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• | Base salaries of NEOs were decreased in 2015. Base salaries of each of our NEOs were decreased 8-10% from their 2014 base salary. |
• | No annual cash bonuses were paid to NEOs in 2015. No annual cash incentive payouts were made to NEOs in 2015, even though certain performance targets were met. |
• | CEO stock awards and total pay in 2015 were reduced substantially, and are therefore aligned with stock performance. The value of stock awards issued to our CEO (including a one-time award) and earned declined approximately 43% year-over-year, and his total pay declined approximately 49%. As noted by ISS’ own report, Mr. Patterson’s 2015 pay was below the median of the Company’s peers. In addition, as noted by ISS’ own report on relative alignment for pay and performance for annualized 3-year performance, the Company’s pay was in fact aligned with its performance using ISS metrics. |
• | Overall stock awards and total pay for other NEOs in 2015 were reduced substantially. The value of stock awards issued to other NEOs and earned in 2015 decreased by up to 55%, and the total pay of the other NEOs in 2015 was reduced between 32% and 56% compared to 2014, as further detailed in the Summary Compensation Table. |
• | Mr. Patterson received a one-time grant of 100,000 restricted shares in recognition of his greater responsibilities as CEO. As noted in the Proxy Statement (p. 18), during 2015 the Compensation Committee approved a one-time grant of 100,000 shares of restricted stock to Mr. Patterson, which vests over three years. The Company explained: “This grant was made in recognition of three considerations: (1) his continued leadership through the industry downturn; (2) the absence of any adjustment to his equity compensation during 2014 upon transitioning into greater responsibilities as CEO; and lastly, (3) a determination by the Compensation Committee that his base salary was below peer group norms.” In opposing this one-time grant, ISS ignores the peer comparisons in its own report, which state that Mr. Patterson’s 2015 pay was 80% of the median of the Company’s ISS peers. The Compensation Committee and the Board of Directors continue to support this one-time award as reasonable compensation to the Company’s CEO during 2015 for the reasons stated above and in the Proxy Statement. |
• | ISS fails to give the Company any credit for its anti-hedging policy. Our anti-hedging policy is clearly described in the Proxy Statement (see p. 18 summary What We Do - “Anti-Hedging Policy”; and p. 26 full description), while the ISS report incorrectly states “Anti-hedging policy -- Company does not disclose any policy.” |
• | ISS fails to acknowledge significant ongoing reductions in CEO and other NEO compensation (both in terms of total cash and equity compensation). Contrary to assertions in the ISS report, the Company in fact made substantial changes to the executive pay program after the 2015 Say-on-Pay proposal failed to receive majority support, which changes are further described in the Proxy Statement and this supplement. |
• | In its analysis of long-term compensation, ISS neglects more substantive positive features. The Company’s 2015 compensation program included ongoing significant value reductions, including reductions in equity values of equity awards resulting from lower stock prices during the energy industry downturn. Similarly, when focusing solely on share numbers in connection with “plan costs,” ISS fails to acknowledge significant additional equity value reductions in 2015 awards, as well as 2016 awards (share grants numbers kept constant in spite of falling share prices). |