(Amendment☑ ☒☐ Preliminary Proxy Statement ☐ ☑☒ Definitive Proxy Statement ☐ Definitive Additional Materials ☐ §240.14a-12Matador Resources Company(Name of Registrant as Specified In Its Charter)(Name of Person(s) Filing Proxy Statement, if other than the Registrant)Payment of Filing Fee (Check the appropriate box):☑☒ No fee required. ☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.1)Title of each class of securities to which transaction applies:2)Aggregate number of securities to which transaction applies:3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):4)Proposed maximum aggregate value of transaction:5)Total fee paid:☐Fee paid previously with preliminary materials. ☐ Check box if any part of the fee is offset as providedRule 0-11(a)(2) Rules identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.1)Amount Previously Paid:
Form, Schedule or Registration Statement No.:
Filing Party:
Date Filed:
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Notice of Annual Meeting of Shareholders and Proxy Statement |
June 4, 20219, 2023 | Dallas, Texas
One Lincoln Centre
5400 LBJ Freeway, Suite 1500
Dallas, Texas 75240
www.matadorresources.com
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 4, 20219, 2023
To the Matador Resources Company Shareholders:
Please join us for the 20212023 Annual Meeting of Shareholders of Matador Resources Company. The meeting will be held at the Westin Galleria, San AntonioHilton Dallas Lincoln Centre, Lakeside Ballroom, 13340 Dallas Parkway,5410 LBJ Freeway, Dallas, Texas 75240, onFriday, June 4, 2021, 9, 2023, at 9:30 a.m., Central Daylight Time.
At the meeting, you will hear a report on our business and act on the following matters:
| (1) | Election of the |
| (2) | Advisory vote to approve the compensation of our named executive officers as described in the attached Proxy Statement; |
| (3) | Ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, |
| (4) | Any other matters that may properly come before the meeting. |
All shareholders of record at the close of business on April 8, 202112, 2023 are entitled to vote at the meeting or any postponement or adjournment of the meeting. A list of the shareholders of record is available at the Company’s offices in Dallas, Texas.
Depending on concerns aboutBy Order of the novel coronavirus, or COVID-19, we might hold a virtual annual meeting insteadBoard of holding an in-person meeting. We would publicly announce a determination to hold a virtual annual meeting in a press release available at our website, www.matadorresources.com, as soon as practicable before the meeting. In that event, the annual meeting would be conducted solely virtually, on the above date and time, via live audio webcast. You or your proxyholder could participate, vote and examine our shareholder list at the virtual annual meeting by visiting www.virtualshareholdermeeting.com/MTDR2021 and using your control number, but only if we decide to hold a virtual annual meeting.Directors,
Joseph Wm. Foran Chairman and Chief Executive Officer April 27, 2023 |
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YOUR VOTE IS IMPORTANT!
Whether or not you will attend the meeting, please vote as promptly as possible by using the Internet or telephone or by signing, dating and returning your proxy card to the address listed on the card.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to Be Held on June 4, 2021:9, 2023:
Our Proxy Statement and the Annual Report to Shareholders for the fiscal year ended December 31, 20202022 are available for viewing, printing and downloading at https://materials.proxyvote.com/576485.
TABLE OF CONTENTS
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Strategic Planning and Compensation Committee Interlocks and Insider Participation | ||||
Proposal | ||||
Fees of Independent Registered Public Accounting Firm for Fiscal Years | ||||
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Securities Authorized for Issuance Under Equity Compensation Plans | ||||
Security Ownership of Certain Beneficial Owners and Management | ||||
Director Nominations or Other Business for Presentation at the | ||||
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20212023 Proxy Statement| Matador Resources Company i
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Matador Resources Company
One Lincoln Centre
5400 LBJ Freeway, Suite 1500
Dallas, Texas 75240
www.matadorresources.com
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 4, 20219, 2023
This Proxy Statement is being mailed on or about April 22, 202127, 2023 to the shareholders of Matador Resources Company (“Matador” or the “Company”) in connection with the solicitation of proxies by the Board of Directors (the “Board”) of the Company to be voted at the Annual Meeting of Shareholders of the Company to be held at the Westin Galleria, San AntonioHilton Dallas Lincoln Centre, Lakeside Ballroom, 13340 Dallas Parkway,5410 LBJ Freeway, Dallas, Texas 75240, on June 4, 2021,9, 2023, at 9:30 a.m., Central Daylight Time (the “Annual Meeting” or the “2021“2023 Annual Meeting”), or at any postponement or adjournment thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. The address of the Company’s principal executive office is One Lincoln Centre, 5400 LBJ Freeway, Suite 1500, Dallas, Texas 75240.
If you are a shareholder of record, you may vote in person by attending the meeting, by completing and returning a proxy by mail or by using the Internet or telephone. You may vote your proxy by mail by marking your vote on the enclosed proxy card and following the instructions on the card. To vote your proxy using the Internet or telephone, see the instructions on the proxy form and have the proxy form available when you access the Internet website or place your telephone call.
The named proxies will vote your shares according to your directions. If you sign and return your proxy but do not make any of the selections, the named proxies will vote your shares: (i)FORthe election of the fivefour nominees for director as set forth in this Proxy Statement, (ii) FORthe approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in this Proxy Statement and (iii) FORthe ratification of KPMG LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2021.2023. Your proxy may be revoked at any time before it is exercised by filing with the Company a written revocation addressed to the Corporate Secretary, by executing a proxy bearing a later date or by attending the Annual Meeting and voting in person.
The cost of soliciting proxies will be borne by the Company. In addition to the use of postal services and the Internet, proxies may be solicited by directors, officers and employees of the Company (none of whom will receive any additional compensation for any assistance they may provide in the solicitation of proxies) in person or by telephone.
The outstanding voting securities of the Company consist of issued and outstanding common stock, par value $0.01 per share (the “Common Stock”). The record date for the determination of the shareholders entitled to notice of and to vote at the Annual Meeting, or any postponement or adjournment thereof, has been established by the Board as the close of business on April 8, 202112, 2023 (the “Record Date”). As of the Record Date, there were 116,781,445119,183,914 shares of Common Stock outstanding and entitled to vote.
The presence, in person or by proxy, of the holders of record of a majority of the outstanding shares entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting, but if a quorum should not be present, the meeting may be adjourned from time to time until a quorum is obtained. A holder of Common Stock will be entitled to one vote per share on each matter properly brought before the meeting. Cumulative voting is not permitted in the election of directors.
The proxy card provides space for a shareholder to abstain with respect to any or all nominees for the Board. The affirmative vote of a majority of the votes cast by holders of shares present in person or represented by proxy and
2021 Proxy Statement| Matador Resources Company 1
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entitled to vote on the election of directors at the Annual Meeting is required for the election of each nominee for
2023 Proxy Statement| Matador Resources Company 1
PROXY STATEMENT |
director. With respect to the election of directors in an uncontested election, such as that being held at the Annual Meeting, “majority of the votes cast” means the number of votes cast “for” the election of such nominee exceeds the number of votes cast “against” such nominee. See “Corporate Governance—Majority Vote in Director Elections” for additional information regarding election of directors.
The other proposals require the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote at the meeting. Shares held by a shareholder who abstains from voting on any or all proposals will be included for the purpose of determining the presence of a quorum. Other than with respect to the election of directors, an abstention will effectively count as a vote cast against the remaining proposals. Broker non-votes on any matter as to which the broker has indicated on the proxy that it does not have discretionary authority to vote will be treated as shares not entitled to vote with respect to that matter. However, such shares will be considered present and entitled to vote for quorum purposes so long as they are entitled to vote on at least one other matter.
2 Matador Resources Company |20212023 Proxy Statement
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PROXY SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully prior to voting. For more complete information regarding our 20202022 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2020.2022.
20212023 Annual Meeting of Shareholders
Voting Matters and Board Recommendation
| Proposal | Board
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Election of | FOR | |||
Advisory Vote to Approve Named Executive Officer Compensation (page | FOR | |||
Ratification of the Appointment of KPMG LLP as the Company’s Independent Registered Public Accounting Firm for | FOR | |||
20202022 Business Highlights
Despite the precipitous decline in global oil demand resulting from the worldwide spread of the novel coronavirus (“COVID-19”) in 2020 along with the actions of the Organization of Petroleum Exporting Countries, RussiaThe year 2022 was a tremendous year for Matador, including record total production, net income, adjusted earnings before interest expense, income taxes, depletion, depreciation and amortization and certain other oil-exporting countriesitems (“OPEC+”)Adjusted EBITDA”, which led to a very challenging oilnon-GAAP financial measure), net cash provided by operating activities and natural gas price environment, the successful execution of our business strategies led to increases in our oil and natural gas production and proved oil and natural gas reserves in 2020. We achieved these results despite reducing our operated drilling rig count from six at the beginning of the year to three by the end of the second quarter. We also improved the capital efficiency of our drilling and completion operations and achieved several key operational milestones throughout the year. In addition, we concluded several important financing transactions in 2020, including an increase in the elected commitment under our third amended and restated credit agreement (the “Credit Agreement”), the reaffirmation of the borrowing base and the restructuring of our oil hedging portfolio.adjusted Free Cash Flow (a non-GAAP financial measure). San Mateo Midstream, LLC (“San Mateo”), our midstream joint venture, (“also had a record year in 2022, including increased throughput volumes for natural gas gathering and processing, oil gathering and transportation and water handling, as well as record net income and record Adjusted EBITDA. In 2022, both Matador and San Mateo”)Mateo generated free cash flow in all four quarters.
In addition, we doubled our quarterly dividend from $0.05 per share in the first and second quarters of 2022 to $0.10 per share in the third and fourth quarters of 2022. In December 2022, we announced that the Board had again amended the Company’s dividend policy, increasing the quarterly dividend by 50% to $0.15 per share. We also paid down debt and ended 2022 with a leverage ratio of 0.1x (calculated in accordance with the Credit Agreement (as defined below) without the application of the maximum available cash set forth in the Credit Agreement), also achieved several important milestonesthe lowest since we became a public company in 2020,2012.
20212023 Proxy Statement| Matador Resources Company 3
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including the expansion of its cryogenic natural gas processing plant in Eddy County, New Mexico (the “Black River Processing Plant”) and associated pipelines and the merger of San Mateo Midstream II, LLC (“San Mateo II”) with and into San Mateo. These achievements and transactions increased our operational flexibility and opportunities while preserving the strength of our balance sheet and our liquidity position.
In 2020, we achieved record oil, natural gas and average daily oil equivalent production. In addition, we increased our estimated total proved oil and natural gas reserves 7% as of December 31, 2020, as compared to December 31, 2019.
Reserves and Production Growth
Business highlights achieved during 2020 include the following:
A 14% increase in oil production from 14.0 million barrels (“Bbl”) of oil produced in 2019 to 15.9 million Bbl of oil produced in 2020.
A 14% increase in natural gas production from 61.1 billion cubic feet (“Bcf”) of natural gas produced in 2019 to 69.5 Bcf of natural gas produced in 2020.
A 14% increase in average daily oil equivalent production from 66,203 barrels of oil equivalent (“BOE”) per day, including 38,312 Bbl of oil per day and 167.4 million cubic feet (“MMcf”) of natural gas per day, in 2019, to 75,175 BOE per day, including 43,526 Bbl of oil per day and 189.9 MMcf of natural gas per day, in 2020.
The ongoing transition to drilling longer laterals, whereby 83% of the operated horizontal wells we completed and turned to sales in 2020 had lateral lengths greater than one mile, as compared to 29% in 2019 and 9% in 2018.
The continuing improvement in capital efficiency as demonstrated by (i) our average drilling and completion (“D&C”) costs for all operated horizontal wells completed and turned to sales of approximately $850 per lateral foot in 2020, a decrease of 27% as compared to average drilling and completion costs of $1,165 per lateral foot in 2019 and a decrease of 44% as compared to average drilling and completion costs of $1,528 per lateral foot in 2018, and (ii) the sequential quarterly decrease in our drilling and completion costs per lateral foot on operated wells turned to sales throughout 2020, from $1,009 in the first quarter to $881 in the second quarter to $790 in the third quarter and, finally, to $625 in the fourth quarter.
Record-low unit operating costs for lease operating expenses (“LOE”) of $3.81 per BOE and general and administrative (“G&A”) expenses of $2.27 per BOE, both for the year ended December 31, 2020.
Lower Costs and Increased Capital Efficiency
Business Highlights
| • | A 23% increase in oil production to 21.9 million barrels (“Bbl”) of oil produced in 2022 from 17.8 million Bbl of oil produced in 2021. |
| • | A 22% increase in natural gas production to 99.3 billion cubic feet (“Bcf”) of natural gas produced in 2022 from 81.7 Bcf of natural gas produced in 2021. |
| • | A 22% increase in average daily oil equivalent production to 105,465 barrels of oil equivalent (“BOE”) per day, including 60,119 Bbl of oil per day and 272.1 million cubic feet (“MMcf”) of natural gas per day, in 2022, from 86,176 BOE per day, including 48,876 Bbl of oil per day and 223.8 MMcf of natural gas per day, in 2021. |
| • | Continued drilling of longer laterals, whereby 90% of the operated horizontal wells we turned to sales in 2022 had lateral lengths of two miles or greater, as compared to only 8% as recently as 2019. |
| • | Capital expenditures for drilling, completing and equipping wells (“D/C/E capital expenditures”) for 2022 of $772.5 million, which was at the low end of our revised estimated range for 2022 D/C/E capital expenditures of $765 to $835 million as provided on July 26, 2022 and affirmed on October 25, 2022, which included the addition of a seventh operated drilling rig in September 2022. |
Returning Value to Shareholders
Capital Resources and Financial Highlights
| • | The generation of free cash flow in all four quarters of 2022 by both Matador and San Mateo. |
| • | The repayment of all outstanding borrowings under our Fourth Amended and Restated Credit Agreement (the “Credit Agreement”), resulting in no outstanding borrowings under that facility at December 31, 2022. |
| • | The repurchase of an aggregate principal amount of $350.8 million of our outstanding 5.875% senior notes due 2026. |
| • | The amendments of our dividend policy in the second and fourth quarters of 2022, pursuant to which we increased the quarterly cash dividend from $0.05 per share of Common Stock to $0.15 per share of Common Stock. |
| • | The receipt of $28.3 million in performance incentives directly from Five Point Energy, LLC, our joint venture partner in San Mateo (“Five Point”). |
4 Matador Resources Company |20212023 Proxy Statement
PROXY SUMMARY
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Financial highlights achieved during 2020 include the following:
| • | The revision of our Credit Agreement at our spring and fall redetermination processes to collectively (i) increase the borrowing base to $2.25 billion, as compared to $1.35 billion at December 31, 2021, (ii) increase the elected borrowing commitment to $775.0 million, as compared to $700.0 million at December 31, 2021, (iii) reaffirm the maximum facility amount at $1.5 billion and (iv) add one new bank to our lending group. |
| • | The amendment of San Mateo’s revolving credit facility (the “San Mateo Credit Facility”) in December 2022 to (i) extend the maturity date by three years from December 2023 to December 2026, (ii) increase the lender commitments under the San Mateo Credit Facility from $450.0 million to $485.0 million, (iii) refresh the accordion feature that provides for potential increases in lender commitments to up to $735.0 million, as compared to $700.0 million previously, and (iv) add one new bank to San Mateo’s lending group. |
The amendment of the Credit Agreement in February 2020 to reaffirm the borrowing base at $900.0 million, increase our elected borrowing commitment from $500.0 million to $700.0 million and add two new banks to our lending group.
Achievement of free cash flow in the fourth quarter of 2020.
Recent Developments
In February 2021, the Board adopted a dividend policy pursuant to which the Company intends to pay quarterly cash dividends on its common stock of $0.025 per share. Pursuant to this policy, the Board declared Matador’s first quarterly cash dividend of $0.025 per share of common stock, which was paid on March 31, 2021 to shareholders of record as of March 24, 2021.
Environmental, Social and Governance (“ESG”) Initiatives (page 27)28)
At Matador, we are committed to creating long-term value in a responsible manner. Our aim is to reliably and profitably provide the energy that society needs in a manner that is safe, protects the environment and is consistent with the industry’s best practices and the highest applicable regulatory and legal standards. In alignment with this goal, we maintain an active ESG program that is overseen and continued working in 2020 to improve upon that foundation, includingsupported by revising the mandate ofsenior management and the Board’s Environmental, Social and Corporate Governance CommitteeCommittee. In December 2022, we were pleased to enhance focus, oversight and support forissue Matador’s annual Sustainability Report, which included quantitative metrics aligned with standards developed by an industry leader, the Sustainability Accounting Standards Board (“SASB”). For additional information on the Company’s ESG efforts. Furthermore, we anticipate publishing ESG metrics in alignment with the Sustainability Accountability Standards Board (SASB) framework later this year as part of our ongoing efforts, to raise the profile of the Company’s ESG initiatives and to provide stakeholders with consistent and comparable ESG disclosures. Seesee “Corporate Governance—Environmental, Social and Governance (ESG) Initiatives” on page 27 for additional information and 2020 ESG performance highlights.28. Information included in our Sustainability Report is not incorporated into this Proxy Statement.
2021 Proxy Statement| Matador Resources Company 5
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Director Nominees (page 12)11)
Our Board currently has 10nine members and one vacancy and is divided into three classes of directors, designated Class I, Class II and Class III. Directors are elected for three-year terms. The table below provides certain summary information about each nominee for director named in this Proxy Statement:
Name | Age | Director Since | Principal Occupation | Committee Memberships | ||||||||
William M. Byerley* | 67 | 2016 | Retired Partner, PricewaterhouseCoopers LLP (PwC) | A, ESG, M | ||||||||
Monika U. Ehrman* | 43 | 2019 | Professor of Law and Faculty Director of Oil & Gas, Natural Resources, and Energy Center, University of Oklahoma College of Law | A, ESG, M, O, P | ||||||||
Julia P. Forrester Rogers* | 61 | 2017 | Professor of Law, Southern Methodist University Dedman School of Law | A, ESG | ||||||||
James M. Howard* | 70 | 2021 | Retired Trustee, Private Family Trust | A, ESG, M | ||||||||
Kenneth L. Stewart* | 67 | 2017 | Retired EVP, Compliance and Legal Affairs, Children’s Health System of Texas | CM, E, ESG, SPC | ||||||||
Name | Age | Director Since | Principal Occupation | Committee Memberships | ||||||||
Joseph Wm. Foran | 70 | 2003 | Chairman and CEO, Matador Resources Company | E, CM, O, P | ||||||||
Reynald A. Baribault* | 59 | 2014 | President and CEO, IPR Energy Partners, LLC | A, E, O, P, SPC | ||||||||
Timothy E. Parker* | 48 | 2018 | Former Portfolio Manager and Analyst – Natural Resources, T. Rowe Price & Associates | A, CM, E, ESG, P, SPC | ||||||||
Shelley F. Appel** | 33 | — | ESG Coordinator and Special Advisor to the Board, Matador Resources Company | — | ||||||||
| * | Independent Director |
| ** | Ms. Appel has not previously served on our Board. We anticipate that Ms. Appel will be appointed to the Capital Markets and Finance Committee following the 2023 Annual Meeting. |
| A | Audit Committee |
| CM | Capital Markets and Finance Committee |
| E | Executive Committee |
| ESG | Environmental, Social and Corporate Governance |
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| O | Operations and Engineering Committee |
| P | Prospect Committee |
| SPC | Strategic Planning and Compensation Committee |
Executive Compensation Highlights (page 40)
Response to COVID-19 and Oil Price Decline
During the first quarter and through April 2020, the oil and natural gas industry witnessed an abrupt and significant decline in oil prices from $63 per Bbl in early January to as low as ($38) per Bbl in late April. This sudden decline in oil prices was attributable to two primary factors: (i) the precipitous decline in global oil demand resulting from the worldwide spread of COVID-19 and (ii) a sudden, unexpected increase in global oil supply resulting from actions initiated by Saudi Arabia to increase its oil production to world markets following the failure of efforts by OPEC+ to agree on coordinated production cuts at their March 6, 2020 meetings in Vienna, Austria.
In connection with these events, we implemented compensation reductions effective April 1, 2020 for our entire workforce, including our executive officers. Chairman and Chief Executive Officer Joseph Wm. Foran voluntarily agreed to a 25% base salary reduction with the other executive officers and vice presidents agreeing to 20% and 10% reductions, respectively. These pay cuts were not restored until March 1, 2021, at which time our stock price had rebounded from a low of $1.11 in March 2020 to close at $22.04 on March 1, 2021.
In March 2020, after consulting with the Strategic Planning and Compensation Committee’s independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”) and management and considering shareholder feedback, the Independent Board granted executive officer awards consisting of 50% service-based cash-settled restricted stock units and 50% share-settled performance stock units. These awards reflect the Company’s continued commitment to transition to additional performance-based compensation. Importantly, in determining the targeted value of these awards, the Independent Board used a stock price of approximately $12.50 on a date at which the Company’s stock price closed at $2.41. The use of this considerably higher stock price in sizing the 2020 long-term incentive awards significantly lowered the number of units granted to each officer, preserving shares under the Company’s long-term incentive plan for future grants, preventing additional
62023 Proxy Statement| Matador Resources Company |2021 Proxy Statement5
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shareholder dilution and further aligning the interests of our executive officers with shareholders. Mr. Foran’s 2020 long-term award grant date fair value of $651,373 represented an 85% decrease from his 2019 long-term incentive award grant date fair value.Executive Compensation Highlights (page 42)
Consistent with the compensation reductions noted above, in setting 2020 annual cash incentive opportunities under our annual cash incentive plan for our Named Executive Officers, the Strategic Planning and Compensation Committee and Independent Board also lowered these amounts as compared to 2019. Mr. Foran’s target annual incentive opportunity as a percentage of his earned 2020 base salary was reduced from 110.0% to 73.3%, and his maximum annual incentive opportunity was reduced from 220.0% to 110.0%.
The 2020 operational and financial successes noted above contributed to the Company meeting or exceeding the maximum level of each of the Independent Board-approved performance metrics under our annual cash incentive plan. Nonetheless, to strengthen the Company’s balance sheet and further align the interests of our executive officers with our shareholders, the Company’s executive officers and the Independent Board agreed that the executive officers would forego receiving any 2020 annual cash bonuses.
As a result of the base salary reduction, the lower long-term incentive award grant date fair value and the absence of an annual cash bonus payment, Mr. Foran’s total 2020 compensation of $1.7 million reflects a 79% reduction from 2019 levels. Similarly, the total 2020 compensation of the other Named Executive Officers decreased an average of 75% from 2019 levels.
Details of our executive compensation are shown in the 2020 Summary Compensation Table on page 59. For further discussion of the above changes to our executive compensation program, see “Executive Compensation—Compensation Discussion and Analysis” beginning on page 41.
Our Executive Compensation Philosophy
Our compensation program is designed to reward, in both the short term and the long term, performance that contributes to the implementation of our business strategies, maintenance of our culture and values and achievement of our objectives. In addition, we reward qualities that we believe help achieve our business strategies such as:
teamwork;
| • | teamwork; |
mentoring future leaders within the Company to drive long-term shareholder value;
| • | recruiting and mentoring future leaders within the Company to drive long-term shareholder value; |
individual performance in light of general economic and industry-specific conditions;
| • | individual performance in light of general economic and industry-specific conditions; |
relationships with shareholders and vendors;
| • | relationships with shareholders and vendors; |
level of job responsibility;
| • | level of job responsibility; |
industry experience;
| • | industry experience; |
general professional growth; and
| • | general professional growth; and |
the ability to:
| • | the ability to: |
| ¡ | manage and enhance production from our existing assets; |
| ¡ | explore new opportunities to increase oil and natural gas production; |
| ¡ | identify and acquire additional acreage; |
| ¡ | improve total shareholder returns; |
| ¡ | increase year-over-year proved reserves; |
| ¡ | control unit production costs; and |
| ¡ | pursue midstream opportunities. |
For discussion of recent changes to our executive compensation program, see “Executive Compensation—Compensation Discussion and Analysis” beginning on page 42.
2021 Proxy Statement|
6 Matador Resources Company 7|2023 Proxy Statement
INFORMATION ABOUT THE ANNUAL MEETING
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INFORMATION ABOUT THE ANNUAL MEETING
We are furnishing you this Proxy Statement in connection with the solicitation of proxies by the Board to be used at the Annual Meeting and any adjournment thereof. The Annual Meeting will be held on Friday, June 4, 2021,9, 2023, at 9:30 a.m., Central Daylight Time. We are sending this Proxy Statement to our shareholders on or about April 22, 2021.27, 2023.
All references in this Proxy Statement to “we,” “our,” “us,” “Matador” or the “Company” refer to Matador Resources Company, including our subsidiaries and affiliates.
What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the following matters outlined in the Annual Meeting notice:
the election of the five nominees for director named in this Proxy Statement;
| • | the election of the four nominees for director named in this Proxy Statement; |
an advisory vote to approve the compensation of our named executive officers as described herein;
| • | an advisory vote to approve the compensation of our named executive officers as described herein; |
the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021; and
| • | the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023; and |
| • | any other matters that may properly come before the meeting. |
any other matters that may properly come before the meeting.
What are the Board’s voting recommendations?
FOR the election of the five nominees for director named in this Proxy Statement;
| • | FOR the election of the four nominees for director named in this Proxy Statement; |
FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers; and
| • | FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers; and |
| • | FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023. |
FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021.
Who is entitled to vote?
Shareholders as of the close of business on April 8, 202112, 2023 are eligible to vote their shares at the Annual Meeting. As of the Record Date, there were 116,781,445119,183,914 shares of our Common Stock outstanding. Each share of Common Stock is entitled to one vote at the Annual Meeting.
Why did I receive a Notice Regarding the Internet Availability of Proxy Materials in the mail instead of a full set of proxy materials?
Securities and Exchange Commission (“SEC”) rules allow companies to furnish proxy materials over the Internet. We have elected to send a separate Notice of Internet Availability of Proxy Materials (the “Notice”) to most of our shareholders instead of a paper copy of the proxy materials. This approach conserves natural resources and reduces the costs of printing and distributing our proxy materials while providing shareholders with a convenient way to access our proxy materials. Instructions on how to access the proxy materials over the Internet or to request a paper copy of proxy materials, including a proxy card or voting instruction form, may be found in the Notice. In addition, shareholders may request to receive future proxy materials in printed form by mail or electronically by email by following the instructions in the Notice. A shareholder’s election to receive proxy materials by mail or email will remain in effect until the shareholder terminates it.
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INFORMATION ABOUT THE ANNUAL MEETING
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How do I vote?
You may:
attend the Annual Meeting and vote in person;
dial the toll-free number listed on the Notice, proxy card or voting instruction form provided by your broker. Easy-to-follow voice prompts allow you to vote your shares and confirm that your voting instructions have been properly recorded. Telephone voting will be available 24 hours a day and will close at 11:59 p.m., Eastern Daylight Time on June 3, 2021;
| • | attend the Annual Meeting and vote in person; |
| • | dial the toll-free number listed on the Notice, proxy card or voting instruction form provided by your broker. Easy-to-follow voice prompts allow you to vote your shares and confirm that your voting instructions have been properly recorded. Telephone voting will be available 24 hours a day and will close at 11:59 p.m., Eastern Daylight Time, on June 8, 2023; |
| • | go to the website www.proxyvote.com and follow the instructions, then confirm that your voting instructions have been properly recorded. If you vote using the website, you can request electronic delivery of future proxy materials. Internet voting will be available 24 hours a day and will close at 11:59 p.m., Eastern Daylight Time, on June |
| • | if you received a paper copy of your proxy materials and elect to vote by written submission, mark your selections on the proxy card, date and sign it, and return the card in the pre-addressed, postage-paid envelope provided. |
if you received a paper copy of your proxy materials and elect to vote by written submission, mark your selections on the proxy card, date and sign it, and return the card in the pre-addressed, postage-paid envelope provided.
Why did I receive paper copies of proxy materials?
We are providing certain shareholders with paper copies of the proxy materials instead of a separate Notice. If you received a paper copy and would no longer like to receive printed proxy materials, you may consent to receive all future proxy materials electronically via email or the Internet. To sign up for electronic delivery, please follow the instructions provided in your proxy materials. When prompted, indicate that you agree to receive or access shareholder communications electronically in the future.
Will each shareholder in our household receive proxy materials?
Generally, no. To the extent you are receiving printed proxy materials, we try to provide only one set of proxy materials to be delivered to multiple shareholders sharing an address, unless you have given us other instructions. Any shareholder at a shared address may request delivery of single or multiple copies of printed proxy materials for future meetings by contacting us at:
Matador Resources Company
Attention: Investor Relations
5400 LBJ Freeway, Suite 1500
Dallas, Texas 75240
Email: investors@matadorresources.com
Telephone: (972) 371-5200
We undertake to deliver promptly, upon written or oral request, a copy of proxy materials to a shareholder at a shared address to which a single copy of the proxy materials was delivered. Requests should be directed to Investor Relations at the address or phone number set forth above.
Who will be admitted to the Annual Meeting?
Admission to the Annual Meeting will be limited to our shareholders of record, persons holding proxies from our shareholders, beneficial owners of our Common Stock and our employees. If your shares are registered in your name, we will verify your ownership at the meeting in our list of shareholders as of the Record Date. If your shares are held through a broker, bank or other nominee, you must bring proof of your ownership of the shares. This proof could consist of, for example, a bank or brokerage firm account statement or a letter from your bank or broker confirming your ownership as of the Record Date. You may also send proof of ownership to us at Matador Resources Company, Attention: Corporate Secretary, 5400 LBJ Freeway, Suite 1500, Dallas, Texas 75240, or email: investors@matadorresources.com, before the Annual Meeting, and we will send you an admission card.
2021 Proxy Statement|8 Matador Resources Company 9|2023 Proxy Statement
INFORMATION ABOUT THE ANNUAL MEETING
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If I vote via telephone or the Internet or by mailing my proxy card, may I still attend the Annual Meeting?
Yes.
What if I want to change my vote?
You may revoke your proxy before it is voted by submitting a new proxy with a later date (by mail, telephone or the Internet), by voting at the Annual Meeting or by filing a written revocation with our Corporate Secretary. Your attendance at the Annual Meeting will not automatically revoke your proxy.
What constitutes a quorum?
A majority of the shares entitled to vote, present in person or represented by proxy, constitutes a quorum. If you vote by telephone or Internet or by returning your proxy card, you will be considered part of the quorum. The Inspector of Election will treat shares represented by a properly executed proxy as present at the meeting. Abstentions and broker non-votes will be counted for purposes of determining a quorum. A broker non-vote occurs when a nominee holding shares for a beneficial owner submits a proxy but does not vote on a particular proposal because the nominee does not have discretionary voting power for that item and has not received instructions from the beneficial owner.
How many votes will be required to approve a proposal?
The affirmative vote of a majority of the votes cast by holders of shares of Common Stock present in person or represented by proxy and entitled to vote on the election of directors at the Annual Meeting is required for the election of each nominee for director. With respect to the election of directors in an uncontested election, such as that being held at the Annual Meeting, “majority of the votes cast” means the number of votes cast “for” such nominee exceeds the number of votes cast “against” such nominee.
With respect to all other matters, the affirmative vote of the holders of a majority of the shares of Common Stock, present in person or represented by proxy and entitled to vote at the Annual Meeting, is required.
Shares cannot be voted at the Annual Meeting unless the holder of record is present in person or represented by proxy.
Can brokers who hold shares in street name vote those shares if they have received no instructions?
Under the rules of the New York Stock Exchange (“NYSE”), brokers may not vote the shares held by them in street name for their customers and for which they have not received instructions, except with respect to a routine matter. The only matter to be voted on at the Annual Meeting that is considered routine for these purposes is the ratification of the appointment of our independent registered public accounting firm. Accordingly, brokers may not vote your shares on any other matter if you have not given specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote will be counted.
How will you treat abstentions and broker non-votes?
Shares of a shareholder who abstains from voting on any or all proposals will be included for the purpose of determining the presence of a quorum. Other than with respect to the election of directors, an abstention will effectively count as a vote cast against the remaining proposals. Broker non-votes on any matter, as to which the broker has indicated on the proxy that it does not have discretionary authority to vote, will be treated as shares not entitled to vote with respect to that matter. However, such shares will be considered present and entitled to vote for quorum purposes so long as they are entitled to vote on at least one other matter.
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INFORMATION ABOUT THE ANNUAL MEETING
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Who pays the solicitation expenses?
We will bear the cost of solicitation of proxies. Proxies may be solicited by mail or personally by our directors, officers or employees, none of whom will receive additional compensation for such solicitation. Those holding shares of Common Stock of record for the benefit of others, or nominee holders, are being asked to distribute proxy soliciting materials to, and request voting instructions from, the beneficial owners of such shares. We will reimburse nominee holders for their reasonable out-of-pocket expenses.
Where can I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting, and we will publish final results in a Current Report on Form 8-K that will be filed with the SEC within four business days of the Annual Meeting. You may obtain a copy of this and other reports free of charge at www.matadorresources.com, by contacting our Investor Relations Department at (972) 371-5200 or investors@matadorresources.com or by accessing the SEC’s website at www.sec.gov.
Will the Company’s independent registered public accounting firm be available at the Annual Meeting to respond to questions?
Yes. The Audit Committee of the Board has approvedappointed KPMG LLP to serve as our independent registered public accounting firm for the year ending December 31, 2021.2023. Representatives of KPMG LLP will be present at the Annual Meeting. They will have an opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions.
Where can I contact the Company?
Our mailing address is:
Matador Resources Company
Attention: Investor Relations
5400 LBJ Freeway, Suite 1500
Dallas, Texas 75240
Our telephone number is (972) 371-5200.
2021 Proxy Statement|10 Matador Resources Company 11|2023 Proxy Statement
PROPOSAL 1 |
PROPOSAL 1 | ELECTION OF DIRECTORS
The Board currently consists of 10nine members with one vacancy and is divided into three classes of directors, designated Class I, Class II and Class III, with the term of office of each director ending on the date of the third annual meeting following the annual meeting at which such director’s class was elected. The number of directors in each class will be as nearly equal as possible. The Class I directors are William M. Byerley, Monika U. Ehrman, Julia P. Forrester Rogers and Kenneth L. Stewart, eachthe terms of whom is a Class I director nominee at the 2021 Annual Meeting, inwill each case, to hold officecontinue until the 2024 Annual Meeting of Shareholders or his or her earlier death, retirement, resignation or removal. The Class II directors are R. Gaines Baty Craig T. Burkert and James M. Howard. TheHoward, the terms of Messrs. Baty and Burkertwhom will each continue until the 20222025 Annual Meeting of Shareholders (the “2022 Annual Meeting”) or his earlier death, retirement, resignation or removal. Mr. Howard was appointed to the Board following the 2020 Annual Meeting andShelley F. Appel is therefore a Class II nominee at the 20212023 Annual Meeting to hold office until the 20222025 Annual Meeting of Shareholders or hisher earlier death, retirement, resignation or removal. The Class III directors are Joseph Wm. Foran, Reynald A. Baribault and Timothy E. Parker, the termseach of whom willis a Class III director nominee at the 2023 Annual Meeting, in each continuecase, to hold office until the 20232026 Annual Meeting of Shareholders or his earlier death, retirement, resignation or removal.
The Board believes that each of the director nominees possesses the qualifications described below in “Corporate Governance—Board Committees—Nominating Committee.” That is, the Board believes that each nominee possesses:
deep experience at the policy making level in business, government or education;
| • | deep experience at the policy making level in business, government or education; |
the availability and willingness to devote adequate time to Board duties;
| • | the availability and willingness to devote adequate time to Board duties; |
the character, judgment and ability to make independent analytical, probing and other inquiries;
| • | the character, judgment and ability to make independent analytical, probing and other inquiries; |
a willingness to exercise independent judgment along with a willingness to listen and learn from others;
| • | a willingness to exercise independent judgment along with a willingness to listen and learn from others; |
business knowledge and experience that provides a balance with the other directors;
| • | business knowledge and experience that provides a balance with the other directors; |
financial independence; and
| • | financial independence; and |
| • | excellent past performance on the Board or, in the case of Ms. Appel, as a Special Advisor to the Board. |
excellent past performance on the Board.
Director Diversity (Including Nominees)
TENURE
RACIAL/ETHNIC DIVERSITY
| AGE
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PROPOSAL 1 |
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Core Competencies (Including Nominees)
  | Senior Leadership Experience |   | Energy Industry Experience | |||||
| Financial Expertise |
| Legal and Risk Management Experience | |||||
| Strategic Planning Expertise |  | ESG Experience | |||||
| Capital Markets Experience |  | Information Technology Expertise | |||||
The information provided below is biographical information about each of the nominees, as well as a description of the experience, qualifications, attributes or skills that led the Board to conclude that the individual should be nominated for election as a director of the Company.
Nominees No director or director nominee currently holds, or has held within the past five years, any other directorships with public companies.
12 Matador Resources Company |2023 Proxy Statement
PROPOSAL 1 |
Nominees
MR. JOSEPHW
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Chairman of the Board
Director since:
Independent:
Age:
Committees: • • • |
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The affirmative vote of a majority of the votes cast by holders of shares present in person or represented by proxy and entitled to vote on the election of directors at the Annual Meeting is required for the election of each nominee for director. With respect to the election of directors in an uncontested election, such as that being held at the Annual Meeting, “majority of the votes cast” means the number of votes cast “for” such nominee exceeds the number of votes cast “against” such nominee. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum.
The Board of Directors recommends that you vote FOR each of the nominees.
16 Matador Resources Company |2021 Proxy Statement
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Directors Continuing in Office
Biographical information for our directors who are continuing in office is provided below.
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Mr. Foran founded Matador Resources Company in July 2003 and since our founding has served as Chairman of the Board and Chief Executive Officer and,
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Qualifications:
As the founder, Chairman of the Board and Chief Executive Officer of Matador Resources Company, Mr. Foran provides Board leadership, industry experience and long relationships with many of our shareholders. |
20212023 Proxy Statement| Matador Resources Company 1713
PROPOSAL 1
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MR. REYNALD A. BARIBAULT
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Director
Director since: 2014
Independent: Yes
Age:
Committees: • Operations and Engineering (Chair) • Prospect (Chair) • Audit • Executive • Strategic Planning and Compensation | Biographical Information:
Mr. Baribault was elected to the Board in 2014 and is chair of the Board’s Operations and Engineering Committee and Prospect Committee. He served as lead independent director of the Board from 2016 to 2019.
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Qualifications:
Mr. Baribault provides valuable insight to our Board on our drilling, completions and reservoir engineering operations, as well as growth strategies, midstream operations and administration. |
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1814 Matador Resources Company |20212023 Proxy Statement
PROPOSAL 1
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MR.
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Lead Independent Director
Director since:
Independent: Yes
Age:
Committees: •
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• Audit • Environmental, Social and Corporate Governance • Executive •
• Strategic Planning and Compensation | Biographical Information:
Mr. Parker was appointed to the Board in 2018, serves as lead independent director and is chair of the Board’s Capital Markets and Finance Committee. Mr. Parker currently serves as a contractor in charge of research for Brightworks Wealth Management, LLC. Mr. Parker retired in 2017 as Portfolio Manager and Analyst—Natural Resources for T. Rowe Price & Associates. Mr. Parker joined T. Rowe Price in 2001 as an equity analyst before becoming a portfolio manager in 2010. He managed the New Era fund from 2010 to 2013 and managed the energy and natural resources portions of T. Rowe Price’s Small Cap Value, Small Cap Stock and New Horizons funds from 2013 to 2017. Prior to joining T. Rowe Price, Mr. Parker was an investment banking analyst at Robert W. Baird & Co., Inc. Mr. Parker holds a Bachelor of Science degree in Commerce from the University of Virginia and a Master of Business Administration degree from the Darden School of Graduate Business (University of Virginia).
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Qualifications:
Mr. Parker’s experience with a large institutional shareholder and his extensive familiarity with the capital markets provide the Company with valuable insight. | ||
20212023 Proxy Statement| Matador Resources Company 1915
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MS. SHELLEY F. APPEL | ESG Coordinator and Special Board Advisor, Matador Resources Company | Class II | ||
Director Nominee Independent: No Age: 33 | Biographical Information: Ms. Appel was retained to serve as Matador’s Environmental, Social and Governance Coordinator in January 2021. In that role, Ms. Appel was the primary author of the Company’s inaugural sustainability report published in 2021 and our sustainability report published in 2022. In October 2022, Ms. Appel was appointed to also serve as a Special Advisor to the Board. Following her graduation from business school at the University of Chicago, Ms. Appel joined Royal Dutch Shell PLC in August 2017 in the Mergers & Acquisitions group, where she served as a manager with responsibility for financial analysis—including valuation, structuring, negotiation and due diligence—for over $18 billion of acquisition and divestment opportunities. In December 2019, Ms. Appel was promoted to Senior Investor Relations Officer. In this role, Ms. Appel had responsibility for Shell’s global Upstream business narrative. She also served as an authorized spokesperson for Shell at investor meetings and conferences and managed relationships with North America-based investors and research analysts. Following graduation from Yale and prior to attending the University of Chicago, Ms. Appel began her career at the parent company of the New York Stock Exchange, NYSE Euronext, as a business analyst in its Corporate Strategy group. She participated in the evaluation and implementation of its $11 billion merger with the Intercontinental Exchange Group and continued in the Corporate Strategy group of the combined company until June 2015. Ms. Appel holds a Bachelor of Arts degree, with honors, in Cognitive Science from Yale University and a Master of Business Administration degree from the Booth School of Business (University of Chicago). Ms. Appel served as Co-Chair of the Energy Group while attending the University of Chicago. | |
Qualifications: Ms. Appel’s extensive knowledge and experience with the Company’s Environmental, Social and Governance initiatives and investor relations experience provides the Board valuable insight and leadership on these matters. |
Vote Required
The affirmative vote of a majority of the votes cast by holders of shares present in person or represented by proxy and entitled to vote on the election of directors at the Annual Meeting is required for the election of each nominee for director. With respect to the election of directors in an uncontested election, such as that being held at the Annual Meeting, “majority of the votes cast” means the number of votes cast “for” such nominee exceeds the number of votes cast “against” such nominee. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum.
The Board of Directors recommends that you vote FOR each of the nominees.
16 Matador Resources Company |2023 Proxy Statement
PROPOSAL 1 |
Directors Continuing in Office
Biographical information for our directors who are continuing in office is provided below.
MR. R. GAINES BATY | CEO, R. Gaines Baty Associates, Inc. | Class II | ||
Deputy Lead Independent Director Director since: 2016 Independent: Yes Age: 72 Committees: • Strategic Planning and Compensation (Chair) • Executive • Environmental, Social and Corporate Governance • Nominating | Biographical Information: Mr. Baty was appointed to the Board in 2016. He serves as deputy lead independent director and is chair of the Board’s Strategic Planning and Compensation Committee. Mr. Baty is CEO of R. Gaines Baty Associates, Inc., a leading executive search firm he founded in 1982 after working with the IBM Corporation. With over 30 years of experience, Mr. Baty has provided companies across the country and in a variety of industries with executive search and advisory services. Mr. Baty has served as a two-term President of the Society of Executive Recruiting Consultants and a two-term President of the Independent Recruiter Group. Mr. Baty is also a published author. Mr. Baty received a Bachelor of Business Administration degree from Texas Tech University, where he was a football team letterman, captain and, later, graduate assistant coach. | |
Qualifications: Mr. Baty’s experience and expertise in executive leadership and development provide our Board with an important and unique perspective on these matters, and Mr. Baty assists the Board and the Company with recruitment, board administration, compensation and growth strategies. |
MR. WILLIAM M. BYERLEY | Retired Partner, PricewaterhouseCoopers LLP (PwC) | Class I | ||
Director Director since: 2016 Independent: Yes Age: 69 Committees: • Audit (Chair) • Environmental, Social and Corporate Governance • Marketing and Midstream | Biographical Information: Mr. Byerley was appointed to the Board in 2016 and is chair of the Board’s Audit Committee. Mr. Byerley retired from PricewaterhouseCoopers LLP(PwC) in 2014. From 1988 through 2014, Mr. Byerley was a Partner with PwC, serving as an Assurance Partner on various audit engagements primarily for energy sector clients. From 1988 through 1990, Mr. Byerley served in the PwC National Office Accounting Services Group. Mr. Byerley received a Bachelor of Business Administration degree in 1975 and a Master of Business Administration degree in 1976, both from Southern Methodist University. He is a licensed Certified Public Accountant. | |
Qualifications: Mr. Byerley’s extensive experience in public accounting and longtime service to energy sector clients of PwC provide the Board with invaluable financial and accounting expertise, particularly for oil and natural gas companies, strong accounting and financial oversight and general industry knowledge. |
2023 Proxy Statement| Matador Resources Company 17
PROPOSAL 1 |
MS. MONIKA U. EHRMAN | Charles J. and Inez Wright Murray Distinguished Visiting Professor of Law, Southern Methodist University Dedman School of Law | Class I | ||
Director Director since: 2019 Independent: Yes Age: 45 Committees: • Marketing and Midstream (Co-Chair) • Environmental, Social and Corporate Governance • Executive • Nominating • Operations and Engineering • Prospect • Strategic Planning and Compensation | Biographical Information: Professor Ehrman was appointed to the Board in 2019 and is co-chair of the Board’s Marketing and Midstream Committee. She is the Charles J. and Inez Wright Murray Distinguished Visiting Professor of Law, Southern Methodist University Dedman School of Law, where she will join as Professor of Law in the Fall of 2023. Prior to joining SMU, she worked at the University of North Texas at Dallas and at the University of Oklahoma College of Law (OU). At OU, she was Professor of Law, where she led the energy and natural resources program and served as the Faculty Director of the Oil & Gas, Natural Resources, and Energy Center. While at OU, she taught in the J.D. and graduate programs at the College of Law and in the Executive Energy Management Program at the Price College of Business. Professor Ehrman joined the University of Oklahoma College of Law in 2013 as Associate Professor of Law. Prior to teaching, she served as in-house legal counsel for two oil and natural gas companies from 2008 to 2012 and as an associate oil and natural gas attorney at an international law firm from 2005 to 2008. Before law school, Professor Ehrman worked as a petroleum engineer in the upstream, midstream and pipeline sectors of the energy industry. In addition to serving on various oil and natural gas law committees, she also served as an Editor of the Oil and Gas Reporter for the Institute for Energy Law. Professor Ehrman received her Bachelor of Science degree in Petroleum Engineering from the University of Alberta; J.D. from Southern Methodist University Dedman School of Law; and Master of Laws degree from Yale Law School. She is currently the Secretary for the Section on Natural Resources & Energy Law for the Association of American Law Schools, and she is on the Editorial Board of the Journal of World Energy Law & Business (published by Oxford University Press). She previously served as Treasurer and was on the Executive Committee of the Foundation for Natural Resources and Energy Law. | |
Qualifications: Professor Ehrman provides valuable insight to our Board on our engineering and midstream operations as well as legal and governance matters. |
18 Matador Resources Company |2023 Proxy Statement
PROPOSAL 1 |
MR. JAMES M. HOWARD | Retired Trustee, Private Family Trust | Class II | ||
Director Director since: 2021 Independent: Yes Age: 72 Committees: • Marketing and Midstream (Co-Chair) • Audit • Capital Markets and Finance • Environmental, Social and Corporate Governance | Biographical Information: Mr. Howard was appointed to the Board in 2021 and is co-chair of the Board’s Marketing and Midstream Committee. He retired in March 2020 from his long-time role as a trustee of a private family trust in Houston, Texas where, since 1999, he exercised sole responsibility for all trust assets and actions. The trust was comprised of over 40 privately held limited partnerships, limited liability companies and public market positions in various asset classes and sectors. From 2000 to 2020, Mr. Howard also served as trustee of a private secondary trust with a different mix of assets than the primary family trust. Prior to his work as a trustee, he served as Vice President of Texon, L.P. from 1996 to 2000, marketing all crude oil, condensate and liquefied petroleum gas for the company and its public utility joint venture partner. From 1986 to 1996, he served as Vice President of Tripetrol Oil Trading, Inc., through which he also served on the New York Mercantile Exchange (NYMEX) Crude Oil Advisory Committee. Mr. Howard previously served in other trading positions at various Houston-based trading and petroleum companies from 1975 to 1986. He received a Bachelor of Arts degree from Florida Presbyterian College and a Master of International Management degree from Thunderbird School of International Management. | |
Qualifications: Mr. Howard’s petroleum marketing and trading experience provide the Company with valuable insight, particularly with respect to its marketing activities and the operations of San Mateo. |
MS. JULIA P. FORRESTER ROGERS | Professor of Law, Southern Methodist University Dedman School of Law | Class I | ||
Director Director since: 2017 Independent: Yes Age: 63 Committees: • Environmental, Social and Corporate Governance (Chair) • Audit • Capital Markets and Finance | Biographical Information: Professor Rogers was appointed to the Board in 2017 and is chair of the Board’s Environmental, Social and Corporate Governance Committee. Professor Rogers is a Professor of Law at Southern Methodist University Dedman School of Law where she has been a member of the faculty since 1990, teaching and serving in various administrative positions. From 2015 through 2018, Professor Rogers served the university as Associate Provost for Student Academic Services, overseeing International Student and Scholar Services, Study Abroad, the Center for Academic Development of Student Athletes, the President’s Scholars Program and the Hunt Scholars Program, among others. She served as Dean ad interim of the Dedman School of Law from June 2013 through June 2014 and as Associate Dean for Academic Affairs for the 1995-1996 academic year. Before beginning her academic career at SMU, Professor Rogers practiced law with Thompson & Knight LLP. Professor Rogers holds a Bachelor of Science degree in Electrical Engineering from The University of Texas at Austin, graduating with highest honors, and a law degree from The University of Texas School of Law, graduating with high honors. She is a member of the Order of the Coif, and she received the highest score on the Texas bar exam following her graduation. More recently, she was elected as a member of the American Law Institute. | |
Qualifications: Professor Rogers’ academic, administrative and legal experience provide our Board with a unique perspective on the Company’s business, operations and corporate governance. |
2023 Proxy Statement| Matador Resources Company 19
PROPOSAL 1 |
MR. KENNETH L. STEWART | Retired EVP, Compliance and Legal Affairs, Children’s Health System of Texas | Class I | ||
Director Director since: 2017 Independent: Yes Age: 69 Committees: • Nominating (Chair) • Capital Markets and Finance • Environmental, Social and Corporate Governance • Executive • Strategic Planning and Compensation | Biographical Information: Mr. Stewart was appointed to the Board in 2017 and is chair of the Board’s Nominating Committee and the Shareholder Advisory Committee for Board Nominations. Mr. Stewart was most recently employed as Executive Vice President, Compliance and Legal Affairs, for Children’s Health System of Texas, a position that he began on January 1, 2019 and from which he retired on January 2, 2021. During the time of his employment, Children’s Health System of Texas and its affiliates constituted one of the 10 largest pediatric hospital systems in the United States. Previously, effective December 31, 2018, Mr. Stewart retired from Norton Rose Fulbright US LLP, which constitutes the United States operations of Norton Rose Fulbright, an international legal practice, which then had over 3,700 legal professionals in over 50 cities worldwide. At the time of his retirement, Mr. Stewart was a Partner with Norton Rose Fulbright and held the position of Chair—United States. Mr. Stewart began his legal career with Fulbright & Jaworski LLP, the predecessor to Norton Rose Fulbright US LLP, and previously held at differing times positions of Global Chair of the international organization, Managing Partner of the United States region and Partner-in-Charge of the Dallas office. Prior to entering into full-time management for his firm in 2012, he engaged in a domestic and international transactional legal practice, focusing principally on merger, acquisition, financing and joint venture activities for both public and privately-held entities. Mr. Stewart has extensive experience representing and advising companies and their executive officers and boards of directors engaged in oil and natural gas exploration and midstream activities. Since his retirement from Norton Rose Fulbright, Mr. Stewart has acted, and from time to time continues to act, on a limited basis as an independent contractor senior business consultant to family offices for which he provided services during his legal career. Mr. Stewart graduated from the University of Arkansas School of Business in 1976 with a Bachelor of Science in Business Administration degree in Accounting and was licensed as a Certified Public Accountant in Texas in 1981 (certificate now on non-practice status). He graduated with honors from Vanderbilt Law School in 1979 and was a member of the Order of the Coif. Mr. Stewart has been active in numerous civic and professional organizations in the Dallas area in the past, including among others, the Dallas Regional Chamber, The Center for American and International Law and the Dallas Citizens Council. | |
Qualifications: Mr. Stewart’s extensive experience representing public companies, and particularly oil and natural gas companies, along with his years of management experience, provide our Board with important legal, corporate governance and leadership insight. |
20 Matador Resources Company |2023 Proxy Statement
CORPORATE GOVERNANCE |
CORPORATE GOVERNANCE
The business affairs of Matador are managed under the direction of the Board in accordance with the Texas Business Organizations Code, the Company’s Amended and Restated Certificate of Formation (the “Certificate of Formation”) and its Amended and Restated Bylaws (the “Bylaws”), each as amended to date. The Board has adopted Corporate Governance Guidelines, which are reviewed annually by the Environmental, Social and Corporate Governance Committee of the Board. The Company has a Code of Ethics and Business Conduct for Officers, Directors and Employees (“Code of Ethics”), which is applicable to all officers, directors and employees of the Company. The Company intends to post any amendments to, and may post any waivers of, its Code of Ethics on the Company’s website to the extent applicable to an executive officer or a director of the Company. The Corporate Governance Guidelines and the Code of Ethics are available on the Company’s website at www.matadorresources.com under the heading “Investor Relations—Corporate Governance.”
The Board holds regular and special meetings and spends such time on the affairs of the Company as its duties require. During 2020,2022, the Board held nineeight meetings. The Board also meets regularly in non-management executive sessions in accordance with NYSE regulations. The Corporate Governance Guidelines provide that one of the Company’s independent directors should serve as lead independent director at any time when the chief executive officer serves as the chairman of the board. The lead independent director presides over the non-managementexecutive sessions of the non-management directors and the independent members of the Board (the “Independent Board”), serves as a liaison between the chairman and the independent directors and performs such additional duties as the Board may otherwise determine and delegate. Because Mr. Foran serves as Chairman of the Board and Chief Executive Officer, our independent directors have appointed Mr. Parker to serve as lead independent director and Mr. Baty to serve as deputy lead independent director. In 2020,2022, all incumbent directors of the Company attended at least 75% of the meetings of the Board and the committees on which they served. It is our policy that each of our directors is expected to attend annual meetings of shareholders.shareholders, except if unusual circumstances make attendance impractical. All of our directors attended the 20202022 Annual Meeting.
The Board makes all determinations with respect to director independence in accordance with the NYSE listing standards and the rules and regulations promulgated by the SEC. The actual determination of whether a director is independent is made by the Board on a case-by-case basis.
In connection with its preparation for the Annual Meeting, the Board undertook its annual review of director independence and considered transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates. In making its determination, the Board applied the NYSE listing standards and SEC rules and regulations.
The Board reviewed the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. After this review, our Board determined that nineeight of our 10nine current directors are “independent directors” as defined under the rules of the SEC and the NYSE: Mmes. Ehrman and Rogers and Messrs. Baribault, Baty, Burkert, Byerley, Howard, Parker and Stewart. In addition, Ms. Appel, who is a nominee to serve on the Board, is the daughter of Mr. Foran and would not be considered an “independent director” as defined under the rules of the SEC and the NYSE if she is elected to the Board at the 2023 Annual Meeting. No member of or nominee for our Board other than Ms. Appel and Mr. Foran has a family relationship with any executive officer or other members of our Board.
Majority Vote in Director Elections
On December 21, 2016, the Board amended the Bylaws to implement a majority voting standard in uncontested director elections. Pursuant to the Bylaws, in an election of directors at a meeting of shareholders at which a quorum is present, (i) if the number of nominees exceeds the number of directors to be elected (a “contested election”), directors shall be elected by a plurality of the votes cast by the holders of shares present in person or
2023 Proxy Statement| Matador Resources Company 21
CORPORATE GOVERNANCE |
represented by proxy and entitled to vote on the election of directors at such meeting and (ii) in an election of directors that is not a contested election (an “uncontested election”), such as that being held at the Annual Meeting, directors shall be elected by a majority of the votes cast by the holders of shares present in person or
20 Matador Resources Company |2021 Proxy Statement
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represented by proxy and entitled to vote on the election of directors at such meeting. For purposes of the Bylaws, in an uncontested election, a “majority of the votes cast” means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. Prior to the amendment of the Bylaws, directors were elected by a plurality of the votes cast, whether or not the election was a contested election.
In connection with the amendment to the Bylaws, the Board approved and adopted an amendment to the Company’s Corporate Governance Guidelines to implement a resignation policy for directors who fail to receive the required number of votes in an uncontested election in accordance with the Bylaws. Pursuant to the Corporate Governance Guidelines, as amended, in an uncontested election, any nominee for director who receives a greater number of votes “against” his or her election than votes “for” such election (a “majority against vote”) shall promptly tender his or her resignation following certification of the shareholder vote.
The Nominating Committee shall promptly consider the resignation offer and a range of possible responses based on the circumstances that led to the majority against vote, if known, and make a recommendation to the Board concerning whether to accept or reject such resignation. The Board shall act on the Nominating Committee’s recommendation and publicly disclose its decision with respect to such resignation offer within 90 days following certification of the shareholder vote. The resignation, if accepted by the Board, will be effective at the time specified by the Board when it determines to accept the resignation, which effective time may be deferred until a replacement director is identified and appointed to the Board.
Mr. Foran serves as Chairman of the Board and Chief Executive Officer of the Company. As stated in the Corporate Governance Guidelines, the Board does not believe that the offices of Chairman of the Board and Chief Executive Officer must be separate. The members of the Board possess experience and unique knowledge of the challenges and opportunities the Company faces. They are, therefore, in the best position to evaluate the current and future needs of the Company and to judge how the capabilities of the directors and senior managers can be most effectively organized to meet those needs. Given Mr. Foran’s deep knowledge of the Company and experience in leading it, the Board currently believes that the most effective leadership structure for the Company is to have Mr. Foran serve as Chairman of the Board and Chief Executive Officer.
While Mr. Foran serves as Chairman ofUpon Ms. Appel’s election to the Board, and Chief Executive Officer, alleight of our non-employeeten directors arewill be independent under the rules of the SEC and the NYSE. After considering the recommendations of our Strategic Planning and Compensation Committee, the independent directors determine Mr. Foran’s compensation. Further, the Company has five standing committees, a lead independent director (Mr. Parker) and a deputy lead independent director (Mr. Baty). The Board believes that each of these measures counterbalances any risk that may exist in having Mr. Foran serve as Chairman of the Board and Chief Executive Officer. For these reasons, the Board believes that this leadership structure is effective for the Company.
As lead independent director, Mr. Parker has the following roles and responsibilities:
chairs the executive sessions of the non-management and independent directors;
| • | chairs the executive sessions of the non-management and independent directors; |
leads the independent directors in the evaluation of the Chief Executive Officer;
| • | leads the independent directors in the evaluation of the Chief Executive Officer; |
facilitates communication among the independent directors; and
| • | facilitates communication among the independent directors; and |
acts as a liaison between the independent directors and the Chief Executive Officer.
| • | acts as a liaison between the independent directors and the Chief Executive Officer. |
Mr. Parker, as lead independent director, may also perform such other duties as the Board or the Environmental, Social and Corporate Governance Committee from time to time may assign, which may include, but are not limited to, the following:
help develop Board agendas and ensure critical issues are included;
determine quality, quantity and timeliness of information from management;
make recommendations about retaining consultants or advisors for the Board;
| • | help develop Board agendas and ensure critical issues are included; |
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interview Board candidates;
| • | determine quality, quantity and timeliness of information from management; |
oversee Board and director evaluations; and
| • | make recommendations about retaining consultants or advisors for the Board; |
| • | interview Board candidates; |
help improve communications and processes by and between management and the Board and the Chief Executive Officer.
| • | oversee Board and director evaluations; and |
| • | help improve communications and processes by and between management and the Board and the Chief Executive Officer. |
Mr. Baty, as deputy lead independent director, may also carry out the above duties in the absence of or at the direction of Mr. Parker, as lead independent director.
The standing committees of the Board are the Audit Committee, Environmental, Social and Corporate Governance Committee, Executive Committee, Nominating Committee and Strategic Planning and Compensation Committee. The Board has also established the following advisory committees: Capital Markets and Finance Committee, Marketing and Midstream Committee, Operations and Engineering Committee and Prospect Committee. Each of the standing committees is governed by a charter, and a copy of the charters of each of these committees is available on the Company’s website at www.matadorresources.com under the heading “Investor Relations—Corporate Governance.” Director membership of all of our standing and advisory committees is identified below, as of April 22, 2021.
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We anticipate that Ms. Appel will be appointed to the Capital Markets and Finance Committee following the 2023 Annual Meeting.
Audit Committee
The Audit Committee assists the Board in monitoring:
the integrity of our financial statements and disclosures;
| • | the integrity of our financial statements and disclosures; |
our compliance with legal and regulatory requirements;
| • | our compliance with legal and regulatory requirements; |
the qualifications and independence of our independent auditor;
| • | the qualifications and independence of our independent auditor; |
the performance of our internal audit function and our independent auditor; and
| • | the performance of our internal audit function and our independent auditor; and |
our internal control systems.
| • | our internal control systems. |
In addition, the Audit Committee is charged with the (i) review of compliance with our Code of Ethics and (ii) oversight of the Company’s guidelines and policies to govern the process by which risk assessment and risk management are undertaken by management, including with respect to corporate governance, financial, accounting, operational, environmental, health and safety, regulatory and cybersecurity risks.
As of April 22, 2021,12, 2023, the Audit Committee consisted of Mmes. Ehrman andMs. Rogers and Messrs. Baribault, Burkert, Byerley, Howard and Parker, each of whom is independent under the rules of the SEC and the NYSE. Mr. Byerley is the chair of the Audit Committee. SEC rules require a public company to disclose whether or not its audit committee has an “audit committee financial expert” as defined by applicable SEC rules and regulations. Our Board has determined that each of Messrs. Burkert, Byerley and Parker is an “audit committee financial expert.” During 2020,2022, the Audit Committee met fivefour times.
Environmental, Social and Corporate Governance Committee
The Environmental, Social and Corporate Governance Committee is responsible for periodically reviewing and assessing our Corporate Governance Guidelines and Code of Ethics and making recommendations for changes thereto to the Board, reviewing any other matters related to our corporate governance, unless the authority to conduct such review has been retained by the Board or delegated to another committee, and overseeing the process for evaluation of the Board and management. The Environmental, Social and Corporate Governance Committee (formerly the Corporate Governance Committee), in conjunction with the Company’s CEO,Chief Executive Officer, also oversees ESGand makes recommendations to the Board regarding sustainability matters relevant to the Company’s operations, including ESG-related matters.
As of April 22, 2021,12, 2023, the Environmental, Social and Corporate Governance Committee consisted of Mmes. Ehrman and Rogers and Messrs. Baty, Byerley, Howard, Parker and Stewart, each of whom is independent under the rules of the SEC and the NYSE. Ms. Rogers is the chair of the Environmental, Social and Corporate Governance Committee. During 2020,2022, the Environmental, Social and Corporate Governance Committee met four times.
Executive Committee
The Executive Committee has authority to discharge all the responsibilities of the Board in the management of the business and affairs of the Company, except where action of the full Board is required by statute or by our Certificate of Formation or Bylaws, each as amended to date. As of April 22, 2021,12, 2023, the Executive Committee consisted of Ms. Ehrman and Messrs. Foran, Baribault, Baty, Parker and Stewart. Mr. Foran is the chair of the Executive Committee. During 2020,2022, the Executive Committee did not meet.
Nominating Committee
The Nominating Committee has the following responsibilities:
identifies and recommends to the Board individuals qualified to be nominated for election to the Board; and
recommends to the Board the members and chair of each committee of the Board.
| • | identifies and recommends to the Board individuals qualified to be nominated for election to the Board consistent with criteria approved by the Board; and |
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| • | recommends to the Board the members and chair of each committee of the Board. |
Pursuant to the Nominating Committee charter, no director may serve on the Nominating Committee if such director is subject to re-election to the Board at the next annual meeting of shareholders.
As of April 22, 2021,12, 2023, the Nominating Committee consisted of Ms. Ehrman and Messrs. Baty Burkert and Parker,Stewart, each of whom is independent under the rules of the SEC and the NYSE. Mr. BatyStewart is the chair of the Nominating Committee. During 2020,2022, the Nominating Committee met five times.
The Board has also established a Shareholder Advisory Committee for Board Nominations (the “Advisory Committee”) that is charged with receiving and considering possible nominees for election to the Board by shareholders. Pursuant to the Advisory Committee charter, this committee is comprised of eight to 12 persons selected by the Nominating Committee and consists of at least:
two members of the Nominating Committee;
| • | two members of the Nominating Committee; |
two former members of or special advisors to the Board;
| • | two former members of or special advisors to the Board; |
two shareholders who beneficially own Common Stock having a market value of at least $1.0 million (such value to be based on the market value of the Common Stock immediately prior to designation of such shareholders to the Advisory Committee); and
| • | two shareholders who beneficially own Common Stock having a market value of at least $1.0 million (such value to be based on the market value of the Common Stock immediately prior to designation of such shareholders to the Advisory Committee); and |
two shareholders who have beneficially owned Common Stock continuously for at least the five years prior to such shareholder’s designation to the Advisory Committee.
| • | two shareholders who have beneficially owned Common Stock continuously for at least the five years prior to such shareholder’s designation to the Advisory Committee. |
The current members of the Advisory Committee are Ms. Ehrman and Mr. Stewart and Messrs. Baty and Parker and Rick H. Fenlaw, Scott E. King, George M. Yates,Craig T. Burkert, J. Barry Banker, Joe E. Coleman, Walter Fister, Robert Garrett, Kevin M. Grevey, andDavid E. Lancaster, Bobby K. Pickard. Messrs. KingPickard and Fenlaw are co-chairsGeorge M. Yates. Mr. Stewart is the chair of the Advisory Committee.
The Advisory Committee makes recommendations based on its conclusions to the Nominating Committee for its consideration and review.
The Nominating Committee and the Advisory Committee consider individuals recommended by the Company’s shareholders to serve on the Board.Board in accordance with the advance notice provisions of the Bylaws and the applicable rules and regulations of the SEC and the NYSE. In considering candidates submitted by shareholders, the Advisory Committee and the Nominating Committee take into consideration the needs of the Board and the qualifications of the candidate. To have a candidate considered by the Advisory Committee and the Nominating Committee, a shareholder must submit the recommendation in writing and must include the following information:
The name and address of the shareholder, evidence of the person’s ownership of Common Stock or derivatives, including the number of shares owned, a description of all arrangements or understandings regarding the right to vote shares of the Company, any short interest in any security of the Company, any rights to dividends that are separated or separable from the underlying shares, any proportionate interest in shares or derivatives held by a general or limited partnership whereby the shareholder is a general partner or beneficially owns an interest in the general partner, any performance-related fees (other than an asset-based fee) that the shareholder is entitled to based on any change in the value of the shares or derivatives, any other information relating to the shareholder that would be required to be disclosed in connection with solicitations of proxies for the election of directors in a contested election and a statement whether or not the shareholder will deliver a proxy to shareholders; and
| • | The name and address of the shareholder, evidence of the person’s ownership of Common Stock or derivatives, including the number of shares owned, a description of all arrangements or understandings regarding the right to vote shares of the Company, any short interest in any security of the Company, any rights to dividends that are separated or separable from the underlying shares, any proportionate interest in shares or derivatives held by a general or limited partnership whereby the shareholder is a general partner or beneficially owns an interest in the general partner, any performance-related fees (other than an asset-based fee) that the shareholder is entitled to based on any change in the value of the shares or derivatives, any other information relating to the shareholder that would be required to be disclosed in connection with solicitations of proxies for the election of directors in a contested election and a statement whether or not the shareholder will deliver a proxy to shareholders; and |
The name, age and business and residence addresses of the candidate, the candidate’s résumé or a listing of his or her qualifications to be a director of the Company, the person’s consent to be a director if selected by the Nominating Committee, nominated by the Board and elected by the shareholders and any other information that would be required to be disclosed in solicitations of proxies for the election of directors.
| • | The name, age and business and residence addresses of the candidate, the candidate’s résumé or a listing of his or her qualifications to be a director of the Company, the person’s consent to be a director if selected by the Nominating Committee, nominated by the Board and elected by the shareholders and any other information that would be required to be disclosed in solicitations of proxies for the election of directors. |
The shareholder recommendation and information described above, and in more detail in our Bylaws, must be sent to the Corporate Secretary at One Lincoln Centre, 5400 LBJ Freeway, Suite 1500, Dallas, Texas 75240 and must be received by the Corporate Secretary not fewer than 45 nor more than 75 days prior to the one year
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anniversary date of the date the Company’s proxy statement was mailed in connection with the previous year’s annual meeting of shareholders.
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The Nominating Committee believes that a potential director of the Company must demonstrate that such candidate has:
a depth of experience at the policy-making level in business, government or education;
| • | relevant knowledge and a depth and diversity of background and experience at the policy-making level in business, government or education; |
a balance with the business knowledge and experience of the incumbent or nominated directors;
| • | a balance of the business interest and experience of the incumbent or nominated directors; |
availability and willingness to devote adequate time to Board duties;
| • | availability and willingness to devote adequate time to Board duties; |
any unfilled expertise needed on the Board or one of its committees;
| • | any unfilled expertise needed on the Board or one of its committees; |
character, judgment and ability to make independent analytical, probing and other inquiries;
| • | ability to make independent analytical, probing and other inquiries; |
willingness to exercise independent judgment while remaining willing to listen and learn from the other directors and the Company’s staff; and
| • | personal qualities of leadership, character, judgment and a reputation in the community at large of integrity, trust, respect, competence and adherence to the highest ethical standards; |
| • | willingness to exercise independent judgment while remaining willing to listen and learn from the other directors and the Company’s staff; and |
financial independence to ensure such candidate will not be financially dependent on director compensation.
| • | financial independence to ensure such candidate will not be financially dependent on director compensation. |
In the case of an incumbent director, the Nominating Committee will also consider such director’s past performance on the Board.
The Nominating Committee or the Advisory Committee may identify potential nominees by asking, from time to time, current directors and executive officers for their recommendation of persons meeting the criteria described above who might be available to serve on the Board. The Nominating Committee or the Advisory Committee may also engage firms that specialize in identifying director candidates. As described above, the Nominating Committee and Advisory Committee will also consider candidates recommended by shareholders. Ms. Appel, a nominee at the 2023 Annual Meeting, was recommended to serve on our Board by Mr. Stewart.
Once a person has been identified by the Nominating Committee or the Advisory Committee as a potential candidate, the Nominating Committee or the Advisory Committee will make an initial determination regarding the need for additional Board members to fill vacancies or expand the size of the Board. If the Nominating Committee or the Advisory Committee determines that additional consideration is warranted, the Nominating Committee or the Advisory Committee will review such information and conduct interviews as it deems necessary to fully evaluate each director candidate. In addition to the qualifications of a candidate, the Nominating Committee or the Advisory Committee will consider such relevant factors as it deems appropriate, including the current composition of the Board, the evaluations of other prospective nominees and the need for any required expertise on the Board or one of its committees. The Nominating Committee or the Advisory Committee also contemplates multiple dynamics that promote and advance diversity among the members of the Board. Although the Nominating Committee does not have a formal diversity policy, the Nominating Committee considers a number of factors regarding diversity of personal and professional backgrounds, gender, race, age, specialized skills and acumen and breadth of experience in energyoil and natural gas exploration and production, midstream and marketing, executive leadership, accounting, finance or law. The Nominating Committee does not discriminate based upon race, religion, gender, national origin, age, disability, citizenship or any other legally protected status. The Nominating Committee’s evaluation process will not vary based on whether or not a candidate is recommended by a shareholder.
Strategic Planning and Compensation Committee
The Strategic Planning and Compensation Committee (the “Compensation Committee”) has the following responsibilities:
assists the Board and the independent members of the Board (the “Independent Board”) in the discharge of their fiduciary responsibilities relating to the fair and competitive compensation of our executive officers;
provides overall guidance with respect to the establishment, maintenance and administration of our compensation programs, including stock and benefit plans;
oversees and advises the Board and the Independent Board on the adoption of policies that govern our compensation programs;
recommends to the Board the strategic, tactical and performance goals of the Company, including those performance and tactical goals that relate to performance-based compensation, including but not limited to goals for production, reserves, cash flows and shareholder value; and
in conjunction with the Company’s CEO, oversees management succession planning.
| • | assists the Board and the Independent Board in the discharge of their fiduciary responsibilities relating to the fair and competitive compensation of our executive officers; |
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| • | provides overall guidance with respect to the establishment, maintenance and administration of our compensation programs, including stock and benefit plans; |
| • | oversees and advises the Board and the Independent Board on the adoption of policies that govern our compensation programs; |
| • | recommends to the Board the strategic, tactical and performance goals of the Company, including those performance and tactical goals that relate to performance-based compensation, including but not limited to goals for production, reserves, cash flows and shareholder value; |
| • | in conjunction with the Company’s CEO, oversees management succession planning; and |
| • | produces and approves the annual Compensation Committee Report on executive compensation for inclusion in the Company’s Annual Report on Form 10-K and/or annual proxy statement in accordance with applicable rules and regulations of the SEC and the NYSE. |
The Strategic Planning and Compensation Committee has the authority to form and delegate authority and responsibilities to subcommittees of its members, so long as any subcommittee consists of at least two members.members of the Compensation Committee.
As of April 22, 2021,12, 2023, the Strategic Planning and Compensation Committee consisted of Ms. Ehrman and Messrs. Baribault, Baty, Parker and Stewart, each of whom is independent under the rules of the SEC and the NYSE and a “non-employee director” pursuant to Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Mr. Baty is the chair of the Strategic Planning and Compensation Committee. During 2020,2022, the Strategic Planning and Compensation Committee met sevensix times.
Capital Markets and Finance Committee
The Capital Markets and Finance Committee provides oversight of the Company’s financial objectives, financial policies, capital structure and financing requirements. As of April 22, 2021,12, 2023, the members of the Capital Markets and Finance Committee were Ms. Rogers and Messrs. Foran, Burkert,Howard, Parker and Stewart. Mr. Parker is the chair of the Capital Markets and Finance Committee. We anticipate that Ms. Appel will be appointed to the Capital Markets and Finance Committee following the 2023 Annual Meeting.
Marketing and Midstream Committee
The Marketing and Midstream Committee provides oversight of the Company’s marketing and midstream activities, projects, joint ventures and plans. As of April 22, 2021,12, 2023, the members of the Marketing and Midstream Committee were Ms. Ehrman and Messrs. Burkert, Byerley and Howard. Ms. Ehrman and Mr. Howard is the chairserve as co-chairs of the Marketing and Midstream Committee.
Operations and Engineering Committee
The Operations and Engineering Committee provides oversight of the development of our prospects, our drilling, completions and production operations and associated costs. In addition, the Operations and Engineering Committee provides oversight of the amount and classifications of our reserves and the design of our completion techniques and hydraulic fracturing operations and various other reservoir engineering matters. As of April 22, 2021,12, 2023, the members of the Operations and Engineering Committee were Ms. Ehrman and Messrs. Baribault and Foran. Mr. Baribault is the chair of the Operations and Engineering Committee.
Prospect Committee
The Prospect Committee provides oversight of the technical analysis, evaluation and selection of our oil and natural gas prospects. As of April 22, 2021,12, 2023, the members of the Prospect Committee were Ms. Ehrman and Messrs. Baribault, Foran and Parker. Mr. Baribault is the chair of the Prospect Committee.
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Board’s Role in Risk Oversight
The Audit Committee has the responsibility to oversee the Company’s guidelines and policies to govern the process by which risk assessment and risk management are undertaken by management, including with respect to corporate governance, financial, accounting, operational, environmental, health and safety, regulatory and cybersecurity risks. In connection with the Audit Committee’s oversight responsibility, executive management briefs the Audit Committee on a quarterly basis on risks faced by the Company. Under the Audit Committee’s oversight, management maintains a commercial insurance program for the Company’s benefit covering casualty, property, workers’ compensation, well operations and cybersecurity risks, among others. The Strategic Planning and Compensation Committee has the responsibility to oversee that our incentive pay does not encourage unnecessary risk taking and to review and discuss the relationship between risk management policies and practices, corporate strategy and senior executive compensation.
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Environmental, Social and Governance (ESG) Initiatives
Affirmation of Our Commitment
At Matador, we are committed to creating long-term value in a responsible manner. This commitment extends across our operations and includes a dedication to excellence with respect to environmental, social and governance (ESG) matters. Our guiding focus on good stewardship is reflected in our Code of Ethics and in our Corporate Governance Guidelines, which are reviewed annually by the Environmental, Social and Corporate Governance Committee of the Board. See “Corporate Governance” on page 2021 for additional information.
Oversight and Coordination of ESG Efforts
The Board and senior management understand the importance of ESG matters and of supporting the Company’s ongoing efforts in this area. In 2020, theMatador’s senior management and full Board adopted changesreceive regular updates on our ESG efforts and engage with us to the charter of thepursue continuous improvement in this area.
The Environmental, Social and Corporate Governance Committee (formerlyleads the Corporate Governance Committee)Board’s oversight of Matador’s sustainability practices. In conjunction with senior management, the committee has direct accountability to (i) delegate oversight authorityreview and evaluate sustainability practices, risks and strategies and to make recommendations to the full Board regarding sustainability matters.
The Audit Committee also has responsibility through its role overseeing risk assessment and risk management processes, including with respect to ESG matters to the committee,operational, environmental, health and safety and regulatory risks.
Progress in conjunction with the Company’s CEO, and (ii) change the name of the committee to reflect its expanded oversight authority.
Approach toEnhancing ESG Reporting
In continuing to raise the profile of the Company’s ESGongoing ESG-related initiatives externally, we recognize the growing value to investorsstakeholders of consistent and comparable ESG disclosures. AsIn early 2021, we retained Ms. Appel to conduct a result, we planreview of industry ESG reporting practices and to publishserve as a dedicated single-focal point for our various ESG efforts.
In May 2021, Matador published sustainability metrics in alignmentaligned with standards developed by the Sustainability Accounting Standards Board (SASB) framework later this year.
For more, and in July 2021, Matador published an update providing supplemental information regardingto the Company’s initial report on these SASB-aligned ESG initiatives, please seemetrics.
In December 2022, Matador issued its annual Sustainability Report, which was first issued in December 2021. This report highlights Matador’s continued progress and improvements in its operating practices, including the quantitative metrics aligned with the SASB standards noted above, and should provide Matador’s stakeholders and interested parties with a standardized platform for evaluating the Company’s recent performance and future progress. Matador’s annual Sustainability Report, including the SASB-aligned sustainability metrics, is available on the Company’s website at www.matadorresources.com underwww.matadorresources.com/sustainability. Information included in our Sustainability Report or otherwise included on our website is not incorporated into this Proxy Statement.
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Ongoing Shareholder Engagement
In 2022 and early 2023, members of our Board and management team had conversations with a number of investors regarding our business and our investors’ priorities, consistent with Matador’s regular practice. In addition, members of our management team attended seven investor conferences, hosted 14 roadshows and participated in various investor presentation events and calls. Feedback from these conversations was shared with the heading “Investor Relations—ESG.” Board and served as a valuable input to the enhanced ESG disclosures that we made over the last year. We appreciate the relationship building that results from cultivating these open dialogues and remain committed to engaging shareholders regularly.
ESG Performance Highlights
Highlights from the Company’s 20202022 ESG initiatives are shown below.(1)
Environmental
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Continued Reduction of Per-Barrel Emissions(2) |
• More than 60% reduction in methane emissions intensity from 2019 to 2022 • More than 40% reduction in direct greenhouse gas emissions intensity from 2019 to 2022 | |
Increased Use of Non-Fresh Water, Including | • Over 95% of the total water consumed in 2022 was non-fresh water(3) • Over 70% of operated wells completed in 2022 utilized recycled produced water(4) | |
| Increased Transportation by Pipeline | • 99% of operated produced water transported by pipeline in 2022 • 89% of operated produced oil transported by pipeline in 2022 | |
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| 1 | The sustainability metrics included herein have been calculated using the best information available to the Company at the time of the preparation of this proxy statement. The data utilized in calculating such metrics is subject to certain reporting rules, regulatory reviews, definitions, calculation of methodologies, estimates, adjustments and other factors. As a result, these metrics are subject to change from time to time as updated or other information becomes available. The metrics provided reflect both Matador’s gross operated exploration and production operations and San Mateo’s gross operated midstream operations on a consolidated basis, except where otherwise noted. |
| 2 | Emissions and flared volumes are calculated in accordance with Environmental Protection Agency standards and reflect only Matador’s gross operated exploration and production volumes. |
| 3 | Fresh water is defined as <1,000 mg/L total dissolved solids and includes Matador’s gross operated volumes for hydraulic fracturing and completions operations, as well as estimates for Matador’s other operations. |
| 4 | As some portion of the total fluid used for hydraulic fracturing operations. |
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Social
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| • Provided approximately 16,000 hours of employee continuing education, equating to approximately 50 hours per employee in 2022 | |||
| Supporting Military Veterans | • Congressional Medal of Honor Foundation • Michael E. Thornton Foundation | |||
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Lea Counties in 2022 |
Governance
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| Diverse and Independent Board Composition | • Lead independent director • • One minority and two female directors • Female membership since inception of predecessor company in 1988 | |
Engaged Board of Directors with Majority Voting Standard | • No “overboarding” • Shareholder Advisory Committee for Board Nominations | |
Active Stakeholder Engagement | • Shareholder outreach program, including discussion of compensation, governance, social, safety and environmental practices and disclosures | |
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Strategic Planning and Compensation Committee Interlocks and Insider Participation
Ms. Ehrman and Messrs. Baribault, Baty, Burkert, Parker and Stewart served on the Strategic Planning and Compensation Committee during 2020.2022. None of these individuals is or was previously one of our officers or employees. None of our executive officers serve on the board of directors or compensation committee of a company that has an executive officer that serves on our Board or Strategic Planning andthe Compensation Committee. No member of our Board serves as an executive officer of a company in which one of our executive officers serves as a member of the board of directors or
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compensation committee of that company. There were no compensation committee interlocks during 2020.2022. Mr. Baribault’s sister-in-law is an employee of the Company. For more information on this related person transaction, see “Transactions with Related Persons.”
The Board has established a process to receive communications from shareholders and other interested parties by mail. Shareholders and other interested parties may contact any member of the Board, any Board committee or the entire Board. To communicate with the Board, any individual director or any committee, correspondence should be addressed to the Board. All such correspondence should be sent “c/o Corporate Secretary” at One Lincoln Centre, 5400 LBJ Freeway, Suite 1500, Dallas, Texas 75240. Shareholders should mark the envelope containing any such communication as “Shareholder Communication with Directors” and clearly identify the intended recipient or recipients of the communication. The Corporate Secretary will review and forward correspondence to the appropriate person or persons.persons as expeditiously as reasonably practicable. However, any such communication will not be forwarded if it does not fall within the scope of matters generally considered by the Board or otherwise fails to comply with the requirements of any applicable policy adopted by the Board relating to the subject matter of communications.
Any communications to the Company from one of the Company’s officers or directors will not be considered “shareholder communications.” Communications to the Company from one of the Company’s employees or agents will only be considered “shareholder communications” if they are made solely in such employee’s or agent’s capacity as a shareholder. Any shareholder proposal submitted pursuant to Rule 14a-8 promulgated under the Exchange Act will not be viewed as “shareholder communications.”
Executive Officers and Other Senior Officers of the Company
The following table sets forth the names, ages and positions of our executive officers and certain of our other senior officers at April 8, 2021:12, 2023:
Name | Age | Positions Held With Us | ||||
Executive Officers | ||||||
Joseph Wm. Foran | 70 | Chairman of the Board and Chief Executive Officer | ||||
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Billy E. Goodwin | 65 | President—Operations | ||||
Van H. Singleton, II | 45 | President—Land, Acquisitions & Divestitures and Planning | ||||
Craig N. Adams | 56 | Executive Vice President, Co-Chief Operating Officer, Chief of | ||||
G. Gregg Krug | 62 | Executive Vice President—Marketing | ||||
| 46 | Chief Financial Officer, President of Midstream Operations and Executive Vice President | ||||
W. Thomas Elsener | 38 | Executive Vice President—Reservoir Engineering and Senior Asset Manager | ||||
Other Senior Officers | ||||||
Christopher P. Calvert | ||||||
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Bryan A. Erman | 45 | Executive Vice President and | ||||
Michael D. Frenzel | 41 | Executive Vice President and Treasurer | ||||
Edmund L. Frost, III | 48 | Executive Vice President of Geosciences | ||||
Robert T. Macalik | 44 | Executive Vice President and Chief Accounting Officer | ||||
Glenn W. Stetson | 38 | Executive Vice President—Production | ||||
Jonathan J. Filbert | ||||||
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Each of Matthew V. Hairford, who served as President during 2022, and David E. Lancaster, who served as Executive Vice President and Chief Financial Officer during 2022, retired effective March 31, 2022. From March 31, 2022 to February 16, 2023, Mr. Frenzel served as the Company’s principal financial officer.
On February 16, 2023, Mr. Willey was promoted to Chief Financial Officer, President of Midstream Operations and Executive Vice President and assumed the role of principal financial officer as of this same date.
The following biographies describe the business experience of our executive officers and the senior officers listed above. Each officer serves at the discretion of our Board. There are no family relationships among any of our executive officers.
Executive Officers
Mr. Joseph Wm. Foran
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Chairman of the Board and
| Please see the biography of Mr. Foran on page |
Mr.
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President—Operations | Mr. |
Mr.
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President—Land, Acquisitions & Divestitures and
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3032 Matador Resources Company |20212023 Proxy Statement
CORPORATE GOVERNANCE
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Mr. Craig N. Adams | ||
Executive Vice President, Co-Chief Operating Officer, Chief of Staff and Corporate Secretary | ||
| Mr. Adams joined Matador Resources Company in September 2012 as its Vice President and General Counsel. In July 2013, Mr. Adams was promoted to Executive Vice President—Land and Legal and became Executive Vice President—Land, Legal & Administration in June 2015. He assumed the role of Executive Vice President and Chief Operating Officer—Land, Legal & Administration in April |
2021 Proxy Statement| Matador Resources Company 31
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| Executive Vice President— Marketing and Midstream Strategy | Mr. Krug joined Matador Resources Company in April 2012 as its Marketing Manager. In September 2013 he was named Vice President of Marketing for the Company and Vice President of Longwood Gathering & Disposal Systems, LP, and he was promoted to Senior Vice President—Marketing and Midstream in February 2016. He was promoted to Executive Vice President—Marketing and Midstream Strategy in April 2019. He has overall responsibility for Matador’s marketing activities of its oil and natural gas, as well as responsibility for all business aspects for Longwood Gathering & Disposal Systems, LP. Previously, Mr. Krug was with Unit Petroleum Company, an exploration and production company based in Tulsa, Oklahoma, as Marketing Manager, having joined in 2006. He and his staff were responsible for marketing, gas measurement, contract administration and production reporting in their core areas of Oklahoma, the Texas Panhandle, East Texas and Northwestern Louisiana. From 2005 to 2006, Mr. Krug served as Marketing Manager with Matador Resources Company. From 2000 to 2005, Mr. Krug served as Gas Scheduling Supervisor with Samson Resources in Tulsa, Oklahoma where he and his staff were responsible for scheduling natural gas sales as well as procurement of natural gas supply on Samson-owned gathering systems. From 1983 to 2000, Mr. Krug served with The Williams Companies in various capacities including in the Kansas Hugoton Field in Ulysses, Kansas and Tulsa, Oklahoma for Williams Natural Gas Pipeline and on the trading floor in Tulsa, Oklahoma for Williams Energy Services Company. Mr. Krug received a Bachelor of Business Administration degree from Oklahoma City University in 1996. |
32 Matador Resources Company |2021 Proxy Statement
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Other Senior Officers
Mr.
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Chief Financial Officer, President of Midstream Operations and Executive Vice President | In February 2023, Mr. Willey was promoted to Chief Financial Officer, President of Midstream Operations and Executive Vice President. He also serves as President of San Mateo Midstream, LLC, the Company’s midstream joint venture. Mr. Willey joined Matador Resources Company in February 2014 as its Deputy General Counsel. In January 2016, Mr. Willey was appointed as Co-General Counsel, and in August 2016, he was promoted to Vice President and Co-General Counsel. Mr. Willey became Senior Vice President and Co-General Counsel in July 2018, and in March 2022, he was promoted to President of San Mateo and Senior Vice President, President and General Counsel of Midstream. In October 2022, Mr. Willey was promoted to President and General Counsel of Midstream Operations and Executive Vice President. Prior to joining Matador, Mr. Willey was an attorney with Dean Foods Company where he most recently served as Vice President, Chief Counsel – Corporate. Before Dean Foods, Mr. Willey served as a senior associate in the Dallas office of Baker Botts L.L.P. Mr. Willey’s practice focused on corporate matters, including mergers and acquisitions, public and private securities offerings, venture capital transactions and SEC compliance matters as well as board of director and corporate governance matters. Mr. Willey received a Bachelor of Science degree in Accounting in 2002 from Brigham Young University. He received his law degree in 2005 from The University of Texas School of Law, where he graduated with High Honors and was a member of the Order of the Coif in addition to being named a Chancellor and an Associate Editor on the Texas Law Review. Mr. Willey also served a church mission in the Philippines from 1995 to 1997. |
2023 Proxy Statement| Matador Resources Company 33
CORPORATE GOVERNANCE |
Mr. W. Thomas Elsener | ||
Executive Vice President—Reservoir Engineering and Senior Asset Manager | Mr. Elsener joined Matador Resources Company in April 2013 as an Engineer. In June 2017, he was promoted to Vice President—Engineering and Asset Manager, and he was promoted to Senior Vice President—Reservoir Engineering and Senior Asset Manager in October 2019. In March 2022, Mr. Elsener became a member of Matador’s new, diverse and highly experienced financial planning team supporting the CFO and the finance team. Mr. Elsener was named Executive Vice President—Reservoir Engineering and Senior Asset Manager in April 2022. Prior to joining Matador, Mr. Elsener served in various engineering roles at Encana Oil & Gas (USA) in Dallas, Texas from 2007 to 2013, including reservoir, completions, drilling, business development and new ventures. While at Encana, Mr. Elsener was involved with the exploration and development of assets in the Barnett shale, Deep Bossier, Haynesville shale and other new domestic ventures. Mr. Elsener received a Bachelor of Science degree in Petroleum Engineering from Texas A&M University in 2007. He is a member of the Society of Petroleum Engineers. |
Other Senior Officers
Mr. Christopher P. Calvert | ||
Executive Vice President and Co-Chief Operating Officer | Mr. Calvert joined Matador Resources Company in October 2014 as a Senior Completions Engineer. In July 2018, he was named Vice President of Completions for the Company, and he was promoted to Senior Vice President—Operations in October 2019. In March 2022, he became a member of Matador’s new, diverse and highly experienced financial planning team supporting the CFO and the finance team. Mr. Calvert was promoted to Senior Vice President and Co-Chief Operating Officer in April 2022. In February 2023, Mr. Calvert was promoted to Executive Vice President and Co-Chief Operating Officer. Prior to joining Matador, Mr. Calvert worked as a Staff Reservoir Engineer in Chesapeake Energy Corporation’s South Texas—Eagle Ford group focusing on A&D evaluations and production and completions optimization. At Chesapeake, Mr. Calvert also held roles as a Senior Asset Manager responsible for completions and operations in the Niobrara Shale, a Senior Completions Engineer responsible for Bakken/Three Forks development and a Senior Operations Engineer focused on production and facility optimization on the Texas Gulf Coast. Prior to Chesapeake, Mr. Calvert worked as an Operations Engineer for Williams Production |
Mr.
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General Counsel and Head of M&A | Mr. Erman joined Matador Resources Company in January 2016 as its Co-General Counsel. In August 2016, Mr. Erman was promoted to Vice President and Co-General Counsel. He became Senior Vice President and Co-General Counsel in July 2018. In March 2022, Mr. Erman became Senior Vice President and General Counsel and in October 2022, Mr. Erman was promoted to Executive Vice President and General Counsel and Head of M&A. Prior to joining Matador, Mr. Erman was a Partner at Carrington, Coleman, Sloman & Blumenthal, L.L.P. in Dallas, having joined the firm in 2010. From 2003 to 2010, he was an associate in the Dallas and Washington, D.C. offices of Baker Botts L.L.P. Mr. Erman’s practice focused on litigation matters, including oil and natural gas, securities and other commercial litigation, as well as corporate governance matters. Before attending law school, Mr. Erman worked for Oklahoma Governor Frank Keating. Mr. Erman received a Bachelor of Arts degree in Political Science in 1999 from the University of Oklahoma. He received his law degree in 2003 from Southern Methodist University Dedman School of Law, where he graduated cum laude and was a Hatton W. Sumners Scholar, a member of the Order of the Coif and an Articles Editor on the SMU Law Review. |
34 Matador Resources Company |2023 Proxy Statement
| CORPORATE GOVERNANCE | |
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2021 Proxy Statement| Matador Resources Company 33
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Executive Vice President |
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Treasurer | Mr. Frenzel |
Dr. Edmund L. Frost III
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Executive Vice President of
| Dr. Frost joined Matador Resources Company in August 2014 as a Senior Geologist and in July 2015 was promoted to Chief Geologist. In June 2017, he was promoted to Vice President of |
Mr. Robert T. Macalik
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Executive Vice President and Chief Accounting Officer | Mr. Macalik joined Matador Resources Company in July 2015 as Vice President and Chief Accounting Officer. He was promoted to Senior Vice President and Chief Accounting Officer in November 2017. |
34 Matador Resources Company |2021 Proxy Statement
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| gas industry, and managed numerous client relationships. Mr. Macalik received a Bachelor of Arts degree in History, a Bachelor of Business Administration degree and a Master of Professional Accounting degree all from The University of Texas at Austin in 2002. He is a licensed Certified Public Accountant in the State of Texas. |
2023 Proxy Statement| Matador Resources Company 35
CORPORATE GOVERNANCE
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Mr. Glenn W. Stetson | ||
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President—Production | Mr. Stetson joined Matador Resources Company in August 2014 as a Production Engineer, and in July 2015, he was promoted to Asset Manager. Mr. Stetson was promoted to the role of Vice President and Asset Manager in July 2018 |
Mr.
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Senior Vice
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2021 Proxy Statement|36 Matador Resources Company 35|2023 Proxy Statement
PROPOSAL 2 |
PROPOSAL 2| ADVISORY VOTE TO APPROVE NAMED
EXECUTIVE OFFICER COMPENSATION
In accordance with the requirements of Section 14A of the Exchange Act, the Company seeks a non-binding advisory vote from its shareholders to approve the compensation of its Named Executive Officers (as defined below) as described in this Proxy Statement.
As discussed under the “Executive Compensation—Compensation Discussion and Analysis” section of this Proxy Statement (“CD&A”), we made significant changes to our executive compensation program in 2020 in response to the COVID-19 pandemic and the sudden decline in oil prices. As commodity prices improved in 2021, we shifted our executive compensation program to more closely resemble our 2019 executive compensation program prior to the decline in oil prices in 2020 and the COVID-19 pandemic. As such, our executive officers received increases in their base salary, increases in the grant date fair values for long-term equity awards and annual cash bonuses for 2021 and 2022. These changes to our compensation program in 2021 and 2022 corresponded to our performance as the Company’s stock price hit a resultlow of these changes, Mr. Foran’s total compensation was reduced by 79% from 2019 levels. Similarly, the total$1.11 in March 2020 compensation of the other Named Executive Officers decreased an average of 75% from 2019 levels. Please see “Executive Compensation—Compensation Discussion and Analysis—2020 Compensation Program Changes” for further detail.then recovered to close at $36.92 on December 31, 2021 and continued to increase to close at $57.24 on December 30, 2022.
We believe the Company’s future success and the ability to create long-term value for our shareholders depends on our ability to attract, retain and motivate highly qualified individuals in the oil and natural gas industry. Additionally, we believe that our success also depends on the continued contributions of our Named Executive Officers. The Company’s compensation system plays a significant role in its ability to attract, motivate and retain a high qualityhigh-quality workforce. As described in the CD&A, the Company’s compensation program for Named Executive Officers is designed to reward, in both the short term and the long term, performance that contributes to the implementation of our business strategies, maintenance of our culture and values and achievement of our objectives.
This proposal provides shareholders the opportunity to endorse or not endorse the Company’s executive compensation program through approval of the following resolution:
“Resolved, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.”
The above-referenced CD&A and accompanying disclosures appear on pages 40 to 6742-64 of this Proxy Statement.
Because this is an advisory vote, it will not be binding upon the Board. However, the Strategic Planning and Compensation Committee and the Independent Board will take into account the outcome of the vote when considering future executive compensation arrangements.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting is required to approve this resolution on a non-binding basis. If you hold your shares through a broker and you do not instruct the broker how to vote, your broker will not have the authority to vote your shares. Abstentions will have the effect as a vote cast against the proposal. Broker non-votes will be counted as present for purposes of determining the presence of a quorum but will have no effect upon the outcome of the vote.
During our 2018 Annual Meeting, our shareholders approved a non-binding, advisory proposal to hold advisory votes to approve our executive compensation every year. In consideration of the results of this advisory vote, the Board has maintained its policy of providing for annual advisory votes to approve executive compensation. Unless the Board modifies this policy, the next advisory vote to approve executive compensation following this vote will be held at our 20222024 Annual Meeting.
The Board of Directors recommends that you vote FOR approval of this resolution.
362023 Proxy Statement| Matador Resources Company |2021 Proxy Statement37
PROPOSAL 3 |
PROPOSAL 3 | RATIFICATION OF THE APPOINTMENT OF
KPMG LLP
The Audit Committee has appointed KPMG LLP (“KPMG”) as the independent registered public accounting firm of the Company for the year ending December 31, 2021,2023, and the Board has directed that such appointment be submitted to our shareholders for ratification at the Annual Meeting.
The Company has been advised by KPMGAudit Committee concluded that the firm has no relationship with the Company or its subsidiaries other than that arising from the firm’s engagementKPMG’s provision of non-audit services, such as auditors.tax services, does not compromise KPMG’s independence.
If the shareholders do not ratify the appointment of KPMG, the Audit Committee will consider whether to engage a different independent registered public accounting firm but will not be obligated to do so.
The Company has been advised that representatives of KPMG will be present at the Annual Meeting and will be available to respond to appropriate questions and make a statement if they desire to do so.
Fees of Independent Registered Public Accounting Firm for Fiscal Years 20202022 and 20192021
The following table presents fees for professional audit services rendered by KPMG for the audit of the Company’s annual financial statements for the years ended December 31, 20202022 and 2019,2021, and fees for other services rendered by KPMG during those periods:
| 2022 | 2021 | |||||||||||||||
| 2020 | 2019 | |||||||||||||||
Audit fees | $ | 1,263,100 | $ | 1,440,017 | $ | 1,615,000 | $ | 1,487,000 | ||||||||
Audit-related fees | — | — | — | — | ||||||||||||
Tax fees | — | — | $ | 170,000 | — | |||||||||||
All other fees | — | — | — | — | ||||||||||||
Total | $ | 1,263,100 | $ | 1,440,017 | $ | 1,785,000 | $ | 1,487,000 | ||||||||
Services rendered by KPMG in connection with the fees presented above were as follows:
Audit Fees
For fiscal year 2020,2022, audit fees consisted of fees associated with the audit of the Company’s consolidated financial statements, including the audit of the effectiveness of the Company’s internal control over financial reporting, required reviews of our quarterly condensed consolidated financial statements and consultation on significant accounting matters. Audit fees also included fees paid to KPMG by San Mateo for the audit of their 2022 financial statements.
For fiscal year 2021, audit fees consisted of fees associated with the audit of the Company’s consolidated financial statements, including the audit of the effectiveness of the Company’s internal control over financial reporting, required reviews of our quarterly condensed consolidated financial statements and consultation on significant accounting matters. Audit fees also included fees paid to KPMG by San Mateo for the audit of its 20202021 financial statements.
For fiscal year 2019, audit fees consisted of fees associated with the audit of the Company’s consolidated financial statements, including the audit of the effectiveness of the Company’s internal control over financial reporting, required reviews of our quarterly condensed consolidated financial statements, procedures related to registration statements and consultation on significant accounting matters. Audit fees also included fees paid to KPMG by San Mateo and San Mateo II for the audit of their 2019 financial statements.
Audit-Related Fees
We did not incur any audit-related fees in 20202022 or 2019.2021.
2021 Proxy Statement| Matador Resources Company 37
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Tax Fees
Tax fees for fiscal year 2022 related to permitted tax planning services. We did not incur any fees for tax advice, planning andor other services in 2020 or 2019.2021.
38 Matador Resources Company |2023 Proxy Statement
PROPOSAL 3 |
All Other Fees
We did not incur any other fees in 20202022 or 2019.2021.
The Audit Committee pre-approves all audit and permissible non-audit services provided by KPMG. These services may include audit services, audit-related services, tax services and other services. The Audit Committee has authorized the chair of the Audit Committee to pre-approve audit and permissible non-audit services provided by KPMG up to $750,000. Pursuant to this delegation, the decisions of the chair must be presented to the Audit Committee at its next meeting.
We are a standing committee comprised of independent directors as currently defined by SEC regulations and the applicable listing standards of the NYSE. The Board has determined that at least one of the members of the Audit Committee is an “audit committee financial expert” as defined by applicable SEC rules and regulations. We operate under a written charter adopted by the Board. A copy of the charter is available free of charge on the Company’s website at www.matadorresources.com under “Investor Relations—Corporate Governance.”
We annually select the Company’s independent registered public accounting firm. If the shareholders do not ratify the appointment of KPMG LLP at the Annual Meeting, the Audit Committee will consider whether to engage a different independent registered public accounting firm but will not be obligated to do so.
Management is responsible for the Company’s internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board (the “PCAOB”) and issuing a report thereon. As provided in our charter, our responsibilities include the monitoring and oversight of these processes.
Consistent with our charter responsibilities, we have met and held discussions with management and the independent registered public accounting firm. In this context, management and the independent registered public accounting firm represented to us that the Company’s consolidated financial statements for the fiscal year ended December 31, 20202022 were prepared in accordance with U.S. generally accepted accounting principles. We reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm and discussed with the independent registered public accounting firm matters required to be discussed by the applicable requirements of the PCAOB and the SEC.
The Company’s independent registered public accounting firm has also provided to us the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee, and we discussed with the independent registered public accounting firm that firm’s independence.
Based upon our reviews and discussions with management and the independent registered public accounting firm and our review of the representation of management and the report of the independent registered public accounting firm to the Audit Committee, we recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 20202022 filed with the SEC.
Audit Committee,(1)
William M. Byerley, Chair
Reynald A. Baribault
Craig T. Burkert
James M. Howard
Timothy E. Parker
Julia P. Forrester Rogers
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382023 Proxy Statement| Matador Resources Company |2021 Proxy Statement39
PROPOSAL 3 |
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The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting is required for the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm for the year ending December 31, 2021.2023. If the shareholders do not ratify the appointment of KPMG, the Audit Committee will consider whether to engage a different independent registered public accounting firm but will not be obligated to do so. Abstentions will have the effect as a vote cast against the proposal.
The Board of Directors recommends that you vote FOR the ratification of the appointment
of KPMG as the Company’s independent registered public accounting firm for the
year ending December 31, 2021.2023.
2021 Proxy Statement|40 Matador Resources Company 39|2023 Proxy Statement
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Dear Fellow Shareholders,
On behalf of the Board and the Strategic Planning and Compensation Committee, (the “Compensation Committee”) of the Board, thank you for partnering with usyour continued support for Matador and entrusting Matadorus with your hard-earned capital. We are grateful for the opportunities that we have had to visit with many of you, and we look forward to getting to know more of our shareholders in the future.
The Board, management and staff are extremely pleased to celebrate with you another record year for Matador in 2022. We achieved operational and financial records across the board during 2022, including record production, net income, Adjusted EBITDA, net cash provided by operating activities and adjusted free cash flow. Additionally, as many of our officers have stepped into new opportunities with the growth of the Company and assumed additional responsibilities in connection with the retirement of our former president and our former chief financial officer, in 2022, we announced the promotion from within of two new presidents and a number of other executive and senior officers, showcasing the depth and talent of our people.
We were also committed to further return value to shareholders in 2022 and were pleased to increase our quarterly dividend multiple times. We began 2022 by paying a quarterly dividend of $0.05 per share in the first and second quarters of 2022, which was doubled to $0.10 per share in the third and fourth quarters of 2022. In December 2022, we announced that the Board takehad again amended the Company’s dividend policy, increasing the quarterly dividend by 50% to $0.15 per share. We also paid down debt and ended 2022 with a leverage ratio of 0.1x, the lowest since we became a public company in 2012.
In addition to achieving record results and returning value to shareholders, we also made significant progress in ESG-related initiatives and disclosures in 2022. Among other items, we reduced per-barrel emissions, increased our responsibilities to you very seriously—we are always eager to hear from our shareholders,use of non-fresh water, including recycled water, and we pledge to continue to listen to your views and respond, as appropriate.
During the first quarter and through April 2020, theincreased transportation of oil and natural gas industry witnessedwater by pipeline. In addition, we were pleased to issue our annual Sustainability Report that highlighted Matador’s continued progress and improvements in its operating practices, including disclosure of quantitative metrics aligned with SASB.
Our Board has a “pay for performance” philosophy and recognizes the leadership of our executive officers in contributing to the Company’s achievements. The achievements outlined above have resulted in an abrupt and significant decline in oil prices from $63 per Bbl in early January to as low as ($38) per Bbl in late April. This sudden decline in oil prices was attributable to two primary factors: (i) the precipitous decline in global oil demand resulting from the worldwide spread of COVID-19 and (ii) a sudden, unexpectedover 50-fold increase in global oil supply resulting from actions initiated by Saudi Arabia to increase its oil production to world markets following the failure of efforts by OPEC+ to agree on coordinated production cuts at their March 6, 2020 meetings in Vienna, Austria.
In connection with these events, we implemented compensation reductions effective April 1, 2020 for our entire workforce, including our executive officers. Chairman and Chief Executive Officer Joseph Wm. Foran voluntarily agreed to a 25% base salary reduction with the other executive officers and vice presidents agreeing to 20% and 10% reductions, respectively. These pay cuts were not restored until March 1, 2021, at which time ourMatador’s stock price had rebounded from a low of $1.11 in March 2020 to close at $22.04a closing price of $57.24 on March 1, 2021.
DespiteDecember 30, 2022. As a Board, and as shareholders ourselves, we are grateful for the precipitous decline in global oil demand resulting from the worldwide spread of COVID-19, the successfuloutstanding execution of our business strategiesby Matador’s management and staff that led to increases in our oil and natural gas production and proved oil and natural gas reserves in 2020. We achieved these results despite reducing our operated drilling rig count from six at the beginning of the year to three by the end of the second quarter. We also improved the capital efficiency of our drilling and completion operations and achieved several key operational milestones throughout the year. With an increased focus on sustainability in 2020, we reduced greenhouse gas emissions, increased our use of grid power instead of generators, continued the development of our water recycling program, reduced our surface footprint through the use of batch drilling and longer laterals and recorded no employee injuries. In addition, we concluded several important financing transactions in 2020, including ansuch a remarkable increase in the elected commitment under the Credit Agreement, the reaffirmation of the borrowing base and the restructuring of our oil hedging portfolio. Furthermore, San Mateo achieved several important milestones in 2020, including the expansion of its cryogenic natural gas processing plant in Eddy County, New Mexico and associated pipelines and the merger of San Mateo II with and into San Mateo. These achievements and transactions increased our operational flexibility and opportunities while preserving the strength of our balance sheet and our liquidity position.
Furthermore, in the fourth quarter of 2020, we met our goal of achieving free cash flow and began to pay down debt, while continuing to grow production. Additionally, in early 2021, we announced that the Board had adopted a dividend policy pursuant to which the Company intends to pay quarterly cash dividends on its commonCompany’s stock of $0.025 per share. The first quarterly dividend was paid to shareholders on March 31, 2021.
These 2020 operational and financial successes contributed to the Company meeting or exceeding the maximum level of each of the Independent Board-approved performance metrics under the Company’s annual cash incentive plan. Nonetheless, the Company’s executive officers and the Board agreed that the executive officers would forego receiving any 2020 annual cash bonuses. The Board believes this decision demonstrates management’s commitment to continuing to (i) align their interests with shareholders, (ii) generate profitable growth at a measured pace and (iii) strengthen our balance sheet.
Mr. Foran’s total 2020 compensation of $1.7 million reflects a 79% reduction from 2019 levels.price.
We look forward to ongoing dialogue with our shareholders and to demonstrating responsiveness to your feedback, including by continuing to improve our executive compensation program. We are honored to serve on your behalf and hope you will join us at the 20212023 Annual Meeting of Shareholders.
Sincerely,
|  | |
| Timothy E. Parker | R. Gaines Baty | |
| Lead Independent Director | Chair, Strategic Planning and Compensation Committee |
402023 Proxy Statement| Matador Resources Company |2021 Proxy Statement41
EXECUTIVE COMPENSATION |
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis, or CD&A, provides a general description of our compensation program and specific information about its various components for the following “Named Executive Officers” for 2020:2022:
Joseph Wm. Foran, Chairman of the Board and Chief Executive Officer;
| • | Joseph Wm. Foran, Chairman of the Board and Chief Executive Officer; |
Matthew V. Hairford, President;
| • | Billy E. Goodwin, President—Operations; |
| • | Van H. Singleton, II, President—Land, Acquisitions & Divestitures and Planning; |
| • | Craig N. Adams, Executive Vice President, Co-Chief Operating Officer, Chief of Staff and Corporate Secretary; |
| • | Michael D. Frenzel, Executive Vice President, Treasurer and Former Principal Financial Officer; and |
| • | David E. Lancaster, Former Executive Vice President and Chief Financial Officer; |
Mr. Lancaster retired effective March 31, 2022 and Mr. Frenzel served as the Company’s principal financial officer from March 31, 2022 to February 16, 2023 and was also named Executive Vice President and Treasurer in April 2022. On February 16, 2023, Brian J. Willey was promoted to Chief Financial Officer;
Craig N. Adams,Officer, President of Midstream Operations and Executive Vice President and Chief Operating Officer—Land, Legal & Administration; and
Billy E. Goodwin, Executive Vice President and Chief Operating Officer—Drilling, Completions & Production.
Response to COVID-19 and Oil Price Declineassumed the role of principal financial officer.
In 2020, we faced unprecedented challenges with regards to the global pandemic, dramatically decreased oil demand, the actions of OPEC+ with regards to oil supply and a suddenly declining oil price environment. Recognizing the potential impacts of these challenges on our Company and the desire to align their interests with shareholders, our Named Executive Officers were among the first executives in the industry to voluntarily agree to compensation reductions effective April 1, 2020. In addition, to further align their interests with shareholders, our Named Executive Officers and the Board agreed that the Named Executive Officers would forego any cash bonuses for the year ended December 31, 2020 despite the Company meeting or exceeding the maximum level of each of the Independent Board-approved performance metrics under our annual cash incentive plan.2022 Highlights
Despite the many challengesprecipitous decline in global oil demand resulting from the worldwide spread of COVID-19 in 2020, our Named Executive Officerswhich led the Company in achieving the following records in 2020: (i) record highto a very challenging oil and natural gas price environment, global oil demand and average daily oil equivalent production, (ii) record low unit operating costs for lease operating expenses and general and administrative expenses, (iii) record high oil, natural gas prices improved significantly during 2021 and total proved reserves2022. These factors, along with the successful execution of our business strategies, led to increases in our oil and natural gas production and proved developedoil and natural gas reserves in 2022, as well as to increases in our oil and natural gas revenues and cash flows. We also improved the capital efficiency of December 31, 2020our drilling and (iv) record high midstream revenues, including record high third-party midstream services revenues, while maintainingcompletion operations and achieved several key operational milestones throughout the Company’s commitment to safety and the environment.year. In addition, our Named Executive Officers led efforts to strengthen our balance sheet bywe achieved numerous key capital resources objectives during the year, including generating free cash flow, paying down borrowings, increasing our electedquarterly cash dividend and earning performance incentives from Five Point. Further, we concluded several important financing transactions in 2022, including increasing the borrowing commitment and reaffirming our borrowing base under the Credit Agreement and restructuring certain derivative financial instruments to provide assurance that we would remain in compliance with the leverage covenant under our Credit Agreement even if prices continued to decline furtherand extending the maturity of and increasing the lender commitments under the San Mateo Credit Facility. San Mateo also achieved important milestones in 2020.2022, including the addition of produced water disposal capacity and being awarded several new customer contracts. These achievements and transactions increased our operational flexibility and opportunities while preserving the strength of our balance sheet and our liquidity position.
2020 Highlights
Increased Production, Reserves42 Matador Resources Company |2023 Proxy Statement
EXECUTIVE COMPENSATION |
Record Operational and Midstream RevenuesFinancial Results
The year ended December 31, 20202022 was marked by strongrecord operational and financial results across the Company.Company, including record total production, net income, Adjusted EBITDA, net cash provided by operating activities and adjusted Free Cash Flow. San Mateo also had a record year in 2022, including increased throughput volumes for natural gas gathering and processing, oil gathering and transportation and water handling, as well as record net income and record Adjusted EBITDA. The charts below show the five-year growth experienced by both our exploration and production business and our midstream business. As shown below, our third-party midstream services revenues have experienced significant growth since the formation of San Mateo in 2017.
2021
For the year ended December 31, 2022, we achieved record oil, natural gas and average daily oil equivalent production. In 2022, we produced 21.9 million Bbl of oil, an increase of 23%, as compared to 17.8 million Bbl of oil produced in 2021. We also produced 99.3 Bcf of natural gas, an increase of 22% from 81.7 Bcf of natural gas produced in 2021. Our average daily oil equivalent production for the year ended December 31, 2022 was 105,465 BOE per day, including 60,119 Bbl of oil per day and 272.1 MMcf of natural gas per day, an increase of 22%, as compared to 86,176 BOE per day, including 48,876 Bbl of oil per day and 223.8 MMcf of natural gas per day, for the year ended December 31, 2021. The increase in oil and natural gas production was primarily attributable to our ongoing delineation and development drilling activities in the Delaware Basin throughout 2022, which offset declining production in the Eagle Ford shale. Oil production comprised 57% of our total production (using a conversion ratio of one Bbl of oil per six thousand cubic feet of natural gas) for each of the years ended December 31, 2022 and 2021.
During 2022, we achieved all five significant and important operational milestones in the Delaware Basin that we had set at the beginning of the year. These five operational milestones were each achieved when we turned to sales:
| • | 11 Voni wells, all of which were 2.3-mile laterals, in the western portion of the Stateline asset area in a staggered fashion in early 2022—these 11 Voni wells have produced in aggregate approximately 3.6 million BOE in 11 months of production; |
| • | the third group of nine Rodney Robinson wells in the western portion of our Antelope Ridge asset area in March 2022—these nine Rodney Robinson wells have produced in aggregate approximately 3.1 million BOE in 10 months of production; |
| • | 11 Rustler Breaks wells in April 2022—these 11 wells have produced in aggregate approximately 2.6 million BOE in almost nine months of production; |
| • | 16 Antelope Ridge wells in the second half of 2022—these 16 wells have produced in aggregate approximately 1.6 million BOE in 2022; and |
| • | 12 Ranger wells in the fourth quarter of 2022. |
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Our production growth notedIn addition to achieving these five key operational milestones, further operational achievements in the chart above was largely attributable to the increase of our average daily oil equivalent production from the Delaware Basin by approximately 21% to 67,522 BOE per day (90% of total oil equivalent production). This increase included 41,678 Bbl of oil per day (96% of total oil production) and 155.1 MMcf of natural gas per day (82% of total natural gas production)
in 2020, as compared to 55,599 BOE per day (84% of total oil equivalent production), including 35,184 Bbl of oil per day (92% of total oil production) and 122.5 MMcf of natural gas per day (73% of total natural gas production), in 2019.
Furthermore, in 2020 we continued our transition to drilling more wells with longer horizontal laterals. By combining longer laterals with increased pad development, we significantly reduced development costs per foot between 2018 and 2020. In 2020, 74% of our operated horizontal wells had lateral lengths of two miles, as compared to only one such well in 2018. Drilling and completion costs for our operated horizontal wells turned to sales averaged $850 per completed lateral foot for 2020, a decrease of approximately 27% from an average of $1,165 per completed lateral foot for 2019 and a decrease of approximately 44% from an average of $1,528 per completed lateral foot achieved in full year 2018.2022 included:
| • | continued drilling of longer laterals, whereby 90% of the operated horizontal wells we turned to sales in 2022 had lateral lengths of two miles or greater, as compared to only 8% as recently as 2019; and |
| • | capital expenditures for drilling, completing and equipping wells (“D/C/E capital expenditures”) for 2022 of $772.5 million, which was at the low end of our revised estimated range for 2022 D/C/E capital expenditures of $765 to $835 million as provided on July 26, 2022 and affirmed on October 25, 2022, which included the addition of a seventh operated drilling rig in September 2022. |
Capital Resources and Financing Highlights
In addition to record financial results, we returned value to shareholders through the generation of free cash flow, repayment of debt and multiple increases to our quarterly dividend. We also concluded several important financing transactions in 2020 that increased our operational flexibility and opportunities, while preservingpreserved the strength of our balance sheet and improvingimproved our liquidity position. These
Highlights of these value-generating items include:
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| • | The generation of free cash flow in all four quarters of 2022 by both Matador and San Mateo. |
| • | The repayment of all outstanding borrowings under our Credit Agreement, resulting in no outstanding borrowings under that facility at December 31, 2022. |
| • | The repurchase of an aggregate principal amount of $350.8 million of our outstanding 5.875% senior notes due 2026. |
| • | The amendments of our dividend policy in the second and fourth quarters of 2022, pursuant to which we increased the quarterly cash dividend from $0.05 per share of Common Stock to $0.15 per share of Common Stock. |
| • | The receipt of $28.3 million in performance incentives directly from Five Point in 2022. |
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transactions included:
the amendment of the Credit Agreement in February 2020 to reaffirm the borrowing base at $900.0 million, increase our elected borrowing commitment from $500.0 million to $700.0 million and add two new banks to our lending group;
the reaffirmation of the borrowing base under the Credit Agreement in October 2020 at $900.0 million; and
the restructuring of a portion of our then-existing 2020 NYMEX West Texas Intermediate (“WTI”) oil derivative financial instruments in April 2020 to provide additional revenue assurance had oil prices declined further and help us remain in compliance with our Credit Agreement leverage covenant in 2020.
Midstream Highlights
Effective October 1, 2020, together with our joint venture partner, a subsidiary of Five Point Energy LLC (“Five Point”), we completed the successful merger of San Mateo II with and into San Mateo. San Mateo is owned 51% by us and 49% by Five Point.
San Mateo achieved strong operating results in 2020, highlighted by (i) increased midstream services revenues, (ii) increased produced water handling volumes and (iii) increased oil gathering and transportation volumes, all as compared to 2019. San Mateo’s natural gas gathering and processing volumes declined slightly in 2020 as compared to 2019 due to reduced volumes from a significant third-party customer, but, on a quarterly sequential basis, San Mateo’s natural gas gathering and processing volumes, water handling volumes and oil gathering and transportation volumes all increased significantly in the fourth quarter of 2020, as compared to the third quarter, as we realized the first full quarter of production from the Boros wells in the Stateline asset area and the Leatherneck wells in the Stebbins area and surrounding leaseholds in the southern portion of the Arrowhead asset area (the “Greater Stebbins Area”).
During the third quarter of 2020, San Mateo completed the construction and successful start-up of the expansion of the Black River Processing Plant, which added an incremental designed inlet capacity of 200 MMcf of natural gas per day to the previously designed inlet capacity of 260 MMcf per day for a total designed inlet capacity of 460 MMcf per day. The expanded Black River Processing Plant supports our exploration and development activities in the Delaware Basin and, at December 31, 2020, was gathering and processing natural gas from the Stateline asset area and from the Greater Stebbins Area. The Black River Processing Plant also processes natural gas from our Rustler Breaks asset area and provides natural gas processing services for other San Mateo customers in the area.
In September 2020, San Mateo also completed and placed in service approximately 43 miles of large diameter natural gas gathering pipelines between the Black River Processing Plant and the Stateline asset area (approximately 24 miles) and the Greater Stebbins Area (approximately 19 miles). In addition, San Mateo completed and placed in service approximately 19 miles of various diameter crude oil pipelines from certain points of origin in the Greater Stebbins Area to the existing San Mateo interconnect with a subsidiary of Plains All American Pipeline, L.P. (“Plains”) in Eddy County, New Mexico. At December 31, 2020, San Mateo was gathering or transporting our oil and natural gas production via pipeline in both the Stateline asset area and the Greater Stebbins Area, as well as in the Wolf and Rustler Breaks asset areas. San Mateo was handling our produced water via pipeline in each of these areas as well.
At December 31, 2020, San Mateo’s midstream system included:
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ESG Highlights
During 2022, we also continued to improve our ESG performance and enhance our ESG disclosures. Among other items, our ESG achievements included the following:
| • | The continued decrease in per-barrel emissions, including reduction in direct greenhouse gas emissions intensity from 2019 levels, increased use of non-fresh water, including recycled water, and increased transportation of oil |
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| • | The publishing of our annual Sustainability Report in December 2022, which provides Matador’s stakeholders and interested parties with a standardized platform for evaluating the Company’s recent performance and future progress. |
Compensation Program Objectives
Our Board has a “pay for performance” philosophy and recognizes the leadership of our executive officers in contributing to the Company’s achievements. Our future success and the ability to create long-term value for our shareholders depend
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on our ability to attract, retain and motivate highly qualified individuals in the oil and natural gas industry. In furtherance of these goals, our executive compensation program is designed to meet the following key objectives:
to be fair to both the executive and the Company and be competitive with comparable positions at companies in our peer group;
| • | to be fair to both the executive and the Company and be competitive with comparable positions at companies in our peer group; |
to attract and retain talented and experienced executives in light of the intense competition for talent in our industry and areas of operation, including from peers and larger industry competitors;
| • | to attract and retain talented and experienced executives in light of the intense competition for talent in our industry and areas of operation, including from peers and larger industry competitors; |
to align the interests of our executives with the interests of our shareholders and with the performance of our Company for long-term value creation;
| • | to align the interests of our executives with the interests of our shareholders and with the performance of our Company for long-term value creation; |
to provide financial incentives to our executives to achieve our key corporate and individual objectives with an appropriate mix of fixed and variable pay;
| • | to provide financial incentives to our executives to achieve our key corporate and individual objectives with an appropriate mix of fixed and variable pay; |
to foster a shared commitment among executives by coordinating their corporate and individual goals; and
| • | to foster a shared commitment among executives by coordinating their corporate and individual goals; and |
| • | to provide compensation that takes into consideration the education, professional experience, knowledge, commitment and dedication that is specific to each job and the unique qualities the executive possesses. |
to provide compensation that takes into consideration the education, professional experience, knowledge, commitment and dedication that is specific to each job and the unique qualities the executive possesses.
2020 2022 Say-on-Pay Results
At our 20202022 Annual Meeting, support for our executive compensation program remained strong at over 95%98%, indicatingsuggesting that our shareholders remain supportive of the changes we have implemented to our executive compensation program during 2021. The Compensation Committee took this support into account as one of many factors it considered in connection with the preceding years, includingdischarge of its responsibilities in exercising its judgment in establishing and overseeing our executive compensation arrangements throughout the 2020 compensation program changes described below.year.
2020
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Compensation Program ChangesBest Practices
What We Do: | What We Don’t Do: | |||||
✓ | We pay for performance—approximately 85% of our CEO’s target total compensation for 2022 was variable and at risk, with approximately 60.1% performance-based | × | We do not permit hedging of Company stock | |||
✓ | We maintain robust stock ownership guidelines for officers | × | We do not gross-up excise taxes for severance or change in control payments | |||
✓ | We engage an independent compensation consultant | × | We do not guarantee bonuses | |||
✓ | We use competitive benchmarking in setting compensation | × | We do not reprice stock options without shareholder approval | |||
✓ | We conduct annual risk assessments of compensation practices | × | We have no defined benefit or supplemental executive retirement plans | |||
✓ | We conduct regular shareholder engagement to gather feedback on compensation practices | × | We do not allow pledging of Company stock, except in limited circumstances | |||
✓ | We hold an annual say-on-pay vote | × | We do not pay dividends on phantom units, restricted stock units (“RSUs”) or performance stock units (“PSUs”) | |||
Impact of COVID-19 and Related Items on Our Compensation Programs
2020 and 2021
The year 2020 was a challenging year. During the first quarter and through April 2020, the oil and natural gas industry witnessed an abrupt and significant decline in oil prices from $63 per Bbl in early January to as low as ($38) per Bbl in late April. This sudden decline in oil prices was attributable to two primary factors: (i) the precipitous decline in global oil demandApril resulting from the worldwide spread of COVID-19 and (ii) a sudden, unexpected increase in global oil supply resulting from actions initiated by Saudi Arabia to increase its oil production to world markets following the failure of efforts by OPEC+ to agree on coordinated production cuts at their March 6, 2020 meetings in Vienna, Austria.
supply. In connection with thesesuch events, we implemented certain changes to our compensation program, including reductions effective April 1, 2020in the base salary for our entire workforce, including our executive officers. Chairmanofficers, to strengthen our balance sheet and Chief Executive Officer Joseph Wm. Foran voluntarily agreed tofurther align the interests of our executive officers with our shareholders. Our executive officers’ 2020 equity grants also had a 25% base salary reduction withsignificantly lower grant date fair value than in 2019. In addition, although each of the other Named Executive Officers, otherIndependent Board-approved metrics under our annual cash incentive plan (the “Cash Incentive Plan”) were met or exceeded, the Company’s executive officers and vice presidents agreeingthe Independent Board agreed that the executive officers would forego receiving any 2020 annual cash bonuses.
During the latter half of 2020 and through 2021, the oil and natural gas industry experienced improvement in commodity prices, as compared to 20%, 20% and 10% reductions, respectively. These pay cuts were not restored until March 1, 2021, at which timemid-2020. In connection with this improvement, the price of our stock price had reboundedCommon Stock increased from a low of $1.11 in March 2020 to close at $22.04 on March 1, 2021.
In March 2020, As a result, after consulting with the Compensation Committee’s independent compensation consultant, Meridian and management and considering shareholder feedback,Compensation Partners, LLC (“Meridian”), the Independent Board granted executive officer equity-based awards consistingreinstated many of 50% service-based cash-settled restricted stock unitsthe compensation components that were eliminated or reduced during 2020 and 50% share-settled performance stock units. This award structure reflectsimplemented a compensation program during 2021 that was similar to the Company’s continued commitmentcompensation program in 2019, prior to its transitionthe decline in oil prices in 2020 and the COVID-19 pandemic. For example, the Board determined to additional performance-based compensation that began in 2019. Importantly, in determiningreinstate our Named Executive Officers’ salaries to the targeted value of these awards, the Independent Board used a stock price of approximately $12.50, which approximated the Company’s stock price in late Februarypre-April 2020 when the Compensation Committee began its consideration of 2020 equity-based awards. The Independent Board elected to use this higher stock price regardless of the fact that the Company’s stock price had declined to $2.41 on the March 10, 2020 grant date. The use of this considerably higher stock price in sizing the 2020 long-term incentive awards resulted in a significantly lower number of units granted to each officer, preserving shares under the Company’s long-term incentive plan, preventing additional shareholder dilutionlevels and further aligning the interests of our executive officers with shareholders. The grant date fair value of Mr. Foran’s 2020 long-term incentive award of $651,373 represents an 85% decrease from his 2019 long-term incentive award.
Consistent with the compensation reductions noted above, in setting 2020 annual cash incentive opportunities under our annual cash incentive plan for our Named Executive Officers also received increases in their base salaries effective May 1, 2021. In addition, the Compensation Committee and Independent Board also reduced these amounts asawarded long-term incentive awards to our Named Executive Officers with increased grant date fair values compared to the awards received by the Named Executive Officers in 2020 but at targeted values commensurate with the long-term incentive awards granted in 2019. Mr. Foran’s target annual incentive opportunity as a percentageUnlike 2020, our Named Executive Officers also received bonuses pursuant to our Cash Incentive Plan in connection with the performance of his earned 2020 base salary was reduced from 110.0% to 73.3%, and his maximum annual incentive opportunity was reduced from 220.0% to 110.0%.the Company in 2021.
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The 2020 operational2022
During 2022, the oil and financial successes noted above contributed to the Company meeting or exceeding the maximum level of each of the Independent Board-approved performance metrics under our annual cash incentive plan. Nonetheless, in an effortnatural gas industry continued to strengthen, with prices for oil and natural gas averaging $94.38 per Bbl and $6.37 per MMBtu, respectively, over the Company’s balance sheet and further align the interests ofyear. Matador’s stock price continued to improve as well, closing at $57.24 per share at December 30, 2022. As such, our executive officers with our shareholders, the Company’s Named Executive Officers, other executive officers and the Board agreed that all executive officers would forego receiving any 2020 annual cash bonuses.
The following table summarizes the modifications made to the key components of our executive compensation program in 2020:
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As a result of the base salary reduction, the lower long-term incentive award value and the absence of an annual cash bonus payment,2022 did not materially differ from our compensation program in 2021. Mr. Foran’s total 2020 compensation of $1.7 million, as calculated in the Summary Compensation Table, reflects a 79% reduction from 2019 levels. Our other Named Executive Officers experienced similar decreases in their 2020 compensationfor 2022 decreased approximately 1% as compared to their 2019 compensation.his total compensation for 2021. Mr. Foran’s average annual total compensation for the three years ended December 31, 2022 was approximately $6.6 million.
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In addition to the specific changes noted above, we also maintained other changes made to our executive compensation program in recent years as a result of our ongoing shareholder outreach effort, as noted below.
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Compensation Program Best Practices
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Elements of 20202022 Compensation Program
Our executive compensation program places a considerable amount of an executive’s compensation at risk in the form of incentive or equity-based compensation, which can be variable from year to year. We also seek to provide an appropriate balance between annual incentives and long-term incentives to ensure that each executive is motivated to consider longer-term Company performance in preference to short-term results.
For 2020,2022, our management compensation program was comprised of the following primary elements:
2022 Element | Key Features | Why We Include This Element | ||
Base Salary | • Fixed level of cash compensation | • Compensates each executive for his assigned responsibilities, experience, leadership and expected future contributions | ||
Annual Cash Incentive Payments | • Variable, annual, performance-based cash compensation | • Focuses and motivates management to achieve key corporate and individual objectives
• Rewards achievements over the prior year | ||
| • Approximately 50% of targeted total long-term equity award value
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• | • Directly aligns executive and shareholder interests by tying the cash received on settlement to the Company’s stock price
• Retains executives over vesting period
• Cash settlement avoids dilution of Common Stock | ||
Performance Stock Units(1) | • Approximately 50% of targeted total long-term equity award value
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• If absolute total shareholder return is negative, payout is capped at target (100%) | • Focuses executives on the Company’s long-term performance as award is tied to the Company’s total shareholder return relative to the total shareholder return of its peers over a three-year performance period
• Settlement in shares of the Company’s stock increases alignment between executives and shareholders
• Retains executives over vesting period | ||
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EXECUTIVE COMPENSATION |
Severance and Change of Control Benefits | • Specified severance pay and benefits are provided under each Named Executive Officer’s employment agreement in connection with termination events, including after a change in control | • Provides an incentive for executives to remain with the Company despite the uncertainties of a potential or actual change in control
• Provides a measure of financial security in the event an executive’s employment is terminated without cause | ||
Other Benefits | • Broad-based 401(k) retirement, employee stock purchase plan and health and welfare benefits offered to all eligible employees | • Provides market competitive benefits
• Protects employees against catastrophic loss and encourages a healthy lifestyle | ||
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| (1) | ||
Mr. Frenzel was not serving as an executive officer in February 2022 when annual equity grants were approved. Mr. Frenzel’s long-term incentive compensation for 2022 included approximately 50% share-settled PSUs and approximately 50% service based restricted shares of Common Stock that vest in equal annual tranches over three years from grant.
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Consistent with our compensation program objectives, we provide our executive officers with a significant portion of their total compensation in the form of variable, rather than fixed, compensation. Importantly, a significant portion of total compensation is also performance-based. The percentages shown below reflect each executive’s target compensation opportunity determined by the Compensation Committee and the Independent Board and do not reflect actual payments made to the executives for 2020. As noted previously, executive officer base salaries were reduced effective April 1, 2020, and no 2020 annual cash bonuses were paid to any executive officers.2022.
| (1) | Messrs. Frenzel and Lancaster omitted. |
Role of the Independent Board, Compensation Committee and Management
The Compensation Committee annually evaluates each of the Company’s executive officers, including Mr. Foran, and recommends to the Independent Board the proposed compensation structure for each of the executives, including salary, equity and non-equity incentive compensation. Based on such recommendations, the Independent Board sets Mr. Foran’s compensation each year. Mr. Foran consults with and provides recommendations to the Compensation Committee and Independent Board regarding the compensation structure for each of the other Named Executive Officers. Based on the recommendations of the Compensation Committee and Mr. Foran, the Independent Board sets the other Named Executive Officers’ compensation each year. The members of the Independent Board are required to be independent pursuant to the listing standards of the NYSE and the rules and regulations promulgated by the SEC.
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As part of their annual evaluations, the Compensation Committee:
