UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PROXY STATEMENT PURSUANT TO SECTION 14(a)
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SemGroup2017SemGroup2018 Proxy Statement Notice of Annual Meeting of Stockholders to be held on May 17, 201716, 2018
SEMGROUP CORPORATION
Two Warren Place
6120 S. Yale Avenue, Suite 1500
Tulsa, Oklahoma 74136-4231
April 13, 20172018
LETTER FROM THE CHAIRMAN OF THE BOARD
TO OUR STOCKHOLDERS
On behalf of SemGroup’s Board of Directors, I am pleased to invite you to our Annual Meeting of Stockholders on May 17, 2017.16, 2018. The attached Proxy Statement contains important information about the business to be conducted at the Annual Meeting. Whether or not you plan to attend, we encourage you to vote your proxy as soon as possible so that your shares will be represented at the meeting.
This year we will vote on the election of seven directors and the ratification of Grant Thornton LLP’s selection as the company’s independent registered public accounting firm for 2017.2018. We will also conduct anon-binding advisory vote to approve the compensation of the company’s named executive officers, a non-binding advisory vote regarding the frequency for which stockholders will have an advisory vote to approve the compensation paid to the company’s named executive officers and a vote to approve an amendment to our Amended and Restated Certificate of Incorporation, as amended, to authorize 4,000,000increase the number of authorized shares of preferred stock.Class A Common Stock from 90,000,000 shares to 180,000,000 shares. In addition, leadership will provide a report on the company’s business and stockholders will have an opportunity to ask questions.
SemGroup’s Board of Directors is committed to strong corporate governance, stockholder transparency and consistent value creation for our investors. The Board and management team are comprised of individuals with decades of industry experience and diverse perspectives. As stewards of your investment in SemGroup, we are focused on achieving results for you.
Thank you for your continued support of SemGroup.
Thomas R. McDaniel |
Chairman, Board of Directors |
SEMGROUP CORPORATION
Two Warren Place
6120 S. Yale Avenue, Suite 1500
Tulsa, Oklahoma 74136-4231
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF SEMGROUP CORPORATION
Date: | May | |
Time: | 9:00 a.m., local time | |
Place: | Two Warren Place, 5th Floor, | |
6120 South Yale Avenue, Tulsa, Oklahoma 74136 |
AGENDA:
Election of seven directors named in the proxy statement;
Advisory vote to approve the compensation of our executive officers disclosed in the proxy statement;
Advisory vote regarding the frequency for which stockholders will have an advisory vote to approve the compensation paid to certain executive officers;
Ratification of appointment of Grant Thornton LLP as our independent registered public accounting firm for 2017;
Approval of an amendment to our Amended and Restated Certificate of Incorporation, as amended, to authorize 4,000,000increase the number of authorized shares of preferred stock,our Class A Common Stock from 90,000,000 shares to 180,000,000 shares, as described in Proposal 54 in the proxy statement; and
Transaction of such other business as may properly come before the meeting or any adjournment thereof.
Record Date:You can vote if you were a stockholder of record on March 30, 2017.29, 2018.
Your vote is important regardless of the number of shares you own. Whether or not you expect to attend the meeting, we hope you will take the time to vote your shares. If you are a stockholder of record, you may vote over the Internet, by telephone or by completing and mailing the enclosed proxy card in the envelope provided. If your shares are held in “street name,” that is, held for your account by a broker or other nominee, you will receive instructions from the holder of record that you must follow for your shares to be voted.
By Order of the Board of Directors,
William H. Gault
Secretary
April 13, 20172018
Important Notice Regarding the Availability of Proxy Materials for the 20172018 Annual Meeting of Stockholders to be Held on May 17, 2017:16, 2018: Stockholders may view the accompanying proxy statement, our form of proxy and our 20162017 Annual Report to Stockholders over the Internet by accessing our website athttp://www.semgroupcorp.com.
SEMGROUP CORPORATION
Two Warren Place
6120 S. Yale Avenue, Suite 1500
Tulsa, Oklahoma 74136-4231
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 17, 201716, 2018
This proxy statement is furnished in connection with the solicitation by the Board of Directors of SemGroup Corporation, a Delaware corporation (the “Company,” “SemGroup,” “we,” “our” or “us”), of proxies to be voted at the Annual Meeting of Stockholders to be held on May 17, 2017,16, 2018, or at any adjournment thereof (the “Annual Meeting”), for the purposes set forth in the accompanying Notice of Annual Meeting. This proxy statement and accompanying proxy were first sent on or about April 13, 2017,2018, to stockholders of record on March 30, 2017.29, 2018.
Holders of record of our Class A Common Stock (the “Class A Common Stock”) and Series A Cumulative Perpetual Convertible Preferred Stock (“Preferred Stock”) at the close of business on the record date, March 30, 2017,29, 2018, will be entitled to notice of, and to vote at, the Annual Meeting. As of March 30, 2017,29, 2018, there were 66,237,006 shares of our Class A Common Stock outstanding and 350,000 shares of Preferred Stock outstanding. Each share of Class A Common Stock is entitled to one vote. Holders of shares of Preferred Stock are entitled to vote together with the holders of shares of Class A Common Stock as a single class. Each holder of shares of Preferred Stock is entitled to a number of votes equal to the number of votes such holder would have had if all shares of Preferred Stock held by such holder had been converted into shares of Class A Common Stock as of the record date. As of the record date, March 29, 2018, the outstanding shares of Preferred Stock were convertible into an aggregate of 10,606,061 shares of Class A Common Stock and such amount represents an equal number of votes that may be cast at the Annual Meeting in person or by proxy by holders of such stock. There are no other classes of common stock outstanding. Accordingly, the total number of shares entitled to vote at the Annual Meeting, giving effect to the Preferred Stock on anas-converted basis, is . There is no cumulative voting with respect to the election of directors.
For more information about this solicitation and voting, please see the Questions and Answers section below.
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| Proposal 1 — Election of Directors
Page 4
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4 | Nominees for Directors | |||||
8 | Corporate Governance | |||||
Director Compensation |
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1 | ||||
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Q: | Who is soliciting my proxy? | |||
A: | The Board of Directors of SemGroup (the “Board of Directors” or the “Board”). | |||
Q: | Where and when is the Annual Meeting? | |||
A: | 9:00 a.m., local time, May | |||
Q: | What am I voting on at the Annual Meeting? | |||
A: | • | The election of the seven nominees named in this proxy statement to our Board of Directors. | ||
• | An advisory vote on executive compensation. | |||
• | ||||
The ratification of Grant Thornton LLP as our independent registered public accounting firm for | ||||
• | Approval of an amendment to our Amended and Restated Certificate of Incorporation, as amended, to | |||
Q: | How does the Board of Directors recommend I vote? | |||
A: | Please see the information included in this proxy statement relating to each of the matters to be voted on. Our Board of Directors recommends that you vote: | |||
• | “FOR” the election of all of the nominees for director named in this proxy statement; | |||
• | “FOR” the approval, on an advisory basis, of the compensation of our executive officers named in this proxy statement; | |||
• | ||||
“FOR” ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for | ||||
• | “FOR” the approval of an amendment to our Amended and Restated Certificate of Incorporation, as amended, to | |||
Q: | How do I vote? | |||
A: | Stockholders of Record. If you are a stockholder of record, you may vote by using any of the following methods: | |||
• | VOTE BY INTERNET:You may use the Internet to vote by following the simple instructions on the enclosed proxy card. When voting by Internet, you will need to have your proxy card in hand, so that you can reference the required Control Number. | |||
• | VOTE BY TELEPHONE:You may use any touch-tone telephone to vote by following the simple instructions on the enclosed proxy card. You will need to have your proxy card in hand when you call so that you can reference the required Control Number. | |||
• | VOTE BY MAIL:You may vote by marking, signing and dating your proxy card and promptly returning it in the enclosed postage-paid envelope. | |||
The persons named as your proxy holders on the proxy card will vote the shares represented by your proxy in accordance with the specifications you make. If no specification is made, such shares will be voted: | ||||
• | “FOR” the election of all of the nominees for director named in Proposal 1; and | |||
• | “FOR” Proposals 2, | |||
Please carefully consider the information contained in this proxy statement. Whether or not you expect to attend the Annual Meeting in person, we urge you to vote by Internet or telephone, or by signing, dating and returning the enclosed proxy card as promptly as possible in the postage-paid envelope provided, to ensure your representation and the presence of a quorum at the Annual Meeting. Stockholders of record desiring to vote in person at the Annual Meeting may vote on the ballot provided at the meeting. |
Beneficial Owners. If your shares are held in a brokerage account, by a bank, by a trustee, or by another nominee, please follow the voting instructions provided by your broker or other nominee. Most brokers or other nominees permit their customers to vote by telephone or by Internet, in addition to voting by signing, dating and returning the voting instruction form in the postage-paid envelope provided.
Beneficial owners desiring to vote at the Annual Meeting will need to contact the broker, bank, trustee, or other nominee that is the holder of record of their shares to obtain a “legal proxy” to bring to the Annual Meeting. | ||||
Q: | Who will count the vote? | |||
A: | Representatives of Computershare will count the votes and serve as the inspector of the election. | |||
Q: | What constitutes a quorum? | |||
A: | Stockholders representing at least a majority of our outstanding Class A Common Stock as of the record date must be present at the Annual Meeting, either in person or by proxy, for there to be a quorum. Abstentions and brokernon-votes are counted as present for establishing a quorum. A brokernon-vote occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner. | |||
Q: | What vote is needed for these proposals to be adopted? | |||
A: | Proposal 1—Election of Directors. The affirmative vote of a plurality of the votes cast at the Annual Meeting is required for the election of directors. This means that the nominees with the largest number of votes “for” will be elected as directors, up to the maximum number of directors to be chosen at the election. With respect to the election of directors, you may vote in favor of all nominees, withhold votes as to all nominees, or vote in favor of all nominees except any specific nominee(s) listed as to which you withhold your votes. Votes withheld are deemed present at the meeting and thus will be counted for purposes of determining whether there is a quorum. | |||
Pursuant to our Corporate Governance Guidelines and Principles, each nominee for director is required to tender his or her irrevocable resignation as a director conditioned upon (i) the director receiving more “withhold” votes than “for” votes in an uncontested election and (ii) the Board accepting such resignation. In the event a nominee for director receives more “withhold” votes than for “for” votes in the election, the Nominating and Corporate Governance Committee of our Board of Directors shall promptly consider the tendered resignation and recommend to the Board the action to be taken with respect to such tendered resignation, and the Board will then act on such recommendation. | ||||
Proposal 2—Advisory Vote on Executive Officer Compensation. The approval, on an advisory basis, of the compensation paid to our executive officers named in this proxy statement requires the affirmative vote of a majority of shares | ||||
Proposal 3— | ||||
Proposal | ||||
A brokernon-vote will have no effect on the outcome of the election of directors or Proposals 2 |
4. | ||||
Q: | How will my shares be voted if they are held in a broker’s name? | |||
A: | If you hold your shares through an account with a bank or broker, the bank or broker may vote your shares on some matters even if you do not provide voting instructions. Brokerage firms have the authority under the New York Stock Exchange (“NYSE”) rules to vote shares on certain matters (such as the ratification of independent registered public accounting |
Q: | What should I do now? | |||
A: | You should vote your shares by the Internet, by telephone or by returning your signed and dated proxy card in the enclosed postage-paid envelope as soon as possible so that your shares will be represented at the Annual Meeting. | |||
Q: | Who conducts the proxy solicitation and how much will it cost? | |||
A: | We are asking for your proxy for the Annual Meeting and will pay all the costs of asking for stockholder proxies. We can ask for proxies through the mail or by telephone, fax, or in person. We can use our directors, officers and employees to ask for proxies. These people do not receive additional compensation for these services. In addition, we have retained D.F. King & Co., Inc. to aid in the solicitation of proxies at a base fee of $12,500, plus reasonableout-of-pocket expenses and disbursements. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonableout-of-pocket expenses for forwarding solicitation material to the beneficial owners of our | |||
Q: | Can I revoke my proxy? | |||
A: | Yes. You can change your vote in one of four ways at any time before your proxy is used. First, you can enter a new vote by telephone or Internet. Second, you can revoke your proxy by giving written notice to the Secretary of SemGroup at any time before it is voted. Third, you can send a later dated proxy changing your vote. Fourth, you can attend the Annual Meeting and vote in person. | |||
Q: | Who should I call with questions? | |||
A: | If you have questions about the Annual Meeting, you should call William H. Gault, Secretary, at (918)524-8100. | |||
Q: | When are the stockholder proposals for the Annual Meeting held in | |||
A: | In order to be considered for inclusion in our proxy materials, you must submit proposals for next year’s annual meeting in writing to our Secretary at our executive offices at Two Warren Place, 6120 S. Yale Avenue, Suite 1500, Tulsa, Oklahoma 74136, on or prior to December 14,
In accordance with our Amended and Restated Bylaws, a stockholder who intends to submit a proposal for consideration, but not for inclusion in our proxy materials, or who intends to nominate a candidate for election as a director, must provide written notice of the matter to our Secretary at Two Warren Place, 6120 S. Yale Avenue, Suite 1500, Tulsa, Oklahoma 74136, not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. As a result, any notice given by or on behalf of a stockholder pursuant to these provisions of our Amended and Restated Bylaws, as amended (and not pursuant to Rule14a-8 under the Securities Exchange Act of 1934) must be received no earlier than January |
PROPOSAL 1 ELECTION OF DIRECTORS
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Our Amended and Restated Bylaws provide that our Board of Directors shall consist of not less than three nor more than eleven11 directors, as determined from time to time by resolution of the Board of Directors. The number of directors is currently fixed at seven. Directors are elected by the stockholders to serve for aone-year term expiring at the next annual meeting of stockholders and until their successors are duly elected and qualified, or until their earlier death, resignation or removal. The term of the current directors will expire at the Annual Meeting.
In accordance with the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has nominated Ronald A. Ballschmiede, Sarah M. Barpoulis, Carlin G. Conner, Karl F. Kurz, James H. Lytal, William J. McAdam and Thomas R. McDaniel to the Board of Directors. All of the nominees are presently directors of SemGroup. At the time of Mr. McAdam’s election to the Board of Directors in March 2017, he was recommended to the Nominating and Corporate Governance Committee by a third-party search firm.
The persons named as proxies in the accompanying proxy, who have been designated by the Board of Directors, intend to vote, unless otherwise instructed in such proxy, for the election of each of the nominees for director. Should any nominee named herein become unable for any reason to stand for election as a director, it is intended that the persons named in such proxy will vote for the election of such other person or persons as the Nominating and Corporate Governance Committee may recommend and the Board of Directors may propose to replace such nominee. We know of no reason why any of the nominees will be unavailable or unable to serve.
As noted earlier in the Questions and Answers section of this proxy statement, pursuant to our Corporate Governance Guidelines and Principles of the Board of Directors, as a requirement for nomination as a director, each nominee for director must tender his or her irrevocable resignation as a director conditioned upon (i) the director receiving more “withhold” votes than “for” votes (a “Majority Withhold Vote”) in an uncontested election and (ii) the Board accepting such resignation. In the event a nominee for director receives a Majority Withhold Vote in an uncontested election, the Nominating and Corporate Governance Committee of our Board of Directors shall promptly consider the tendered resignation and recommend to the Board the action to be taken with respect to such tendered resignation. The Nominating and Corporate Governance Committee is authorized to consider all factors it deems relevant to the best interests of the Company and its stockholders in reaching its recommendation. The Board will then act on such recommendation no later than 90 days following the certification of the election results. Following the Board’s decision, the Company will publicly disclose the Board’s decision and, if applicable, the reasons for rejecting the tendered resignation. Accordingly, the seven nominees with the largest number of “for” votes will be elected as directors, and in the event any nominee receives a Majority Withhold Vote, the resignation policy as summarized here will apply. The director resignation policy is set forth in our Corporate Governance Guidelines and Principles and is available on our website athttp://www.semgroupcorp.com under the “Corporate Information—Governance—Governance Documents” caption on the “Investor Relations” page.
Our Board of Directors recommends a vote“FOR” all nominees for directors.
Set forth below is information with respect to each nominee for director, including information they have furnished as to his or her principal occupation or employment for the past five or more years and certain other directorships held. Each nominee’s information below also includes a summary of each individual’s experience, qualifications, attributes and skills that have led to the conclusion that each individual should serve as a director. In addition to the specific experiences, qualifications, attributes and/or skills set forth below, each nominee generally has demonstrated the highest professional and personal ethics, a broad range of experience in business, government and/or technology, the ability to provide insights and practical wisdom based on his or her experience and expertise, a commitment to enhancing stockholder value, compliance with legal and regulatory requirements and the ability to develop a good working relationship with other Board members and contribute to the Board’s working relationship with senior management of SemGroup. See “—Corporate Governance—Consideration of Director Nominees” below for additional information regarding director nominees and the nominating process.
Ronald A. Ballschmiede, age 61,62, has served as a director of SemGroup since 2009. He currently serves as Chair of the Nominating and Corporate Governance Committee of the Board of Directors and as a member of the Audit Committee of the Board of Directors. Since November 2015, Mr. Ballschmiede has served as Executive Vice President and Chief Financial Officer of Sterling Construction Company, Inc. (“Sterling”), a leading heavy civil construction company that specializes in the building and reconstruction of transportation and water infrastructure projects. Mr. Ballschmiede served as a director of the general
partner of Rose Rock Midstream, L.P. (“Rose Rock” or “RRMS”), a publicly traded master limited partnership and subsidiary of SemGroup which owned and operated a diversified portfolio of midstream energy assets, from April 2016 to September 2016 when
SemGroup acquired all of Rose Rock. From 2006 to 2015, Mr. Ballschmiede served as Executive Vice President and Chief Financial Officer of Chicago Bridge & Iron Co. N.V. (“CB&I”), a leading engineering, procurement and construction company that focuses on the energy and natural resource industry. Prior to joining CB&I, he had a29-year career in public accounting, primarily focused on serving public companies in the manufacturing and construction industry. From 2002 to 2006, Mr. Ballschmiede served as a partner with Deloitte & Touche LLP. From 1977 to 2002, he was employed by Arthur Andersen, LLP, becoming a partner in its audit division in 1989. Mr. Ballschmiede graduated from Northern Illinois University with a Bachelor of Science degree in accounting and is a certified public accountant.
Mr. Ballschmiede provides the Board with extensive accounting and financial expertise gained from his service as Executive Vice President and Chief Financial Officer of Sterling and CB&I and his prior experience as a partner of Deloitte & Touche LLP and Arthur Andersen, LLP. His experience and knowledge make him a valuable contributor of financial, accounting and risk management expertise to the Board. Mr. Ballschmiede qualifies as an “audit committee financial expert” as defined by the U.S. Securities and Exchange Commission (“SEC”).
Sarah M. Barpoulis, age 52, has served as a director of SemGroup since 2009. She currently serves as Chair of the Audit Committee of the Board of Directors and as a member of the Compensation Committee of the Board of Directors. Since 2003, she has provided asset management and advisory services to the merchant energy sector through Interim Energy Solutions, LLC, a company she founded. From 1991 to February 2003, Ms. Barpoulis was employed with PG&E National Energy Group, Inc., now known as National Energy & Gas Transmission, Inc. (“National Energy”), a company that developed, built, owned and operated electric generating and natural gas pipeline facilities and provided energy trading, marketing and risk management services, last serving as Senior Vice President, commercial operations and trading. Ms. Barpoulis serves on the board of directors of South Jersey Industries, an energy services holding company with utility andnon-utility operations. She is also a director of South Jersey Energy Company and Educare, DC. She previously served as a director of Reliant Energy, Inc. from 2006 to 2008. Ms. Barpoulis has a master’s degree in business administration from the Tuck School of Business at Dartmouth College and a Bachelor of Science and engineering degree from Princeton University.
Ms. Barpoulis provides the Board with valuable executive-level leadership experience and risk management and business planning expertise obtained from her consulting services provided through Interim Energy Solutions, LLC and her varied roles of increasing responsibility with National Energy. She has received a Certificate of Director Education from the NACD and qualifies as an “audit committee financial expert” as defined by the SEC. Her risk management expertise, background and prior board and work experience allow her to be a valuable contributor to the Board.
Carlin G. Conner, age 49, has served as a director and as50, became President, and Chief Executive Officer, and a director of SemGroup since 2014. Mr. Conner served as Chairman of the board of directors, Presidentin 2014 and Chief Executive Officer of the general partner of Rose Rock,began driving a publicly traded master limited partnershipstrategy toward focused growth and subsidiary of SemGroup which owned and operatedlong-term value creation. In 2000, he joined a diversified portfolio of midstream energy assets, from 2014 until September 2016 when SemGroup acquired all of Rose Rock. From 2012 until 2014, Mr. Conner served as managing directorsubsidiary of Oiltanking GmbH (“Oiltanking”), an independent worldwide storage provider of crude oil, refined petroleum products and liquid chemicalschemicals. During his nearly 14 years with Oiltanking and gases. Heits affiliates he focused on international business development while serving in various leadership roles. From 2012 to 2014, Mr. Conner served as a membermanaging director of Oiltanking and he served as chairman of the board of directors of the general partner of Oiltanking Partners, L.P., a publicly traded master limited partnership engaged in independent terminaling, storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas, (“Oiltanking Partners”), from March 2011 until Marchto 2014. From 2012 to 2014, and was elected Chairman in July 2011 in connection with the completion of Oiltanking Partners’ initial public offering. Mr. Conner also served as President and Chief Executive Officeran executive board member of Oiltanking Partner’s general partner from 2011 to 2012 and as President and Chief Executive OfficerMarquard & Bahls, AG, the parent company of Oiltanking, Holding Americas, Inc., a wholly owned subsidiary of Oiltanking GmbH from 2006 to 2012. Previously, from 2003 to 2006, he worked at Oiltanking GmbH’s corporate headquarters in Hamburg, Germany, where he was responsibleinstrumental in defining a new strategy for internationalthe energy supply, trading, and logistics business developmentacross Europe, the Americas, Asia, and sat on the boards of several Oiltanking GmbH ventures. He joined Oiltanking Houston, L.P. in 2000.Africa. He began his career at GATX Terminals Corporation and served in various roles, including operations and commercial management. From April 2014 to October 2014, Mr. Conner served on the Boardboard of Directorsdirectors of the general partner of NGL Energy Partners LP, a publicly traded master limited partnership engaged in water solutions, crude oil logistics, water solutions, liquids,NGL logistics, refined products/renewables and retail propane,propane. He also served as chairman of the board of directors, president and refined products and renewables. He graduatedchief executive officer of the general partner of Rose Rock from 2014 until September 2016, when SemGroup acquired all of Rose Rock. Mr. Conner holds a bachelor’s degree in environmental science from McNeese State University, with a Bachelorwhere he was also named 2016 Distinguished Alumnus of Science degreethe Year. In addition, he completed INSEAD and MCE executive management training in environmental science.France and Belgium, respectively.
Mr. Conner provides the Board with more than 2425 years of experience in the midstream industry and executive level experience gained through his services with Oiltanking GmbH and its affiliates as described above. He also has substantial board experience related to management and oversight of a midstream publicly traded master limited partnership. In addition, Mr. Conner serves as our President and Chief Executive Officer and is able to provide the Board valuable insight with respect to our management and operations. His industry knowledge, board experience and positions as President and Chief Executive Officer allow him to be a valuable contributor to the Board.
Karl F. Kurz, age 55,56, has served as a director of SemGroup since 2009. He currently serves on the Compensation Committee and on the Nominating and Governance Committee of the Board of Directors. From 2009 through 2012, Mr. Kurz served as a
managing director of CCMP Capital Advisors, LLC, a global private equity firm. From 2000 to 2009, he was employed with Anadarko Petroleum Corporation, one of the largest independent oil and gas exploration and production companies in the world, last serving as Chief Operating Officer from December 2006. Prior to this position, he served Anadarko Petroleum Corporation in
various capacities, including as Senior Vice President, North America operations, midstream and marketing, General Manager, U.S. onshore, Senior Vice President, marketing, and Vice President marketing. Prior to joining Anadarko Petroleum Corporation, Mr. Kurz previously served as general manager of midstream and marketing for Vastar Resources, Inc. and, prior to that, as manager of crude oil marketing for ARCO Oil & Gas Company. He currently serves on the boards of American Water Works Company, Inc. (the largest and most geographically diverse publicly traded U.S. water and wastewater utility company), WPX Energy, Inc. (anoil-focused energy company with operations in the U.S. Permian, Williston and San Juan and one of the 20 largest U.S. producers based on total assets and market capitalization), and Siluria Technologies (a developer of technologies for the commercial production of fuels and chemicals made from natural gas) and RTS Services (a real estate service company) and previously served on the boards of Western Gas Partners, Chaparral Energy, Inc. and, Global Geophysical Services, Inc. and RTS Services. Mr. Kurz graduated with a Bachelor of Science degree in petroleum engineering from Texas A&M University. He is also a graduate of Harvard University Business School’s advanced management program.
Mr. Kurz provides the Board extensive knowledge of the midstream energy services industry and executive-level leadership experience gained through his services provided to Anadarko Petroleum Corporation, Vastar Resources, Inc. and Arco Oil & Gas Company as described above. In addition, he brings public company board experience to our Board. His industry knowledge, executive-level leadership experience in relatively complex organizations and public company board experience allow Mr. Kurz to be a qualified and valuable contributor to the Board.
James H. Lytal, age 59,60, has served as a director of SemGroup since 2011. He currently serves as Chair of the Compensation Committee and as a member of the Audit Committee of the Board of Directors. Since 2009, Mr. Lytal has served as a senior advisor to Global Infrastructure Partners, a New York based partnership that invests in infrastructure assets globally. From 1994 to 2004, Mr. Lytal was President of Leviathan Gas Pipeline Partners, which later became El Paso Energy Partners, and then Gulfterra Energy Partners, where he served on the board of directors. In 2004, Gulfterra Energy Partners merged with Enterprise Products Partners, one of the largest publicly-traded energy partnerships in the United States, where Mr. Lytal served as Executive Vice President until 2009. From 1998 to 2008, he was directly involved in the development of over $3 billion in offshore platform and oil and gas pipeline projects. Having entered the energy industry in 1980, Mr. Lytal’s business experience includes midstream mergers, acquisitions and master limited partnership drop-downs, as well as onshore midstream and deepwater asset development and management. Mr. Lytal currently serves on the boardsboard of Azure Midstream Partner GP, LLC, the general partner of Azure Midstream Partners LP (a fee-based, growth oriented limited partnership formed to develop, operate, and acquire midstream energy assets), Rice Midstream Management LLC, the general partner of Rice Midstream Partners LP (afee-based, growth-oriented limited partnership formed by Rice Energy Inc. to own, operate, develop and acquire midstream assets in the Appalachian basin), and Archrock, Inc. (a U.S. natural gas contract compression services company). He previously served as a director of Azure Midstream Partner GP, LLC, the general partner of Azure Midstream Partners LP (afee-based, growth oriented limited partnership formed to develop, operate, and acquire midstream energy assets) until May 2017. Mr. Lytal graduated from the University of Texas at Austin with a Bachelor of Science degree in petroleum engineering.
Mr. Lytal has over 3537 years of experience in the midstream/MLP industry and provides the Board a broad range of knowledge and understanding in the management of midstream assets. His experience, executive leadership skills and familiarity with governance issues, particularly in the midstream sector, qualify him as a valuable and resourceful member of the Board.
William J. McAdam, age 65,66, has served as a director of SemGroup since March 2017. He serves on the Nominating and Corporate Governance Committee and Compensation Committee of the Board of Directors. Mr. McAdam was President and Chief Executive Officer of Aux Sable Liquid Products Inc., Aux Sable Canada LP, and Aux Sable Midstream LLC (North American midstream energy companies) from 2000 to 2013. Prior to joining Aux Sable, he held progressively more senior positions with Imperial Oil and Exxon Chemical from 1974 to 1994 in the engineering, refining, fertilizer, petrochemicals, planning and natural gas liquids businesses in the United States and Canada. He began working with Aux Sable in 1995 during its development phase until 1998, and was President of Mapco Canada Energy Inc. from 1998 until 1999. Mr. McAdam joined Aux Sable in 1999 to lead thestart-up and development of the Aux Sable business in conjunction with the construction and commissioning of the Alliance Pipeline/Aux Sable rich gas system in 2000. He serves as a director of Seven Generations Energy Ltd., a Canadian exploration and production company, and Tundra Energy Marketing Limited, a Canadian midstream service provider. Mr. McAdam previously served as a director of Canexus Corporation, a Canadian chemical manufacturing and handling company until it was acquired in March 2017 by ChemTrade Logistics Income Fund. Mr. McAdamHe earned a Bachelor of Science in Chemical Engineering from Queen’s University and a Master of Business Administration from McMaster University. HeMr. McAdam earned the ICD.D designation from the Institute of Corporate Directors in 2015.
Mr. McAdam has over 4243 years of experience in the energy industry and provides the Board a robust knowledge and understanding of the Canadian and U.S. energy sector. His executive leadership gained through his service to Aux Sable combined with his industry and public company board experience qualify him to make valuable contributions to the Board.
Thomas R. McDaniel, age 68,69, has served as a director of SemGroup since 2009 and as Chairman of the Board of Directors since January 1, 2017. Mr. McDaniel was Executive Vice President, Chief Financial Officer and Treasurer of Edison International, a
generator and distributor of electric power and investor in infrastructure and energy assets, before retiring in 2008 after 37 years of service.
Prior to 2005, he was Chairman, Chief Executive Officer and President of Edison Mission Energy, Edison International’s power generation subsidiary specializing in the development, acquisition, construction, management and operation of power production facilities. Prior to that, Mr. McDaniel served as President and Chief Executive Officer of Edison Capital, a capital and financial services business subsidiary which invests worldwide in energy and infrastructure projects. Mr. McDaniel serves on the board of directors of SunPower Corporation, a manufacturer of high-performance solar electric systems worldwide for residential, commercial and utility-scale power plant customers, and of Tendril, Inc., a provider of energy services management solutions.customers. He has previously served on the board of directors of Cypress Envirosystems, a subsidiary of Cypress Semiconductor Corp., and of Aquion Energy, Inc., a manufacturer of proprietary Aqueous Hybrid Ion (AHI™) batteries and battery systems for long-duration, stationary energy storage applications.applications, and Tendril, Inc., a provider of energy services management solutions. Mr. McDaniel graduated from the University of California at Los Angeles with a Bachelor of Science degree.
Mr. McDaniel has extensive operational and financial management experience gained from his roles of increasing responsibility with Edison International. In addition, he provides the Board with his experience as a director and audit committee member of a public company. Mr. McDaniel’s operational and financial management experience and his understanding of the role of board of directors allow him to be a valued contributor to the Board and as Chairman.
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Our Board of Directors is committed to sound and effective governance practices. Our Board of Directors has adopted corporate governance guidelines titled “Corporate Governance Guidelines and Principles of the Board of Directors” which provide a framework of governance principles and procedures to assist in the operation of the Board of Directors. The guidelines address, among other things, director qualifications, director independence, composition of the Board, director responsibilities, Board committees, Board self-evaluation and management review and succession. The Nominating and Corporate Governance Committee reviews the guidelines periodically, and the guidelines may be amended at any time upon recommendation by Nominating and Corporate Governance Committee and approval of the Board of Directors.
SemGroup has a Code of Business Conduct and Ethics for directors, officers (including the chief executive officer, principal financial officer and principal accounting officer) and employees. SemGroup also has a separate Code of Ethics for the Chief Executive Officer and Senior Financial Officers, which contain provisions specifically applicable to our chief executive officer and senior financial officers, including our chief financial officer and chief accounting officer.
The Corporate Governance Guidelines and Principles, the Code of Business Conduct and Ethics and the Code of Ethics for the Chief Executive Officer and Senior Financial Officers are available on our website athttp://www.semgroupcorp.com under the “Corporate Governance—Governance Documents” caption on the “Investor Relations” page and copies of these documents may also be obtained in print by any stockholder who requests them from our corporate secretary. If we amend the Code of Business Conduct and Ethics or Code of Ethics for the Chief Executive Officer and Senior Financial Officers or waive the Code of Business Conduct and Ethics or Code of Ethics for the Chief Executive Officer and Senior Financial Officers with respect to the chief executive officer, principal financial officer or principal accounting officer, we will post the amendment or waiver, as the case may be, at the same location on our website.
Director Independence. Our Board of Directors has adopted a formal set of categorical independence standards with respect to the determination of director independence based on the NYSE listing standards. These standards are set forth in our Director Nomination Policy which is available on our website athttp://www.semgroupcorp.com under the “Corporate Governance—Governance Documents” caption on the “Investor Relations” page. The provisions of the Director Nomination Policy regarding director independence meet and in some areas exceed the listing standards of the NYSE. In order to be considered independent a director must be determined to have no material relationship with the Company other than as a director.
Under the Director Nomination Policy, an “independent director” is one who:
For purposes of determining a “material relationship,” the following standards are utilized:
For purposes of these independence standards, (i) immediate family members of a director include the director’s spouse, parents, stepparents, children, stepchildren, siblings, mother- andfather-in-law, sons- anddaughters-in-law, and brothers- andsisters-in-law and anyone (other than domestic employees) who shares the director’s home and (ii) the term “primary business affiliation” means an entity of which the director is a principal/executive officer or in which the director holds at least a 5% equity interest.
In accordance with the Director Nomination Policy and the current director independence standards of the NYSE, the Board undertook its annual review of director and director nominee independence. During this review, the Board considered transactions and relationships between each director and director nominee or any member of his or her immediate family and the Company and its subsidiaries and affiliates. The Board also considered whether there were any transactions or relationships between directors, nominees or any member of their immediate family (or any entity of which a director, director nominee or an immediate family member is an executive officer, general partner or significant equity holder). As provided in the Director Nomination Policy and the NYSE independence standards, the purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the director or nominee is independent.
The Board of Directors has affirmatively determined that each of Mr. Ballschmiede, Ms. Barpoulis, Mr. Kurz, Mr. Lytal, Mr. McAdam and Mr. McDaniel, current directors of the Company, are independent under the standards set forth in the Director Nomination Policy and the current director independence standards of the NYSE. Mr. Conner is not considered to be independent because of his current employment as our President and Chief Executive Officer.
Board Meetings and Attendance. The Board held 2218 meetings during the year ended December 31, 2016.2017. During that year, each of our directors attended at least 75 percent of the aggregate number of Board meetings and meetings held by all committees on which he or she then served. In addition, the Board of Directors took action four timesone time during 20162017 by unanimous written consent.
Director Attendance at Annual Meeting of Stockholders. Each director is encouraged to participate in our annual meetings of stockholders. Each of our directors then serving attended our 20162017 annual meeting of stockholders.
Board Leadership Structure and Role in Risk Oversight. While we currently separate the offices of Chairman of the Board and Chief Executive Officer, our Corporate Governance Guidelines and Principles specify that the Board of Directors has no policy mandating the separation of the offices of Chairman of the Board and Chief Executive Officer, as our Board believes it is in our best interest to have flexibility in selecting our Chairman and board leadership structure as future circumstances may warrant. Our Board’s oversight of risk management (discussed below) has had no effect on our leadership structure.
Our Board of Directors has six independent members and only onenon-independent member. A number of our independent board members are currently serving or have served as members of senior management or as directors of other public companies. Our Audit, Compensation and Nominating and Corporate Governance Committees are comprised solely of independent directors, each with a different independent director serving as chair of the committee. We believe that the number of independent, experienced directors that make up our Board of Directors, along with the independent oversight of the Board by thenon-executive Chairman, benefits our Company and our stockholders.
Our Board of Directors is responsible for oversight of our enterprise-wide risk and has approved our Comprehensive Risk Management Policy that reflects an enterprise-wide approach to risk management and considers both financial andnon-financial risks. Our Comprehensive Risk Management Policy and its associated framework is designed to ensure we:
The Audit Committee of our Board of Directors has oversight responsibilities for the implementation of, and compliance with, our Comprehensive Risk Management Policy on behalf of the Board of Directors.
While the Board of Directors oversees our risk management, our management is responsible forday-to-day risk management processes. We have established an executive management committee, comprised of corporate officers, which oversees the financial andnon-financial risks associated with all activities governed by our Comprehensive Risk Management Policy and its associated framework, including: asset operations; marketing; investments, divestitures, and other capital expenditures and dispositions; credit risk management; and other strategic activities. We also have a separate risk management group that is assigned responsibility for independently monitoring compliance with, reporting on, and enforcing the provisions of our Comprehensive Risk Management Policy.
Board Committees. The Board of Directors has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Each of the current members of each of the committees qualifies as an “independent” director under the current listing standards of the NYSE.
The table shows the current membership of the Committees and identifies our independent directors:
Name
| Ronald A. Ballschmiede | Sarah M. Barpoulis | Carlin G. Conner | Karl F. Kurz | James H. Lytal | William J. McAdam | Thomas R. McDaniel | |||||||
Audit | X | X* | X | |||||||||||
Compensation | X | X* | X | |||||||||||
Nominating and Corporate Governance | X* | X | X | |||||||||||
Independent Directors | X | X | X | X | X | X |
* Denotes Committee Chairman.
Audit Committee. The Board of Directors has determined that Ronald A. Ballschmiede and Sarah M. Barpoulis qualify as “audit committee financial experts” within the meaning of the regulations of the SEC. The Audit Committee has a written charter, which is available on our website athttp://www.semgroupcorp.com. We have in place and circulated a “whistleblower policy” entitled “Audit Committee Accounting Concern Resolution Policy.” The Audit Committee assists the Board of Directors in fulfilling its responsibilities by providing oversight relating to:
A more detailed description of the Audit Committee’s responsibilities can be found in its charter.
The Audit Committee held eightseven meetings during 2016.2017.
Compensation Committee. The Compensation Committee has a written charter, which is available on our website athttp://www.semgroupcorp.com. The Compensation Committee reviews and takes action for and on behalf of the Board of Directors with respect to management compensation policies and practices, including (i) reviewing and recommending the
compensation for our Chief Executive Officer to the independent members of the Board of Directors for approval, (ii) determining and approving the compensation for our other executive officers, (iii) reviewing and approving management incentive compensation policies and programs and (iv) administrating our equity incentive plan. In addition, the Compensation Committee
recommends the form and amount ofnon-employee director compensation to the Board of Directors, and the Board of Directors makes the final determination. The Compensation Committee has authority under its charter to obtain advice and seek assistance from compensation consultants and from internal and outside legal, accounting and other advisors.
In considering and recommending the compensation ofnon-employee directors, the Compensation Committee may consider such factors as it deems appropriate, including historical compensation, level of compensation necessary to attract and retainnon-employee directors meeting our desired qualifications and market data. In connection with the review of ournon-employee director compensation by the Compensation Committee in 2016,2017, the Compensation Committee retained Pearl Meyer & Partners (“Pearl Meyer”) to provide market information onnon-employee director compensation, including annual board and committee retainers, board and committee meeting fees, committee chairperson fees and stock-based compensation. The Compensation Committee has discretion under its charter to form and delegate some or all of its authority to subcommittees composed entirely of independent directors. During 2016,2017, the Compensation Committee did not form or utilize a subcommittee. More information describing the Compensation Committee’s processes and procedures for considering and determining executive compensation, including the role of our Chief Executive Officer and consultants in determining or recommending the amount or form of executive compensation, is included in the Compensation Discussion and Analysis under “Executive Compensation” below.
The Compensation Committee held eight meetings during 2016.2017. In addition, the Compensation Committee took action threefour times during 20162017 by unanimous written consent.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee has a written charter, which is available on our website athttp://www.semgroupcorp.com. The Nominating and Corporate Governance Committee is responsible for identifying and recommending nominees for election orre-election as directors by stockholders at each annual meeting of stockholders, as well as candidates to fill vacancies on the Board of Directors should vacancies occur. The Nominating and Corporate Governance Committee has the authority under its charter to retain a professional search firm to identify candidates. The Nominating and Corporate Governance Committee is also responsible for developing and recommending to the Board of Directors our Corporate Governance Guidelines and Principles.
The Nominating and Corporate Governance Committee held three meetings during 2016.2017 and took action one time during 2017 by unanimous written consent.
Consideration of Director Nominees. The Nominating and Corporate Governance Committee has adopted a Director Nomination Policy, which is available on our website athttp://www.semgroupcorp.com. The Committee will consider director candidates submitted to it by other directors, employees and stockholders. The Committee may engage professional search firms to assist it in identifying and evaluating potential candidates. Any stockholder recommendations of candidates proposed for consideration by the Nominating and Corporate Governance Committee should include the candidate’s name and qualifications for director and should be addressed to: Secretary, Two Warren Place, 6120 S. Yale Avenue, Suite 1500, Tulsa, Oklahoma 74136. In addition, as described below, our Amended and Restated Bylaws permit stockholders to nominate directors for consideration at a meeting of stockholders.
In considering prospective nominees for the Board, the Nominating and Corporate Governance Committee will endeavor to find individuals of high integrity who have a solid record of accomplishment in their chosen fields and who possess the qualifications, qualities and skills to effectively represent the best interests of all stockholders. Candidates are selected for their ability to exercise good judgment and provide practical insights and diverse perspectives. The Nominating and Corporate Governance Committee considers the following qualifications at a minimum to be required in recommending to the Board potential new Board members or the continued service of existing members:
Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominating and Corporate Governance Committee may also consider such other factors as it may deem are in the best interests of the Company and its
stockholders. The Nominating and Corporate Governance Committee does, however, believe it appropriate for at least one
member of the Board to meet the criteria for an “audit committee financial expert” as defined by the rules of the SEC. When considering potential nominees for the Board, the Committee will consider the criteria above and each potential nominee’s individual skills and qualifications in context of the current composition of the Board and needs of the Board at such time. In connection therewith, the Committee will consider diversity in professional background, experience, expertise, perspective, age, gender and ethnicity with respect to Board composition as a whole, although the Committee does not have a specific diversity policy. With respect to diversity, in accordance with our Corporate Governance Guidelines and Principles, particular emphasis is placed on identifying candidates whose experiences, qualities and skills complement and augment those of other Board members with respect to the Board of Directors as a group.
The Company’s Corporate Governance Guidelines and Principles provide that a director who changes substantially the principal occupation, position or responsibility he or she had when elected to the Board should volunteer to resign from the Board. The Nominating and Corporate Governance Committee will have the opportunity to evaluate the continued appropriateness of Board membership under the facts and circumstances and make a recommendation to the Board whether to accept the resignation or request the director to continue to serve on the Board.
Our Amended and Restated Bylaws permit stockholders to nominate directors for consideration at an annual meeting of stockholders. To nominate a director, stockholders must follow the procedures specified in our Amended and Restated Bylaws that require advance notice and certain other information.information and requirements. Stockholders must submit the candidate’s name and qualifications in writing to our Secretary at the following address: Secretary, SemGroup Corporation, Two Warren Place, 6120 S. Yale Avenue, Suite 1500, Tulsa, Oklahoma 74136. The written notice must be received by our Secretary not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting. The notice must contain certain information required under our Amended and Restated Bylaws, including, among other things, (i) the nominee’s name, age, business and residential addresses, written consent to being named in the proxy statement and to serving as director if elected, relationships between the nominee and the stockholder submitting the nomination, a completed and signed questionnaire, representation and agreement as required by our Amended and Restated Bylaws, and any other information relating to such person as would be required to be disclosed in solicitations of proxies for election of directors pursuant to Section 14(a) under the Securities Exchange Act of 1934 and (ii) with respect to the stockholder submitting the nomination and anyone acting in concert with that stockholder, the name and business addresses of the stockholder and the person acting in concert with the stockholder, a representation that the stockholder is a record holder of Class A Common Stockstock entitled to vote at such meeting (and will continue to be through the date of the meeting) and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, a description of all agreements, arrangements or understandings between or among the stockholder and any other person or persons with respect to the nomination and the class and number of shares of Class A Common Stockstock beneficially owned by the stockholder and any person acting in concert with that stockholder.stockholder, a description of any voting arrangements with respect to securities of the Company, a description of any dividend rights separate from the underlying shares of the Company, a description of any performance-based fees the person is entitled to based on any increase or decrease in the value of shares of the Company, and a summary of any material discussion regarding the nomination between the stockholder submitting the nomination and other holders of our stock. For further information, stockholders may contact our Secretary at our principal executive offices for a copy of the relevant provisions of our Amended and Restated Bylaws.
Any single stockholder, or group of stockholders, that has beneficially owned more than 5% of our outstanding common stock for at least one year as of the date of recommendation may recommend nominees for director to the Nominating and Governance Committee by delivering a written notice to our Secretary that satisfies the notice, information, and consent requirements of the Director Nomination Policy. The Committee will evaluate such recommended nominees against the same criteria that it uses to evaluate other nominees. The notice must be received by the Nominating and Governance Committee no later than the date that is 120 calendar days prior to the anniversary of the date that our proxy statement was released to stockholders in connection with the previous year’s annual meeting. The notice must include, among other things, proof of the required stock ownership, proof of identification of the stockholder(s) submitting the proposal, information regarding the proposed candidate to the Board of Directors and a signed statement by the candidate with respect to certain matters. The notice should be addressed to: Secretary, Two Warren Place, 6120 S. Yale Avenue, Suite 1500, Tulsa, Oklahoma 74136.
Executive Sessions. Each regularly scheduled meeting of the Board of Directors includes an executive session of thenon-management directors. These sessions are chaired by the independent,non-executive Chairman of the Board. If ournon-management directors include any directors who have been determined not to be independent by the Board, the Board will schedule an executive session of just the independent directors at least once each year.
Communications with the Board of Directors. Stockholders who wish to communicate with our Board of Directors or any of its committees may send written communications to: Board of Directors, SemGroup Corporation, Two Warren Place, 6120 S. Yale Avenue, Suite 1500, Tulsa, Oklahoma 74136. In addition, stockholders and other interested parties may communicate with the Chairman of the Board or with thenon-management directors as a group by writing to: Chairman of the Board, Two Warren Place, 6120 S. Yale Avenue, Suite 1500, Tulsa, Oklahoma 74136.
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION
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In accordance with Section 14A of the Securities Exchange Act of 1934, we are providing our stockholders the opportunity to approve, on an advisory andnon-binding basis, the compensation of our named executive officers as disclosed in this proxy statement.
This proposal, commonly known as a “say-on-pay”“say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation objectives, philosophy and practices described in this proxy statement. As discussed in greater detail in the “Compensation Discussion and Analysis” in this proxy statement, our compensation program is designed to, among other things:
We believe that our compensation program, with its balance of base salary, short-term and long-term incentives and benefits, fairly accomplishes our objectives. We believe our executive compensation program has allowed us to attract and build a leadership team which is focused on our business objectives and helped us achieve many of our 20162017 objectives as noted in “2016“2017 Business Highlights” under “Executive Compensation—Compensation Discussion and Analysis—Executive Summary” in this proxy statement.
Accordingly, our Board of Directors recommends our stockholders vote in favor of thesay-on-pay proposal as set forth in the following resolution:
“RESOLVED, that the compensation of the Company’s named executive officers as disclosed in its Proxy Statement for the 20172018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the executive compensation tables and the corresponding narrative discussion, is approved.”
This vote is advisory, and therefore nonbinding. Stockholders are strongly encouraged to read the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure. The Board of Directors and the Compensation Committee expect to take into account the outcome of the vote in connection with their evaluation of our compensation program to the extent they can determine the stockholders’ concerns associated with any significant negative voting results. At our 20162017 annual meeting, the compensation of our named executive officers as disclosed in last year’s proxy statement was approved by over 98.58%97.38% (more than 98.59%97.4% if abstentions are excluded from the calculation) of the votes cast on the proposal, which demonstrated strong stockholder support for our executive compensation approach.
As determined by the Board of Directors, weWe have provided our stockholders with the opportunity to vote on the compensation to our named executive officers at every annual meeting of stockholders since 2011. An
As determined by the Board of Directors, we will continue to provide our stockholders with the opportunity to vote on the compensation to our named executive officers at every annual meeting of stockholders until the next required advisory vote at the 2023 annual meeting of stockholders on the frequency of stockholder advisory votes on the compensation of our named executive officers is being conducted again in connection with the Annual Meeting as set forth in Proposal 3.officers.
Our Board of Directors recommends that you vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers.
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In accordance with Section 14A of the Securities Exchange Act of 1934, we are also including in this proxy statement a separate resolution to enable our stockholders to vote, on an advisory and non-binding basis, for their preference as to how frequently we should seek future say-on-pay advisory votes on the compensation of our named executive officers. Stockholders may indicate whether future advisory votes on executive compensation should occur every one, two or three years. Stockholders also may, if they wish, abstain from casting a vote on this proposal.
This advisory vote on the frequency of future say-on-pay votes must be provided to stockholders at least once every six years. At the May 2011 annual meeting of our stockholders, our Board of Directors recommended, and the stockholders voted on an advisory basis in favor of, holding the say-on-pay vote every year. The Board accepted our stockholders’ recommendation, and stockholders have been provided with the opportunity to vote to approve, on an advisory and non-binding basis, the compensation of our named executive officers every year.
Our Board of Directors continues to believe that a frequency of “every year” for the advisory vote on executive compensation is the most optimal interval for conducting and responding to a say-on-pay vote. The Board believes that an annual advisory vote on executive compensation will allow our stockholders to provide direct input on the philosophy, policies and practices of our executive compensation program as disclosed in the proxy statement every year. An annual advisory vote on our executive compensation will provide a better opportunity for stockholders to constructively communicate with us regarding their views on our executive compensation program on a timely basis.
The proxy card and the Internet and the telephone proxy submission procedures each will provide stockholders with the opportunity to choose among four options: holding the vote every one, two or three years, or abstaining. Stockholders will not be voting to approve or disapprove our Board of Directors’ recommendation.
Although this advisory vote on the frequency of the say-on-pay vote is nonbinding, our Board of Directors will take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation. The Board may decide that it is in the best interests of our stockholders and us to hold an advisory vote on executive compensation more or less frequently than the frequency receiving the most votes cast by our stockholders.
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years or three years or abstain from voting when you vote in response to the resolution set forth below.
“RESOLVED, that the option of every one year, two years or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a stockholder vote to approve, on an advisory basis, the compensation of the named executive officers.”
Our Board of Directors recommends that you vote “FOR” the option of every one year as the preferred frequency for the holding of future advisory votes on compensation of our named executive officers.
PROPOSAL
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On February 26, 2017, theThe Audit Committee has appointed Grant Thornton LLP as our independent registered public accounting firm (“independent auditor”) for the fiscal year ending December 31, 2017.2018. A proposal will be presented at the Annual Meeting asking the stockholders to ratify the appointment of Grant Thornton LLP as our independent auditor for 2017.2018. If the stockholders do not ratify the appointment of Grant Thornton LLP, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee, in its sole discretion, may change the appointment at any time during the year if the Audit Committee determines that a change is in the best interests of SemGroup.
A representative of Grant Thornton LLP will be present at the Annual Meeting and will have the opportunity to make a statement, if he or she desires to do so, and respond to appropriate questions.
Our Board of Directors recommends a vote “FOR” the ratification of Grant Thornton LLP as our independent auditor for the fiscal year ending December 31, 2017.2018.
Change in Independent Registered Public Accounting Firm
SemGroup recently solicited bids for audit services for 2017 from several independent auditors, including BDO USA, LLP (“BDO USA”), which had been our independent auditor since 2008. As a result of this process and following careful consideration and deliberation, on February 26, 2017, the Audit Committee approved the engagement of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017 and to perform interim review procedures related to the financial statements included in our quarterly reports on Form10-Q, beginning with the quarter endingended March 31, 2017. Also on February 26, 2017, the Audit Committee dismissed BDO USA as the Company’s independent registered public accounting firm. BDO USA was notified of the Committee’s decision on February 27, 2017.
BDO USA’s audit reports on the Company’s consolidated financial statements for the two most recent fiscal years ended December 31, 2016 and 2015, did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles generally accepted in the United States (“US GAAP”).
During the Company’s two most recent fiscal years ended December 31, 2016 and 2015 and through the subsequent interim period through February 26, 2017, (i) there were no disagreements between the Company and BDO USA on any matters of US GAAP or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of BDO USA, would have caused BDO USA to make reference to the subject matter of the disagreement in its reports on the Company’s consolidated financial statements for such years, and (ii) there were no “reportable events” as defined in Item 304(a)(1)(v) of RegulationS-K.
During the Company’s two most recent fiscal years ended December 31, 2016 and 2015, and during the subsequent interim period through February 26, 2017, we did not consult with Grant Thornton LLP with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report was provided to the Company nor oral advice was provided to the Company that Grant Thornton LLP concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement as defined in Item 304(a)(1)(iv) of RegulationS-K and the related instructions or a “reportable event” as described in Item 304(a)(1)(v) of RegulationS-K.
Fees of Independent Registered Public Accounting Firm
The following table sets forth the fees for professional services provided to us by Grant Thornton LLP for fiscal 2017 and BDO USA, LLP for fiscal 2016 and 2015:2016:
Service | 2016 | 2015 | Grant Thornton LLP – 2017
| BDO USA – 2016
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Audit fees | $ | 2,248,077 | $ | 2,255,925 | $ | 2,164,817 | $ | 2,248,077 | ||||||||
Audit-related fees | 40,000 | 36,154 | — | 40,000 | ||||||||||||
Tax fees | 24,129 | 22,064 | — | 24,129 | ||||||||||||
All other fees | — | — | — | — | ||||||||||||
Total | $ | 2,312,206 | $ | 2,314,143 | $ | 2,164,817 | $ | 2,312,206 |
Audit fees include those related to the audit of our consolidated financial statements, reviews of our quarterly financial statements, audits of the financial statements of our subsidiaries (as required by statute, by our credit agreements, by partnership agreements and by regulations of the SEC), and the audit of internal control over financial reporting as required by Section 404 of
the Sarbanes-Oxley Act of 2002. Audit fees also include services performed in connection with other filings with the SEC. Audit-related fees are related to the audits of benefit plans. Tax fees are related to certain international tax consultation services.
Audit CommitteePre-Approval Policies and Procedures
The Audit Committeepre-approves all audit and permissiblenon-audit services by its independent registered public accountant prior to the receipt of such services. All services for the fiscal years ended December 31, 20162017 and 20152016 set forth in the table above werepre-approved by the Audit Committee.
Introduction
OurThe Board of Directors has approved an amendmentand declared advisable, and is recommending to our Amended and Restated Certificate of Incorporation, which we refer to as the “Preferred Stock Amendment,” to provide authority to issue up to 4,000,000 shares of preferred stock, par value $0.01 per share, and has directed that the Preferred Stock Amendment be submitted to our stockholders for approval at the Annual Meeting. The proposed Preferred Stock Amendment is set forth in Annex A attachedMeeting, an amendment to this proxy statement, which amendment has been marked to indicate additions toArticle FOURTH of our Amended and Restated Certificate of Incorporation, as underlined text and deletions to our Amended and Restated Certificate of Incorporation as strike-outs.
Authorization of Preferredamended (which we call the “Class A Common Stock
We are not currently authorized under our Amended and Restated Certificate of Incorporation to issue any shares of preferred stock. The Preferred Stock Amendment authorizes our Board of Directors to issue, from time to time, up to 4,000,000 shares of preferred stock in one or more series with such designations, powers, preferences and rights as may be determined by our Board of Directors. The specific Amendment”), which sets forth the terms of a particular series of preferred stock would be described in a certificate of designation relating to that series. Our Amended and Restated Certificate of Incorporationthe Company’s authorized capital stock. Article FOURTH currently authorizes (i) 90,000,000 shares of Class A Common Stock, par value $0.01 per share, and (ii) 10,000,000 shares of Class B Common Stock, par value $0.01 per share, and 4,000,000 shares of preferred stock, par value $0.01 per share. AsThe proposed amendment would increase the authorized Class A Common Stock to 180,000,000 shares of Class A Common Stock. The authorized shares of Class B Common Stock would remain at 10,000,000 and the authorized shares of preferred stock would remain at 4,000,000. Our Class B Common Stock is not eligible to be traded on an exchange and there is no established trading market for such stock. The proposed Class A Common Stock Amendment would amend our Amended and Restated Certificate of Incorporation, as amended, to replace Section A and Section B(1) of Article FOURTH in their entirety as follows:
“FOURTH:
A.Authorized Capital Stock. The total number of shares of all classes of stock which the Corporation shall have authority to issue is One Hundred Ninety-Four Million (194,000,000) shares, consisting of One Hundred Ninety Million (190,000,000) shares of Common Stock, par value $0.01 per share (“Common Stock”), and Four Million (4,000,000) shares of Preferred Stock, par value $0.01 per share (“Preferred Stock”). Except as otherwise provided by law, the shares of stock of the record date, March 30, 2017, there were 66,237,006Corporation may be issued by the Corporation from time to time in such amounts, for such consideration and for such corporate purposes as the Board of Directors of the Corporation (the “Board of Directors”) may from time to time determine.
B.Common Stock.
1. Classes. The Common Stock shall consist solely of (a) 180,000,000 shares of Class A Common Stock, outstandingpar value $0.01 per share (“Class A Common Stock”), and no(b) 10,000,000 shares of Class B Common Stock, outstanding.par value $0.01 per share (“Class B Common Stock” and collectively, “Class A and Class B Common Stock”). Except as otherwise provided in this Article FOURTH or any amendments thereto, all Common Stock shall be identical and shall entitle the holders thereof to the same rights and privileges.”
IfThe additional shares of Class A Common Stock authorized by the PreferredClass A Common Stock Amendment, if and when issued, would have the same rights and privileges as the shares of our Class A Common Stock currently authorized. The Class A Common Stock has no preemptive rights to purchase common stock or other securities.
The Board of Directors believes it is approved, no furtherin our best interest to have sufficient additional authorized but unissued shares of Class Common Stock available in order to provide flexibility in considering and planning for potential business needs. As of March 9, 2017, 79,062,794 shares of Class A Common Stock, were issued and outstanding, which amount does not include shares of Class A Common Stock reserved for issuance upon the conversion of our outstanding preferred stock or shares reserved for issuance under our existing equity compensation plans.
Reasons for the Class A Common Stock Amendment
The Board of Directors believes that the increase in authorized shares of Class A Common Stock will provide us with several long-term advantages. The passage of the amendment would make additional shares of Class A Common Stock available for issuance from time to time in the Board of Directors’ discretion in connection with possible future public or private financings, stock splits, business acquisitions, business combinations, stock distributions, equity incentives for employees, officers or directors, or other corporate purposes. We investigate and explore additional sources of financing on a regular basis and we may issue shares of Class A Common Stock in connection therewith if the Board of Directors’ deems such issuance is in our and our stockholders’ best interests. If additional authorized shares are available, transactions dependent upon the issuance of additional shares will be less likely to be undermined by delays and uncertainties occasioned by the need to obtain stockholder approvalauthorization to provide the shares necessary to consummate such transactions. The ability to issue shares, as the Board of Directors determines from time to time to be in our best interests, will also allow us to avoid the extra expenses which would be required priorincurred in holding special meetings of stockholders solely to approve an increase in the number of shares which the Company has the authority to issue.
As of the date on which this proxy statement is being mailed, there are no definite plans or arrangements relating to the issuance of any of the authorizedadditional shares of preferredClass A Common Stock proposed to be authorized. Such shares of common stock except as maywould be available for issuance without further action by the stockholders unless such action is required by applicable law or the rules of
any stock exchange on which the common stock may be listed. The NYSE, rules. The authorizationon which the Class A Common Stock is listed, currently requires stockholder approval as a prerequisite to listing shares in certain instances, including in connection with transactions where the present or potential issuance of shares could result in an increase in the preferrednumber of shares of common stock will notoutstanding of at least 20%.
If we issue additional shares of Class A Common Stock, existing holders of shares of common stock would have no preemptive rights under our Certificate of Incorporation, or otherwise, to purchase any immediateof such shares. It is possible that shares of common stock, or securities convertible into or exercisable for common stock, may be issued at a time and under circumstances that may dilute the voting power of existing stockholders, decrease the earnings per share and book value per share of shares presently held and have a negative effect on the rightsmarket price of our existing stockholders. However, in connection with the issuance of preferred stock, our Board of Directors would have the authority to designate and issue series of our preferred stock with dividend, liquidation, conversion, voting or other rights that may be superior to those of our common stock. The effectsClass A Common Stock.
Potential Anti-Takeover Effect of the issuance of preferred stock upon holders of our common stock may include, among other things: (i) a preference in the payment of dividends to holders of preferred stock, which may restrict our ability to declare dividends on our common stock; (ii) dilution of voting power if holders of preferred stock are given voting rights; (iii) dilution of equity interests and voting power if the preferred stock is convertible, and converted into, common stock; or (iv) a preference in payments upon liquidation to holders of preferred stock, which may limit liquidation payments on our common stock.
Reasons for the PreferredClass A Common Stock Amendment
OurThe availability of authorized but unissued shares of Class A Common Stock could, under certain circumstances, have an anti-takeover effect. Although the Board of Directors has determined that the authorizationno present intention of preferred stock is advisable and in the best interests of SemGroup and its stockholders because it will provide SemGroup with the flexibility to consider and respond to future business needs and opportunities as they arise from time to time, including in connection with capital raising, financing and acquisition needs or opportunities. The availability ofdoing so, additional shares of preferred stock would provide us flexibility in responding to future capital raising, financing and acquisition needs and opportunities without the delay and expense associated with holding a special meeting of stockholders to obtain further stockholder approval. As part of our business and growth strategy, we monitor and screen for potential strategic acquisitions and investments, and shares of preferred stockClass A Common Stock could be issued onto dilute the stock ownership or voting rights of a timely basis as consideration for an acquisitionperson seeking to obtain control of us or in connection withto change our management should the financingBoard of an acquisition or investment. If determinedDirectors consider the action of such person not to be in the best interest of SemGroupour stockholders. We are not aware of any pending or proposed effort to obtain control of us or to change our management, and its stockholders,we have not proposed the Board of Directors will be able to authorize the issuance ofincrease in authorized shares of preferred stock withoutClass A Common Stock with the delay and expense associated with obtaining further stockholder approvals and to customizeintention of using the terms of the preferred stock to meet the particular needs of any transaction or market conditions.
The Preferred Stock Amendment has been prompted by business and financial considerations. Future purposes for utilizing shares of preferred stock could include, but would not be limited to, issuances in public or private offerings ofadditional shares for cash, effecting acquisitions or other strategic transactions, and pursuing additional financing opportunities. We have no current plan, commitment, arrangement, understanding or agreement regarding the issuance of shares of preferred stock resulting from the approval of the Preferred Stock Amendment.
Potential Anti-Takeover Effect of the Proposed Preferred Stock Amendment
The Preferred Stock Amendment is not intended to have any anti-takeover effect and is not part of any series of anti-takeover measures contained in our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws in effect on the date of this proxy statement. Our Board of Directors represents that, if the Preferred Stock Amendment is approved, it will not, without prior stockholder approval, approve the issuance or use of any of the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan. Within these limits, as well as others imposed by
applicable law and NYSE rules, our Board of Directors may approve the issuance or use of preferred stock for capital raising, financing and acquisition needs or opportunities that has the effect of making an acquisition of SemGroup more difficult or costly, as could also be the case if our Board of Directors were to issue additional shares of common stock for such purposes.
Effectiveness of the PreferredClass A Common Stock Amendment
The PreferredClass A Common Stock Amendment will become effective once it is approved at the Annual Meeting and filed with the Secretary of State of the State of Delaware.
Appraisal Rights
Under Delaware General Corporation Law, stockholders are not entitled to appraisal rights with respect to the proposed PreferredClass A Common Stock Amendment.
Our Board of Directors recommends a vote “FOR” the approval of the amendment to our Amended and Restated Certificate of Incorporation, as amended, to authorize 4,000,000increase the number of authorized shares of preferred stock.our Class A Common Stock from 90,000,000 shares to 180,000,000 shares.
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF
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Except as otherwise indicated, we believe that the beneficial owners of our Class A Common Stockstock listed in the tables below, based on information furnished by such owners, have sole investment and voting power with respect to such shares, as the case may be, subject to community property laws where applicable.
Principal Stockholders
The following table contains information regarding the only persons we know of that beneficially own more than 5% of our outstanding shares of Class A Common Stock or Preferred Stock as of March 10, 20179, 2018 (except as noted below). The percentagesPercentage of the Class A Common Stockclass amounts are based on 66,237,00679,062,794 shares of our Class A Common Stock and 350,000 shares of our Preferred Stock outstanding as of March 10, 2017.9, 2018. Percentage of all outstanding voting stock amounts is based on the maximum number of 89,668,855 votes which may be cast at the Annual Meeting if present in person or by proxy, which, as of March 9, 2018, is the sum of (i) outstanding shares of Class A Common Stock and (ii) 10,606,061, which is the number of votes holders of Preferred Stock are entitled to cast at the Annual Meeting.
Name and Address | Number of Class A Stock | Percentage of Stock |
Number of Class A Stock | Percentage of Stock | Number of Preferred | Percentage of Outstanding | Percentage of Voting Stock | |||||||||||||||||||||
Iridian Asset Management LLC 276 Post Road West Westport, CT 06880 | 6,368,602(1) | 9.61 | % | |||||||||||||||||||||||||
Buffalo Investor I, L.P. c/o Alinda Capital Partners 100 West Putnam Avenue Greenwich, CT 06830 | 7,346,129(1) | 9.3 | % | — | — | 8.2 | % | |||||||||||||||||||||
Buffalo Investor II, L.P. c/o Alinda Capital Partners 100 West Putnam Avenue Greenwich, CT 06830 | 5,037,771(2) | 6.4 | % | — | — | 5.6 | % | |||||||||||||||||||||
Chickasaw Capital Management, LLC 6075 Poplar Ave. Suite 720 Memphis, TN 38119 | 5,969,323(2) | 9.01 | % | 6,725,234(3) | 8.5 | % | — | — | 7.5 | % | ||||||||||||||||||
Harvest Fund Advisors LLC 100 W. Lancaster Ave., Suite 200 Wayne, PA 19087 | 7,413,207(4) | 9.4 | % | — | — | 8.3 | % | |||||||||||||||||||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 5,226,574(3) | 7.89 | % | 6,538,406(5) | 8.3 | % | — | — | 7.3 | % | ||||||||||||||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 4,076,161(4) | 6.15 | % | 4,576,876(6) | 5.8 | % | — | — | 5.1 | % | ||||||||||||||||||
Goldman Sachs Asset Management 200 West Street New York, NY 10282 | 3,749,005(5) | 5.66 | % | |||||||||||||||||||||||||
Harvest Fund Advisors LLC 100 W. Lancaster Ave., Suite 200 Wayne, PA 19087 | 3,501,460(6) | 5.29 | % | |||||||||||||||||||||||||
Prudential Financial, Inc. 751 Broad St. Newark, New Jersey 07102 | 3,313,395(7) | 5.00 | % | |||||||||||||||||||||||||
WP SemGroup Holdings, L.P. c/o Warburg Pincus LLC 450 Lexington Avenue New York, NY 10017 | — | — | 300,000(7) | 85.71 | % | 10.1 | % |
(1) | Buffalo Investor I, L.P. directly holds 7,346,129 shares of Class A Common Stock as of March 9, 2018. Based on a Schedule 13G dated July 25, 2017, each of the following may also be deemed to be the beneficial owner of the shares of Class A Common Stock listed above: Christopher W. Beale is the managing member of Alinda GP of GP II LLC, which is the general partner of Alinda GP II, L.P., which is the general partner of Alinda Infrastructure Fund II, L.P., which is the managing member of Buffalo Holding I LLC, which is the managing member of Buffalo Investor I GP LLC, which is the general partner of Buffalo Investor I, L.P. |
(2) | Buffalo Investor II, L.P. directly holds 5,037,771 shares of Class A Common Stock as of March 9, 2018. Based on a Schedule 13G dated July 25, 2017, each of the following may also be deemed to be the beneficial owner of the shares of Class A Common Stock listed above: Christopher W. Beale is the Director of Alinda Parallel Fund GP II, Ltd., which is the general partner of Alinda Parallel Fund GP II, L.P., which is the managing member of Buffalo Holding II LLC, which is the managing member of Buffalo Investor II GP, LLC, which is the general partner of Buffalo Investor II, L.P. |
(3) | Information is as of December 31, |
Information is as of November 6, 2017 and is based on Amendment No. 1 to a Schedule 13D dated November 6, 2017 (the “Harvest 13D”), which was filed by Harvest Fund Advisors LLC (“HFA”), Harvest Fund Holdco L.P., Blackstone Harvest Holdco L.L.C., Blackstone Intermediary Holdco L.L.C., Blackstone Advisory Partners L.P., Blackstone Advisory Services L.L.C., Blackstone Holdings I L.P., Blackstone Holdings I/II GP Inc., The Blackstone Group L.P., Blackstone Group Management L.L.C., and Stephen A. Schwarzman (collectively, the “Harvest Persons”). The Harvest Persons reported sole dispositive and voting power over the shares set forth above. According to the Harvest 13D, Harvest Fund Holdco L.P. is the sole member of HFA. Blackstone Harvest Holdco L.L.C. is the general partner of Harvest Fund Holdco L.P. Blackstone Intermediary Holdco L.L.C. is the sole member of Blackstone Harvest Holdco L.L.C. Blackstone Advisory Partners L.P. is the sole member of Blackstone Intermediary Holdco L.L.C. Blackstone Advisory Services L.L.C. is the general partner of Blackstone Advisory Partners L.P. Blackstone Holdings I L.P. is the sole member of Blackstone Advisory Services L.L.C. Blackstone Holdings I/II GP Inc. is the general partner of Blackstone Holdings I L.P. The Blackstone Group L.P. is the controlling shareholder of Blackstone Holdings I/II GP Inc. The general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. HFA, an investment adviser registered under the Investment Advisers Act of 1940, as amended, advises funds and accounts. According to the Harvest 13D, in such capacity, HFA has voting authority and dispositive discretion over the shares set forth above that are owned by the funds |
and accounts advised by it. Except for the purpose of determining beneficial ownership under Section 13(d) of the Securities Exchange Act of 1934, HFA and the other Harvest Persons each disclaimed beneficial ownership of all securities reported as beneficially owned by HFA in the Harvest 13D. None of the Reporting Persons has any pecuniary interest in the securities reported as beneficially owned by HFA in the Harvest 13D, as such term is used for purposes of Section 16 of the Securities Exchange Act of 1934. The Harvest 13D states that neither the filing of such report nor any of its contents shall be deemed to constitute an admission that any of the Harvest Persons is the beneficial owner of the securities referred to therein for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934 or for any other purpose. |
(5) | Information is as of December 31, |
Information is as of December 31, |
(7) |
Stock Ownership of Directors and Executive Officers
The following table sets forth, as of March 10, 2017,9, 2018, the beneficial ownership of our Class A Common Stock by:
None of our directors or executive officers beneficially owns any shares of our Preferred Stock.
Name | Shares of Class A Common Stock Beneficially Owned(1) | Percentage | ||||||
Ronald A. Ballschmiede(2) | * | |||||||
Sarah M. Barpoulis(3) | * | |||||||
Carlin G. Conner | * | |||||||
Karl F. Kurz | * | |||||||
James H. Lytal | * | |||||||
William J. | ||||||||
* | ||||||||
Thomas R. McDaniel(5) | * | |||||||
Thomas F. DeLorbe | * | |||||||
Robert N. Fitzgerald(6) | * | |||||||
Susan L. | * | |||||||
Timothy R. O’Sullivan | 68,236 | * | ||||||
All executive officers and directors as a group (11 people) | * |
* | Less than one percent. |
(1) | Shares beneficially owned include shares of restricted Class A Common Stock held by our directors and executive officers over which they have voting power but not investment power as follows: Mr. Ballschmiede – |
(2) | Includes 15,358 shares of Class A Common Stock held of record by the RAB GRAT2016-1 grantor annuity trust, |
(3) | Includes |
(4) | Includes |
(5) | Includes 34,868 shares of Class A Common Stock held of record by the McDaniel Trust |
Includes 10 shares of Class A Common Stock held by son. |
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Compensation Discussion and Analysis
Executive Summary. SemGroup is focused on delivering stockholder value through growth and financial discipline. We strive to generate consistent earnings and cash flows and capitalize on growth opportunities around our assets. We are committed to managing risk and promoting a company culture centered on safety and integrity.
This Compensation Discussion and Analysis (“CD&A”) describes SemGroup’s executive compensation program for 2016.2017. Our program is designed to protect our assets in the near-term and position the Company for future growth by attracting, motivating and retaining a senior management team capable of delivering stockholder value by ensuring each of our businesses meet or exceed financial and operational targets. In particular, this CD&A explains how the Compensation Committee of the Board (the “Committee”) made 20162017 compensation decisions for the following named executive officers (“NEOs”):
NEO | Title | |
Carlin G. Conner | President and Chief Executive Officer | |
Robert N. Fitzgerald | Senior Vice President and Chief Financial Officer | |
Susan S. Lindberg | Vice President and General Counsel | |
Timothy R. O’Sullivan | Vice President, Corporate Planning and Strategic Initiatives | |
Thomas F. DeLorbe |
Our executive compensation program promotes good governance and operates in the best interests of our stockholders. A summary of our compensation governance practices are listed below:
We Do: | We Do | |
✓Place heavy emphasis on variable compensation | × Offertax-related gross ups outside of relocation benefits | |
✓ Use performance-based long-term compensation | × Have any significant perquisites | |
✓ Have stock ownership requirements | × Allow pledging or hedging of SemGroup securities | |
✓ Have an executive clawback policy | × Have single triggerchange-in-control severance agreements | |
✓ Have an independent compensation consultant | × Guarantee short-term incentive payouts |
20162017 Business Highlights. During 2016,2017, we successfully implemented several initiatives supporting our strategic plan to grow our presence in the midstream energy sector. We focused on our business objectives, and achieved the following:
VALUES | | COMMITMENTS Purpose: Our Goals and Corresponding Actions | ||||
Dedicated to Excellence | Safety | Safety | ||||
Respect Everyone | Execution | Unmatched Excellence | ||||
Integrity In All We Do | Committed to Growth | |||||
Value Teamwork | Culture | Community Involvement | ||||
Entrepreneurial Spirit | Employee Well-Being | |||||
Social Responsibility | ||||||
Results | S |
20162017 Compensation Decisions & Actions.Actions
• |
20162017 CEO PayAt-A-Glance
The majority of our CEO’s pay is variable and linked to drivers of financial performance or growth in stockholder value. The chart below shows the elements of our CEO’s total direct compensation (base salary, annual bonus, and grant date or target value of annual equity grants) for the past three years. In 2014, Mr. Conner received a one-time equity award of $5 million in shares of restricted stock and RRMS restricted common units intended in part to make Mr. Conner whole for equity value that he forfeited at his previous employer when he agreed to join SemGroup. This one-time award was also intended to provide immediate and significant direct alignment between Mr. Conner’s compensation and stockholder interests.
Effect of StockholderSay-on-Pay Vote on Executive Compensation Decisions. The Committee has reviewed the voting results from the annual advisory vote on executive compensation (commonly known as asay-on-pay proposal) conducted at our 20162017 annual meeting of stockholders. At this meeting, approximately 98.6%97% of the votes cast on thesay-on-pay proposal were in favor of our NEOs’ compensation as disclosed in the proxy statement for that meeting and, as a result, our NEOs’ compensation was approved.
In addition, over the past year we have engaged in a dialogue with many of our stockholders to solicit their input on a range of topics, including executive compensation and governance matters. The Committee determined that, based on such discussions and given the very high level of support, no substantive changes to our executive compensation policies and decisions were necessary. necessary aside from adding an internal performance metric under our long-term performance share program of Cash Available for Distribution (CAFD) per share which is discussed in greater detail below.
The Committee continues to believe that a substantial majority of NEO compensation should be variable, at risk and subject to performance conditions. Given that 80% of CEO compensation and over 65% of compensation for our other NEOs remains variable/at risk, we believe our compensation program is designed to drive and reward outstanding performance in the face of these challenging market conditions.
We intend to continue such dialogue withto reach out to our stockholders for feedback on our compensation program, and the Committee intends to continue to make its executive compensation decisions as it has in the past year by focusing on performance-based compensation, gauging competitive practices and authorizing compensation that is within the range of what is deemed to be competitive and appropriate in our industry.
The Committee continues to value the opinions of our stockholders. In the event there is any significant vote against the compensation of our NEOs as disclosed in the proxy statement, the Committee will consider the concerns of the stockholders and evaluate any actions necessary to address such concerns.
The Committee continues to believe that a substantial majority of NEO compensation should be variable, at risk and subject to performance conditions. Given that 80% of CEO compensation and over 65% of compensation for our other NEOs is variable/at risk, we believe our compensation program is designed to drive and reward outstanding performance in the face of these challenging market conditions.
Compensation Philosophy. Our Committee oversees an executive compensation program designed to motivate high performance, ethics and alignment with the interests of our stockholders. Our compensation program rewards our executive officers for achieving performance objectives and fostering a culture of collaboration and teamwork. This forms the basis of ourpay-for-performance philosophy.
To support our compensation philosophy, we established the following objectives:
We design, implement and administer our compensation program to support our philosophy.
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NEO 2017 Target Total Direct Compensation Time-vested RSA – SEMG 30% Base Salary 20% CEO Short-term Incentive 20% Performance units—target value 30% Variable 80% Time-vested RSA – SEMG 24% Base Salary 32% OTHER NEOs Short-term Incentive 20% Performance units – target value 24% Variable 68%
Compensation Overview. Consistent with our philosophy, our compensation program consists of a market-competitive pay mix designed to motivate and reward our NEOs for successfully implementing our strategy to grow our business and create long-term stockholder value. We believe dividing the total compensation awarded to executive officers among the following four directthree primary components helps us achieve a balanced set of incentives to accomplish our goals:
Elements of Compensation. Our mixThe primary components of executive compensation includes:are: base pay, short-term cash incentives and long-term equity incentives and benefits.incentives. The chart below summarizes how our compensation design supports our compensation objectives:
Key Elements of |
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| Pay for | Stockholder | ||||
Base | • Fixed cash payment • | ✓ |
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Short-term incentives | • Cash incentive earned annually •
| ✓ | ✓ |
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Long-term incentives | • • Promotes stockholder alignment by tying a significant portion of NEO compensation directly to
| ✓ |
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Emphasis on variable and incentive-based pay.The majority of an executive’s compensation should be based on his or her contribution to the success of the Company and the creation of value for our stockholders. Our executive compensation is heavily weighted toward variable, at risk, pay elements based on performance. To further strengthen our alignment with stockholders, the majority of our executives’ variable, at risk compensation is based on our long-term success.
Compensation Methodology. Setting executive pay is an annual process that involves our management, the Committee, our Audit Committee, our Board of Directors and an independent compensation consultant. We review our pay programs to ensure consistency with our compensation philosophy and business objectives. The Committee strives to target total direct compensation levels to be competitive with the market in which we compete for executive talent.
We review each NEO’s total compensation in light of our Company’s strategic objectives, market conditions and individual responsibilities and accomplishments. Part of this review includes considering the appropriate compensation level and mix. Although we focus on total direct compensation, each individual element of compensation is reviewed against the market, which includes the 25th, 50th and 75th percentile of compensation paid to similarly situated executives represented in the market data, to ensure our compensation is in line with the market. VariationsWe generally target the median of the market, but variations from the median may occur due to experience, skills, criticality of function to the Company and the sustained performance of the executive.
Role of the Board of Directors. The Board of Directors acts on any recommendations regarding executive compensation matters made by the Committee and its independent directors approve CEO compensation.
Role of the Compensation Committee. Under its charter, the Committee is charged with establishing our compensation program and compensation policies, approving and recommending compensation program designs to the full Board for approval. Also, the Committee has the responsibility for recommending the compensation of our CEO to the Board of Directors for approval. For all other NEOs, the Committee reviews the CEO’s recommendations, supporting market data and individual performance assessments in establishing targets under the compensation program, and administering and approving payouts pursuant to such program. The charter authorizes the Committee to engage consultants and other professionals without management approval to the extent necessary. Details of the Committee’s authority and responsibilities are specified in the Committee’s charter, which is available on our website athttp://www.semgroupcorp.com.
Role of Management. Our CEO and other executive officers develop recommendations regarding the appropriate level and mix of compensation for their direct reports. Recommendations are based on our compensation philosophy, the range of compensation programs authorized by the Committee, market data from nationally recognized executive and industry related salary surveys, and the individual responsibilities and performance of each direct report.
Our CEO and Vice President of Human Resources provide support to the Committee and attend all Committee meetings, but are not present for discussion of their individual compensation.
Role of Audit Committee. With respect to our Chief Financial Officer (“CFO”), the Audit Committee of the Board of Directors consults with management and the Committee about his performance evaluation and compensation.
Additionally, the Audit Committee validates the calculation of our achievement percentage for each performance measure prior to the determination of our incentive pool. Our internal audit function confirms the short-term incentive pool before payments are processed. Also, the internal audit function validates the calculation of our achievement percentage for our performance metrics related to our performance-based equity awards. Our internal audit function confirms the calculation prior to the Committee certifying the achievement of our performance-based equity awards and distribution of equity awards.
Role of the Independent Compensation Consultant. The Committee engaged Pearl Meyer & Partners (“Pearl Meyer”) to serve as its independent compensation consultant on matters related to executive compensation during 2016,2017, including the review of executive compensation recommendations provided by management. Pearl Meyer also provided guidance on director compensation. Pearl Meyer reported directly to the Committee and performed no other services for the Company. The Committee has assessed the independence of Pearl Meyer pursuant to SEC rules and concluded that Pearl Meyer’s work for the Committee during 2017 did not raise any conflict of interest.
The Committee regularly reviews consultant independence and the services provided by its outside consultant. In making its determination regarding the independence of outside advisors for 2016, the Committee noted that:
The Committee monitors the independence of its compensation consultant on an annual basis.
Role of the Peer Group. The Committee compares our executive compensation program to a group of companies that are comparable in terms of size and industry (“the peer group”). The peer group serves two purposes:
• | Market |
• | TSR Performance: Measures our relative TSR performance for purposes of determining a portion of the value of the |
Pearl Meyer provided the market data used when designing our NEOs’ compensation program for 2016. Pearl Meyer’s market compensation analysis used compensation information from SemGroup’s current peer group as the primary data source. Where there was insufficient data from the peers (e.g., small sample sizes, etc.), the market data was supplemented with data from other similarly- sized companies that operate in the Oil and Gas Storage & Transportation industry and/or Energy sector.
For 2016,2017, the peer group includes the following 1916 companies, which comprise a mix of both direct competitors and companies whose primary business matched at least one of our business groups:
While some of the companies in our peer group have revenues, assets and market capitalization larger than SemGroup, we believe the peer group continues to be aligned with our current organization as well as the strategic vision of our company. The Committee reviews our peer group annually and makes adjustments as necessary. In its review
Role of Market Data.Pearl Meyer provided the market data used when designing our NEOs’ compensation program for 2016,2017. Pearl Meyer’s market compensation analysis used compensation information from SemGroup’s current peer group as the primary
data source. Where there was insufficient data from the peers (e.g., small sample sizes, etc.), the market data was supplemented with data from othersimilarly-sized companies that operate in the Oil and Gas Storage & Transportation industry and/or broader Energy sector.
When determining salaries, target bonus opportunities and annual long-term incentive grants for NEOs, the Committee approved several changes to thedoes not rely upon peer group to account for acquisitions, changes in size,data alone but also considers the performance of the Company and the availabilityindividual, the nature of publican individual’s role within the Company, experience in the officer’s current role, as well as input from its independent compensation data.
20162017 Total Direct Compensation.
The chart below illustrates thepay-mix and total target direct compensation for our NEOs for 2016.2017. Each individual component is discussed below.
Base Salary. During the first quarter of the year, recommendations for NEOs, excluding the CEO, are made by the CEO to the Committee on base pay for that year. Merit increases for base salary take into account the individual executive’s performance and achievement of goals, as well as the executive’s current salary level relative to the market. The Committee considers the recommendations and approves the base pay of our NEOs, excluding the CEO. The Committee recommends base pay for the CEO to the independent directors serving on the Board of Directors for approval. Base pay affects other elements of our total compensation, including our short-term and long-term incentives. In reviewing and approving base salaries for the NEOs, the Committee considers the impact on the NEOs’ total compensation. Base salaries become effective as of the first payroll in March of each year.
NEO | 2015 Salary | 2016 Salary | 2016 Percent Change | |||||||||
Carlin G. Conner | $ | 575,000 | $ | 575,000 | 0 | % | ||||||
Robert N. Fitzgerald | $ | 402,100 | $ | 402,100 | 0 | % | ||||||
Candice L. Cheeseman | $ | 342,000 | $ | 342,000 | 0 | % | ||||||
Timothy R. O’Sullivan | $ | 320,000 | $ | 320,000 | 0 | % | ||||||
Peter L. Schwiering | $ | 340,000 | $ | 340,000 | 0 | % |
NEO salaries remained flat as the Committee believed the recent downturnSalaries for our NEOs were adjusted during 2017 based upon individual merit and a desire to keep pace with changes in the oil and gas market would continue to provide a challenging year in 2016 and an environment where cash management, capital efficiency, and cost control remain important.data for these positions.
NEO
|
2016 Salary
|
2017 Salary
|
2017 Percent Change
| |||||||||
Carlin G. Conner
|
$
|
575,000
|
|
$
|
600,000
|
|
|
4.3
|
%
| |||
Robert N. Fitzgerald
|
$
|
402,100
|
|
$
|
414,200
|
|
|
3.0
|
%
| |||
Susan S. Lindberg
|
|
(1
|
)
|
$
|
325,000
|
|
|
(1
|
)
| |||
Timothy R. O’Sullivan
|
$
|
320,000
|
|
$
|
329,600
|
|
|
3.0
|
%
| |||
Thomas F. DeLorbe
|
|
(1
|
)
|
$
|
305,000
|
|
|
(1
|
)
|
(1) | Ms. Lindberg and Mr. DeLorbe became NEOs during 2017 and no additional increase in salary was awarded in 2017. |
Short-Term Incentives. Our NEOs participate in our short-term incentive program, which rewards employees for making decisions that improve our performance in accordance with our annual objectives. Similar to base pay, competitive market information is used to determine short-term incentive targets (expressed as a percentage of base pay) for each NEO. Our short-term incentives are based on achievement of certain performance measures established prior to the beginning of the performance period. Attainment of these performance measures can result in award payouts ranging from 0% to 200% of the NEO’s short-term incentive target.
25
Restricted Stock—RRMS Restricted Stock—SEMG Performance Units—SEMG (Target) Short-term Incentive Base salary—annualized
The annual short-term incentive targets as a percentage of eligible earnings (base salary for a performance year) for our NEOs in 2015 and 20162017 were as follows:unchanged from 2016:
NEO | 2015 Target | 2016 Target | ||||||
Carlin G. Conner | 100 | % | 100 | % | ||||
Robert N. Fitzgerald | 70 | % | 70 | % | ||||
Candice L. Cheeseman | 70 | % | 70 | % | ||||
Timothy R. O’Sullivan | 60 | % | 60 | % | ||||
Peter L. Schwiering | 60 | % | 60 | % |
NEO | 2017 Target | |||
Carlin G. Conner | 100 | % | ||
Robert N. Fitzgerald | 70 | % | ||
Susan S. Lindberg (1) | 60 | % | ||
Timothy R. O’Sullivan | 60 | % | ||
Thomas F. DeLorbe | 60 | % |
(1) | Ms. Lindberg was hired in June 2017 and received aone-time hiring bonus of $100,000. |
For 2016,2017, we completed an analysis of the design and compensation levels utilized in our short-term incentive program. The review consisted of:
As a result of this review, we concluded that our overall short-term incentive program design was consistent with our objectives and aligned with market practice. Consistent with previous years, the program’s metrics are designed to promote consolidated, business unit and individual performance. The 20162017 program included additional emphasis on financial metrics and corporate strategic initiatives to drive both behavior and results necessary to achieve our 20162017 operating budget and long-term strategic plan.
Financial Performance. We continued to use Adjusted EBITDA for consolidated and business unit performance. Adjusted EBITDA is a measure of our financial performance and provides information regarding our ability to meet future debt service, capital expenditures and working capital requirements. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, adjusted for select items that we believe impact the comparability of financial results between reporting periods.
Individual Performance. Our NEOs’ individual performance measure is evaluated by the CEO and his assessment of their contributions and achievement of individual performance goals, as well as our corporate strategic objectives, which are customized and defined in each NEO’s 20162017 performance goals and are aligned with “DRIVE SUCCESS” initiatives as follows:
Individual Performance Measures | ||
Values | Definition | |
Dedicated to Excellence | Trust, accountability, and empowerment frees us to execute our business. We strive to do our work right the first time with the right people in the right role. We act with a sense of urgency and we expect every employee to continuously improve their processes and work environment. | |
Respect Everyone | We have a humility that serves all of our stakeholders. We earn trust, communicate and behave in a truthful, respectful, consistent manner with each other, customers, vendors, and communities. We commit to the protection of the environment and the safety of all. | |
Integrity in All We Do | Deep integrity permeates all we do. We act ethically, we are intellectually honest and absolutely compliant with all legal and regulatory requirements. We take responsibility for what we do and we deliver on our promises and commitments. | |
Value Teamwork | We foster an environment of open communication and approachability to identify opportunities and solve problems. We seek differing perspectives in our decision making process. We value diverse opinions, experiences, and cultures of our team members in support of our business goals. We recognize and celebrate success. | |
Entrepreneurial Spirit | Entrepreneurship energizes us and we encourage innovation and adaptability. Sustainability is a core mission and requires thoughtful, long-term decisions. We foster an environment that embraces change, an appetite for calculated risk and a reasonable acceptance of failure. |
Corporate Strategic Initiatives. Our corporate strategic initiatives are customized and were defined in each NEO’s 20162017 performance goals and are aligned with SemGroup’s four pillars: Safety, Execution, Culture and Results which incorporate our “DRIVE SUCCESS” initiatives, whichand include:
Pillar | Commitments | Definition | ||
Safety | Always put safety | |||
Execution | Unmatched Excellence | |||
Committed to Growth | ||||
Culture | Community Involvement | Continue to support host communities, through sponsorship and employee participation of various charities. | ||
Retain and | ||||
Social Responsibility | Continue to evaluate industry regulations, current and potential, that affect | |||
Stockholder Value |
20162017 Weighting of Performance Measures.The weighting of these measures for the NEOs are as follows:
Financial Performance Measures | Strategic and Individual Performance Measures | |||||||||||||||||||||||
NEO | Group | Consolidated Adjusted EBITDA | Crude Adjusted EBITDA | Corporate Strategic Initiatives | Individual Performance | Total | ||||||||||||||||||
Carlin G. Conner | Corporate | 30% | 30% | 25% | 15% | 100 | % | |||||||||||||||||
Robert N. Fitzgerald | Corporate | 30% | 30% | 25% | 15% | 100 | % | |||||||||||||||||
Candice L. Cheeseman | Corporate | 30% | 30% | 25% | 15% | 100 | % | |||||||||||||||||
Timothy R. O’Sullivan | Corporate | 30% | 30% | 25% | 15% | 100 | % | |||||||||||||||||
Peter L. Schwiering(1) | Crude | 30% | 30% | 25% | 15% | 100 | % |
NEO | Group | Consolidated Adjusted EBITDA | Corporate Strategic Initiatives | Individual Performance | Total | |||||||||||||||
Carlin G. Conner | Corporate | 60% | 25% | 15% | 100 | % | ||||||||||||||
Robert N. Fitzgerald | Corporate | 60% | 25% | 15% | 100 | % | ||||||||||||||
Susan S. Lindberg | Corporate | 60% | 25% | 15% | 100 | % | ||||||||||||||
Timothy R. O’Sullivan | Corporate | 60% | 25% | 15% | 100 | % | ||||||||||||||
Thomas F. DeLorbe | Corporate | 60% | 25% | 15% | 100 | % |
Actual payouts are discretionary and are disbursed from a Company-wide pool approved by the Committee. In approving the incentive pool, the Committee considers our actual performance in relation to the targeted performance for each performance measure, as well as key strategic accomplishments completed during the year. Recommendations for each NEO were based on the NEO’s short-term incentive target adjusted for the achievement of thepre-established performance measures and for personal contributions. We used the following as a guide in calculating each NEO’s recommended short-term incentive payout prior to discretionary adjustments:
Eligible Earnings for 20162017 × Short-term Incentive Target % × (sum of the (Weighting of Performance Measure × Achievement Factor for the Performance Measure) for each Performance Measure)
Our incentive program allows the Committee to make adjustments in the calculation of our performance relative to the performance measures to reflect certain business events. The use of Adjusted EBITDA for our performance metric aligns with ournon-GAAP financial measures reported publicly and helps ensure that incentive programs do not result in unearned windfalls or impose undue penalties. We believe the use of Adjusted EBITDA improves the alignment of incentives with stockholder value creation and effectively encourages our NEOs to take actions to create value for stockholders.
The Audit Committee validates our calculation of the achievement of each performance measure to support the determination of the company-wide pool, as adjusted for these items, and ensure consistency with our financial statements.
The chart below shows the achievement of our 20162017 performance measures and the resulting recommended funding level.
Financial Performance Metrics (millions) | Threshold | Target | Maximum | Actual Performance | Achievement Factor (% of Target to be Paid)(1) | Threshold | Target | Maximum | Actual Performance | Achievement Factor (% of Target to be Paid)(1) | ||||||||||||||||||||||||||||||
Consolidated Adjusted EBITDA | $ | 278.8 | $ | 309.8 | $ | 372.8 | $ | 282.8 | 88.0% | $ | 265.9 | $ | 295.4 | $ | 354.5 | $ | 272.5 | 61.2% | ||||||||||||||||||||||
Crude Adjusted EBITDA | $ | 149.7 | $ | 166.3 | $ | 199.6 | $ | 172.3 | 117.5% |
(1) | Achievement factors were further adjusted for foreign currency rate differences between what was budgeted and was reflected in actuals and to remove impact of |
Individual Performance Values | ||
D | Dedicated to Excellence | |
R | Respect Everyone | |
I | Integrity In All We Do | |
V | Value Teamwork | |
E | Entrepreneurial Spirit | |
NEO individual performance was slightly above target: 110% |
Pillars | Corporate Strategic Initiatives Commitments | Achievement | ||||
Safety | S | Safety | ||||
Execution | U | Unmatched Excellence | Above Target | |||
C | Committed to Growth | |||||
Culture | C | Community Involvement | Slightly Above Target | |||
E | Employee Well-Being | |||||
S | Social Responsibility | |||||
Results | S | Below Target | ||||
Overall: Slightly above target: 105% Slightly above target |
The Committee reviewed and confirmed these results and approved the short-term incentive pool. The Committee evaluated Adjusted EBITDA performance, as well as multiple operational, safety, strategic, and individual performance factors before approving the final payout factor. Our NEOs received, excluding Mr. Schwiering’s pro rata award, on average, 113%79% of their short-term incentive target payout based on actual performance in relation to targeted performance for each performance measure, key strategic accomplishments and individual performance.
Long-Term Incentives. We provide long-term incentives in the form of equity awards under our Equity Incentive Plan and historically under the RRMS Equity Incentive Plan. The Committee oversees the administration of the equity awards granted under both of these plans. Awards issued under the RRMS Equity Incentive Plan were also approved by the Board of Directors of the general partner of RRMS.this plan. To determine the value of equity awards to be granted to NEOs, we consider the following factors:
The Committee has allocated long-term equity awards as follows:
The Committee supports this design as it is equity-based and delivers a significant portion of the equity in performance-based awards to our NEOs, further strengthening alignment with stockholders.
In general, we plan to make our annual equity grants around the same time each year. It is possible that newly hired or promoted executives may receive equity grants on the date on which they are hired or promoted or on the date of a Committee meeting on or around the hire or promotion date. The Committee approves all equity grants to the NEOs and the grant date for such awards is on or after the date of such approval.
The Committee does not intend to make equity grants in anticipation of the release of materialnon-public information and does not intend to time the release of such information based on equity award grant dates.
20162017 Long-Term Incentive Awards. The long-term incentive targets as a percentage of eligible earnings (base salary for a performance year) for our NEOs in 2016 are listed in the table below. In 2016, the Committee awarded NEOs, with the exception of the CEO, long-term incentive grants 10% below target in recognition of the increased pressure on available share balances in our equity incentive plans. The CEO was awarded a long-term incentive grant of 115% of target.2017 were as follows:
NEO |
(% of salary) | |||
Carlin G. Conner | ||||
Robert N. Fitzgerald | 200% | |||
Timothy R. O’Sullivan | 130% | |||
(1) |
2014 Performance Share Unit Awards Vesting. Consistent with our design, the 2014 performance-based awards were weighted 50% tied to the Adjusted EBITDA Growth performance metric and 50% tied to relative TSR and had a three-year performance period ended December 31, 2016. The following Adjusted EBITDA Growth and relative TSR performance calculations were verified by our internal audit department. The achievement of these metrics was reviewed and certified by the Committee on February 22, 2017.
| ||||||||||||||||||||
50% | ||||||||||||||||||||
restricted stock and 50% performance share units in an amount equal to $190,000. |
Benefits. Our NEOs currently receive the same level of health and welfare benefits provided to all employees including participating in our 401(k) Plan which provides for a matching contribution of a portion of an employee’s annualtax-deferred contribution. Our NEOs currently receive no perquisites (perks) or supplemental benefits, except for the following:
• | Tax and Financial Planning Allowance: We provide up to $15,000 annually to our CEO for annual income tax return preparation and financial planning to provide expertise on current tax laws, to assist with personal financial planning and to prepare for contingencies such as death and disability. We provide this benefit in order to help our CEO keep his focus on his responsibilities at SemGroup. |
Compensation of Former Named Executive
Peter L. Schwiering. Peter L. Schwiering, age 72, retired from the Company effective August 5, 2016. In connection with his retirement, the Company and Mr. Schwiering entered into a consulting agreement (the “Consulting Agreement”). Pursuant to the Consulting Agreement, Mr. Schwiering will provide consulting services to the Company through July 31, 2017 to ensure an orderly transition of his responsibilities and be paid $22,000 per month. Pursuant to the terms of the Consulting Agreement, Mr. Schwiering participated on a pro-rata basis in the Company’s short-term incentive plan with respect to the year ended December 31, 2016. Upon his retirement, Mr. Schwiering’s (i) 3,375 shares of Company restricted stock, together with associated unvested dividends, fully vested and (ii) 5,718 RRMS unit awards, together with associated distribution rights, fully vested. Mr. Schwiering’s 6,749 outstanding performance-based equity awards granted by the Company will vest on a pro rata basis if performance criteria associated with such awards are achieved at the end of the applicable performance periods.
Other Executive Compensation Matters
Stock Ownership Policy. We have a Stock Ownership Policy for our executive officers, including NEOs, which further strengthens our NEOs’ alignment with stockholders. All NEOs must maintain an equity interest in the Company and its affiliates equal to a specified multiple of their base pay. Executives are required to retain 100% of annual equity awards, net of taxes, until ownership requirements are met. Fifty percent of the unvested time-based equity awards will count towards the ownership requirements. Unvested performance-based awards do not count toward the ownership requirements. We intend to periodically review the policy and adjust it as internal objectives or market conditions warrant. The chart below shows the NEO stock ownership guidelines currently in effect.
Position | Holding Requirement as a Percent of Base Pay | |||
CEO | 3x | |||
NEO | 2x | |||
Other Executive Officers | 1x |
Clawback Policy. We have a Clawback Policy that if an accounting restatement occurs due to material noncompliance with the financial reporting requirements under U.S. federal securities laws, the Committee has the right to use reasonable efforts to recover from any of our current or former executive officers who received incentive-based compensation during the three-year period preceding the date on which the Company is required to prepare an accounting restatement any excess incentive-based compensation awarded as a result of the misstatement. This policy is intended to be interpreted in a manner consistent with any rules or regulations adopted by the SEC or listing guidelines adopted by the NYSE as contemplated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Our short-term incentive program and form of award agreements for long-term incentives require participants and grantees to return any incentive-based compensation which we determine we are required to recover from the participants and grantees under this policy. Our executive severance agreements discussed below also contain certain forfeiture and clawback provisions in the event that the executive breaches anynon-competition,non-solicitation,non-disparagement, confidential information or intellectual property covenants in the agreements.
Policy on Hedging and Pledging Our Securities. Our Insider Trading Policy specifically prohibits our directors, named executive officers and other employees from (a) engaging in any hedging activities with respect to our securities or (b) holding our securities in a margin account or otherwise pledging our securities.
Compensation Program as it Relates to Risk. We have reviewed our compensation policies and practices for both executives andnon-executives as they relate to risk and have determined that at this time they are not reasonably likely to have a material adverse effect on the Company.
In reaching this conclusion, we considered the various elements of our compensation program that are designed to help mitigate excessive risk taking, including:
• | Components of Compensation: We use a mix of compensation elements including base salary, short-term incentives and long-term incentives to avoid placing too much emphasis on any one component of compensation. |
• | Level of Compensation: Our total direct compensation is designed to be competitive with the marketplace and aligned with the interest of our stockholders. |
• | Short-term Incentive:Our short-term incentive plan does not allow for unlimited payouts. Short-term incentive payments cannot exceed 200% of target levels. Our short-term incentive plan is discretionary and is subject to the Committee’s approval. |
• | Equity Awards:Our restricted stock |
• | Board/Committee Oversight: The Board of Directors and the Committee maintain full discretion of reviewing and administering all awards under short- and long-term incentive plans. |
• | Performance Measures: Our performance goal setting process is aligned with our business strategy and our values and commitments. |
• | Comprehensive Risk Management Policy: Our policy provides that employees will not be compensated for exposing us to undue risk as determined by our senior management and/or Board of Directors. |
• | Clawback Policy: We have the ability to recover any excess incentive-based compensation awarded to any of our executive officers as a result of any accounting restatement due to materialnon-compliance with the reporting requirements under U.S. federal securities laws. |
Our compensation program is intended to motivate NEOs and employees to achieve business objectives that generate stockholder returns while demonstrating behaviors that are consistent with our values.
Executive Severance Agreements. We entered into severance agreements with each of our NEOs, other than our CEO, to encourage and motivate such executive officers to devote their full attention to their duties without the distraction of concerns regarding their involuntary or constructive termination of employment under certain circumstances. Each severance agreement expires on June 1, 20182020 unless extended. Termination-related benefits are described in greater detail under “Potential Payments Upon Termination or Change in Control” below.
Employment Agreement. We entered into an employment agreement with Carlin G. Conner on March 6, 2014, in conjunction with the commencement of his service as our President and Chief Executive Officer on April 1, 2014. Mr. Conner’s employment agreement provides for certain basic compensation provisions, including a base salary and eligibility to participate in incentive compensation programs and benefit programs available to our other executives, and provided for asign-on bonus payment andone-time equity award. Mr. Conner’s agreement also includes certain termination-related benefits in the event of his involuntary or constructive termination of employment, including following a change of control, which are described under “Potential Payments Upon Termination or Change in Control” below. The benefits offered by the employment agreement were the result of negotiations between us and Mr. CarlinConner in connection with our hiring him away from his previous employer. We believe the termination-related benefits are appropriate and competitive and that they should allow Mr. CarlinConner to devote his full attention to his various duties without the distraction of concerns regarding his involuntary or constructive termination of employment under the circumstances set forth in the agreement.
Accounting and Tax Treatment. We consider the impact of accounting and tax treatment when designing all aspects of compensation, but the primary driver of program design is the support of business objectives. In that regard, we review and consider the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which limits the tax deductibility by a corporation of compensation in excess of $1 million paid to its CEO and any of its three other most highly compensated executive officers, other than the CFO. CompensationEffective for tax years beginning after December 31, 2017, U.S. tax law changes will expand the definition of covered employees under Section 162(m) to, include among others, the CFO, and eliminate the performance-based compensation exception beginning in 2018.
Under the tax laws in effect during 2017, compensation which qualifiesqualified as “performance-based” iscould be excluded from the $1 million limit if, among other requirements, the compensation iswas payable only upon attainment ofpre-established, objective performance goals under a plan approved by the corporation’s stockholders. The Committee, however, hasdid not adoptedadopt a policy
that all compensation must be deductible. If future compliance with Section 162(m) is inconsistent with ourThe Committee views the tax deductibility of executive compensation as one factor to be considered in the context of its overall compensation philosophy, or what is believedand will consider the tax law changes. The Committee reviews each material element of compensation on a continuing basis to determine whether deductibility can be inaccomplished without sacrificing flexibility and other important elements of the best interests of our stockholders, then futureoverall executive compensation arrangements may not be fully deductible under Section 162(m). For example, our time-vested awards of restricted stock do not qualify as performance-based and may not be fully deductible.program.
The Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management of SemGroup and, based on such review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
THE COMPENSATION COMMITTEE |
James H. Lytal (Chair) |
Karl F. Kurz |
|
The following table summarizes the total compensation earned by or paid or awarded to each of the named executive officers with respect to each of the fiscal years ended December 31, 2017, 2016 2015 and 2014. The persons2015. Susan S. Lindberg joined SemGroup in June 2017 and Thomas F. DeLorbe became a named below, except for Mr. Schwiering, constitute all of the executive officers of SemGroup as of December 31, 2016. Mr. Schwiering retired as Vice President of SemGroup on August 5, 2016.officer in January 2017.
For each of the fiscal years presented, we have compensated Mr. Conner, our President and CEO, pursuant to an employment agreement. For additional information regarding this employment agreement, see “Potential Payments Upon Termination or Change in Control – Conner Employment Agreement” below. We have not entered into an employment agreement with any of the other named executive officers.
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option ($) | Non-Equity Incentive Plan Compensation ($)(3) | Change in ($) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||||||||
Carlin G. Conner(5) President and CEO | 2016 | 577,211 | – | 1,735,041 | – | 575,000 | – | 15,900 | 2,903,152 | |||||||||||||||||||||||||||
2015 | 573,173 | – | 1,699,922 | – | 393,300 | – | 20,365 | 2,686,760 | ||||||||||||||||||||||||||||
2014 | 416,731 | 600,000 | 5,000,000 | (6) | – | 1,000,000 | – | 185,086 | 7,201,817 | |||||||||||||||||||||||||||
Robert N. Fitzgerald Senior Vice President and Chief Financial Officer | 2016 | 403,646 | – | 740,441 | – | 337,764 | – | 15,900 | 1,497,751 | |||||||||||||||||||||||||||
2015 | 400,665 | – | 891,939 | – | 200,970 | – | 13,250 | 1,506,824 | ||||||||||||||||||||||||||||
2014 | 383,267 | – | 759,750 | – | 510,000 | – | 13,000 | 1,666,017 | ||||||||||||||||||||||||||||
Candice L. Cheeseman Vice President and General Counsel | 2016 | 343,315 | – | 409,341 | – | 275,310 | – | 15,900 | 1,043,866 | |||||||||||||||||||||||||||
2015 | 341,058 | – | 444,537 | – | 166,630 | – | 13,250 | 965,475 | ||||||||||||||||||||||||||||
2014 | 327,705 | – | 426,408 | – | 436,300 | – | 13,000 | 1,203,413 | ||||||||||||||||||||||||||||
Timothy R. O’Sullivan Vice President Corporate Planning and Strategic Initiatives | 2016 | 321,231 | – | 383,022 | – | 211,200 | – | 14,664 | 930,117 | |||||||||||||||||||||||||||
2015 | 319,354 | – | 459,993 | – | 133,635 | – | 13,250 | 926,232 | ||||||||||||||||||||||||||||
2014 | 307,983 | – | 348,309 | – | 292,800 | – | 13,000 | 962,092 | ||||||||||||||||||||||||||||
Peter L. Schwiering Former Vice President / Former Chief Operating Officer of Rose Rock Midstream GP, LLC | 2016 | 204,000 | – | – | – | 128,690 | – | 152,528 | 485,218 | |||||||||||||||||||||||||||
2015 | 338,814 | – | 492,935 | – | 143,005 | – | 13,250 | 988,004 | ||||||||||||||||||||||||||||
2014 | 320,932 | – | 481,937 | – | 354,000 | – | 12,750 | 1,169,619 | ||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option ($) | Non-Equity Incentive Plan Compensation ($)(3) | Change in ($) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||||||||
Carlin G. Conner President and Chief Executive Officer | 2017 | 596,154 | – | 1,800,054 | – | 476,820 | – | 37,903 | 2,910,931 | |||||||||||||||||||||||||||
2016 | 577,211 | – | 1,735,041 | – | 575,000 | – | 15,900 | 2,903,152 | ||||||||||||||||||||||||||||
2015 | 573,173 | – | 1,699,922 | – | 393,300 | – | 20,365 | 2,686,760 | ||||||||||||||||||||||||||||
Robert N. Fitzgerald Senior Vice President and Chief Financial Officer | 2017 | 412,338 | – | 828,459 | – | 230,500 | – | 31,206 | 1,502,503 | |||||||||||||||||||||||||||
2016 | 403,646 | – | 740,441 | – | 337,764 | – | 15,900 | 1,497,751 | ||||||||||||||||||||||||||||
2015 | 400,665 | – | 891,939 | – | 200,970 | – | 13,250 | 1,506,824 | ||||||||||||||||||||||||||||
Susan S. Lindberg Vice President and General Counsel | 2017 | 175,000 | 100,000 | 190,003 | – | 155,000 | – | 27,608 | 647,611 | |||||||||||||||||||||||||||
Timothy R. O’Sullivan Vice President Corporate Initiatives | 2017 | 328,123 | – | 428,543 | – | 157,200 | – | 23,082 | 936,948 | |||||||||||||||||||||||||||
2016 | 321,231 | – | 383,022 | – | 211,200 | – | 14,664 | 930,117 | ||||||||||||||||||||||||||||
2015 | 319,354 | – | 459,993 | – | 133,635 | – | 13,250 | 926,232 | ||||||||||||||||||||||||||||
Thomas F. DeLorbe Vice President Corporate Services | 2017 | 305,000 | – | 396,559 | – | 145,500 | – | 39,411 | 886,470 | |||||||||||||||||||||||||||
(1) | The amount represents asign-on bonus paid to |
(2) | Represents the grant date fair value computed in accordance with ASC Topic 718, “Compensation –Stock Compensation,” which excludes the effect of estimated forfeitures, of the shares of restricted stock and performance share units granted under our Equity Incentive Plan and the restricted RRMS common units granted under the RRMS Equity Incentive Plan. Awards with performance conditions are valued on the grant date closing price on the NYSE based on the number of awards expected to vest. Awards with market conditions are valued using Monte Carlo simulations. The assumptions used to value the SemGroup stock awards are included in Note |
The value included for the performance share units is based on 100 percent of the performance share units vesting at the end of the three-year performance period. Using the maximum number of shares of stock issuable upon vesting of the performance share units (200 percent of the units granted in 2017, 2016 |
Name | 2016 | 2015 | 2014 | 2017 | 2016 | 2015 | ||||||||||||||||||
Carlin G. Conner | $ | 1,745,030 | $ | 1,699,926 | — | $ | 1,800,090 | $ | 1,745,030 | $ | 1,699,926 | |||||||||||||
Robert N. Fitzgerald | $ | 740,442 | $ | 891,948 | $ | 759,774 | $ | 828,495 | $ | 740,442 | $ | 891,948 | ||||||||||||
Candice L. Cheeseman | $ | 409,342 | $ | 444,575 | $ | 426,405 | ||||||||||||||||||
Susan S. Lindberg | $ | 190,003 | — | — | ||||||||||||||||||||
Timothy R. O’Sullivan | $ | 383,014 | $ | 459,969 | $ | 348,314 | $ | 428,579 | $ | 383,014 | $ | 459,969 | ||||||||||||
Peter L. Schwiering | — | $ | 492,935 | $ | 481,877 | |||||||||||||||||||
Thomas F. DeLorbe | $ | 396,595 | — | — |
(3) | For |
(4) | All Other Compensation for |
Name | 401(k) Matching Contribution ($) | Consulting Fee($) (a) | Accrued Vacation ($)(b) | Total Other Compensation ($) | 401(k) Matching Contribution ($) | Cash ($)(a) | Relocation Expenses ($)(b) | Housing Allowance ($)(c) | Total Other Compensation ($) | |||||||||||||||||||||||||||
Carlin G. Conner | 15,900 | — | — | 15,900 | 16,200 | 21,703 | — | — | 37,903 | |||||||||||||||||||||||||||
Robert N. Fitzgerald | 15,900 | — | — | 15,900 | 16,200 | 15,006 | — | — | 31,206 | |||||||||||||||||||||||||||
Candice L. Cheeseman | 15,900 | — | — | 15,900 | ||||||||||||||||||||||||||||||||
Susan S. Lindberg | 7,875 | — | — | 19,733 | 27,608 | |||||||||||||||||||||||||||||||
Timothy R. O’Sullivan | 14,664 | — | — | 14,664 | 16,200 | 6,882 | — | — | 23,082 | |||||||||||||||||||||||||||
Peter L. Schwiering | 14,618 | 105,218 | 32,692 | 152,528 | ||||||||||||||||||||||||||||||||
Thomas F. DeLorbe | 16,200 | — | 23,211 | — | 39,411 |
(a) | Represents |
(b) | Represents |
Represents |
Grants of Plan-Based Awards During 20162017
The following table provides information about stock option and RRMS common unitoption awards andnon-equity and equity incentive plan awards granted to our named executive officers during the year ended December 31, 2016.2017. No stock options were granted to our named executive officers in 2016.2017. There can be no assurance that the Grant Date Fair Value of Stock and Option Awards will ever be realized.
Name | Grant Date | Approval Date |
Estimated Possible Payouts Under |
Estimated Future Payouts Under | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($ / Sh) | Grant Date Value of Stock Option Awards ($)(5) | Grant Date | Approval Date |
Estimated Possible Payouts Under |
Estimated Future Payouts Under | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($ / Sh) | Grant Date Value of Stock Option Awards ($)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carlin G. Conner | — | — | — | 575,000 | 1,150,000 | — | — | — | — | — | — | — | — | — | — | 600,000 | 1,200,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | 23,430 | 46,859 | 93,718 | — | — | — | 872,515 | 3/1/2017 | 2/22/2017 | — | — | — | 12,466 | 24,932 | 49,864 | — | — | — | 900,045 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | — | — | — | 35,144 | (3) | — | — | 654,381 | 3/1/2017 | 2/22/2017 | — | — | — | — | — | — | 24,931 | (3) | — | — | 900,009 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | — | — | — | 17,826 | (4) | — | — | 208,145 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert N. Fitzgerald | — | — | — | 281,470 | 562,940 | — | — | — | — | — | — | — | — | — | — | 289,940 | 579,880 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | 9,942 | 19,883 | 39,766 | — | — | — | 370,221 | 3/1/2017 | 2/22/2017 | — | — | — | 5,738 | 11,475 | 22,950 | — | — | — | 414,248 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | — | — | — | 14,912 | (3) | — | — | 277,661 | 3/1/2017 | 2/22/2017 | — | — | — | — | — | — | 11,474 | (3) | — | — | 414,211 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | — | — | — | 7,927 | (4) | — | — | 92,559 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Candice L. Cheeseman | — | — | — | 239,400 | 478,800 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | 5,496 | 10,992 | 21,984 | — | — | — | 204,671 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | — | — | — | 8,244 | (3) | — | — | 153,503 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Susan S. Lindberg | — | — | — | 195,000 | 390,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/19/2017 | 5/16/2017 | — | — | — | 1,912 | 3,823 | 7,646 | — | — | — | 95,002 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | — | — | — | 4,383 | (4) | — | — | 51,167 | 6/19/2017 | 5/16/2017 | — | — | — | — | — | — | 3,823 | (3) | — | — | 95,002 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy R. O’Sullivan | — | — | — | 192,000 | 384,000 | — | — | — | — | — | — | — | — | — | — | 192,000 | 384,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | 5,143 | 10,285 | 20,570 | — | — | — | 191,507 | 3/1/2017 | 2/22/2017 | — | — | — | 2,968 | 5,936 | 11,872 | — | — | — | 214,290 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | — | — | — | 7,714 | (3) | — | — | 143,635 | 3/1/2017 | 2/22/2017 | — | — | — | — | — | — | 5,935 | (3) | — | — | 214,254 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas F. DeLorbe | — | — | — | 183,000 | 366,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2017 | 2/22/2017 | — | — | — | 2,747 | 5,493 | 10,986 | — | — | — | 198,297 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/23/2016 | — | — | — | — | — | — | 4,100 | (4) | — | — | 47,880 | 3/1/2017 | 2/22/2017 | — | — | — | — | — | — | 5,492 | (3) | — | — | 198,261 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Peter L. Schwiering | — | — | — | 204,000 | 408,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Represents estimated possible payouts under our short-term incentive plan. The estimated possible payout amounts are based on the applicable bonus target percentage and base salary for each named executive officer in effect for |
(2) | Represents the range of payouts in shares of stock for the performance period beginning January 1, |
(3) | Represents restricted shares of Class A Common Stock underlying restricted stock awards granted under our Equity Incentive Plan. In general, restricted stock awards vest on the third anniversary of the date of grant, subject to the executive’s continued service with the Company through the vesting date. While an executive officer holds restricted shares, he or she is entitled to vote such shares with holders of our Class A Common Stock. Dividends, if any, paid with respect to the restricted shares are held by the Company and are subject to forfeiture until such time that the restricted shares on which the dividends were paid vest. The vesting of the restricted shares will accelerate in full in the event (i) an executive officer is terminated by the Company without cause or by the executive officer for good reason after or in connection with a change in control, (ii) an executive officer is terminated due to death or disability, or (iii) an executive officer is |
involuntarily terminated by the Company, as the direct result of a divestiture or otherwise, without cause. If an execute officer’s employment is terminated for any reason other than those in (i), (ii) and (iii) above, all unvested restricted shares, and any dividends distributed thereon, will be forfeited. |
(4) |
Represents the grant date fair value computed in accordance with ASC Topic 718, “Compensation—Stock Compensation,” which excludes the effect of estimated forfeitures, of the shares of restricted stock and performance share units granted under our |
Outstanding Equity Awards at FiscalYear-End 2016 2017
The following table shows the outstanding equity awards held by our named executive officers as of December 31, 2016.2017.