, LLP. Wellington Management Company, LLP represents that
it has shared voting power over 7,170,755 shares and shared
dispositive power over 8,643,255 shares of Ultra common
stock. |
6
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, 2007.
EXECUTIVE
COMPENSATION
Compensation Discussion and Analysis
In this compensation discussion and analysis, we discuss our
compensation objectives, our decisions and the rationale behind
those decisions relating to 2007 compensation for our named
executive officers.
Objectives
of our compensation program
Our business strategy is to enhance stockholder value through
sustained growth in our reserve base, production levels and
resulting cash flows from operations. Our compensation program
is designed to attract, retain, and motivate employees in order
to effectively execute our business strategy.
What our
compensation program is designed to reward
Our compensation program is designed to reward performance that
contributes to the achievement of our business strategy on both
a short-term and long-term basis. We believe that 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 our compensation program and why we pay each
element
Our compensation program is comprised of four elements: base
salary, cash bonus, long-term equity-based compensation and
benefits.
We pay 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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We include an annual bonus as part of our compensation program
because we believe 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
our compensation policy because we believe 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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We offer benefits such as matching 401(k) contributions and
payment of insurance premiums in order to provide a competitive
remuneration package.
How we
determine each element of compensation
The Compensation Committee of our Board of Directors oversees
our compensation programs. The 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
non-management members of our Board of Directors. The
Compensation Committee annually reviews and establishes the base
salary, incentive compensation, and other equity based awards
for the CEO and makes recommendations to the CEO with respect to
the compensation of the Companys other executive officers.
Our strategy is to pay total direct compensation (the sum of
total annual cash and the expected value of long-term
incentives) at the market 75th percentile if target
performance levels are achieved. During 2007, we used the ECI
Oil & Gas E&P 2007 Compensation Survey and the
Mercer Energy 2007 Survey to assess our competitive position. In
2005, we adopted and implemented an incentive compensation plan
consisting of a short-term, cash based annual plan, the Annual
Incentive Plan (AIP) and a long-term equity based
Long-Term
Incentive Plan (LTIP). Additionally, the
Compensation Committee created a one-time, three year,
performance based Best in Class program primarily targeting
non-officer employees, which will be paid out in the second
quarter of 2008.
Base salary. With respect to base salary, we
target by position the market 50th percentile. Based on
survey data, in 2007 the base salaries of all of the named
executive officers were increased in order to align them with
the 50th percentile.
Bonus. In 2005, we 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. At a
regularly scheduled February meeting, the Compensation Committee
establishes threshold, target and maximum performance measures
such as net income, cash flow, and production for the ensuing
year as well as funding for each performance level matched to
employee specific targets.
Because unanticipated events, some of which are beyond our
control, may affect our attainment of the goals established by
the Committee, the final determination of actual awards under
the AIP is discretionary. For instance, a large acquisition or
divestiture may substantially change our budget and forecast,
thereby affecting the performance metrics. Also, our Committee
encourages our executives to pursue long-term goals, even if
these long-term goals may result in a reduction in our 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
8
year. Awards under the AIP are payable in cash, provided that we
reserve the right to pay amounts in our common shares.
In February 2007, 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
Above Expectations level. The Compensation Committee awarded a
bonus to Mr. Watford for 2007 of $1.5 million,
representing 255% of his 2007 base salary. Mr. Smith was
awarded a bonus for 2007 of $300,000, representing 130% of his
2007 base salary, Mr. Picquet was awarded a bonus for 2007
of $325,000, representing 138% of his 2007 base salary,
Mr. Kneller was awarded a bonus for 2007 of $200,000,
representing 85% of his 2007 base salary, Mr. Nance was
awarded a bonus for 2007 of $128,000, representing 80% of his
2007 base salary and Mr. Patterson did not receive a bonus
for 2007 as he has adjusted his work schedule to part-time in
anticipation of retirement.
Long-Term Equity-Based Incentives. In 2005, we
adopted the 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.
Participants are recommended by the CEO and approved by the
Compensation Committee. Selected officers, managers and other
key employees are eligible to participate in the LTIP which has
two components, an LTIP Stock Option Award and an LTIP Common
Stock Award.
Under the LTIP, each year the Compensation Committee establishes
a percentage of base salary for each participant which is
multiplied by the participants base salary to derive an
LTI Value. With respect to LTIP Stock Option Awards,
options are awarded equal to one half of the LTI Value based on
the fair value on the date of grant (using Black-Scholes
methodology). In February 2007, the Compensation Committee
approved the award of an aggregate of 137,631 options to
purchase common stock to the Companys officers and
employees, representing less than one one-tenth of one percent
of the outstanding common shares on the date of grant. A total
of 55 employees and no non-employee directors received
stock option awards, including five of the six named executive
officers, who received an aggregate of 69,106 stock options or
16% of the total stock options granted in fiscal 2007.
Mr. Patterson did not receive any stock option awards in
2007 as he has adjusted his work schedule to part-time in
anticipation of retirement. All LTIP Stock Options granted to
the named executive officers in 2007 vest in three years.
The other half of the LTI Value is the target amount
that may be awarded to the participant as an LTIP Common Stock
Award at the end of a three-year performance period. The
Compensation Committee establishes performance measures at the
beginning of each three-year overlapping performance period.
Each participant is also assigned threshold and maximum award
levels in the event that performance is below or above target
levels. Awards are expressed as dollar targets and become
payable in common shares at the end of each performance period
based on the Companys overall performance during such
period. A new three-year period begins each January.
Participants must be employed by the Company when payments are
made in order to receive an award.
For the first (January 2005 December 2007), second
(January 2006 December 2008) and third (January
2007 December 2009) performance periods, the
Compensation Committee established the following performance
measures: return on equity, reserve replacement ratio, and
production growth. No LTIP Common Stock Awards will be made
until the first performance period ends in December 2007 and
adequate time has elapsed to allow for performance measurement.
Best in Class Program. Also in 2005, we
established a Best in Class program for all
employees. The Best in Class program recognizes and financially
rewards the collective efforts of all of our employees in
achieving sustained industry leading performance and the
enhancement of shareholder value. Under the Best in Class
program, on January 1, 2005 or the employment date if
subsequent to January 1, 2005, all employees received a
contingent award of stock units equal to $50,000 worth of our
common stock based on the average high and low share price on
the date of grant. Employees joining the Company after
January 1, 2005 will 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
our performance relative to the industry during a three-year
performance period beginning January 1, 2005, and ending
December 31, 2007, and are set at
9
threshold (50%), target (100%) and maximum (150%) levels. For
each vested unit, the participant will receive one share of
common stock. The performance measures are all sources finding
and development cost and full cycle economics. Performance
results will be determined after the end of the performance
period and publication of the applicable industry reports. A
participant must be employed by the Company when payments are
made in order to receive an award.
Benefits. We provide Company benefits, or
perquisites, that we believe are standard in the industry to all
of our 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 2007. The
Company pays all administrative costs to maintain the plan.
How
elements of our compensation program are related to each
other
We view the various components of compensation as related but
distinct and 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. Our compensation philosophy is to foster entrepreneurship
at all levels of the organization by making long-term
equity-based incentives, in particular stock option grants, a
significant component of executive compensation. We determine
the appropriate level for each compensation component based in
part, but not exclusively, on our view of internal equity and
consistency, and other considerations we deem relevant, such as
rewarding extraordinary performance. Our 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
We have structured our 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.
In connection with Mr. Watfords 2004 employment
agreement, he was awarded shares of the Companys stock
over a three year period with the final period being 2007. This
award was non-performance based compensation paid in excess of
the Internal Revenue Code Section 162(m) tax deduction
limit due to significant share price appreciation over the three
year period. We currently have no other employees with
non-performance based compensation paid in excess of the
Internal Revenue Code Section 162(m) tax deduction limit;
however, we reserve the right to use our judgment to authorize
compensation payments that do not comply with the exemptions in
Section 162(m) when we believe that such payments are
appropriate and in the best interest of the stockholders, 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 our employees, including executive
officers, and to our directors have been granted and reflected
in our consolidated financial statements, based upon the
applicable accounting guidance, at fair market value on the
grant date in accordance with Statement of Financial Accounting
Standards No. 123R (revised 2004), Share-Based
Payment (SFAS 123R).
10
Stock
Ownership Policy
Currently we do not have a stock ownership policy that applies
to our employees.
Compensation
Committee Report
We have reviewed and discussed with management certain
compensation discussion and analysis provisions to be included
in the Companys 2008 proxy statement filed pursuant to
Section 14(a) of the Securities Exchange Act of 1934. Based
on the reviews and discussions referred to above, we recommend
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, 2007 and 2006, for our
principal executive officer, our principal financial officer,
and four additional executive officers. We refer 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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($)
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Michael D. Watford,
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2007
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$
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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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$
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1,028,125
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|
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$
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417,608
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|
|
|
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$
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29,420
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|
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$
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3,562,653
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Chairman, Chief Executive
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2006
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$
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493,750
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$
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500,000
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|
|
$
|
3,554,900
|
|
|
$
|
468,677
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|
|
|
|
|
|
|
|
|
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$
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28,770
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|
|
$
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5,046,097
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Officer and President
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Marshall D. Smith,
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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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235,124
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|
|
$
|
108,044
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|
|
|
|
|
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$
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29,870
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|
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$
|
903,038
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|
Chief Financial Officer
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|
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2006
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|
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$
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222,500
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$
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260,000
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|
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$
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82,500
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|
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$
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123,728
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|
|
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$
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28,770
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|
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$
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717,498
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Stephen R. Kneller,
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2007
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$
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235,000
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$
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200,000
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$
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84,375
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|
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$
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110,434
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|
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$
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29,920
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|
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$
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659,729
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Vice President Exploration,
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2006
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$
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227,500
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$
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260,000
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$
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84,375
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$
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126,545
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$
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28,770
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|
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$
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727,190
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Domestic
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William R. Picquet,
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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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233,632
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$
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110,434
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|
|
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|
|
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$
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28,770
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|
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$
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932,836
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Vice President Operations
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|
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2006
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|
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$
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227,500
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|
|
$
|
235,000
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|
|
$
|
84,375
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|
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$
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126,545
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|
|
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$
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28,770
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$
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702,190
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George M. Patterson,
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2007
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$
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107,000
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$
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$
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|
|
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$
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$
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14,560
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$
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121,560
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Vice President International
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2006
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$
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112,000
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$
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$
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35,280
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|
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$
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|
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$
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14,730
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$
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162,010
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Stuart E. Nance,
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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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126,275
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$
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29,042
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|
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$
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20,970
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$
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464,287
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Vice President Marketing
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2006
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$
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135,000
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$
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128,000
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$
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45,525
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$
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24,213
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$
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17,720
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$
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350,458
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|
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(1) |
|
The amounts in this column represent bonuses earned in 2007 and
2006, respectively, under our AIP. The Compensation Committee
awarded a bonus to Mr. Watford of $1,000,000 in 2006, of
which $500,000 was paid in cash and $500,000 was paid in shares
of our common stock. |
|
(2) |
|
The amounts in this column relate to total estimated payouts
earned during 2007 and 2006, respectively, under our 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 first three-year
performance cycle in December 2007 and adequate time has elapsed
to allow for performance measurement. The dollar amounts stated
for stock awards reflect the expense recognized for financial
statement reporting purposes for the years ended
December 31, 2007 and 2006, respectively, in accordance
with SFAS 123R. 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, 2007. |
11
|
|
|
|
|
Mr. Watfords 2006 stock awards include $2,742,400
associated with the award of 40,000 shares in conjunction
with his employment agreement as well as $500,000 of his 2006
bonus paid in Company stock. |
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(3) |
|
The dollar amounts stated for option awards reflect the expense
recognized for financial statement reporting purposes for the
years ended December 31, 2007 and 2006, respectively, in
accordance with SFAS 123R. The assumptions utilized in the
calculation of these amounts are 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, 2007. |
|
(4) |
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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. |
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 2007.
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All Other
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All Other
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Stock
|
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Option
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Awards:
|
|
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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
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Stock and
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards(1)
|
|
|
Option
|
|
Name
|
|
Grant Date
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
Awards(2)
|
|
|
Michael D. Watford
|
|
|
02-16-2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,585
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
$
|
900,044
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,776
|
|
|
|
12,587
|
|
|
|
18,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Marshall D. Smith
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02-16-2007
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|
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|
|
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|
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|
|
|
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|
|
9,350
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(3)
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|
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|
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$
|
51.60
|
|
|
$
|
230,023
|
|
|
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(4)
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|
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|
|
|
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|
|
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965
|
|
|
|
3,217
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|
|
|
4,825
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Stephen R. Kneller
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02-16-2007
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
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9,553
|
(3)
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|
|
|
|
|
|
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|
|
|
|
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$
|
51.60
|
|
|
$
|
235,018
|
|
|
|
|
|
(4)
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|
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|
|
|
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|
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|
|
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|
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|
|
|
|
|
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William R. Picquet
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|
|
02-16-2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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9,553
|
(3)
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|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
$
|
235,018
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
986
|
|
|
|
3,287
|
|
|
|
4,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George M. Patterson
|
|
|
02-16-2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stuart E. Nance
|
|
|
02-16-2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,065
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
$
|
100,005
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
420
|
|
|
|
1,399
|
|
|
|
2,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All stock options granted to the named executive officers in
2007 were awarded under the 2005 Stock Incentive Plan and have
an exercise 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. |
|
(2) |
|
The dollar value stated for options reflect the number of shares
granted in 2007 multiplied by the fair market value in
accordance with SFAS 123R. 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 From
10-K for the
year ended December 31, 2007. |
|
(3) |
|
Represents LTIP Stock Options granted to the named executive
officers in 2007, all of which vest on February 16, 2010. |
|
(4) |
|
Represents potential payouts under our 2007 LTIP for the
three-year period ending December 2009. Pursuant to the LTIP,
the Compensation Committee determined target payout amounts for
each named executive officer in February 2007. Awards are paid
at 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. |
12
Employment
Agreements
We are party to an employment agreement with Mr. Watford,
our Chairman, President and Chief Executive Officer, which
became effective February 1, 2007. The agreement has an
initial term of three years, which we may elect to renew for
successive one year terms. The terms of any extension must be
agreed to by us and Mr. Watford. If the agreement is not
extended, Mr. Watford will be entitled to the payments
described below.
Under the agreement, Mr. Watfords base salary is
$600,000, which shall be reviewed by the compensation committee
annually for appropriate increases based on
Mr. Watfords performance and the then current market
conditions for comparable positions. In addition,
Mr. Watford is entitled to participate in our long-term
incentive compensation plans. We have agreed that any plans we
adopt in the future will be at least as favorable to
Mr. Watford as plans currently in effect. Mr. Watford
prepares the applicable performance targets, goals and rewards
under such plans, for review and approval by our compensation
committee. We provide Mr. Watford an automobile, and
reimburse him for reasonable business expenses. He also is
entitled to participate in any life insurance, disability and
health insurance plans we maintain during the term of the
agreement.
We may terminate the agreement at any time for any reason or for
cause. Cause is generally defined as a breach of the agreement
by Mr. Watford, or the commission by him of illegal acts.
Additionally, Mr. Watford may terminate the agreement
within two years following any of the following:
|
|
|
|
|
Assignment to Mr. Watford of duties inconsistent with his
position with us as of the date of the agreement;
|
|
|
|
A change of control of the company;
|
|
|
|
Our failure to continue to provide Mr. Watford the level of
compensation to which he is entitled as of the date of the
agreement;
|
|
|
|
Our requirements that Mr. Watford relocate outside of
Houston, Texas; or
|
|
|
|
Our breach of the agreement.
|
If the agreement is terminated other than for just cause or we
fail to renew it following the end of the three year term of the
agreement, we are required to pay Mr. Watford a lump sum
equal to his most recent salary plus his most recent bonus. In
addition, all of his unvested equity awards will immediately
vest upon such termination, and be exercisable for one year. We
have also agreed to indemnify Mr. Watford for liabilities
he may be subject to as a result of acting as an officer of our
Company or a subsidiary, 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 of the Companys 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.
13
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, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
2,019,870
|
|
|
|
|
|
|
|
|
|
|
$
|
0.46
|
|
|
|
01-28-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
$
|
0.25
|
|
|
|
03-24-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,213
|
(2)
|
|
$
|
75,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,145
|
(3)
|
|
$
|
796,875
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,112
|
(4)
|
|
$
|
937,500
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,881
|
(5)
|
|
$
|
1,350,000
|
(5)
|
Marshall D. Smith
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
$
|
33.57
|
|
|
|
07-18-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,895
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,350
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,830
|
(2)
|
|
$
|
61,426
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,579
|
(3)
|
|
$
|
112,871
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,462
|
(4)
|
|
$
|
247,500
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,825
|
(5)
|
|
$
|
345,000
|
(5)
|
Stephen R. Kneller
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
0.57
|
|
|
|
06-05-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
$
|
2.61
|
|
|
|
04-27-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.43
|
|
|
|
05-07-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.83
|
|
|
|
04-25-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
$
|
16.97
|
|
|
|
04-26-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
$
|
25.68
|
|
|
|
02-07-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,052
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,553
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,213
|
(2)
|
|
$
|
75,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,540
|
(3)
|
|
$
|
253,125
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,540
|
(4)
|
|
$
|
253,125
|
(4)
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (#)
|
|
|
($)
|
|
|
William R. Picquet
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
$
|
40.34
|
|
|
|
08-16-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,052
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,553
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,473
|
(2)
|
|
$
|
59,438
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,332
|
(3)
|
|
$
|
95,270
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,540
|
(4)
|
|
$
|
253,125
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,930
|
(5)
|
|
$
|
352,500
|
(5)
|
George M. Patterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,213
|
(2)
|
|
$
|
75,000
|
(2)
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,213
|
(2)
|
|
$
|
75,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,416
|
(3)
|
|
$
|
101,250
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,784
|
(4)
|
|
$
|
127,575
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,098
|
(5)
|
|
$
|
150,000
|
(5)
|
|
|
|
(1) |
|
All of the options will vest on February 16, 2010. |
|
(2) |
|
Under the Best in Class program, on January 1, 2005 or the
employment date if subsequent to January 1, 2005, all
employees received a contingent award of stock units equal to
$50,000 worth of our common stock based on the average high and
low share price on the date of grant. Employees joining the
Company after January 1, 2005 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 our performance relative to the industry during a
three-year performance period beginning January 1, 2005,
and ending December 31, 2007, 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 maximum level. |
|
(3) |
|
Represents potential payouts under our 2005 LTIP for the
three-year period ending December 2007. Pursuant to the 2005
LTIP, the Compensation Committee determined target payout
amounts for each named executive officer in February 2005 or at
the Board of Directors meeting immediately following the
named executive officers hire date. Awards are paid at 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. Awards under the 2005 LTIP will be paid at
the maximum level. |
|
(4) |
|
Represents potential payouts under our 2006 LTIP for the
three-year period ending December 2008. Pursuant to the 2006
LTIP, the Compensation Committee determined target payout
amounts for each named executive officer in March 2006. Awards
are paid at 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, we anticipate that
awards will be paid at the maximum level. |
15
|
|
|
(5) |
|
Represents potential payouts under our 2007 LTIP for the
three-year period ending December 2009. Pursuant to the 2007
LTIP, the Compensation Committee determined target payout
amounts for each named executive officer in February 2007.
Awards are paid at 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, we anticipate 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 2007 for each named executive officer on an aggregated
basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
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
|
|
|
555,130
|
|
|
$
|
36,444,695
|
|
|
|
40,000
|
|
|
$
|
2,078,000
|
|
Marshall D. Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen R. Kneller
|
|
|
80,000
|
|
|
$
|
5,160,089
|
|
|
|
|
|
|
|
|
|
William R. Picquet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George M. Patterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stuart E. Nance
|
|
|
94,324
|
|
|
$
|
5,474,678
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
Potential
Payouts Upon Change of Control and Termination
Our 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, 2007, the
change of control payments to our named executive officers would
have been as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Potential Change-of-Control Payments
|
|
|
|
Mr. Watford(2)
|
|
|
Mr. Smith
|
|
|
Mr. Kneller
|
|
|
Mr. Picquet
|
|
|
Mr. Patterson
|
|
|
Mr. Nance
|
|
|
Base Salary
|
|
$
|
1,468,750
|
|
|
$
|
460,000
|
|
|
$
|
470,000
|
|
|
$
|
470,000
|
|
|
$
|
214,000
|
|
|
$
|
320,000
|
|
Bonus
|
|
|
3,750,000
|
|
|
|
600,000
|
|
|
|
400,000
|
|
|
|
650,000
|
|
|
|
|
|
|
|
256,000
|
|
Health & Welfare Benefits
|
|
|
6,730
|
|
|
|
5,075
|
|
|
|
5,075
|
|
|
|
5,075
|
|
|
|
5,075
|
|
|
|
5,075
|
|
Additional Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$
|
5,225,480
|
|
|
$
|
1,065,075
|
|
|
$
|
875,075
|
|
|
$
|
1,125,075
|
|
|
$
|
219,075
|
|
|
$
|
581,075
|
|
Fair market value of accelerated equity compensation(1)
|
|
|
3,159,375
|
|
|
|
766,797
|
|
|
|
581,250
|
|
|
|
760,332
|
|
|
|
75,000
|
|
|
|
453,825
|
|
Tax gross-up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
8,384,855
|
|
|
$
|
1,831,872
|
|
|
$
|
1,456,325
|
|
|
$
|
1,885,407
|
|
|
$
|
294,075
|
|
|
$
|
1,034,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes the 2005, 2006 and 2007 LTIP amounts and the 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, 2007. See Employment
Agreements. The health and welfare benefits are assumed to
continue for three years as provided in the employment agreement
and are calculated using 2007 amounts. |
16
For our executive officers (other than our CEO whose severance
benefits were set forth in his employment agreement) we provide
for:
|
|
|
|
|
a lump sum severance payment equal to two times the
executives base salary plus the maximum bonus opportunity
under the AIP,
|
|
|
|
continuation of life and health insurance benefits for two years
at existing group rates,
|
|
|
|
immediate vesting of all stock options awards which are
exercisable for one year following termination, and
|
|
|
|
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 $50,000
and received common shares equivalent to $100,000 granted under
the 2005 Stock Incentive Plan. Directors who are also officers
or employees of the Company do not receive any compensation for
duties performed as directors. The following table shows
compensation paid to each of our directors during the fiscal
year ended December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)
|
|
|
($)
|
|
|
W. Charles Helton
|
|
$
|
50,000
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
150,000
|
|
Robert E. Rigney
|
|
$
|
50,000
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
150,000
|
|
Roger A. Brown(2)
|
|
$
|
17,534
|
|
|
$
|
8,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,301
|
|
Stephen J. McDaniel
|
|
$
|
50,000
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
150,000
|
|
James C. Roe(1)
|
|
$
|
29,860
|
|
|
$
|
59,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
89,540
|
|
|
|
|
(1) |
|
On August 6, 2007, Mr. Roe submitted his resignation
to the Board of Directors. Mr. Roe also resigned from the
Companys Audit Committee and Nominating and Corporate
Governance Committee. Mr. Roes departure was not
related to any disagreement with the Company or with the
Companys operations, policies or practices. |
17
|
|
|
(2) |
|
On October 23, 2007, the Companys Board of Directors
elected Mr. Brown to fill the vacancy and to serve until
the next annual meeting of shareholders. On October 23,
2007, the Board of Directors appointed Mr. Brown to serve
on the Companys Audit Committee and Nominating and
Corporate Governance Committee. Mr. Brown is an
independent director pursuant to the rules adopted
by the Securities and Exchange Commission applicable to the
corporate governance standards for companies listed on the New
York Stock Exchange. |
CORPORATE
GOVERNANCE
Statement
of Corporate Governance Practices
We have long believed that good corporate governance is
important to ensure that our Company is managed for the
long-term benefit of our shareholders. We periodically review
our corporate governance policies and practices and compare them
to those suggested by various authorities in corporate
governance and to the practices of other public companies. We
also continuously review 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. Our 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 our Certificate 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 our
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, our Board adopted a Code of Business Conduct and
Ethics which applies to all of our directors, officers and
employees. 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 our 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 our website.
Mandate
of the Board
Our 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 identification on a regular basis of the principal
risks of our business and the establishment of appropriate
systems to manage these risks;
(c) the assessment of management performance, considering
succession planning, and taking responsibility for appointing,
training and monitoring senior management;
(d) establishing a policy to facilitate communications with
shareholders and others involved with the Company;
(e) addressing the integrity of our internal control and
management information systems; and
(f) considering, from time to time, matters that pertain to
our operations in foreign countries.
18
Our Board of Directors met formally four times during the last
fiscal year. During the last fiscal year, all directors attended
at least 75% of the total number of meetings of the Board of
Directors, and each committee member attended at least 75% of
the total number of meetings held by all committees on which he
served.
Board
Composition and Independence from Management
The Board believes that four of the five current directors and
four of the five nominated directors are independent
directors pursuant to the rules adopted by the Securities
and Exchange Commission applicable 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 has 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 $60,000 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 $60,000.
|
|
|
|
Has an immediate family member who is a partner in, or a
controlling shareholder or 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 5% of the organizations consolidated gross revenues
for that year, or $200,000, 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 our non-management directors, our 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 our
Board.
|
Communication
with the Board of Directors.
In order to provide our 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 our Audit Committee or with the non-management
directors of the Company as a group by written communications
addressed in care of Kelly L. Whitley, Ultra Petroleum Corp.,
363 North Sam Houston Parkway East, 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
19
director or directors unless it is determined that the
communication (a) 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; (b) relates to
routine or insignificant matters that do not warrant the
attention of the Board of Directors; (c) is an
advertisement or other commercial solicitation or communication;
(d) is frivolous or offensive; or (e) 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
Our 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.
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 state as
to whether, in their view, 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.
This Committee is comprised of Messrs. McDaniel, Helton and
Brown. Mr. Brown was appointed to the Audit Committee on
October 23, 2007. James C. Roe served on the Audit
Committee until his resignation
20
from the Board of Directors on August 6, 2007. The Board of
Directors has affirmatively determined that each of the members
is financially literate and is an independent director 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 a financial expert and is
independent under the Securities Exchange Act of 1934, as
amended.
The Audit Committee held four meetings during 2007. All members
of the Audit Committee attended the meetings. The Board of
Directors adopted an Audit Committee Charter in 2001 and revised
the Charter in 2004 to meet the updated requirements of the
Securities and Exchange Commission and the American Stock
Exchange. The Company will adopt a new Audit Committee Charter
or amend the current one, if required, to comply with the
requirements of the New York Stock Exchange before the first
anniversary of the Companys listing on the New York Stock
Exchange. The Audit Committee Charter is available free of
charge 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 fair and competitive compensation of the
Companys Chief Executive Officer and other executives,
(ii) approve 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. Members are
Messrs. Helton, McDaniel and Rigney. The Compensation
Committee held three meetings during 2007. All members of the
Compensation Committee attended 66% of the meetings. The
Compensation Committee Charter is available free of charge to
the public on our 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.
The Company will adopt a new Compensation Committee Charter or
amend the current one, if required, to comply with the
requirements of the New York Stock Exchange before the first
anniversary of the Companys listing on the New York Stock
Exchange.
Nominating and Corporate Governance
Committee. The purpose of the Nominating and
Corporate Governance 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 our Corporate
Governance Principles and our Code of Business Conduct and
Ethics and make recommendations for changes thereto to the
Board. The Nominating and Corporate Governance Committee Charter
is available free of charge to the public on our website at
http//www.ultrapetroleum.com.
You may also request a copy of the Nominating and Corporate
Governance 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.
The Company will adopt a new Nominating and Corporate Governance
Committee Charter or amend the current one, if required, to
comply with the requirements of the New York Stock Exchange
before the first anniversary of the Companys listing on
the New York Stock Exchange.
This Committee is comprised of Messrs. Brown, McDaniel and
Helton. Mr. Brown was appointed to the Nominating and
Corporate Governance Committee on October 23, 2007. James
C. Roe served on the Nominating and Corporate Governance
Committee until his resignation from the Board of Directors on
August 6, 2007. The Nominating and Corporate Governance
Committee met three times during the last year and all members
of the committee attended the meeting. The Nominating and
Corporate Governance Committee Charter is available free of
charge to the public in print or on the Companys website
at
http://www.ultrapetroleum.com.
21
Identifying
and Evaluating Nominees for Directors.
The Board of Directors has established certain criteria it and
the Nominating and Corporate Governance Committee consider as
guidelines in considering nominations to our Board of Directors.
The criteria include: (i) personal characteristics,
including such matters as integrity, age, education, diversity
of background and experience, absence of potential conflicts of
interest with the Company or its operations, 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; and (iv) practical and mature business
judgment. The criteria are not exhaustive and the Board of
Directors and the Nominating and Corporate Governance 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. Our
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 and Corporate Governance
Committee also consider candidates with appropriate non-business
backgrounds.
The Board of Directors and the Nominating and Corporate
Governance 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 and Corporate Governance
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 and Corporate
Governance 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 and Corporate
Governance Committee members discuss among themselves and
members of management their respective recommendations. The
Board and the Nominating and Corporate Governance 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
and Corporate Governance 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 and Corporate Governance 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.
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 our 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.
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
22
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Position
|
Name
|
|
Age
|
|
Position with the Company
|
|
Since
|
|
Michael D. Watford
|
|
|
54
|
|
|
Chairman of the Board, CEO, President and Director
|
|
|
1999
|
|
W. Charles Helton
|
|
|
66
|
|
|
Director
|
|
|
1994
|
|
Robert E. Rigney
|
|
|
76
|
|
|
Director
|
|
|
2001
|
|
Stephen J. McDaniel
|
|
|
46
|
|
|
Director
|
|
|
2006
|
|
Roger A. Brown
|
|
|
63
|
|
|
Director
|
|
|
2007
|
|
Marshall D. Smith
|
|
|
48
|
|
|
Chief Financial Officer
|
|
|
2005
|
|
William R. Picquet
|
|
|
56
|
|
|
VP Operations
|
|
|
2005
|
|
Stuart E. Nance
|
|
|
48
|
|
|
VP Marketing
|
|
|
2002
|
|
Mr. Michael D. Watford was appointed Chairman,
President and Chief Executive Officer of Ultra Petroleum Corp.
in January 1999. Mr. Watford has enjoyed a full range of
industry experiences while working over his 34 year career
for a number of energy companies including Shell Oil, Superior
Oil, Meridian Oil (Burlington Resources), Torch Energy and Nuevo
Energy Company. Prior to joining Ultra Petroleum,
Mr. Watford was Chief Executive Officer of Nuevo Energy
Company for three and one-half years where he led the
companys growth in market value from $200 million to
over $1 billion. 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. 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 5 years.
Mr. Stephen J. McDaniel has been a director of the
Company since July 2006. Currently, Mr. McDaniel is the
President and a director of Midstates Petroleum, 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.
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. Prior to that,
Mr. Rigney was the Chief Executive Officer and Chairman of
Pendaries Petroleum Ltd. since its inception in 1996.
Mr. Rigney has been a diplomat, an oil company executive
and a consultant in Asia for over 21 years.
Mr. Roger A. Brown has been a director of the
Company since October 2007. Mr. Brown most recently was
Vice President Strategic Initiatives for Smith
International, Inc., and prior to that, President of Smith
Technologies, a division of Smith International. Mr. Brown
retired from Smith in early 2007. He holds a Bachelor of
Science, Economics, History and Political Science and a Juris
Doctorate all from the University of Oklahoma.
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 us in July 2005, Mr. Smith served as the Vice
President of Upstream Business Development at Constellation
Energy.
23
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 on the Board of
Governors of M3 Energy, LLC. Just prior to joining us,
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. He has demonstrated
superior commercial skills and focused strategy development in
directing Ultra Petroleums rapidly expanding marketing
efforts.
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 herin 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 18, 2008, 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, 2008. Under Yukon Territory 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.
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, 2008. 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.
Audit Fees Paid to Independent Auditors. Fees
paid for professional services rendered related to the audit of
the Companys annual financial statements and review of the
quarterly financial statements, including
out-of-pocket
expenses, were $1,336,951 and $430,748 paid to Ernst &
Young LLP in 2007 and 2006, respectively and $787,002 paid to
KPMG LLP in 2006.
Audit-related Fees. The Company paid KPMG
$13,100 in 2007 in connection with KPMGs consent to
incorporate their report dated March 30, 2006 by reference
into the December 31, 2006 annual report on
Form 10-K.
There were no audit-related fees paid in 2006.
Tax Fees. Tax fees are for services rendered
by Grant Thornton LLP related to advice and tax planning. The
Company has elected not to use its current principal accountant
for tax services. Fees paid to Grant Thornton LLP for tax
related services were $135,544 in 2007 and $129,106 in 2006.
All Other Fees. There were no other fees paid
to Ernst & Young LLP or KPMG LLP in 2007 or 2006.
Grant Thornton LLP was paid $272,399 in relation to outsourcing
our internal audit department in 2007 and
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engagements related to Sarbanes-Oxley compliance. Grant Thornton
LLP was paid $172,780 in relation to an engagement related to
Sarbanes-Oxley compliance in 2006.
All of the services provided by the Companys independent
auditors during 2007 and 2006 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, 2007 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 2007. 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 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 CLIMATE CHANGE REPORT
The proponent of the following shareholder proposal has stated
that it intends to present the proposal at the Annual Meeting.
In accordance with applicable proxy regulations, the following
proposal and supporting statement, as submitted by the
proponent, 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 has been submitted by the Nathan Cummings
Foundation. The address of the Nathan Cummings Foundation and
the number of voting common shares it holds will be promptly
provided upon oral or written request to the Companys
Secretary.
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CLIMATE
CHANGE REPORT
WHEREAS:
The Intergovernmental Panel on Climate Change (IPCC) recently
concluded that warming of the climate system is unequivocal and
that human activity is the main cause. Debate surrounding
climate change now focuses not on whether a problem exists but
rather on the best means for abatement and adaptation.
The rise in average global temperatures resulting from climate
change is expected to have significant adverse impacts.
According to Business Week, many scientists agree that
the warmer temperatures resulting from climate change are
causing more powerful storms and perhaps intensifying extreme
weather events including droughts and wild fires. Thermal
expansion and melting ice sheets are expected to lead to rising
sea levels, with significant implications for coastal
communities.
Climate change also has important economic implications. The
Stern Review, often cited as the most comprehensive
overview of the economics of climate change, estimated that the
cumulative economic impacts of climate change could be
equivalent to a loss of up to 20% of average world-wide
consumption if action is not taken quickly. A more general
pronouncement in the IPCCs report, Climate Change 2007:
Impacts, Adaptation and Vulnerability, observed that
Taken as a whole, the range of published evidence
indicates that the net damage costs of climate change are likely
to be significant and to increase over time.
Data from the Energy Information Administration indicates that
over half of domestic GHG emissions result from the combustion
of oil and gas. The Financial Times has asserted that,
Perhaps more than any other industry, oil companies are
having to get to grips with the issue of climate change.
Industry leaders such as BP, Chevron, Statoil, XTO Energy and
Apache are already taking action to address climate change,
including assuming a cost for carbon in their strategic
planning, reporting on and reducing their GHG emissions,
engaging in emissions trading and investing in renewable energy.
All have reported on their plans for addressing the issue.
According to the Conference Board, climate change is a
fact of life for business in the 21st century...businesses that
ignore the debate over climate change do so at their
peril. Shareholder resolutions requesting information on
Ultras approach to climate change and backed by
approximately 22% and 31% of the vote in 2006 and 2007 have thus
far been ignored. Ultra also declined to participate in both the
2006 and 2007 iterations of the Carbon Disclosure Project, an
investor coalition seeking information on corporate greenhouse
gas emissions and backed by approximately $41 trillion.
RESOLVED:
The shareholders request that a committee of independent
directors of the Board prepare a report, at reasonable cost and
omitting proprietary information, on our companys plans to
address climate change by December 31, 2008.
SUPPORTING
STATEMENT:
We believe that management best serves shareholders by carefully
assessing and disclosing all pertinent information on its
response to climate change, including the development of
policies that will minimize Ultras impacts on climate
change.
END OF
SHAREHOLDER PROPOSAL
*****
26
Board of
Directors Statement in Opposition
THE
COMPANYS BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS
PROPOSAL
FOR THE FOLLOWING REASONS
Ultra recognizes that the concerns raised by the stockholder
proposal are timely and important issues. For this reason, Ultra
believes that it is currently addressing these concerns. As a
member of the local communities in which Ultra operates and a
member of the United States community at large, Ultra has a
vested interest in these topical issues, and it is Ultras
policy to monitor regulatory and scientific developments
regarding the environment and meet or exceed all of its
obligations.
Ultra strives to conduct its operations in a way that addresses
environmental concerns, prevents pollution, conserves resources
and energy, minimizes the use of hazardous materials and reduces
waste. Ultra believes it is an industry leader in how it
conducts its operations to effectively and responsibly address
the issues raised by the proposal. Ultra is continually
evaluating and implementing initiatives aimed at environmental
concerns especially those regarding air quality and green house
gas emissions. This policy is implemented by managements
evaluation of the use of new technologies in order to meet or
exceed current practices and regulatory requirements.
In this regard:
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Ultra seeks out opportunities to contract for rigs built to
conform with the highest air quality standards as defined under
the Clean Air Act. As these rigs become available, we let
contracts for rigs with lower ratings expire. Currently, Ultra
has commitments on 13 rigs with the highest engine emission
performance ranking. In addition, our rigs use self-sustaining
natural gas boilers rather than diesel.
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Ultra has provided funds to the state of Wyoming for air quality
monitoring equipment and for personnel to conduct such
monitoring.
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Ultra promotes a framework that maximizes efficiency and
minimizes our impact on the environment through such initiatives
as the installation of Computer Assisted Operations which give
us the ability to remotely monitor field operations, reducing
truck trips, emissions, dust and particulate matter introduced
into the air; routing pumps and units to closed systems or
emission control systems so as to reduce emissions; and
monitoring our production facilities with the most
technologically advanced tools available in order to better
detect leaks and fugitive emissions.
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In addition, because our operations are on or near federal
lands, they are scrutinized heavily by state, local and federal
authorities, including the U.S. Bureau of Land Management
and the Wyoming Department of Environmental Quality, with whom
we maintain an ongoing dialogue regarding how best to conduct
our operations with minimal impacts on the environment. Unlike
oil and gas companies operating in other parts of the country,
we are required to conduct our operations under Environmental
Impact Statements and other environmental studies issued by the
U.S. Bureau of Land Management which dictate how we can
conduct our operations. Components of these studies have
included reports and regulations including drilling rig
forecasts, emission reduction reports, water well monitoring
reports, operations forecasts and the use of
flareless-completion technology to reduce noise, visual impacts
and air emissions, including greenhouse gases, as well as other
monitoring and mitigation measures. We include a more detailed
description of our environmental activities in our annual
reports on
Form 10-K
filed with the Securities and Exchange Commission and which are
available on the Companys website.
In connection with a Record of Decision expected to be issued
this summer for the Pinedale Anticline Project Area, Ultra has
committed to:
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reduce emissions to 80% of 2005 levels no later than
42 months after the date the Record of Decision is issued;
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fund additional air quality monitoring equipment and provide
additional financial offsets of personnel costs for the state of
Wyoming; and
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install a liquids gathering system which is estimated to
eliminate 165,000 truck trips per year, reducing the amount of
tank and fugitive emissions as well as dust and particulate
matter introduced into the air.
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It is clear that Ultra already addresses the climate change
issues identified in the stockholder proposal. Accordingly, the
Board does not believe that creating the type of report
requested by the proponents would help in the reduction of
emissions or in the environmental performance of the Company but
rather would serve only to increase administrative burdens and
costs. Accordingly, the Companys Board of Directors
recommends that you vote AGAINST the proposal.
SHAREHOLDER
PROPOSALS FOR 2009 ANNUAL MEETING
Any shareholder who intends to present a proposal at the 2009
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 our
principal executive offices not later than December 2,
2008. 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 2009
Annual Meeting is changed by more than 30 days from the
date of the 2008 Annual Meeting, the deadline for submitting
proposals to be included in managements 2009 proxy
statement is a reasonable time before the Company begins to
print and mail its proxy materials for its 2009 Annual Meeting.
The persons named in the Companys proxy card for the 2009
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 February 18,
2009. If the Company changes the date of its 2009 Annual Meeting
by more than 30 days from the date of the 2008 Annual
Meeting, the persons named in the Companys 2009 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 2009 Annual
Meeting of Shareholders.
If the date of the 2009 Annual Meeting is advanced or delayed by
more than 30 calendar days from the date of the 2008 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 2009 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 unless we have received contrary instructions from one
or more of the shareholders. We 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 North Sam Houston Parkway
East, 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, 2007 and the auditors report
thereon, but no vote by the shareholders with respect thereto is
required or proposed to be taken.
28
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 3, 2008
29
![(Proxy Card)](h55529dh5552902.gif)
Security Class
Holder Account Number
Fold
Form of Proxy Annual Meeting to be held on May 16, 2008
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. 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 may be required to provide documentation evidencing your power to sign this proxy with signing capacity stated.
3.
This proxy should be signed in the exact manner as the name appears 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 or withheld from voting, 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 to matters identified in the Notice of Meeting or other matters that may properly come before the meeting.
8.
This proxy should be read in conjunction with the accompanying documentation provided by Management.
Proxies submitted must be received by 9:00 a.m. EDT on Wednesday, May 14, 2008.
Fold
VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK!
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, HOLDER ACCOUNT NUMBER and ACCESS NUMBER listed below.
CONTROL NUMBER HOLDER ACCOUNT NUMBER ACCESS NUMBER
28JA08078.E.SEDAR/000001/000001/i |
![(Proxy Card)](h55529dh5552903.gif)
Appointment of Proxyholder
The undersigned shareholder (Registered Shareholder) of Ultra Petroleum Print the name of the person you are
Corp. (the Company) hereby appoints: Michael D. Watford, or failing him Kelly L. Whitley, OR appointing if this person is someone other than the Chairman of the
Meeting.
as my/our proxyholder with full power of substitution and to vote 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 Ultra Petroleum Corp. to be held at the Crowne Plaza Hotel, 425 N. Sam Houston Parkway E., Houston Texas, on Friday, May 16, 2008 at 10:00 a.m. CDT and at any adjournment 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. Roger A. Brown
03. W. Charles Helton
Fold
04. Stephen J. McDaniel
05. Robert E. Rigney
Withhold
2. Appointment of Auditors
Appointment Ernst & Young LLP as independent auditors of the corporation for the ensuing year and authorizing the Directors to fix their remuneration.
For
3. Shareholder Proposal
If presented, to consider and vote upon a shareholder proposal regarding climate change which is opposed by the Board of Directors.
Against Fold
4. Transact Other Business
To transact such other business as may properly be brought before the Annual Meeting or any adjournments or postponements thereof.
Signature(s) Date
Authorized Signature(s) This section must be completed
for your 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
Annual Report
Mark this box if you would like to receive interim financial statements and accompanying Mark this box if you would like to receive the Annual Report and
Managements Discussion and Analysis by mail.
accompanying Managements Discussion and Analysis by mail. 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.
038382 AR1 UPQQ |