UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant ☐
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Preliminary Proxy Statement
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
Civitas Resources, Inc.
(Name of Registrant As Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
![[MISSING IMAGE: lg_civitas-4c.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/lg_civitas-4c.jpg)
![[MISSING IMAGE: lg_civitas-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/lg_civitas-4c.jpg)
April , 202323, 2024
Dear Stockholder:
You are cordially invited to join us for the 20232024 Annual Meeting of Stockholders (the “Annual Meeting”) of Civitas Resources, Inc. (the “Company”). The Annual Meeting will be held on Thursday,Tuesday, June 1, 2023,4, 2024, at 12:00 noon (MDT). The Annual Meeting will be a virtual meeting of stockholders, which will be conducted via live audio webcast. You will be able to attend the Annual Meeting online, vote, and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CIVI2023.CIVI2024.
We are excited to utilize the virtual stockholder meeting technology to provide expanded access as well as cost savings to our stockholders and the Company.
The materials following this letter include the formal Notice of Annual Meeting of Stockholders and the proxy statement. The proxy statement describes the business to be conducted at the Annual Meeting, including (i) the election of nine directors; (ii) the ratification of the appointment of Deloitte & Touche LLP as our independent auditors for the 20232024 fiscal year; (iii) the approval of the Civitas Resources, Inc. 2024 Long Term Incentive Plan; (iv) the approval, on a non-binding advisory basis, of the compensation of our named executive officers; (iv) the approval of amendments to our certificate of incorporation to create a right of stockholders to call a special meeting;and (v) the approval of amendments to our certificate of incorporation to create a right of stockholders to take action by written consent; (vi) the approval ofdetermination, on an amendment to our certificate of incorporation to limit the liability of certain officersadvisory basis, of the Company; (vii)frequency with which the approval of an amendment to our certificate of incorporation to permit stockholders to fill certain vacancies on our board of directors; (viii) the approval of an amendment to our certificate of incorporation to add a federal forum selection provision; and (ix) the approval of the amendment and restatement of our certificate of incorporation to clarify and modernize our certificate of incorporation.Company will hold future “say-on-pay” votes.
Whether you own a few or many shares of our stock, it is important that your shares be represented. Regardless of whether you participate in the Annual Meeting online, please take a moment now to vote your proxy by completing and signing the enclosed proxy card and promptly returning it in the envelope provided, or by granting a proxy and giving voting instructions by telephone or the Internet. Instructions on how to vote your shares are located on your proxy card or on the voting instruction card provided by your broker.
The officers and directors of the Company appreciate and encourage stockholder participation. We look forward to your participation at the Annual Meeting.
Sincerely,
![[MISSING IMAGE: sg_chrisdoyle-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/sg_chrisdoyle-bw.jpg)
![[MISSING IMAGE: sg_chrisdoyle-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/sg_chrisdoyle-bw.jpg)
President and Chief Executive Officer
| | CIVITAS RESOURCES, INC. 555 17th Street Suite 3700 Denver, Colorado 80202 | | | | |
Suite 3700
Denver, Colorado 80202
To the Stockholders of Civitas Resources, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Civitas Resources, Inc. (the “Company”) will be held on Thursday,Tuesday, June 1, 2023,4, 2024, at 12:00 noon (MDT), as a virtual meeting (the “Annual Meeting”). You will be able to vote your shares and submit questions during the Annual Meeting via a live audio webcast at www.virtualshareholdermeeting.com/CIVI2023CIVI2024. The Annual Meeting is being held for the following purposes:
| | ![[MISSING IMAGE: ic_date-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_date-bw.jpg) | | | Date: Tuesday, June 4, 2024 | | | ![[MISSING IMAGE: ic_time-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_time-bw.jpg) | | | Time: 12:00 noon (MDT) | | | ![[MISSING IMAGE: ic_location-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_location-bw.jpg) | | | Location: via a live audio webcast at www.virtualshareholdermeeting.com/ CIVI2024 | | | ![[MISSING IMAGE: ic_recorddate-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_recorddate-bw.jpg) | | | Record Date: April 8, 2024 | |
1)
To elect nine directors named in this proxy statement to our board of directors;
2)
To ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accountant for 2023;2024;
3)
To approve the Civitas Resources, Inc. 2024 Long Term Incentive Plan;
4)
To approve, on an advisory basis, the compensation of our named executive officers;
5)
To approve amendments to our certificate of incorporation to create a right of stockholders to take action by written consent;determine, on an advisory basis, the frequency with which the Company will hold future “say-on-pay” votes; and
6)
To transact such other business as may properly come before the Annual Meeting.
These proposals are described in the accompanying proxy materials. You will be able to vote at the Annual Meeting only if you were a stockholder of record at the close of business on April 14, 2023.8, 2024.
By Order of the Board of Directors,
![[MISSING IMAGE: sg_travislcounts-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/sg_travislcounts-bw.jpg)
![[MISSING IMAGE: sg_adrianmilton-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/sg_adrianmilton-bw.jpg)
Corporate Secretary
Denver, Colorado
April, 202323, 2024
April
YOUR VOTE IS IMPORTANT
Please sign, date, and promptly return the enclosed proxy card in the envelope provided, or grant a proxy and give voting instructions by telephone or the Internet, so that you may be represented at the Annual Meeting. Instructions are on your proxy card or on the voting instruction card provided by your broker.
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CIVITAS RESOURCES, INC.
555
Suite 3700
Denver, Colorado
Proxy Statement 2024 Annual Meeting of Stockholders
2023 ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors (the “Board”) of Civitas Resources, Inc. (“we,” “us,” “our,” “Civitas,” or the “Company”) requests your proxy for the Annual Meeting of Stockholders (the “Annual Meeting”), which will be held on Thursday,Tuesday, June 1, 2023,4, 2024, at 12:00 noon (MDT), as a virtual meeting. Distribution of these proxy solicitation materials is scheduled to begin on or about April 28, 2023.23, 2024. By granting the proxy, you authorize the persons named in the proxy to represent you and vote your shares at the Annual Meeting. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time-to-time and to vote your shares at any adjournments or postponements of the Annual Meeting. If any other business properly comes before the stockholders for a vote at the Annual Meeting, your shares will be voted in accordance with the discretion of the holders of the proxy.
General Information
This year’s Annual Meeting will be held entirely online, which will be conducted through an audio webcast. You must be a Civitas stockholder as of the close of business on April 14, 20238, 2024 in order to participate in the Annual Meeting. Stockholders will be able to attend, vote their shares, and submit questions during the Annual Meeting via a live audio webcast available by visiting the following website, www.virtualshareholdermeeting.com/CIVI2023CIVI2024. To join the Annual Meeting, you will need the 16-digit Control Number included on your proxy card or on the instructions that accompanied your proxy materials. Shares held in your name as the stockholder of record may be voted electronically during the Annual Meeting. Shares for which you are the beneficial owner but not the stockholder of record may also be voted electronically during the Annual Meeting.
Our stockholder question and answer session will include questions submitted live during the Annual Meeting. Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/CIVI2023CIVI2024.
The Annual Meeting will begin promptly at 12:00 noon (MDT). Online check-in will begin at 11:50 a.m. (MDT), and you should allow ample time for the online check-in procedures.
If you are a stockholder of record, you may revoke your proxy at any time before it is voted at the Annual Meeting. To do this, you must: (i) grant a new proxy bearing a later date (which automatically revokes your earlier proxy), (ii) provide written notice of the revocation to our Company’s Secretary at our principal office, which such written notice must be received prior to the Annual Meeting, (iii) submit your vote electronically through the Internet before it is voted at the Annual Meeting, (iv) call by telephone to the number provided in your proxy card after the grant of the proxy, or (v) attend the virtual Annual Meeting online and vote using your 16-digit Control Number. For shares you hold beneficially in the name of a broker, trustee, or other nominee, you may change your vote by submitting new voting instructions to your broker, trustee, or nominee, or by participating in the meeting and electronically voting your shares during the meeting.
Most of the Company’s stockholders hold their shares through a broker, bank, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholders of Record. If your shares are registered directly in your name with the Company’s transfer agent, you are considered the stockholder of record with respect to those shares, and proxy materials are being sent by our transfer agent directly to you. As a stockholder of record, you have the right to vote by proxy or to vote your shares during the Annual Meeting. The proxy materials include a proxy card for the Annual Meeting.
CIVITAS RESOURCES, INC. 2024 Proxy Statement
1
Beneficial Owners. If your shares are held in a brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and proxy materials will be forwarded to you by your broker or nominee. The broker or nominee is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker how to vote. The proxy materials should include a proxy card or a voting instruction card for the Annual Meeting.
Voting Stock. The Company’s common stock, par value $0.01 per share (the “common stock”), is the only class of securities that entitles holders to vote generally at meetings of the Company’s stockholders. Each share of common stock outstanding on the record date is entitled to one vote.
Record Date. The record date for stockholders entitled to notice of and to vote at the Annual Meeting was the close of business on April 14, 2023.8, 2024. As of the record date, 80,299,101100,090,259 shares of the Company’s common stock were outstanding and are entitled to be voted at the Annual Meeting.
Quorum and Adjournments. The presence, in person or by proxy, of the holders of a majority of the outstanding shares entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
If a quorum is not present, the chair of the meeting or a majority of the stockholders entitled to vote who are present in person or by proxy at the Annual Meeting have the power to adjourn the Annual Meeting from time to time, without notice other than an announcement at the Annual Meeting, until a quorum is present. At any adjourned Annual Meeting at which a quorum is present, any business may be transacted that might have been transacted at the Annual Meeting as originally notified.
Vote Required. In an “uncontested” (as defined by our bylaws) election, directors shall be elected by a majority of the votes cast by holders of shares of the Company’s capital stock entitled to vote in the election of directors at any meeting of stockholders at which a quorum is present. In a “contested” (as defined by our bylaws) election, directors shall be elected by a plurality of the votes cast by holders of shares of the Company’s capital stock entitled to vote in the election of directors at any meeting of stockholders at which a quorum is present. TheEach of the (i) ratification of the appointment of Deloitte & Touche LLP as our independent auditors for the 20232024 fiscal year, (ii) approval of the Civitas Resources, Inc. 2024 Long Term Incentive Plan, (iii) approval, on an advisory basis, of the compensation of our named executive officers, and (iv) determination, on an advisory basis, of the frequency with which the Company will hold future “say-on-pay” votes will require the affirmative vote of the holders of at least a majority of the shares present, in person or by proxy, and entitled to vote with respect to these matters. Each of the Charter Proposals will require the affirmative vote of the holders of at least a majority of the shares outstanding: (i) the approval, on a non-binding advisory basis, of the compensation of our named executive officers; (ii) the approval of amendments to our certificate of incorporation to create a right of stockholders to call a special meeting (the “Special Meeting Amendment”); (iv) the approval of amendments to our certificate of incorporation to create a right of stockholders to take action by written consent (the “Written Consent Amendment”); (v) the approval of an amendment to our certificate of incorporation to limit the liability of certain officers of the Company (the “Officer Exculpation Amendment”); (vi) the approval of an amendment to our certificate of incorporation to permit stockholders to fill certain vacancies on our board of directors (the “Board Vacancies Amendment”); (vii) the approval of an amendment to our certificate of incorporation to add a federal forum selection provision (the “Federal Forum Selection Amendment”); and (vii) the approval of the amendment and restatement of our certificate of incorporation to clarify and modernize our certificate of incorporation (the “New Certificate Amendment” and, together with the Special Meeting Amendment, Written Consent Amendment, Officer Exculpation Amendment, Board Vacancies Amendment and Federal Forum Selection Amendment, the “Charter Proposals”).each such matter. An automated system will tabulate the votes cast by proxy for the Annual Meeting, and the inspector of elections will tabulate votes cast in person at the Annual Meeting. Brokers who hold shares in street name for customers are required to vote shares in accordance with instructions received from the beneficial owners. Brokers are permitted to
vote on discretionary items if they have not received instructions from the beneficial owners, but they are not permitted to vote on non-discretionary items absent instructions from the beneficial owner (a “broker non-vote”).
Non-discretionary items include the election of directors, the approval of the Civitas Resources, Inc. 2024 Long Term Incentive Plan, the approval, on an advisory basis, of the compensation of the Company’s named executive officers, and the Charter Proposals.determination, on an advisory basis, of the frequency with which the Company will hold future “say-on-pay” votes. For ratification of the selection of the Company’s independent registered public accountant, brokers will have discretionary authority in the absence of timely instructions from their customers. Abstentions and broker non-votes will count in determining whether a quorum is present at the Annual Meeting. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on the director election, subject to the Company’s Director Resignation Policy further described under “Proposal One — One—Election of Directors” below, oron the vote with respect to approval of the Civitas Resources, Inc. 2024 Long Term Incentive Plan, on the advisory vote on compensation of our named executive officers.officers, or on the advisory vote on the frequency with which the Company will hold future “say-on-pay” votes. For purposes of voting on the ratification of the selection of the Company’s independent registered public accountant for 2023,2024, abstentions will be included in the number of shares voting and will have the effect of a vote against the proposal. For purposes of voting on the Charter Proposals, abstentions will have the effect of a vote against the proposal. Shares of voting stock of the Company resulting in broker non-votes, if any, also have the same effect as a vote against the Charter Proposals.
Default Voting. A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows:
•
•
CIVITAS RESOURCES, INC. 2024 Proxy Statement
2
•
“FOR” the approval of the Civitas Resources, Inc. 2024 Long Term Incentive Plan;
•
•
If any other business properly comes before the stockholders for a vote at the meeting, your shares will be voted in accordance with the discretion of the holders of your proxy. The Board knows of no matters, other than those previously stated, to be presented for consideration at the Annual Meeting.
CIVITAS RESOURCES, INC. 2024 Proxy Statement
3
Under the Resignation Policy (as defined below), each current director shall submit, at the time of being nominated or renominated, an irrevocable resignation in writing to December 2011. Priorthe Chairperson of the Board, which, if the director receives a Majority Withheld Vote (as defined below) at the stockholders’ meeting in question, would become effective at the earlier of (i) the date on which the Board appoints an individual to joining DCP Midstream in August 2010, Mr. van Kempen was Presidentfill the office held by the director, which appointment shall constitute the filling of Duke Energy Generation Services (“Duke Energy”) from September 2006a vacancy by the Board, (ii) 180 days after certification of such Majority Withheld Vote. Acceptance by the Board is not a condition to July 2010 and Vice Presidentthe effectiveness of Mergers and Acquisitions of Duke Energy from December 2005 to September 2006. Mr. van Kempen joined Duke Energy in 2003 and served in a number of management positions. Prior to Duke Energy, Mr. van Kempen was employed by General Electric, where he served in increasing roles of responsibility, becoming the staff executiveirrevocable resignation. See “Corporate Governance—Required Voting for corporate mergers and acquisitions in 1999. Mr. van Kempen holds a Masters in Business Economics from Erasmus University Roterdam, The Netherlands. Directors; Director Resignation Policy.”
The Board has concludedno reason to believe that Mr. van Kempen is qualifiedany of the director nominees will be unable or unwilling to serve as aif elected. However, if any director because ofnominee becomes unable or unwilling to accept his extensive operational and development experience inor her nomination or election, either the energy industry and his experience serving as chief executive officer of other public energy companies.
The Board unanimously recommends that stockholders vote “FOR” Proposal One and approve the Environmental, Social, and Governance (“ESG”) Committee. Ms. Byers retired as a Partner from Ernst & Young LLP (“EY”) in July 2022 after 36 yearselection of service in Public Accounting while holding multiplethe director nominees.
CIVITAS RESOURCES, INC. 2024 Proxy Statement
4
About Director Nominees
Biographical information with respect to each of the nine director nominees, together with a list of competencies that contributed to the conclusion that such person should serve as a director, are presented below. An overview of the core competencies of each director nominee is featured in a skills matrix on page 12. Ages are as of April 12, 2024.
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| | ![[MISSING IMAGE: ph_wouternew-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_wouternew-4c.jpg) Chair of the Board | | | BACKGROUND Wouter van Kempen, age 54, joined our Board as Chair in February 2023, and is a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Mr. van Kempen previously served as DCP Midstream GP, LLC’s (“DCP Midstream”) Chief Executive Officer since January 2013, Chairman since January 2014, and President since February 2016, until he resigned in December 2022. He was also the Chairman, President and Chief Executive Officer for DCP Midstream, LLC, which is the owner of DCP Midstream, from January 2013 until December 2022. Mr. van Kempen was previously DCP Midstream’s President and Chief Operating Officer from September 2012 until January 2013, where he led the gathering and processing and the marketing and logistics business units and oversaw all corporate functions of the organization; President, Gathering and Processing, from January 2012 to August 2012; and President, Midcontinent Business Unit, and Chief Development Officer, from August 2010 to December 2011. Prior to joining DCP Midstream in August 2010, Mr. van Kempen was President of Duke Energy Generation Services (“Duke Energy”) from September 2006 to July 2010 and Vice President of Mergers and Acquisitions of Duke Energy from December 2005 to September 2006. Mr. van Kempen joined Duke Energy in 2003 and served in a number of management positions. Prior to Duke Energy, Mr. van Kempen was employed by General Electric, where he served in increasing roles of responsibility, becoming the staff executive for corporate mergers and acquisitions in 1999. Mr. van Kempen holds a Masters in Business Economics from Erasmus University Rotterdam, The Netherlands. | | | QUALIFICATIONS The Board has concluded that Mr. van Kempen is qualified to serve as a director because of his extensive operational and development experience in the energy industry and his experience serving as chief executive officer of other public energy companies. | |
CIVITAS RESOURCES, INC. 2024 Proxy Statement
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| | Deborah Byers | | ||||||
| | ![[MISSING IMAGE: ph_deborahbyers-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_deborahbyers-4c.jpg) | | | BACKGROUND Deborah Byers, age 62, joined our Board in February 2023, and is a member of the Audit Committee and the Environmental, Social, and Governance (“ESG”) Committee. Ms. Byers retired as a Partner from Ernst & Young LLP (“EY”) in July 2022 after 36 years of service in Public Accounting while holding multiple leadership roles. From July 2018 to her retirement, she was EY’s Americas Industry Leader overseeing the markets and growth strategy across its primary industry markets including Energy, Industrials & Automotive, Consumer, Technology, Telecom, Media & Entertainment, Healthcare & Life Sciences, Real Estate, Private Equity, and Government. Ms. Byers was EY’s Houston Office Managing partner and US Energy Leader from July 2013 to July 2018, and Managing Partner of the Southwest Region Strategy & Transactions business unit from July 2008 to July 2013. In these roles, she was a leader in the global energy markets and worked with corporations and investment funds in all phases of energy investment across the sector. Ms. Byers currently serves as a member of the board of directors of DTE Energy Company, Excelerate Energy, Inc. and Kinetik Inc. Ms. Byers remains very active mentoring young professionals and is passionate about supporting women in energy while engaging publicly on all things Energy Transition and Transformation. Ms. Byers holds a BBA from Baylor University in Waco Texas and is a Certified Public Accountant. | | | QUALIFICATIONS The Board has concluded that Ms. Byers is qualified to serve as a director because of her financial expertise and years of experience and leadership overseeing various markets and growth strategy, with focus on energy markets and investments across the sector. | |
| | Morris R. Clark | | ||||||
| | ![[MISSING IMAGE: ph_mclarke-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_mclarke-4c.jpg) | | | BACKGROUND Morris R. Clark, age 56, joined our Board in November 2021, and serves as Chair of the Audit Committee and is a member of the Compensation Committee. Mr. Clark served as a director of Extraction from January 2021 through October 2021. Mr. Clark previously served as Vice President and Treasurer of Marathon Oil Corporation from 2014 to 2019 and Assistant Treasurer from 2007 to 2014. Following Mr. Clark’s retirement from Marathon in 2019, he continues to be involved with several community-based and educational organizations, with a focus on higher education and broadband accessibility in underserved communities. Prior to Marathon, Mr. Clark served as Senior Tax Counsel at Enron North America, as a Tax Attorney at the law firm of Bracewell & Patterson, and as a Senior Accountant with Touche Ross & Company. Mr. Clark serves on the Board of Directors for Sitio Royalties Corp. and also on the Board of Trustees for the University of St. Thomas in Houston, Texas. He holds a bachelor’s degree in Accounting from Southern University, a Juris Doctor from Tulane Law School, and a Master of Laws from New York University School of Law. | | | QUALIFICATIONS The Board has concluded that Mr. Clark is qualified to serve as a director because of his financial expertise, including corporate finance, accounting and taxation, and years of executive management experience in the oil and gas industry. | |
CIVITAS RESOURCES, INC. 2024 Proxy Statement
6
| | Carrie M. Fox | | ||||||
| | ![[MISSING IMAGE: ph_cfox-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_cfox-4c.jpg) | | | BACKGROUND Carrie M. Fox, age 40, joined our Board in November 2021, and is a member of the ESG Committee and the Nominating and Corporate Governance Committee. Ms. Fox served as a director of Extraction from January 2021 through October 2021. Ms. Fox is currently the President and Chief Executive Officer of Driltek Inc., a privately held global onshore and offshore upstream operations and decommissioning company. She founded Cygnet Resources, a real property investment company, in September 2020. Before Driltek Inc., Ms. Fox served as the Vice President of Business Development for California Resources Corporation from 2014 to 2020. Ms. Fox previously served in multiple positions for Occidental Petroleum, including Reservoir Management Team Leader, from 2012 to 2014, Manager of California State Government Affairs from 2010 to 2012, and as a Reservoir and Production Engineer from 2006 to 2010. Ms. Fox previously served as a director of Rice Acquisition Corp. II, a publicly traded special purpose acquisition company focused on the energy transition sector, from June 2021 to June 2023, when it merged with Net Power Inc. She holds a Bachelor of Science in Engineering from California Polytechnic State University. | | | QUALIFICATIONS The Board has concluded that Ms. Fox is qualified to serve as a director because of her financial accounting experience and years of executive management experience in the oil and gas industry. | |
| | Carrie L. Hudak | | ||||||
| | ![[MISSING IMAGE: ph_carriehudak-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_carriehudak-4c.jpg) | | | BACKGROUND Carrie L. Hudak, age 48, joined our Board in October 2019, and is the Chair of the ESG Committee and a member of the Audit Committee. Ms. Hudak previously served as Chief Operating Officer of Koloma, Inc., a geologic hydrogen company, from April 2022 to February 2024. Ms. Hudak served as Vice President of DJ Basin Development for Anadarko Petroleum Corporation, an oil and natural gas exploration and production company, from May 2017 to September 2019. Prior to that, Ms. Hudak served in various management positions at Anadarko, including General Manager of DJ Basin Development and Execution from March 2016 to May 2017, and Director, Rockies Business Development from November 2014 to March 2016. Ms. Hudak previously served the non-profit organization, Coloradoans for Responsible Energy Development, as its Chair from 2018 to 2019, and as a Board Member from 2017 to 2018. Ms. Hudak also served as Treasurer and Executive Board Member for the Colorado Oil and Gas Association from 2017 to 2019. Ms. Hudak received her Master’s Degree in Geology from Duke University and her Bachelor’s Degree in Geology from Miami University. | | | QUALIFICATIONS Ms. Hudak’s extensive experience in the oil and gas industry, and particularly her work in the DJ Basin, has led the Board to conclude that she has the expertise necessary to serve as a director of the Company. | |
CIVITAS RESOURCES, INC. 2024 Proxy Statement
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| | James M. Trimble | | ||||||
| | ![[MISSING IMAGE: ph_jamestrimble-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_jamestrimble-4c.jpg) | | | BACKGROUND James M. Trimble, age 75, joined our Board in November 2021, and serves as a member of the Audit Committee and the ESG Committee. Mr. Trimble served on the board of Crestone Peak Resources, a private E&P company, from 2016 through October 2021, and served as its Chair beginning in 2018. He was previously the Interim Chief Executive Officer and President of Stone Energy Corporation from 2017 to 2018. Mr. Trimble was President and Chief Executive Officer of PDC Energy, Inc. (“PDC”) from 2011 to 2015. Prior to PDC, he founded and also led several oil and gas companies focused primarily on drilling in Texas, Louisiana and Oklahoma. In addition, Mr. Trimble served as the Senior Vice President of Exploration and Production for Cabot Oil and Gas for 17 years. Mr. Trimble holds a Bachelor of Science in Petroleum Engineering from Mississippi State University. He is a registered Professional Engineer in the State of Texas. He is active and has served on the board of several professional organizations including the Independent Oil and Gas Association of Pennsylvania, the Independent Oil and Gas Association of West Virginia, the Independent Petroleum Association of America, the American Petroleum Institute, the Society of Petroleum Engineers, and the Texas Independent Producers & Royalty Owners Association. He is an honorably discharged Officer from the United States Army after serving 10 years of active and reserve duties. Mr. Trimble currently serves as a member of the board of directors of Berry Corporation. Mr. Trimble previously served on the Board of Directors for Callon Petroleum Corporation from March 2012 to April 2023, Stone Energy from March 2017 to May 2018 when it merged with Talos Energy, and on the Talos Energy board until May 2021. | | | QUALIFICATIONS The Board has concluded that Mr. Trimble is qualified to serve as a director because of his expertise in petroleum engineering and experience serving as chief executive officer and director of other public and private oil and gas companies. | |
| | Howard A. Willard III | | ||||||
| | ![[MISSING IMAGE: ph_hwillard-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_hwillard-4c.jpg) | | | BACKGROUND Howard A. Willard III, age 60, joined our Board in November 2021, and is Chair of the Compensation Committee and a member of the Nominating and Corporate Governance Committee. Mr. Willard was the Chairman and Chief Executive Officer of Altria Group, Inc. from May 2018 to April 2020. Previously, Mr. Willard was Altria’s Executive Vice President and Chief Operating Officer from March 2015 to May 2018, and the Executive Vice President and Chief Financial Officer from January 2011 to February 2015. Mr. Willard joined Altria in 1992 as Assistant Controller and progressed through a series of more senior positions. Prior to Altria Group Mr. Willard worked at Salomon Brothers and Bain & Co. Mr. Willard also served as board member of SABMiller plc from 2009 to July 2015. He holds a Bachelor of Arts from Colgate University and a Master of Business Administration from the University of Chicago. | | | QUALIFICATIONS The Board has concluded that Mr. Willard is qualified to serve as a director because of his significant experience in large public company executive management and board roles. | |
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| | Jeff E. Wojahn | | ||||||
| | ![[MISSING IMAGE: ph_wojhan-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_wojhan-4c.jpg) | | | BACKGROUND Jeff E. Wojahn, age 61, joined our Board in November 2021, and is Chair of the Nominating and Corporate Governance Committee and a member of the Compensation Committee. From November 2014 through October 2021, Mr. Wojahn served as a director of Bonanza Creek, the Company’s predecessor. Mr. Wojahn served as Executive Vice President of Encana Corporation, an oil and natural gas E&P company, from 2003 to 2013, and was President of Encana Oil & Gas (USA) Inc. from 2006 to 2013. Beginning in 1985, Mr. Wojahn held senior management and operational positions in Canada and the United States and has extensive experience in unconventional resource play development. He has served as co-founder and a board member of KODA Resources, LLC since March 2017 and served as a Strategic Advisory Board member for Morgan Stanley Energy Partners from October 2014 until April 2017. Mr. Wojahn currently serves on the board of directors of Baytex Energy Corp. and previously served on the board of directors of Ranger Oil Corporation from September 2019 until June 2023 when it merged with Baytex Energy Corp. He received his B.S. in Geophysics from the University of Calgary in 1985. | | | QUALIFICATIONS The Board has concluded that Mr. Wojahn is qualified to serve as a director because of his extensive experience of over 30 years in the oil and gas industry and his significant operational and development experience as an executive of other oil and gas companies. | |
| | Chris Doyle | | ||||||
| | ![[MISSING IMAGE: ph_chrisdoyle-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_chrisdoyle-4c.jpg) | | | BACKGROUND Chris Doyle, age 51, was named the Company’s President and Chief Executive Officer in May 2022, and joined our Board in July 2022. Prior to joining Civitas in 2022, Mr. Doyle was President and CEO of Primexx Energy Partners, Ltd. (“Primexx”) and CEO of Rock Ridge Royalty Company from September 2020 through March 2022, privately held companies with exploration and production assets and minerals throughout the Delaware Basin of West Texas. From April 2016 to September 2020, he served as President and CEO of Olympus Energy LLC (“Olympus”), a privately-held energy company specializing in upstream and midstream development focused in the southwest Pennsylvania portion of the Appalachian Basin. Prior to Olympus, Mr. Doyle held various leadership roles at Chesapeake Energy Corporation and Anadarko Petroleum. Mr. Doyle currently serves on the board of Olympus and previously served on the boards of Guidon Energy LLC, Blue Sky Infrastructure, LLC, and Primexx. Mr. Doyle holds a B.S. in Petroleum Engineering from Texas A&M University and an M.B.A. from Rice University. | | | QUALIFICATIONS The Board has concluded that Mr. Doyle is qualified to serve as a director because of his expertise in petroleum engineering and his extensive operational and development experience in the energy industry as well as his experience serving as chief executive officer and director of other public and private oil and gas companies. | |
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Our Company
Civitas Resources, Inc. is an independent, Denver-baseddomestic exploration and production company focused on the acquisition, development, and production of oil and associated liquids-rich natural gas in the Rocky Mountain region, primarilyDenver-Julesburg Basin in the Denver-Julesburg BasinColorado (the “DJ Basin”) of Colorado.and the Permian Basin in Texas and New Mexico. At year-end 2022,2023, the Company’s assets were comprised of approximately 453,600 net acres in the DJ Basin, located primarily in Weld, Arapahoe, Adams, Boulder, and Broomfield counties, Colorado, and approximately 68,500 net acres in the Permian Basin, located primarily in Upton and Reagan counties, Texas and Eddy and Lea counties, New Mexico. Furthermore, on January 2, 2024, the Company hadclosed on its acquisition from Vencer Energy, LLC (“Vencer”) of certain oil and gas properties, interests, and related assets (the “Vencer Acquisition”), which included approximately 470,00044,000 net acres of large, contiguous acreage blocks in some of the most productive areas ofPermian Basin. These basins are among the DJ Basin. The DJ Basin is one of the premier oil and natural gas resource playsmajor producing basins in the United States benefiting from a low-cost structure,and are characterized by extensive production histories, mature infrastructure, strong production efficiencies,long reserve lives, multiple producing horizons, multiple service providers, established reserves,enhanced recovery potential, and prospective drilling opportunities, which helps facilitate predictable production and reserve growth.a large number of operators.
Corporate Governance Guidelines and Code of Business Conduct and Ethics
The Board believes that sound governance practices and policies provide an important framework to assist it in fulfilling its duty to stockholders. The Company’s Corporate Governance Guidelines cover the following principal subjects:
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Process for Director Selections;
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Qualifications and Responsibilities of Directors;
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Committees of the Board;
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Director Access to Management and Independent Advisors;
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Director Compensation;
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Director Orientation and Continuing Education;
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Chief Executive Officer Evaluation and Management Succession;
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Annual Performance Evaluations;
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The Company’s Code of Business Conduct and Ethics;
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Term Limits for Directors; and
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Changed Circumstances of the Company’s Directors.
Our Corporate Governance Guidelines, including a copy of the current “Code of Business Conduct and Ethics,” are postedpublished on the Governance section of our website, at www.civitasresources.com, under “Investor Relations—Governance”. Our Corporate Governance Guidelines are reviewed annually and as necessary by our Nominating and Corporate Governance Committee, and any proposed additions to or amendments of the Corporate Governance Guidelines are presented to the Board for its approval.
The New York Stock Exchange (the “NYSE”) has adopted rules that require listed companies to adopt governance guidelines covering certain matters. The Company believes our Corporate Governance Guidelines comply with the NYSE rules.
Board Leadership
Our Board has separated the Chair and Chief Executive Officer roles. We believe this leadership structure permits the Chief Executive Officer to focus on managing our business and allows the Chair to function as an important liaison between management and the Board, enhancing the ability of the Board to provide oversight of the Company’s management and affairs. Our Chair provides input to our Chief Executive Officer and is responsible for presiding over the meetings of the Board and executive sessions of the independent directors, which we expect will be held at every regularly scheduled Board meeting in 2023.2024. Our Chief Executive Officer is responsible for setting the Company’s strategic direction and for the day-to-day leadership performance of the Company. Based on current circumstances, the direction of the Company, and the experienced membership of our Board, our Board believes that separate roles for our Chair and our Chief Executive Officer, coupled with a majority of independent directors and strong corporate governance guidelines, is the most appropriate leadership structure for the Company and its stockholders at this time.
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Communications with the Board
Stockholders or other interested parties can contact any director (including the Chair of the Board), any committee of the Board, or our independent directors as a group, by writing to them at 555 17th Street, Suite 3700, Denver, Colorado 80202, Attention: Secretary. All such communications will be forwarded to the appropriate member(s) of the Board. Comments or concerns relating to the Company’s accounting, internal accounting controls, or auditing matters will be referred to members of the Audit Committee.
Director Independence
The Company’s standards for determining director independence require the assessment of our directors’ independence each year, and periodically as circumstances change. A director cannot be considered independent unless the Board affirmatively determines that such director does not have any material relationship with the Company, including any of the relationships that would disqualify the director from being independent under the rules of the NYSE. The Board assesses the independence of each independent director and each independent nominee for director under the Company’s Corporate Governance Guidelines and the independence standards of the NYSE, and has determined that Mses. Byers, Fox Hudak, and ByersHudak, and Messrs. Clark, Trimble, van Kempen, Trimble, Willard, and Wojahn are independent. In assessing the independence of Ms. Fox, the Board considered certain transactions between a subsidiary of the Company and Driltek, Inc., for which Ms. Fox serves as President and Chief Executive Officer. See “Transactions with Related Persons—Related Party Transactions” for additional information. As the Company’s Chief Executive Officer, Mr. Doyle is not currently considered an independent director. We have made the determination that all members of the Company’s Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee are independent, thus satisfying NYSE listing standards.
Director Qualifications
Our Board believes that individuals who serve as directors should have demonstrated notable or significant achievements in business, education, or public service; should possess the requisite intelligence, education, and experience to make a significant contribution to the Board and bring a range of skills, diverse perspectives, and backgrounds to its deliberations; and should have the highest ethical standards, a strong sense of professionalism, and intense dedication to serving the interests of the Company’s stockholders. Our Corporate Governance Guidelines limit the number of boards on which a director may sit to no more than four other public company boards in the absence of obtaining the Board’s prior approval. The following are our desired qualifications, experience, and skills for Board members, which are important to the Company’s business and its future:
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Leadership Experience — Experience—The Company seeks directors who demonstrate extraordinary leadership qualities. Strong leaders bring vision, strategic agility, diverse and global perspectives, and broad business insight to the Company. The directors should demonstrate practical management experience, skills for managing change, and deep knowledge of industries, geographies, and risk management strategies relevant to the Company. They should have experience in identifying and developing the Company’s current and future leaders. The relevant leadership experience the Company seeks includes a past or current leadership role in a major public company or recognized privately held entity; a past or current leadership role at a prominent educational institution or senior faculty position in an area of study important or relevant to the Company; a past elected or appointed senior government position; or a past or current senior managerial or advisory position with a highly visible nonprofit organization.
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Finance Experience — Experience—The Company believes that all directors should possess an understanding of finance and related reporting processes. The Company also seeks directors who qualify as an “audit committee financial expert” as defined in the SEC’s rules.
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Industry Experience — Experience—The Company seeks directors who have relevant oil and gas industry experience.
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Diversity of Backgrounds — Backgrounds—Although the Board has not established any formal diversity policy to be used to identify director nominees, it is committed to actively seeking women and minority candidates as well as individuals with diverse backgrounds,attributes, skills, viewpoints, and experiences. When assessing a Board candidate’s background, skills, and experiences, the Nominating and Corporate Governance Committee takes into consideration a broad range of relevant factors, including a candidate’s ethnic status, gender, professional, cultural, political, and geographic background. In 2022, the Board of Directors established a target that its gender-composition be at least 30% female by the time of Civitas’
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The following matrix summarizes the key knowledge, skills, and experience that qualifies each director for our Board.
| | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | Morris Clark | | | Carrie Fox | | | Carrie Hudak | | | James Trimble | | | Howard Willard | | | Jeff Wojahn | | | M. Christopher Doyle | | | Deborah Byers | | | Wouter Kempen | | ||||||||||||||||||||||||||
| | Leadership Experience | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Industry | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | | | | ✓ | | | ✓ | | | | | | ✓ | | ||||||||||||||||||||||||||
| | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government / Academic / | | | | | | | | | | | | | | | | | | | | | | | | ✓ | | | | | |||||||||||||||||||||||||||
| | Financial | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Financial Literacy | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | ||||||||||||||||||||||||||
| | Audit Committee Financial Expert | | | ✓ | | | | | | | | | ✓ | | | | | | | | | | | | ✓ | | | | | ||||||||||||||||||||||||||
| Education / Substantive Background | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | ✓ | | | | | | | | |||||||||||||||||||||||||||
| | Accounting | | | ✓ | | | | | | | | | | | | | | | | | | | | | ✓ | | | | | ||||||||||||||||||||||||||
| | Finance | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | | | | ✓ | | ||||||||||||||||||||||||||
| | Legal | | | ✓ | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
| | Sciences | | | | | | ✓ | | | ✓ | | | | | | | | | ✓ | | | ✓ | | | | | | | | ||||||||||||||||||||||||||
| | Diversity | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Gender | | | | | | ✓ | | | ✓ | | | | | | | | | | | | | | | ✓ | | | | | ||||||||||||||||||||||||||
| | Ethnicity | | | ✓ | | | | | | | | | | | | | | | | | | | | | ✓ | | | | | ||||||||||||||||||||||||||
| | Public Company C-Level Experience | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | CEO | | | | | | | | | | | | ✓ | | | ✓ | | | | | | ✓ | | | | | | ✓ | | ||||||||||||||||||||||||||
| | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Committee Financial Expert | | | | | | | | | | | | | | | ✓ | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | ||||||||||||||||||||||||||||
| | Private Company C-Level Experience | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | CEO | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | ✓ | | | | | | | | ||||||||||||||||||||||||||
| | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||
| | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | ✓ | | | | | ✓ | | | ✓ | ||||||||||||||||||||||||||||||||||||||||||||
| | | ✓ | | | | | ✓ | | | | | ✓ | | ||||||||||||||||||||||||||||||||||||||||||
Independent Director Share Ownership Requirements
In the past, our independent directors have been subject to our Stock Ownership Policy, which required that each holds shares of the Company’s stock with a fair market value equal to five times such independent director’s annual cash retainer (subject to a defined period of allowable time in which to reach this ownership level). Effective November 1, 2021, the independent directors’ annual cash retainer was reduced to zero, and their equity award program was restructured. Further, for so long as they remain Civitas independent directors, all independent directors are now required to retain ownership of all Civitas shares that they receive as a result of their future equity awards as well as the equity awards they received under the predecessor director compensation plans at Bonanza Creek Energy, Inc., Extraction Oil & Gas, Inc., and Crestone Peak Resources.
As a result of these changes, which increased the directors’ stock ownership requirements from what they had been previously, the independent directors were removed from the scope of our Stock Ownership Policy.
Anti-Hedging and Anti-Pledging Policies
Our Insider Trading Policy prohibits all directors, officers of the level of Vice President and above, and certain key employees in accounting, legal, and other departments (collectively, “Insiders”) from engaging in short-term trading involving Company stock in the absence of the Company’s advance approval. Our Insider Trading Policy further prohibits options trading, short sales, trading on margin, hedging, and the buying or selling of puts or calls with respect to the Company’s securities, without advance approval.
Our Stock Ownership Policy prohibits the Company’s executive officers (as such term is defined in Rule 3b-7 of the Securities Exchange Act of 1934, as amended)amended (the “Exchange Act”)) from pledging as collateral for a loan any of the Company’s common stock that they own or have a right to receive.
Oversight of Risk Management
While the Board, as a whole and also at the committee level, oversees our risk management processes, with particular focus on the most significant risks we face, management is responsible for day-to-day risk management. We believe this division of responsibilities is the most effective approach for addressing the risks we face.
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We also believe that the current Board leadership structure, with Mr. van Kempen serving as our Chair of the Board and Mr. Doyle serving as our President and Chief Executive Officer, supports this approach by facilitating communication between management and the Board regarding risk management issues. We also believe that this design places the Board in a better position to evaluate the performance of management, more efficiently facilitates communication of the views of the independent directors, and contributes to effective corporate governance. The Board realizes, however, that it is not possible or desirable to eliminate all risk and that appropriate risk-taking is essential in order to achieve the Company’s objectives.
Except as discussed below and in the section “Cybersecurity Risk Management,” the Board oversees the Company’s assessment of major risks and the measures taken to manage such risks. For example, the Board:
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provides governance and oversight for the financial and commodity risks assumed by the Company and approves the policies and periodically reviews and discusses with the members of management the procedures and systems in place to identify, review, and mitigate the Company’s exposure to such risks;
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along with the Company’s Audit Committee, reviews the Company’s commodity price risk and hedging strategy with executive management at least quarterly and provides oversight of the Company’s hedging policy; and
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reviews management’s capital spending plans, approves the Company’s capital budget and requires that management present for Board review significant departures from those plans.
The Company’s Audit Committee is responsible for overseeing the Company’s assessment and management of financial reporting and internal control risks, as well as other financial risks, such as
commodity price risk and the credit risks associated with counterparty exposure. Management and the Company’s independent registered public accountants report regularly to the Audit Committee on those subjects.
The Company’s Compensation Committee periodically reviews our compensation programs to ensure that they do not encourage excessive risk-taking and reports its significant findings to the full Board.
Cybersecurity Risk Management
Our Director and HeadVice President of Information Technology, (“DHIT”) overseesJerry Vigil, leads our information security programcybersecurity initiatives, reporting directly to the Chief Administrative Officer and Corporate Secretary and maintains open communication channels with the broader senior management team, the Board, and our Audit Committee. Mr. Vigil is responsible for leading enterprise-wide cyber resilienceimplementing our cybersecurity strategy, policy, standards, architecture, and processes. The DHIT reports to the Chief Legal Officer and serves as the designated leader for cyber or data-relatedmanaging daily operations, coordinating incident response, activities. The DHITand regularly and routinely reviewsreviewing our security model and its practices and future initiatives with external auditors to ensure alignment with industry best practices, changes in audit compliance requirements, and adherence to planned business objectives.objectives, as well as providing regular updates and reports on our cybersecurity status and risk assessments to the Board. Mr. Vigil has over 25 years of information technology management experience and has served as our Vice President of Information Technology since April 2021 and served in the same role at HighPoint Resources Corporation from May 2014 until its merger with us. Mr. Vigil has a Bachelor of Science in Business Technology Management and Computer Science from Regis University.
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We also employ a cybersecurity awareness program, which incorporates external expertise and guidance in all aspects of our cybersecurity program, which includes an extensive onboarding training requirement and monthly ongoing training on protecting corporate data and digital assets. We complete annual internal security audits and vulnerability assessments of our information systems and related controls, including systems affecting personal data. In addition, we leverage cybersecurity specialists to managingcomplete annual external audits and objective assessments of our internalcybersecurity program and practices, including our data protection practices, as well as to conduct targeted attack simulations. We continually enhance our information security risk programs, we maintaincapabilities in order to protect against emerging threats, while also increasing our ability to detect and respond to cyber risk insurance as partincidents and maximize our resilience to recover from potential cyber-attacks. We have a robust incident response plan in place that provides a documented runbook for responding to cybersecurity incidents and facilitates coordination across multiple parts of our risk mitigation efforts.entity. Additionally, we have purchased network security and cyber liability insurance in order to provide a level of financial protection, should a data breach occur. Our insurance covers situations arising from, among other things, cyber-related breaches and interruptions in the business continuity of our computing environment. These policies are annually reviewed by industry underwriters at which time our security practices, programs, processes, and procedures are thoroughly disclosed, reviewed, and evaluated for purposes of determining our insurability.
We have not experienced any material information security breaches in the last three years, nor are we aware of any cybersecurity risks that are reasonably likely to materially adversely affect us. As such, we have not spent any material amount of capital on addressing information security breaches in the last three years, nor have we incurred any material expenses from penalties and settlements related to a material breach during this same time. For additional information about our cybersecurity risks, please refer to our Annual Report on Form 10-K filed with the SEC on February 27, 2024.
Required Voting for Directors; Director Resignation Policy
The manner by which directors will be elected at any meeting of stockholders will be as follows, depending on whether the election is “contested” or “uncontested” (as such terms are defined in the Company’s bylaws). The Company’s bylaws provide that a nominee for director to the Board in an “uncontested” election of directors is elected if he or she receives a “majority of the votes cast” (as defined in the Company’s bylaws) by holders of shares of the Company’s capital stock entitled to vote in the election of directors at any meeting of stockholders at which a quorum is present. In a contested election, directors shall be elected by a plurality of the votes cast by holders of shares of the Company’s capital stock entitled to vote in the election of directors at any meeting of stockholders at which a quorum is present.
On November 12, 2018, the Board adopted a Director Resignation Policy, which was updated on November 1, 2021, and October 26, 2022, and February 20, 2024 (the “Resignation Policy”). The procedures set forth in the Resignation Policy address the situation in which a nominee for the Board does not receive a majority of the votes cast for his or her election (a “Majority Withheld Vote”) in an uncontested election of directors. The Resignation Policy provides that each nominee to the Board shall submit, at the time of such nominee’s nomination, a contingentan irrevocable resignation in writing to the chairmanChairperson of the Nominating and Corporate Governance Committee,Board, which, would become effective only if (i) such director receives a Majority Withheld Vote at the stockholders’ meeting in question, and (ii)would become effective at the earlier of (i) the date on which the Board acceptsappoints an individual to fill the resignation.
Any director who changes his or her employer or otherwise has a significant change in job responsibilities shall give written notice to the Nominating and Corporate Governance Committee, specifying the details, as soon as feasible. Any director who changes his or her employer or otherwise has a significant change in job responsibilities shall also proffer his or her resignation to the Board. The Board, through the Nominating and Corporate Governance Committee, shall review the matter in order to evaluate the continued appropriateness of such director’s membership on the Board and each applicable Board committee under these circumstances, taking into account all relevant factors and may accept or reject a proffered resignation. Following the Board’s decision, the Company will promptly publicly disclose its decision whether to accept or reject such tendered resignation in a periodic or current report filed or furnished in accordance with SEC rules.
While this summary reflects the current terms of the Resignation Policy, the Board retains the power to amend and administer the policy as the Board, in its sole discretion, determines is appropriate. The Resignation Policy is published on our website, www.civitasresources.com, under “Corporate “Investor Relations—Governance,” and is also available by written request to Civitas Resources, Inc., Investor Relations, 555 17th Street, Suite 3700, Denver, Colorado 80202.
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Meetings and Committees of Directors
During 2022,2023, the Board held 1720 meetings, including regularly scheduled and special meetings. Our independent directors routinely meet in executive session immediately before or after each meeting of the Board. During 2022,2023, each of our current directors attended at least 76%85% of the aggregate of all meetings of the Board and the standing committees of the Board on which they serve.
The following table identifies the current members of each committee and sets forth the number of meetings held in 2022:2023:
| Name of Director | | | Audit Committee | | | Compensation Committee | | | Nominating & Corporate Governance Committee | | | ESG Committee | | ||||||||||||
| Independent Directors | | | | | | | | | | | | | | | | | | | | | | | | | |
Deborah Byers ![[MISSING IMAGE: ic_finance-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/ic_finance-bw.jpg) | | | ![[MISSING IMAGE: ic_member-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/ic_member-bw.jpg) | | | | | | | | | | | | | | | | | ||||||
Morris R. Clark | | | ![[MISSING IMAGE: ic_chair-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/ic_chair-bw.jpg) | | | | | | | | | | | | | | | | | ||||||
| Carrie M. Fox | | | | | | | | | | | | | | | | | | | | ||||||
| Carrie L. Hudak | | | | | | | | | | | | | | | | | | | | ||||||
James M. Trimble | | | | | | | | | | | | | | | | | | | | ||||||
Wouter van Kempen ![[MISSING IMAGE: ic_star-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/ic_star-bw.jpg) | | | | | | | | | | | | | | | | | | | | ||||||
| Howard A. Willard III | | | | | | | | | | | | | | | | | | | | ||||||
| Jeff E. Wojahn | | | | | | | | | | | | | | | | | | | | ||||||
| Inside Director | | | | | | | | | | | | | | | | | | | | | | | | | |
| M. Christopher Doyle | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of Meetings in 2022 | | | | | 5 | | | | | | 6 | | | | | | 6 | | | | | | 5 | | |
| | Name of Director | | | Audit Committee | | | Compensation Committee | | | Nominating & Corporate Governance Committee | | | ESG Committee | |
| | Independent Directors | | | | | | | | | | | | | |
| | Deborah Byers ![[MISSING IMAGE: ic_finance-bw.gif]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_finance-bw.gif) | | | ![[MISSING IMAGE: ic_member-bw.gif]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_member-bw.gif) | | | | | | | | | | |
| | Morris R. Clark | | | ![[MISSING IMAGE: ic_chair-bw.gif]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_chair-bw.gif) | | | | | | | | | | |
| | Carrie M. Fox | | | | | | | | | | | | | |
| | Carrie L. Hudak | | | | | | | | | | | | | |
| | James M. Trimble | | | | | | | | | | | | | |
| | Wouter van Kempen ![[MISSING IMAGE: ic_star-bw.gif]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_star-bw.gif) | | | | | | | | | | | | | |
| | Howard A. Willard III | | | | | | | | | | | | | |
| | Jeff E. Wojahn | | | | | | | | | | | | | |
| | Inside Director | | | | | | | | | | | | | |
| | M. Christopher Doyle | | | | | | | | | | | | | |
| | Number of Meetings in 2023 | | | 6 | | | 8 | | | 5 | | | 5 | |
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![[MISSING IMAGE: ic_star-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ic_star-bw.jpg) = Board Chair | | | | |||||
| Committee Chair = | | | | |||||
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| = Financial Expert | | | ||||||
Each standing committee has adopted a formal charter detailing such committee’s duties, functions, and responsibilities. The charters for the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee and ESG Committee are postedpublished on the Company’sour website, www.civitasresources.com, under “Investor Relations—Governance,” and such charters are drafted in a manner consistent with the applicable regulations of the SEC and standards of the NYSE. The information on our website is not, and shall not be deemed to be, a part of this proxy statement or incorporated herein or into any of our other filings with the SEC.
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| | Audit Committee | | |||
| | Committee Chair: Morris R. Clark Members: Deborah Byers Carrie L. Hudak James M. Trimble | | | The current members of the Audit Committee are Mr. Clark, Chair, Mses. Byers and Hudak, and Mr. Trimble. The Audit Committee met six times in 2023. Our Board has determined all four members of the Audit Committee to be financially literate under the standards of the NYSE and SEC regulations and has also determined that each of Messrs. Clark and Trimble and Ms. Byers qualifies as an “audit committee financial expert” as defined in SEC regulations. The Audit Committee oversees, reviews, acts on, and reports on various auditing and accounting matters to our Board, including: the scope of our annual audits, fees to be paid to our independent accountants, the performance of our independent accountants, and our accounting and reporting practices and processes. The Audit Committee also has oversight of the Company’s estimates of proved oil and gas reserves and the Company’s independent reserve engineers’ qualifications, independence, and performance. In addition, the Audit Committee oversees our management of cybersecurity and information technology risks, compliance programs relating to legal and regulatory requirements and the Company’s assessment and management of financial reporting and internal control risks. The Board has delegated to the Audit Committee all authority of the Board as may be required or advisable to fulfill the purposes of the Audit Committee as set forth in the Audit Committee’s charter. The Audit Committee may delegate any responsibilities of the Audit Committee to individual members of the Audit Committee. Additional information regarding the functions performed by the Audit Committee is set forth in the “Audit Committee Report” included herein. | |
| | Compensation Committee | | |||
| | Committee Chair: Howard A. Willard III Members: Morris R. Clark Wouter van Kempen Jeff E. Wojahn | | | The current members of the Compensation Committee are Mr. Willard, Chair, and Messrs. Clark, van Kempen, and Wojahn. The Compensation Committee met eight times in 2023. The Compensation Committee approves total compensation of the Chief Executive Officer based on the Compensation Committee’s evaluation of the Chief Executive Officer’s performance in light of goals and objectives set and approved by the Compensation Committee, the Nominating and Corporate Governance Committee, and the full Board. The Chief Executive Officer makes compensation recommendations to the Compensation Committee for all other executive officers, including salary and annual equity compensation. The Compensation Committee then reviews such recommendations and determines whether to approve them. The Compensation Committee also oversees our compensation and benefit plans; stockholder proposals relating to executive compensation; our human resources management, strategies, and initiatives; the implementation of our Clawback Policy and Recoupment Policy; and reviews and considers the results of our Say on Pay Votes, and recommends related responses, if any, to the Board. The Compensation Committee has sole authority to retain and dismiss compensation consultants and other advisors that provide objective advice, information, and analysis regarding executive and director compensation. These consultants report directly to and may meet separately with the Compensation Committee and may consult with the Compensation Committee Chair between meetings. Meetings may, at the discretion of the Compensation Committee, include members of the Company’s management, other members of the Board, consultants or advisors, and such other persons as the Compensation Committee or its Chair may determine. The Compensation Committee is also responsible for the oversight of the Company’s management succession planning. The Board has delegated to the Compensation Committee all authority of the Board as may be required or advisable to fulfill the purposes of the Compensation Committee as set forth in the Compensation Committee’s charter. The Compensation Committee may form and delegate authority to subcommittees comprised of members of the Compensation Committee. Additional information regarding the functions performed by the Compensation Committee is set forth in the “Compensation Discussion and Analysis” section and the “Compensation Committee Report” included herein. | |
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| | Nominating and Corporate Governance Committee | | |||
| | Committee Chair: Jeff E. Wojahn Members: Carrie M. Fox Wouter van Kempen Howard A. Willard III | | | The current members of the Nominating and Corporate Governance Committee are Mr. Wojahn, Chair, Ms. Fox, and Messrs. van Kempen and Willard. The Nominating and Corporate Governance Committee met five times in 2023. The Nominating and Corporate Governance Committee identifies, evaluates, and recommends qualified nominees to serve on our Board and develops and oversees our internal corporate governance processes. Our Board, through the Nominating and Corporate Governance Committee, evaluates itself annually. The Nominating and Corporate Governance Committee endeavors to achieve an overall balance of diversity of experiences, skills, attributes, and viewpoints among our directors. It does not discriminate based upon race, religion, sex, national origin, age, disability, citizenship, or any other legally protected status. The Nominating and Corporate Governance Committee is also primarily responsible for reviewing and approving the goals and objectives relevant to the Company’s Chief Executive Officer’s performance and coordinating the annual evaluation of the Chief Executive Officer’s performance based on such goals and objectives. The Board has delegated to the Nominating and Corporate Governance Committee all authority of the Board as may be required or advisable to fulfill the purposes of the Nominating and Corporate Governance Committee as set forth in the Nominating and Corporate Governance Committee’s charter. The Nominating and Corporate Governance Committee may form and delegate authority to subcommittees comprised of members of the Nominating and Corporate Governance Committee. Additional information regarding the functions performed by the Nominating and Corporate Governance Committee is set forth in the “Other Matters—Stockholder Proposals; Identification of Director Candidates” section included herein. | |
| | ESG Committee | | |||
| | Committee Chair: Carrie L. Hudak Members: Deborah Byers Carrie M. Fox James M. Trimble | | | The members of the ESG Committee are Ms. Hudak, Chair, Mses. Byers and Fox, and Mr. Trimble. The ESG Committee met five times in 2023. The ESG Committee assists our Board in providing global oversight and support of the Company’s environmental, health, safety, and regulatory compliance policies, programs, and initiatives. In carrying out these responsibilities, the ESG Committee reviews the status of our health, safety, and environmental performance, including processes monitoring and reporting on compliance with internal policies and goals and applicable laws and regulations. In addition, the ESG Committee is responsible for the oversight and support of the Company’s environmental, social, and social governance commitments, functions, and responsibilities. In carrying out these responsibilities, the ESG Committee monitors (i) the Company’s general strategy relating to ESG matters, including corporate social responsibility; social governance, including the Company’s policies and practices promoting diversity, equity, inclusion, and human and workplace rights; sustainability; and other public policy matters, (ii) communications with employees, investors, and other stakeholders of the Company relating to ESG matters, and (iii) developments relating to, and improving the Company’s understanding of, ESG matters. The ESG Committee is also responsible for the oversight of the Company’s five-year capital development program and the Company’s ability to develop its proved undeveloped reserves in a timely manner. Further, the ESG Committee is responsible for overseeing climate-related risks and proactively mitigating them to the extent feasible, as well as pursuing relevant climate-related opportunities. | |
Attendance at Annual Meetings
The Board encourages all directors to attend all annual meetings of stockholders, if practicable. All of our directors who were serving at the time of the 20222023 Annual Meeting of Stockholders attended the Annual Meeting. We anticipate that all of our directors will attend the 20232024 Annual Meeting.
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Civitas is focused on exceptional performance in managing ESG issues, with a goal of mitigating risks while benefiting our shareholdersstockholders and partnering with the communities where we operate. Civitas believes economic value and sustainability are fundamental to its success and considerconsiders sustainability and ESG leadership core to its corporate identity. To accomplish this, sustainability and ESG factor as a critical part of the Company’s integrated strategy and business development. Civitas strives to responsibly meet the world’s demand for oil and gas in a way that is sustainable for the environment while returning value to shareholdersstockholders and partnering with the community.
The Board of Directors provides the highest level of oversight for the Company and its ESG program. The Board of Directors also has a dedicated ESG Committee that is responsible for overseeing and supporting the Company’s commitment to environmental, health, and safety; social responsibility, including diversity, equity and inclusion and human and workplace rights; sustainability; and other public policy matters relevant to the Company. The ESG Committee assists senior management in setting the Company’s general strategy relating to ESG matters and in developing, implementing, and monitoring initiatives and policies based on that strategy. The Company’s Senior Vice President of Environmental, Health, Safety & Regulatory and Chief Sustainability Officer leads the Company’s ESG program within the executivesenior management team and is accountable for strategy and execution of ESG objectives.
Civitas utilizes established assessment frameworks to help identify, understand, and prevent potential ESG-related risks and performed a sustainability materiality assessment to establish the foundation of its ESG program. More information regarding the sustainability materiality assessment can be found in the Company’s 20222023 Corporate Sustainability Report. The report was notably produced utilizingis informed by three different sustainability and climate disclosure frameworks: the Sustainability Accounting Standards Board (“SASB”) and Task Force on Climate-Related Financial Disclosures (“TCFD”), as well as the American Exploration and Production Council (“AXPC”) ESG Metrics Framework, an industry reporting framework for addressing industry-specific issues. Considering the Company’s significant growth, expansion outside of the DJ Basin and transformation of its executive management team, we performed a new sustainability materiality assessment in 2024 that will be used as a guide for the 2024 Corporate Sustainability Report. Civitas anticipates publishing its 20232024 Corporate Sustainability Report in the third quarter of 2023.2024.
Civitas encourages you to visit the “Sustainability” tab on its website at www.civitasresources.com to access its 20222023 Corporate Sustainability Report and corporate policies and to learn more about the Company’s commitment to sustainability, safety, community, and good governance. The information on Civitas’ website, including its 20222023 Corporate Sustainability Report, is not incorporated by reference or otherwise made part of this Proxy Statement.
Civitas provides additional highlights regarding its ESG program below.
Environmental
Greenhouse Gas Emissions
Utilizing an operational greenhouse gas emissions-reduction program coupled with multi-year investment in certified emissions credits from recognized voluntary carbon offsetcredit registries, including American Carbon Registry, Climate Action Reserve, Verra, and Gold Standard, to offsetaddress residual emissions, Civitas believes it is Colorado’s first carbon neutral operator on both a Scope 1 and Scope 2 basis.basis with respect to assets acquired prior to 2023. Civitas is committed to maintain a carbon neutral status with respect to its Scope 1 and Scope 2 greenhouse gas emissions through a two-fold approach to 1) reduce and eliminate operational emissions as a foremost priority, and 2) offsetaddress the remaining residual Scope 1 and Scope 2 emissions annually using certified carbon offsetscredits and renewable energy certificates, respectively. In 2022,2023, projects that supported this commitment included a comprehensive retrofit of natural gas pneumatic devices, FLIR Leak Detection & Repair, continuous methane leak detection monitoring technologies, compression optimization, and electrification. Further, as of March 31, 2023,28, 2024, Civitas had more than 80148 development locations equipped with 24-hour, real-time ambient air monitoring stations, had more than 3034 wells that are certified by Trustwell® to produce Responsibly Sourced Gas, and had achieved zero routine flaring at all Colorado operations since January 2022.
Mitigating Surface Impacts
Preventing spills is an important part of Civitas’ license to operate and the Company goes to significant lengths to proactively manage this risk. When spills do occur, a Spill Response Notification Program drives Civitas’ internal critical communications and Civitas is committed to reporting these spills to its regulators as required. In
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Guided by its Biodiversity Policy, Civitas seeks to operate on previously environmentally disturbed locations to limit new impacts. Once operations are complete, Civitas seeks to restore disturbed areas to their original self-sustaining ecosystem in accordance with its Reclamation Policy, which defines its protocols and processes around biodiversity and habitat restoration.
Managing Water Resources
The Company strives to prioritize environmental stewardship, including water resource management and conservation. The Company’s efforts to minimize water use where possible include the use of tanks and temporary collapsible water pipelines to minimize unnecessary water evaporation. At sites where water collection infrastructure systems are available, Civitas reverses piped water disposal systems to enable water reuse. Civitas is committed to meeting water standards set by the Colorado Oil and Gas Conservation Commission andalso conducts monitoring prior to and after its drilling and completion operations, as appropriate, to help ensure local freshwater resources are protected.
Social
Occupational Safety and Heath
Civitas is committed to protecting the safety of our employees, our contractors, and the communities in which we operate. Safety is embedded in everything we do and is prioritized in each decision made by management, employees, and contractors. A commonly used measure of an organization’s safety performance is total recordable incident rate (“TRIR”), which represents the number of injuries requiring medical treatment per 100 full-time employeesworkers during a one-year period. Civitas monitors this performance measure and communicates it broadly across the company as a means to evaluate safety performance. We are committed to maintaining a TRIR below 0.250.22 in 2024 for both employees and contractors, a target far below industry average as reported by the Bureau of Labor Statistics for the Oil and Gas Extraction industry. During 2022, we achieved a TRIR of 0.19.
Civitas works to identify and track hazards and incidents in the workplace and incidents so corrective actions may be taken to continuously improve safety performance. Civitas operates its worksites under a stop work authority program, under which every person is empowered and obligated to halt operations if they observe operations that are being planned or executed without a complete risk assessment or safety management.
All employees are required to participate in training courses that ensure work is completed safely and efficiently. The courses vary according to employee group, job responsibilities, and manager discretion. Classroom training courses are held throughout the year to inform employees of relevant safety and environmental topics within the industry and to proactively ensure compliance and adherence related to recently issued rules and regulations.
Diversity, Equity & Inclusion
Civitas believes supporting a diverse and inclusive workforce is critical to its success as a business and will allow the Company to gain valuable perspectives for continuous improvement. Civitas is committed to creating and maintaining a workplace in which all employees have an opportunity to participate and contribute to the success of the business and are valued for their expertise, experiences, and ideas. The Company requires annual unconscious bias training for all employees to continue to foster an inclusive environment where everyone, regardless of background or demographic, feels valued in the workplace. Civitas provides equal opportunity for all candidates, employees, and consultants regardless of race, religion, gender, sexual orientation, age, ethnic or national origin, social origin, disability, family status, or any other protected status and personal characteristics for all aspects of employment.
Compensation, Benefits, and Employee Development
Civitas seeks to provide fair, market-competitive, performance-based compensation, and comprehensive benefits to its employees. To ensure alignment with its short-term and long-term business goals, Civitas’ compensation program consists of base pay as well as short-term and long-term incentives. To foster the health and well-being of our employees and their families, all full-time employees are offered access to financial, health,
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and wellness programs, including: a 401(k) plan with company match, medical, dental, and vision insurance, income protection and disability coverage, paid time off, fitness reimbursement, and various quality of life tools and resources included within our Employee Assistance Program. Civitas believes that its compensation and benefits package promotes retention and employee engagement as well as fosters physical, mental, financial, and social health within the Company’s workforce. The Compensation Committee oversees our compensation programs and regularly modifies program design to incentivize achievement of our corporate strategy and matters of importance to our stakeholders.
Civitas recognizes and supports the growth of our employees by offering internal and external development programs, including a tuition reimbursement program. The Company invests in leadership training and professional development programs that will enable its employees to reach their potential and perform at their best.
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Executive Officers
The following table sets forth the name, age and positions of each of our executive officers as of April 12, 2024.
| | Name | | | Age | | | Title | |
| | M. Christopher Doyle | | | | | | ||
| | Travis L. Counts | | | 46 | | | Chief Administrative Officer and Secretary | |
| | Marianella Foschi | | | 36 | | | Chief Financial Officer and Treasurer | |
| | Jeffrey S. Kelly | | | 46 | | | Chief Transformation Officer | |
| | T. Hodge Walker | | | 53 | | | Chief Operating Officer | |
| | Kayla D. Baird | | | 52 | | | Senior Vice President and Chief Accounting Officer | |
Biographical information for Mr. Doyle is set forth in this proxy statement under the heading “Election of Directors—Director Nominees.”
| | Travis L. Counts | | |||
| | ![[MISSING IMAGE: ph_traviscounts-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_traviscounts-4c.jpg) Chief Administrative Officer and Secretary | | | Travis L. Counts has served as Chief Administrative Officer and Secretary of the Company since October 2023, having previously served as the Chief Legal Officer and Secretary of the Company from August 2022 to October 2023. Prior to joining the Company, Mr. Counts served as a Partner at Bracewell LLP, an international law firm based in Houston, Texas, from September 2021 through July 31, 2022, and as an executive advisor and consultant for ConocoPhillips from January 2021 to June 2021. From April 2013 until January 2021, he held various officer positions at Concho Resources Inc. prior to its acquisition by ConocoPhillips, including Senior Vice President, General Counsel and Corporate Secretary beginning in 2017. Mr. Counts also held in-house legal positions at Halcon Resources Corporation and Petrohawk Energy Corporation from 2010 to 2013. Prior to joining Petrohawk Energy Corporation, Mr. Counts was an equity member at Hinkle Elkouri Law Firm L.L.C. Mr. Counts holds a Bachelor of Arts from Vanderbilt University and a Juris Doctor from Tulane University School of Law. | |
| | Marianella Foschi | | |||
| | ![[MISSING IMAGE: ph_marianellafoschi-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_marianellafoschi-4c.jpg) Chief Financial Officer | | | Marianella Foschi has served as Chief Financial Officer for the Company since November 2021. Ms. Foschi served as Chief Financial Officer for Extraction from January 2021 through October 2021 and was Extraction’s Vice President, Finance from September 2019 to January 2021. She previously served as Director of Finance at Extraction from May 2015 until September 2019. Prior to joining Extraction, from 2012 to 2015 Ms. Foschi was an Associate at The Blackstone Group in Houston, Texas, focused on mezzanine debt and equity investments across the energy sector. While at The Blackstone Group, Ms. Foschi was responsible for investing $1.5 billion of private capital in the energy sector. From 2010 to 2012, Ms. Foschi was an energy investment banker at Credit Suisse where she developed her expertise in debt, equity, and advisory assignments for exploration and production, midstream and oilfield services companies. Ms. Foschi holds a Bachelor in Business Administration (Finance) and a Bachelor of Arts in Economics, both from the University of Texas. | |
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| | Jeffrey S. Kelly | | |||
| | ![[MISSING IMAGE: ph_jeffkelly-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_jeffkelly-4c.jpg) Chief Transformation Officer | | | Jeffrey S. Kelly has served as Chief Transformation Officer for the Company since August 2023. Prior to joining the Company, Mr. Kelly served as Managing Director, Asset Management at The Blackstone Group from April 2019 to August 2023 where he drove growth, value creation, and strategic transformation within its Private Equity Energy portfolio. From July 2011 until joining Blackstone in April 2019, Mr. Kelly held various leadership positions within Anadarko Petroleum Corporation’s (“Anadarko Petroleum”) onshore, international and midstream divisions where, most recently, Mr. Kelly served as the Vice President of WCTP Company where he led Anadarko Petroleum’s Ghana Business Unit. Before joining Anadarko, Mr. Kelly served as the Director, Operations & Costs Consulting for IHS Inc. from July 2007 to July 2011. Mr. Kelly holds a Bachelor of Science in Industrial Engineering and Management from Oklahoma State University. | |
| | T. Hodge Walker | | |||
| | ![[MISSING IMAGE: ph_hodgewalker-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_hodgewalker-4c.jpg) Chief Operating Officer | | | T. Hodge Walker has served as Chief Operating Officer for the Company since April 2023. Prior to joining Civitas in 2023, Mr. Walker served as vice president of Chevron Corporation’s (“Chevron”) Rockies Business Unit since October 2020, when Chevron acquired Noble. Prior to joining Chevron, Mr. Walker served as director of Noble Midstream GP since July 2018, Senior Vice President responsible for Noble’s U.S. onshore operations since February 2018 and Noble’s Vice President of West Africa and the U.S. Gulf of Mexico since 2014. Additionally, he served as Director of Strategic Planning, Environmental Analysis, and Reserves; managed Noble’s operated West Africa assets, non-operated international assets, and frontier business ventures and was a member of the Noble business development team since 2007. Prior to joining Noble in 2007, Mr. Walker held various positions at Amoco Corporation and BP America. Inc. Mr. Walker earned a Bachelor of Science and Masters in Geology from Louisiana State University and completed the Harvard Advanced Management Program in 2018. Mr. Walker is active in the energy industry and serves on the board of directors for the Coloradans for Responsible Energy Development and previously served on the advisory board of the Department of Geology at Louisiana State University and the board of directors for the Colorado Oil and Gas Association. | |
| | Kayla D. Baird | | |||
| | ![[MISSING IMAGE: ph_baird-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_baird-4c.jpg) Senior Vice President and Chief Accounting Officer | | | Kayla D. Baird has served as Senior Vice President and Chief Accounting Officer for the Company since January 2024. Prior to joining the Company, Ms. Baird served as Vice President, U.S. Accounting and Corporate Services for Baytex Energy Corp. (“Baytex”) since June 2023 following Baytex’s acquisition of Ranger Oil Corporation (“Ranger”), where she had served as Vice President, Chief Accounting Officer and Controller since February 2021. Prior to joining Ranger, Ms. Baird served as served as the Vice President, Chief Accounting Officer and Controller of EnVen Energy Corporation (“Enven”) from September 2017 through April 2020. Prior to joining Enven, she served as Chief Accounting Officer at Permian Resources, LLC (“Permian Resources”) from September 2014 until August 2017. Prior to Permian Resources, she served in various executive positions at ConocoPhillips, including Director of Lower 48 Strategy & Portfolio Management and Reserves Reporting & Compliance; Manager of Commercial Gas, Crude & NGL; and Manager of Upstream & Corporate Accounting Policy. Ms. Baird has 26 years of experience in the oil & gas industry. Previously, she worked for 13 years in public accounting, primarily for Ernst & Young, LLP, auditing large public oil and gas companies. Ms. Baird holds a bachelor’s degree in Accounting from Langston University and is a Certified Public Accountant. | |
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This compensation discussion and analysis (“CD&A”) provides a general description of our executive compensation program and information about its various components. This CD&A is intended to place in perspective the information contained in the executive compensation tables that follow this discussion.
Executive Summary
The following individuals are referred to as the “named executive officers” for fiscal year 20222023 and are included in the Summary Compensation Table:
| | | | | Name | | | Title | |
| | | | | M. Christopher Doyle | | | President and Chief Executive Officer (principal executive officer) | |
| | | | | Marianella Foschi | | | Chief Financial Officer and Treasurer (principal financial officer) | |
| | | | | T. Hodge Walker | | | Chief Operating Officer | |
| | | | | Travis L. Counts | | | Chief Administrative Officer and Secretary | |
| | | | | Jeffrey S. Kelly | | | Chief Transformation Officer | |
| | ![[MISSING IMAGE: ph_matthewrowens-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/ph_matthewrowens-4c.jpg) | | | Matthew R. Owens | | | Former Chief Operating Officer | |
Introduction
The information presented in this CD&A focuses on our fiscal year 2022;2023; however, we also describe compensation actions taken before or after fiscal year 20222023 to the extent such discussion enhances the understanding of our executive compensation disclosure.
2023 was a transformational year for Civitas as we significantly expanded our portfolio outside of the completionDJ Basin by acquiring approximately $7 billion in November 2021Permian Basin assets (the “Permian Acquisitions”). These transactions established operational scale in a second premier oil basin and more than doubled our proved reserves, daily production, and the depth of Civitas’ merger with Extraction Oil & Gas, Inc.our high-quality drilling inventory. Combined, the Permian Acquisitions added approximately 160 thousand barrels of crude oil equivalent per day (“Extraction”MBoe/d”) of production, 112,000 net acres and such merger,1,200 high-value development locations through the “Extraction Merger”) and its acquisitionacquisitions of CPPIB Crestone PeakTap Rock Resources, America Inc.LLC (“Crestone Peak”Tap Rock”), on March 1, 2022 Civitas completed its acquisition of Bison Oil & Gas II, LLC.Hibernia Energy III, LLC (“Hibernia”), and Vencer. The Company’s low-cost operating model, combined with its high-quality asset base and strong balance sheet is expected to allow Civitas to deliver significant value to stakeholders.stockholders. During 2022,2023, Civitas returned more than $530$660.3 million to shareholdersstockholders in the form of fixed and variable dividends. In January 2023, the Company also repurchased approximately $300 million worth of stock from its largest shareholder.
Leadership Changes
Effective January 31, 2022, Eric Greager, the Company’s Chief Executive Officer, was terminated without “cause.” Benjamin Dell, then Chair of our Board of Directors, was appointed as Interim Chief Executive Officer whileApril 5, 2023, the Company conducted a search process to select a new permanentappointed Thomas Hodge Walker as its Chief Executive Officer and remained in that role until May 2, 2022.Operating Officer. Mr. Dell did not receive any compensation for serving as Interim Chief Executive Officer other than reimbursement for his travel.
Effective August 3, 2023, the Company. The Company appointed T. Hodge WalkerJeffrey S. Kelly as its new Chief OperatingTransformation Officer to lead the Company’s integration of its transformative acquisitions in the Permian Basin.
Effective January 3, 2024, the Company appointed Kayla D. Baird as its Senior Vice President and Chief Accounting Officer. Ms. Baird replaced Sandra K. Garbiso, the Company’s former Chief Accounting Officer and Treasurer, whose employment was terminated without “cause” effective April 5, 2023.January 2, 2024.
For the details of the severance benefits that Messrs. Greager, Tinsley, and MarterMr. Owens received, please see the sections below entitled “Severance Agreement with Mr. GreagerOwens”, “Severance Agreement with Mr. Tinsley”, “Retirement Agreement with Mr. Marter”, and “Potential Payments Upon Termination and Change in Control.”
We successfully navigated a challenging 2022, deliveringdelivered on our key financial objectives while maintainingand maintained a strong capital structure.structure amongst ongoing transformation in 2023. We successfully executed our development plan and countered industry-wide inflationary pressures while exercising capital discipline to ensure we were investing in our best projects and able to return significant free cash flow to shareholders.stockholders.
We posted strong financial results in 2022,2023, including net income of approximately $1.2 billion$784.3 million and cash flow from operating activities of approximately $2.5$2.2 billion, driven primarilyunderpinned by commodity prices, well performance from our high-return development projects and the Company’s overall performance following the consolidating transactionsacquisitions occurring in 2021.2023. We invested approximately 39%60% of our 20222023 cash flow from operating activities into drillingthe development of our crude oil and completion activities,natural gas properties, allowing us to continue to return significant cash to shareholdersstockholders. During 2023, we declared $668.7 million through our base and variable dividend.dividends, including $149.1 million paid in December 2023. In early 2022, the Board initiated a quarterly variable cash dividend in addition to2023, we also repurchased approximately 5.2 million shares of our base dividend.common stock at an average price of $61.21 per share. We believe Civitas provides investors with one of the highest dividend yields in the exploration and production sector.
The Company achieved its annual safety target, advanced critical environmental, health, and safety objectives, integrated data management systems to improve productivity and align work processes, and continued to cultivate a results-driven employee culture focused on continuous improvement. We completed our comprehensive retrofit program of natural gas pneumatic devices, which have historically constituted a significant portion of our Scope 1 GHG emissions. The emissions reduction from this project is equivalent to removing over 3,500 light-duty trucks from the roads. Additionally, we safely tested enhancedbegan the process of plugging the wells in our voluntary orphaned well abandonment program announced in 2022, with anticipated completion designs on large, efficient multi-well pads throughout the Company’s acreage position. Fluid volumes and types, fluid rates, proppant volumes and types, stage spacing, perforation architecture, lateral spacing, and flowback techniques were the primary variables that were tested throughout the 2022 program. Along with extensive internal evaluation,in 2025. Additionally, the Company will also continuedecreased its occurrence of operated spills by 43% as compared to monitor industry trends, public data, and information from non-operated wells to further optimize completion techniques.2022.
During 2022,2023, the Company incurred capital costs of approximately $988.5 million$1.4 billion that, along with the incremental production acquired through acquisitions, drove an increaseresulted in average sales volumes to 170.0 MBoe per day.of 279 MBoe/d for the fourth
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quarter of 2023. The capital invested during 20222023 allowed the Company to drill 176, complete 142,107 and turn to sales 146148 gross operated wells.wells in the DJ Basin and drill 55 and turn to sales 78 gross operated wells in the Permian Basin. The Company ended 20222023 with total proved reserves of 416697.8 MMBoe, an increase of approximately 5%68% over year-end 20212022 proved reserves.
Business Strategies
The Company’s primary objective is to maximize shareholderstockholder returns by responsibly developing our oil and natural gas resources. To achieve this, Civitas is guided by four foundationalstrategic pillars that we believe add long-term, sustainable value. These pillars are:
| | Generate free cash flow
Features of Our Compensation Program in We strive to create a compensation program that encourages long-term value creation by tying individual compensation to the long-term performance of our stock while acknowledging and fostering the unique qualifications, skills, experience, and responsibilities of each individual. As part of the transformative nature of the events of 2021, we made significant changes to our compensation program, with those changes coming into effect on November 1, 2021 during which the Company merged with Extraction Oil & Gas, Inc. (“Extraction” and such merger, the “Extraction Merger”) and acquired CPPIB Crestone Peak Resources America Inc. (“Crestone CIVITAS RESOURCES, INC. 2024 Proxy Statement 25 Peak”), when we closed on our mergers with Extraction and Crestone Peak. Specifically, on a go-forward basis, we implemented the following features: • Executive officers were removed from eligibility under our • Executive officers’ base salaries were increased to make up a portion of the reduction in cash compensation attributable to that • Awards under the These changes were designed to increase the alignment of our executive officers’ interests with those of our stockholders with a focus on compensation that is intended to generate stronger compensation outcomes for stronger stock performance and weaker compensation outcomes for weaker stock performance. Key features of our
CIVITAS RESOURCES, INC. 2024 Proxy Statement 26
Compensation Committee Consideration of Compensation Philosophy and Objectives At Civitas, we view our employees as an investment for the future. We invest in our people to grow our business and deliver more value to our stockholders. The objectives of our compensation program are: • to attract, retain and motivate the most qualified individuals in the oil and gas industry; • to provide a total compensation package that aligns pay with performance and is flexible enough to respond to changing market conditions; and • to align the interests of our named executive officers with our stockholders’ interests. We design our compensation program to reward named executive officers for performance that creates stockholder value, in that incentive compensation is only earned by successfully implementing our long-term strategy and delivering strong stockholder returns. Conversely, our named executive officers will experience weaker compensation outcomes for weaker stock performance. Our compensation program, including benefits and perquisites, is reviewed by our Compensation Committee Executive Compensation Risk Assessment The Compensation Committee, in conjunction with advice provided by the Compensation Consultant (defined below), designed our Setting Executive Officer Compensation Role of our Board and Compensation Committee. Our Compensation Committee (i) oversees our compensation programs on behalf of our Board; (ii) is responsible for CIVITAS RESOURCES, INC. 2024 Proxy Statement 27 officers, and takes into consideration proposals made by our Chief Executive Officer regarding such compensation. The Compensation Committee has the sole authority to retain, amend the engagement with, and terminate any compensation consultant to be used to assist in the evaluation of director or executive officer compensation. The Compensation Committee has sole authority to approve the compensation consultant’s fees and other retention terms and has authority to cause the Company to pay the fees and expenses of the compensation consultant. Role of the Compensation Consultant. The Compensation Committee selected Meridian Compensation Partners, LLC to serve as a consultant to the Compensation Committee on compensation-related issues. (Meridian Compensation Partners, LLC is referred to herein as the “Compensation Consultant.”) Our Compensation Committee chose the Compensation Consultant because our Compensation Committee believes the Compensation Consultant has extensive experience in providing executive compensation advice, including specific experience in the oil and gas industry. Our Compensation Committee continues to believe it is beneficial to have an experienced, independent third party assist it in evaluating and setting executive compensation. On an annual basis and when otherwise required, the Compensation Consultant provides our Compensation Committee with an analysis of our executive compensation programs, including total direct compensation comprised of base salary and long-term incentive compensation, in order to assess the competitiveness of our programs and to provide conclusions and recommendations. Additionally, the Compensation Consultant attends meetings with the Compensation Committee and the Board, reviews various Company public disclosures, provides market data on officer and Board compensation and design practices, updates the Compensation Committee on emerging trends and regulatory changes, and serves as a resource for the Chair of our Compensation Committee on an as-needed basis. In making a determination to retain the Compensation Consultant, the Compensation Committee assesses the independence of the Compensation Consultant pursuant to SEC rules and considers, among other things, whether the Compensation Consultant provides any other services to us, the policies of the Compensation Consultant that are designed to prevent any conflicts of interest between the Compensation Consultant, the Compensation Committee, and us, any personal or business relationships between the Compensation Consultant and a member of the Compensation Committee or one of our executive officers, and whether the Compensation Consultant owns any shares of our common stock. Based in part on representations made by the Compensation Consultant, the Compensation Committee has concluded that the Compensation Consultant does not have any conflicts of interest in the representation of our Compensation Committee. While the Compensation Consultant makes recommendations to our Compensation Committee on compensation, our Compensation Committee and Board make and implement compensation decisions and have full discretion to do so independent of the Compensation Consultant’s recommendations. The Compensation Committee also has the right to terminate the services of the Compensation Consultant and appoint a new compensation consultant at any time. For fiscal year Competitive Benchmarking and Peer Group. Our Compensation Committee considers competitive industry data in making executive pay determinations. The Compensation Committee focuses on a group of peer companies with market capitalization and growth profiles similar to ours, taking into account geographic footprint and employee count and location. The Committee intends to continue, at a minimum on an annual basis, its review and assessment of the peer group and will make changes to the group when it is deemed appropriate.
CIVITAS RESOURCES, INC. 2024 Proxy Statement 28 The Compensation Consultant compiled compensation data for the Utilizing data obtained from the Compensation Consultant, we establish compensation standards for our named executive officers Role of CEO and Other Named Executive Officers in Determining Executive Compensation. The Compensation Committee, after reviewing the information provided by the Compensation Consultant and considering other factors, determines each element of compensation assessed against the Company’s rigorous goals. When making determinations about each element of compensation for the other executive officers, the Compensation Committee considers recommendations from our Chief Executive Officer. Additionally, at the Compensation Committee’s request, our executive officers may assess the design of, and make recommendations related to, our compensation and benefit programs, including recommendations related to the performance measures used in our incentive programs. The Compensation Committee is under no obligation to use these recommendations and is conscious of the need for the evaluation and incorporation of an effective independent and stockholder-focused compensation review process. Elements of Our Our Compensation Committee, assisted by the Compensation Consultant and executive management, continues to develop compensation programs that provide our named executive officers with an overall compensation package tailored to our
Pay-for-Performance. Our pay-for-performance philosophy is demonstrated in the mix of compensation that we provide to our named executive officers. A significant portion of our named executive officers’ compensation in CIVITAS RESOURCES, INC. 2024 Proxy Statement 29 RSUs instead of cash is at-risk because its value varies with changes in the stock price and because it is forfeitable if the executive voluntarily terminates employment (without “good reason”) prior to vesting. In addition, compensation that is paid in the form of The following chart illustrates the mix of pay in The chart below further illustrates, approximately NEOs Mix of Pay ![[MISSING IMAGE: pc_neomixpay-4c.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/pc_neomixpay-4c.jpg) ![[MISSING IMAGE: pc_neomixpay-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/pc_neomixpay-pn.jpg) Base Salary. Base salary is intended to provide a guaranteed amount of compensation that recognizes the level of responsibility and authority of each individual named executive officer and compensates for the individual named executive officer’s day-to-day contributions to the Company’s success. In response to tight expense controls and efforts to preserve stakeholder value while retaining key employees, our Board and Compensation Committee have generally increased base salaries only modestly for cost of living increases to account for inflation or in connection with special circumstances of promotions, competitive pay positioning, instances where the Compensation Committee concluded that an officer’s salary is significantly below market, and mergers. Base salaries as of December 31,
Annual Cash Incentive Awards. All of our employees generally have been eligible to receive annual cash incentive awards tied to both the Company’s performance and the underlying individual’s performance. On November 1, 2021, however, our Board determined that the Company’s executive officers would no longer participate in the Company’s STIP or receive annual cash incentive awards. This remained true for CIVITAS RESOURCES, INC. 2024 Proxy Statement 30 The Board’s decision to remove executive officers from the STIP was based on the conclusion that their incentive compensation should be more heavily weighted toward stock in the Company, which in turn strengthens their alignment with our stockholders. Special Transaction Bonus Awards. In November 2023, the Compensation Committee awarded a one-time special transaction cash bonus award to our named executive officers. The award was approved in recognition of the extraordinary efforts of the named executive officers since 2022 to diversify, scale, and transform the Company. Specifically, the Compensation Committee recognized the additional responsibilities and workloads of the named executive officers to meet all key deliverables under the Company’s 2023 business plan, while simultaneously identifying, closing, and integrating several large-scale accretive transactions that resulted in significant shareholder value creation. See “Compensation Discussion and Analysis — Introduction” above for further information. The special transaction bonus amounts for each named executive officer is as follows:
Long-Term Equity-Based Incentives. In expressed by stockholders and equity analysts, the Compensation Committee also determined that the PSUs would be based on The following table describes the performance metrics used in
In February
(1) Reflects the number of PSUs granted at “target” performance level. (2) Messrs. CIVITAS RESOURCES, INC. 2024 Proxy Statement 31 (3) Reflects the aggregate grant date fair value of RSU and PSU awards granted in (4) Mr. Upon the closing of the Extraction Merger, the Company assumed Extraction’s 2021 Long Term Incentive Plan (the “Extraction LTIP”). Further, pursuant to the terms of the merger agreement between the Company and Extraction, all outstanding Extraction LTIP awards, including those held by Ms. Foschi and Mr. Owens, were converted to economically equivalent Civitas awards. Ms. Foschi’s and Mr. Owens’ outstanding awards, in the form of PSUs tied to absolute TSR and time-based RSUs, were thus converted to awards that Further Details of PSU and RSU Awards. The The 2023 PSUs are subject to a performance criteria based solely on absolute TSR Calculation of Company’s Absolute TSR Performance. The Company’s absolute TSR performance is the Company’s annualized TSR for the Performance Period. Annualized TSR is calculated ![[MISSING IMAGE: eq_formula1-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/eq_formula1-bw.jpg) In all events, TSR is adjusted to give effect to any stock dividends, stock splits, reverse stock splits and similar transactions. PSU Vesting. Subject to the named executive officer’s continued employment through the Performance Period, the
In the event absolute TSR performance is between the thresholds shown above, the number of shares of common stock earned is adjusted through linear interpolation. The CIVITAS RESOURCES, INC. 2024 Proxy Statement 32 ![[MISSING IMAGE: eq_formula2-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/eq_formula2-bw.jpg)
Treatment upon Termination and Change in Control of In accordance with the accelerated vesting provisions contained in the award agreements, the vesting of the No Dividends While a named executive officer holds unvested PSUs or RSUs, he or she is not entitled to vote or receive dividends, if any, with respect to such unvested units. The named executive officers’ RSUs and PSUs include dividend equivalent rights payable in cash at the same time as the related RSUs and PSUs vest and are settled. Officer Arrangements and Severance None of our currently employed named executive officers is party to an employment agreement or offer letter that obligates the Company to provide any ongoing compensation or benefits other than (i) base salary, (ii) participation in the Company’s LTIP program, (iii) participation in the Severance Plan in effect at the time of the executive’s termination, and (iv) the same health, welfare, and other employee benefits available to our employees generally. See “Eighth Amended and Restated Severance Plan” below for a description of the Severance Plan and the severance benefits provided under the Severance Plan to our named executive officers. The executive officers are also each party to an Employee Restrictive Covenants, Proprietary Information and Inventions Agreement with the Company (the “Restrictive Covenants Agreement”). The Restrictive Covenants Agreements generally prohibit the executives from being involved in oil and gas exploration and development activities and other activities that directly compete with the Company’s business. The Restrictive Covenants Agreements also generally prohibit the executives from (i) participating in any business engaged in oil and gas exploration and development activities within a 25-mile radius of any mineral property interest of the Company or its affiliates (with exceptions in both cases for preexisting business activities and certain permitted investments) and (ii) soliciting employees or customers of the Company, in each case, for a defined period of time after employment with the Company has ended. Under the Restrictive Covenants Agreements, the executives are also generally prohibited from (i) using or disclosing the Company’s proprietary information and (ii) disparaging the Company or its business or any of its employees or officers, in each case, at any time during or after termination of employment. Eighth Amended and Restated Severance Plan. On January 21, 2022, the Board adopted the Eighth Amended and Restated Executive Change in Control and Severance Plan (the “Severance Plan”), pursuant to which our named executive officers CIVITAS RESOURCES, INC. 2024 Proxy Statement 33 Under the Severance Plan, the Compensation Committee of the Board identifies Eligible Individuals (as defined in the Severance Plan) as “Tier 1 Executives,” “Tier 2 Executives,” “Tier 3 Executives,” “Tier 4
(1) The employment of The Severance Plan provides that, upon the termination of an Eligible Individual’s employment without Cause or due to an Eligible Individual’s resignation for Good Reason (each, a “Qualifying Termination”), Tier 1, Tier 2, and Tier 3 Executives will be eligible to receive (i) a cash severance payment equal to 2.0x, 1.5x, and 1.0x, respectively, their then current Base Salary (as defined in the Severance Plan) as of the Date of Termination (as defined in the Severance Plan), paid in equal monthly installments over a 24-month period with respect to Tier 1 Executives and a 12-month period with respect to Tier 2 and Tier 3 Executives, in each case, following the Date of Termination and (ii) reimbursement for the cost of any COBRA premiums incurred by the Executives during the The Severance Plan provides that if a Qualifying Termination occurs within 12 months following a Change in Control, Tier 1, Tier 2, and Tier 3 Executives will be eligible to receive (i) a lump sum cash severance payment equal to 3.0x, 2.5x, and 2.0x, respectively, their then current Base Salary as of the Date of Termination and (ii) reimbursement for the cost of any COBRA premiums incurred by such Executives during the 24-month period with respect to Tier 1 Executives and 18-month period with respect to Tier 2 and Tier 3 Executives, in each case, following the Date of Termination. For Tier 1, Tier 2, and Tier 3 Executives, the cash severance payment under the Severance Plan no longer includes an annual bonus component since our executive officers no longer participate in the Company’s STIP. All equity incentives then held by such Tier 1, Tier 2, and Tier 3 Executive pursuant to the LTIP or otherwise will be governed by the award agreement applicable to the equity incentive award. Severance Agreement with Mr. Other Employee Benefits. We expect that the named executive officers will continue to be eligible for the same health, welfare, and other employee benefits available to our employees generally, including medical and dental insurance, short and long-term disability benefits, parking, and a 401(k) plan that includes Company CIVITAS RESOURCES, INC. 2024 Proxy Statement 34 matching of an employee’s contributions of up to 6% of such employee’s cash earnings. We believe that offering a comprehensive employee benefits package helps us attract and retain executive talent and remain competitive in our industry. Executive Officer Stock Ownership Policy We have established a Stock Ownership Policy for executive officers with the goal of promoting ownership of our common stock and aligning the interests of our executive officers with those of our stockholders. In February The ownership requirements for our named executive officers are currently established at the following minimum levels:
Executive officers have five years from officers may only sell shares if, after the sale of such shares, such executive officer will still be in compliance with the ownership requirements as of the day the shares are sold based on the then-current share price and salary level. The Compensation Committee monitors stock ownership levels on an annual basis. If an executive is promoted to a position with a higher salary multiple, such executive will have two years from the date of the change in position to reach the higher expected stock ownership level, but still must meet the prior expected ownership level within the original five-year period. Executives who do not satisfy the ownership requirements within the time required must hold one hundred percent (100%) of the net shares acquired through the LTIPs until the ownership levels are satisfied. Shares owned outright, including shares purchased as part of any co-investment requirement, and unvested restricted shares and shares underlying unvested restricted stock units that, in each case, vest solely based on time and continued employment count towards satisfaction of the guidelines, but unvested performance-based restricted shares and shares underlying unvested performance stock units do not. Clawback Policy The Compensation Committee adopted a clawback policy (the “Clawback Policy”) that complies with the NYSE’s new clawback rules promulgated under Section 10D of the Exchange Act and the rules promulgated thereunder. In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any such financial reporting requirement, the Clawback Policy requires that covered executives must reimburse the Company, or forfeit, any excess incentive-based compensation received by such covered executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare the restatement. Executives covered by the Clawback Policy are current and former executive officers, as determined by the Compensation Committee in accordance with Section 10D of the Exchange Act and the NYSE listing standards. Incentive-based compensation subject to the Clawback Policy includes any cash or equity compensation that is granted, earned, or vested based wholly or in part on the attainment of a financial reporting measure. The amount subject to recovery is the excess of the incentive-based compensation received based on the erroneous data over the incentive-based compensation that would have been received had it been based on the restated results. The Clawback Policy will only apply to incentive-based compensation received on or after October 2, 2023. Tax Considerations Our Compensation Committee considers tax and accounting rules and regulations when structuring the executive compensation paid to our named executive officers, including the following: Tax Gross-Ups. Our arrangements with our executive officers do not provide a “gross-up” or other reimbursement payment for any tax liability that such officer might owe as a result of the application of CIVITAS RESOURCES, INC. 2024 Proxy Statement 35 Section 409A of the Code or with respect to Sections 280G and 4999 of the Code (which may provide for, among other things, an excise tax on certain golden parachute payments received by the executives upon a change in control of the Company), and we have not agreed and are not otherwise obligated to provide any named executive officers with such a “gross-up” or other reimbursement. Our arrangements, including the Severance Plan, generally provide that if any payments upon a change in control constitute “parachute payments” (as defined under Section 280G of the Code), then such payments may be either paid in full or reduced so that such payments are less than the limitation under Section 280G, whichever produces the better after-tax result for the executive officer. Indemnification and Exculpation Our certificate of incorporation and bylaws provide indemnification rights to our directors and officers and permit us to purchase insurance on behalf of any officer, director, employee, or other agent for any liability arising out of that person’s actions as our officer, director, employee, or agent, regardless of whether Delaware law would mandate indemnification. Additionally, we have entered into separate indemnity agreements with our directors and officers to provide additional indemnification benefits, including the right to receive, in advance, reimbursements for expenses incurred in connection with a defense for which the director or officer is entitled to indemnification. Our certificate of incorporation also provides that none of our officers will be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as an officer, other than (a) for any breach of the officer’s duty of loyalty to the Company or its stockholders, (b) for any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law, (c) for any transaction from which the officer derived an improper personal benefit, or (d) for any action by or in the right of the Company. We believe that the limitation of liability provisions in our certificate of incorporation, bylaws, and the indemnity agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. CIVITAS RESOURCES, INC. 2024 Proxy Statement 36 The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates such information. The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and be incorporated by reference into the Annual Report on Form 10-K filed by the Company with the SEC on February Compensation Committee of the Board Howard A. Willard III, Chair Morris R. Clark, Member Wouter van Kempen, Member Jeffrey E. Wojahn, Member CIVITAS RESOURCES, INC. 2024 Proxy Statement 37 The following table contains information concerning the annual compensation for services provided to us by our named executive officers during the fiscal years ended December 31, 2023, 2022,
(1) Mr. Doyle joined the Company as its President and Chief Executive Officer on May 2, (2) The following are the annual base salaries payable to each of the named executive officers as of December 31, (3) Reflects a one-time special transaction cash bonus paid award received in recognition of the efforts of Messrs. Doyle, Walker, Counts and Kelly, and Ms. Foschi in connection with the Company’s large-scale acquisitions in 2023.See “Special Transaction Bonus Awards” above for further information. (4) Reflects the aggregate grant date fair value of RSU and PSU awards granted in There were no bonuses earned under the Company’s STIP in CIVITAS RESOURCES, INC. 2024 Proxy Statement 38 (6) All Other Compensation for
(A) Parking is available to all employees. The amount listed includes excess costs for reserved parking. (B) Messrs. Doyle and Counts Reflects vacation Reflects the value of severance benefits received by Ms. Foschi received a one-time cash payment pursuant to the Extraction LTIP. (8) Mr. CIVITAS RESOURCES, INC. 2024 Proxy Statement 39 The following table sets forth information concerning each grant of an award made in
(1) granted to each of Messrs. (2) These amounts represent the threshold, target, and maximum payouts under the PSU awards granted to each of the named executive officers in (3) Reflects the number of RSUs granted in 2023. The RSUs will vest in three equal installments on each of the first three anniversaries of the date of grant. (4) Reflects the aggregate grant date fair value of RSUs and PSUs, computed in accordance with ASC Topic 718, and does not reflect the actual value that may be realized by the named executive officer. The discussion of the assumptions used in calculating the aggregate grant date fair value of the RSU awards for purposes of the Company’s financial statements can be found in Note 7 to the financial statements as set forth in the Company’s Form 10-K filed with the SEC on February 27, 2024. (5) The PSUs CIVITAS RESOURCES, INC. 2024 Proxy Statement 40 (6) Mr. Narrative Discussion of Summary Compensation Table and Our executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and The following table sets forth certain information with respect to the outstanding stock awards held by our named executive officers at the end of fiscal year
(1) RSUs vest in three equal installments on each of the first three anniversaries of the date of grant, provided the recipient remains continuously employed through the applicable vesting dates, or if earlier, upon a change-in-control and certain termination events. (2) The market value was calculated using the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023, as quoted by the NYSE, which was $68.38. (3) The amounts here reflect the target amount of the initial number of PSUs granted to the named executive officers. The number of shares of the Company’s common stock that may be issued to settle PSUs ranges from 0% to 200% for PSUs granted in 2022 and 0% to 225% for PSUs granted in 2023 of the number of PSUs awarded based upon attainment of certain pre-determined performance goals. For all PSU awards, the PSUs will be settled in shares of the Company’s common stock following the conclusion of the three-year measurement period. See “ (4) Pursuant to the Agreement and Plan of Merger CIVITAS RESOURCES, INC. 2024 Proxy Statement 41 “Converted PSU PSU Award (5) Ms. Foschi’s (6) Mr. The following table sets forth time-based RSUs and PSUs held by our named executive officers that vested during fiscal year
(1) The number of shares reflected in this column (2) The value realized on vesting is based upon the gross shares underlying the time-based RSU awards that vested on their relevant vesting dates (3) In addition to the vesting of CIVITAS RESOURCES, INC. 2024 Proxy Statement Pension Benefits Other than our 401(k) plan, we do not have any plan that provides for retirement benefits. We do not have any non-qualified deferred compensation plans.
Potential Payments Upon Termination and Change in Control The table below discloses a hypothetical amount of compensation and/or benefits due to our continuing named executive officers in the event of their termination of employment and/or in the event we undergo a change in control. The amounts disclosed assume such termination and/or such change of control was effective as of December 31,
CIVITAS RESOURCES, INC. 2024 Proxy Statement 43
(1) Upon termination without Cause or resignation for Good Reason (as such terms are defined in the Severance Plan), (2) Upon termination without Cause or resignation for Good Reason (as such terms are defined in the Severance Plan), a pro-rata portion of any RSUs that have not vested as of a named executive officer’s date of termination shall vest as of such termination date, except for Ms. Foschi’s RSUs granted in 2021 prior to the Extraction Merger, which would fully vest as of such termination date. The pro-rata portion is determined by a fraction, the numerator of which is (A) the number of days between the last scheduled vesting date of the applicable award and such executive’s date of termination and the denominator of which is (B) the number of days between such last scheduled vesting date and the final vesting date of the applicable award. In the event such termination occurs within 12 months following a change in control, any RSUs that have not vested as of the named executive officer’s date of termination shall fully vest as of such termination date. Upon termination due to death or Disability (as defined in the Severance Plan), any RSUs that have not vested as of the named executive officer’s date of termination will fully vest as of such termination date. The accelerated vesting of the RSU awards is based upon the closing price per share of our common stock on December (3) Upon termination without Cause or resignation for Good Reason (as such terms are defined in the Severance Plan), a pro-rata portion of any PSUs CIVITAS RESOURCES, INC. 2024 Proxy Statement 44 PSUs is based upon the closing price per share of our common stock on December (4) Upon termination without Cause or resignation with Good Reason (as such terms are defined in the Severance Plan), termination; and Ms. Foschi (5) Mr. CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the total compensation of our employees and the annual total compensation of our President and Chief Executive Officer (our “CEO”). for fiscal year 2023.For • The median of the annual total compensation of all employees of our • The annual total compensation of our CEO Based on this information for We identified our median employee by examining the total cash compensation paid to all of our employees in We identified our median employee based on annual total cash compensation, we calculated annual total cash compensation for such employee using the same methodology we use for our named executive officers, as CIVITAS RESOURCES, INC. 2024 Proxy Statement 45 set forth in the Summary Compensation Table described above. For the year ended December 31, The pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Pay versus Performance The following table sets forth certain information with respect to the Company’s financial performance and the compensation paid to our named executive officers (“NEOs”) for the fiscal years ended on December 31, 2023, December 31, 2022, December 31, 2021, and December 31, 2020.
(1) Mr. Doyle was a Principal Executive Officer of the Company (“PEO”) (2) Mr. Dell was a PEO only in fiscal year 2022. Mr. Dell served as Interim Chief Executive Officer from January 31, 2022 until May 2, 2022. During his service as Interim Chief Executive Officer at the Company, he remained an employee of Kimmeridge and did not receive any compensation directly from the Company for his service as Interim Chief Executive Officer or participate in any of the Company’s employee benefits plans. Mr. Dell only received compensation directly from the Company for his services as a director of the Company. In addition, Mr. Dell was allowed private aircraft usage during the period he served as Interim Chief Executive Officer, and the amounts for such private aircraft usage were paid by the Company to Kimmeridge. (3) Mr. Greager was a PEO in fiscal years 2022, 2021 and 2020. Mr. Greager’s employment with the Company terminated effective January 31, 2022. (4) The dollar amounts reported represent the amount of “compensation actually paid” (“CAP”), as computed in accordance with SEC rules. “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. The “compensation actually paid” reflects the adjustments set forth in the table below made to the total compensation amounts reported in the Summary Compensation Table for the applicable year, computed in accordance with Item 402(v) of Regulation S-K. We do not have a defined benefit plan so no adjustment for pension benefits is included in the table below. Similarly, no adjustment is made for dividends as the NEOs are not entitled to receive dividends with respect to unvested RSUs and PSUs and are only entitled to dividend equivalent rights that are payable in cash at the same time as the related RSUs and PSUs vest and are settled:
CIVITAS RESOURCES, INC. 2024 Proxy Statement 46
(A) The dollar amounts reported in the Summary Compensation Table for the applicable year. (B) The amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year represent the grant date fair value of equity awards granted in the applicable year. (C) The recalculated value of equity awards for each applicable year includes the addition (or subtraction, as applicable) of the following: (C1) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (C2) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (C3) for awards that vest in applicable year, the change in the fair value as of the vesting date from the end of the prior year; (C4) for awards that are granted and vest in the same year, the fair value as of the vesting date; (C5) the fair value of awards as of the end of previous fiscal year that were granted in prior years and failed to meet vesting criteria in the current fiscal year. (D) Total Equity Adjustments from the addition (or subtraction, as applicable) of re-valued equity. (E) “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In calculating the “compensation actually paid” amounts, the fair value or change in fair value, as applicable, of the equity award adjustments included in such calculations was computed in accordance with FASB ASC Topic 718. The valuation assumptions used to calculate such fair values did not materially differ from those disclosed at the time of grant. (5) The names of each of the non-PEO NEOs reflected in these columns for each applicable fiscal year are as follows: (i) for fiscal year 2023, Marianella Foschi, Thomas Hodge Walker, Travis L. Counts, Jeffrey S. Kelly, and Matthew R. Owens; (ii) for fiscal year 2022, Matthew R. Owens, Travis L. Counts, Marianella Foschi, Sandra K. Garbiso, Dean Tinsley, and Cyrus D. Marter; (6) The Company TSR and the Company’s Peer Group TSR reflected in these columns for each applicable fiscal year is calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K. The peer group used to determine the Company’s Peer Group TSR for each applicable fiscal year is the Standard and Poor’s 500 Oil & Gas Exploration & Production Index (“S&P O&G E&P Index”) as disclosed in the Company’s Form 10-K filed with the SEC on February (7) Represents the amount of net income reflected in the Company’s audited financial statements for each applicable fiscal year (amounts presented in thousands). (8) CIVITAS RESOURCES, INC. 2024 Proxy Statement 47 Pay versus Performance Comparative Disclosure As described in more detail in the section titled “Compensation Discussion and In accordance with Item 402(v) of Regulation S-K, the Company is providing graphical descriptions of the relationships between the information presented in the table above. ![[MISSING IMAGE: bc_paidagainsttsr-4c.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/bc_paidagainsttsr-4c.jpg) ![[MISSING IMAGE: bc_paidagainsttsr-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/bc_paidagainsttsr-pn.jpg) ![[MISSING IMAGE: bc_paidagainstcomp-4c.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/bc_paidagainstcomp-4c.jpg) ![[MISSING IMAGE: bc_paidagainstnet-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/bc_paidagainstnet-pn.jpg) CIVITAS RESOURCES, INC. 2024 Proxy Statement 48 ![[MISSING IMAGE: bc_paidagainstnet-4c.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/bc_paidagainstnet-4c.jpg) Pay versus Performance Tabular List Our executive compensation program was simplified following mergers with Extraction and Crestone Peak to only provide base salary and long-term incentive as the direct pay elements (along with health and welfare benefits). Beginning in 2023, awards under the LTIP were restructured to be weighted (i) seventy percent in the form of PSUs tied to absolute total shareholder return, and (ii) thirty percent in the form of time-based RSUs. See “Compensation Discussion and Analysis—Introduction—Features of Our Compensation Program in 2023” above for further information. The following table lists our most important and only performance Performance Measures Shareholder Return Shareholder Return
Director Compensation Our Board believes that attracting and retaining qualified independent directors is critical to the ongoing operation of our Company. Similar to the evaluation of the compensation of our executives, our Compensation Committee engages the Compensation Consultant to conduct an analysis of the independent director compensation. Effective Under the Company’s Independent Director Compensation Program
CIVITAS RESOURCES, INC. 2024 Proxy Statement 49 The following table provides information concerning the compensation of our independent directors who served in
(1) Amounts reflect the independent directors’ chair fees that were accrued and earned in (2) The amounts in the Stock Awards column represent the aggregate grant date fair value of No stock options were awarded to independent directors in fiscal year
(3) (4) Includes fees for serving as Chair of the Audit Committee. (5) Mr. Dell resigned from our Board effective as of February 22, 2023. (6) Includes fees for serving as Chair of the ESG Committee. (7) Mr. Steck resigned from our Board effective as of February 22, 2023. The amount includes fees for serving as Chair of the CIVITAS RESOURCES, INC. 2024 Proxy Statement 50 (8) Includes fees for serving as Chair of the Board. Mr. van Kempen’s fees were prorated downward to cover the Includes fees for serving as Chair of the Compensation Committee. (10) Includes fees for serving as Chair of the Nominating and Corporate Governance Committee.
CIVITAS RESOURCES, INC. 2024 Proxy Statement 51 The following table represents the securities authorized for issuance under our compensation plans, as of December 31,
(1) Represents (i) (2) The weighted-average exercise price relates solely to shares subject to outstanding stock options, as shares subject to RSUs and PSUs have no exercise price. (3) Represents securities available for issuance under our 2021 LTIP. (4) Represents (5) Represents securities available for issuance under the Extraction LTIP. The Extraction LTIP was approved by the U.S. Bankruptcy Court for the District of Delaware and became effective upon Extraction’s emergence from bankruptcy proceedings. Civitas assumed the Extraction LTIP in connection with the merger. New awards under the Extraction LTIP can only be granted to individuals (i) who were employed by or otherwise providing services to Extraction or its affiliates immediately before the closing of the merger or (ii) who were hired by, or otherwise CIVITAS RESOURCES, INC. 2024 Proxy Statement 52 Compensation Committee Interlocks and Insider Participation Messrs. van Kempen, Clark, Willard, and Wojahn are the current members of the Compensation Committee. No member of our Compensation Committee has been at any time an employee of ours. None of our executive officers serve or have served on the board of directors or compensation committee of a company that has one or more executive officers who serve on our Board or Compensation Committee. No member of our Board is an executive officer of a company at which one or more of our executive officers serves as a member of the board of directors or compensation committee of that company. CIVITAS RESOURCES, INC. 2024 Proxy Statement 53 The information contained in this Audit Committee Report and references in this proxy statement to the independence of the Audit Committee members shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, The Audit Committee is currently composed of The Board has charged the Audit Committee with a number of responsibilities, including review of the adequacy of the Company’s financial reporting, accounting systems and processes, and internal controls. During the last fiscal year, and earlier this year in preparation for the filing with the SEC of the Company’s Annual Report on Form 10-K for the year ended December 31, • reviewed and discussed the Company’s audited financial statements as of and for the year ended December 31, • reviewed and discussed the Company’s system of internal controls; • required management to perform an evaluation and make an assessment of the effectiveness of the Company’s internal controls over financial reporting asserting compliance with the Sarbanes-Oxley Act of 2002 and discussed the results with management and with the independent registered public accountants; • reviewed and discussed the Company’s assessment of risk related to financial reporting; • provided oversight to the internal audit function; • reviewed and discussed with the independent registered public accountants (i) their judgments as to the quality of the Company’s accounting policies, (ii) the quality, clarity, consistency, and completeness of the Company’s financial reporting and disclosures, (iii) the written disclosures and letter from the independent registered public accountants required by Public Company Accounting Oversight Board Independence Rules, including the independent registered public accountants’ independence, and (iv) the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16, Communications with Audit Committees; • discussed with management and with the independent registered public accountants the process by which the Company’s principal executive officer and principal financial officer make the certifications required by the SEC in connection with the filing with the SEC of the Company’s periodic reports, including reports on Forms 10-K and 10-Q; • pre-approved all auditing services and non-audit services to be performed for the Company by the independent registered public accountants as required by the applicable rules promulgated pursuant to the Exchange Act (details regarding the fees paid to Deloitte in fiscal • considered whether, to assure continuing auditor independence, it would be advisable to regularly rotate the audit firm itself, as recommended by the NYSE’s corporate governance rules. With respect to rotation of the audit firm, the Audit Committee has concluded that the current benefits to the Company from continued retention of Deloitte warrant retaining the firm at this time. The Audit Committee will, however, continue to review this issue on an ongoing basis. Notwithstanding the foregoing actions and the responsibilities set forth in the Audit Committee’s charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s consolidated financial statements are complete and accurate and in accordance with generally accepted accounting principles. Management is responsible for the Company’s financial reporting process, including its system of internal controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States. The independent registered public accountants are responsible for CIVITAS RESOURCES, INC. 2024 Proxy Statement 54 expressing an opinion on those financial statements. Audit Committee members are not employees of the Company. Therefore, the Audit Committee has relied, without independent verification, on management’s representation that the consolidated financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States and on the representations of the independent registered public accountants included in their report on the Company’s consolidated financial statements. The Audit Committee meets regularly with management, the Company’s internal auditors, and the independent auditors, including private discussions with the independent registered public accountants, and receives the communications described above. The Audit Committee has also established procedures for (i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and (ii) the confidential, anonymous submission by the Company’s employees of concerns regarding questionable accounting or auditing matters. However, this oversight does not provide us with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, our considerations and discussions with management and the independent registered public accountants do not assure that the Company’s consolidated financial statements are presented in accordance with generally accepted accounting principles or that the audit of the Company’s consolidated financial statements has been carried out in accordance with generally accepted auditing standards. Based on the review and discussion referred to above, and in reliance on the information, opinions, reports, and statements presented to us by the Company’s management and Deloitte, we recommended to the Board that the December 31, Audit Committee of The Board of Directors Morris R. Clark, Chair Deborah Byers, Member Carrie L. Hudak, Member James M. Trimble, Member CIVITAS RESOURCES, INC. 2024 Proxy Statement 55 The following table sets forth certain information regarding the beneficial ownership of common stock as of April Except as otherwise indicated in the footnotes to the table, each person has sole voting and investment power with respect to all shares of our common stock beneficially owned by them, except to the extent this power may be shared with a spouse. The address for the Company’s directors and executive officers is 555 17th Street, Suite 3700, Denver, Colorado 80202.
* Less than 1%. (1) Includes shares under outstanding RSUs and DSUs that directors (if they were to resign from the Board) and executive officers may acquire within 60 days from April (2) According to SEC rules, beneficial ownership includes shares as to which the individual or entity has voting power or investment power and any shares that the individual has a right to acquire within 60 days of a date reasonably selected by us, through the exercise of any right. We selected April (3) Based on (4) According to a Schedule 13D/A filed with the SEC on January 27, 2023 by Canada Pension Plan Investment Board (“CPPIB”) and CPPIB Crestone Peak Resources Canada Inc. (“CP Canada”), CPPIB has, with respect to Civitas Resources’ common stock, sole power to vote no shares, shared voting power over 16,480,721 shares, sole power to dispose of no shares, and shared power to dispose of 16,480,721 shares. CP Canada CIVITAS RESOURCES, INC. 2024 Proxy Statement 56 has, with respect to Civitas Resources’ common stock, sole power to vote no shares, shared voting power over 16,480,721 shares, sole power to dispose of no shares, and shared power to dispose of 16,480,721 shares. The 13D/A contained information as of January 24, 2023, and may not reflect current holdings of Civitas Resources’ common stock. The address of CPPIB and CP Canada is One Queen Street East, Suite 2500, Toronto, Ontario, M5C 2W, Canada. (5) According to a Schedule 13G/A filed with the SEC on January According to a Schedule 13G/A filed with the SEC on According to a Schedule Director of the Company. See “ (9) Named executive officer of the Company. (10) Includes 637 Tranche A Warrants issued at a price of $91.91 and 318 Tranche B Warrants issued at a price of $104.45. Mr. Owens’ employment with the Company terminated effective April 3, 2023. Amounts reflect shares held by Mr. Owens as reported by Mr. Owens on Includes directors and current executive officers. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the To our knowledge, based solely on a review of the copies of such reports and amendments thereto furnished to us and written representations that no other reports were required, we believe that all required reports of our officers, directors and greater than ten percent CIVITAS RESOURCES, INC. 2024 Proxy Statement 57 Procedures for Review, Approval and Ratification of Related Person Transactions An “Interested Transaction” is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: (i) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year; (ii) the Company or any of its subsidiaries is a participant; and (iii) any “Related Party” has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A “Related Party” includes: • a director or director nominee of the Company; • an executive officer of the Company; • a stockholder beneficially owning more than 5% of any class of the common stock of the Company; • a person who is an immediate family member or sharing the household of any of the foregoing; or • any firm, corporation, or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest. Our Audit Committee reviews all Interested Transactions that the rules of the SEC require be disclosed in the Company’s proxy statement and makes a determination regarding the initial authorization or ratification of any such transaction. The Audit Committee is also charged with reviewing the material facts of all Interested Transactions and either approving or disapproving the Company’s participation in such transactions under the Company’s Related Party Transactions Policy adopted by the Board. This written policy preapproves the following transactions: • any employment of an executive officer if his or her compensation is required to be reported in the Company’s proxy statement under Item 402 of Regulation S-K; • director compensation which is required to be reported in the Company’s proxy statement under Item 402 of Regulation S-K; • any transaction with another company at which a Related Party’s only relationship is as an employee (other than an executive officer), director, or beneficial owner of less than 10% of that company’s voting securities if the aggregate amount involved for any particular service does not exceed the greater of $500,000 or 25% of that company’s total annual revenues; and • any charitable contribution, grant or endowment by the Company to a charitable organization, foundation, or university at which a Related Party’s only relationship is as an employee (other than an executive officer) or a director if the aggregate amount involved does not exceed the lesser of $200,000 or 10% of the charitable organization’s total annual receipts. Prior to a Related Party entering into an Interested Transaction, the Audit Committee reviews the material facts of such Interested Transaction and either approves or disapproves the Interested Transaction. If advance Audit Committee approval of an Interested Transaction is not feasible, then the Interested Transaction is considered and ratified (if the Audit Committee determines it to be appropriate) at the Audit Committee’s next regularly scheduled meeting. In determining whether to approve or disapprove an Interested Transaction, the Audit Committee takes into account, among other factors, the following: (i) whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, (ii) the extent of the Related Party’s interest in the transaction, and (iii) whether the Interested Transaction is material to the Company. Further, the policy requires all Interested Transactions that are required to be disclosed in the Company’s filings with the SEC to be disclosed in accordance with applicable laws, rules, and regulations. Related Party Transactions On January 24, 2023, we entered into a share purchase agreement (the “Share Purchase Agreement”) with CP Canada, for the purchase of 4,918,032 shares of our common stock in a privately-negotiated transaction (the “Purchase”). At the time of the Purchase, CP Canada beneficially owned 21,398,753 shares of common stock, which represented approximately 25.1% of the outstanding shares of common stock. CP Canada remains our largest CIVITAS RESOURCES, INC. 2024 Proxy Statement 58 The price per share for the Purchase equaled $61.00 for a total purchase price of approximately $300 million. The Share Purchase Agreement contained customary representations and warranties of the Company and CP Canada. The Purchase and the Share Purchase Agreement were approved by the Board and, following a review pursuant to the Company’s Related Party Transactions Policy described above, by the Audit Committee. On Mr. Troy Owens, brother of Mr. Matthew R. Owens, our former Chief Operating Officer, is employed by us as an engineer. Consistent with market compensation for his services, Mr. Troy Owens received approximately $0.2 million in aggregate cash compensation relating to the fiscal year ended December 31, Other than as described above, from January 1,
Deborah Byers Morris R. Clark Chris Doyle Carrie M. Fox Carrie L. Hudak James M. Trimble Howard A. Willard III Jeffrey E. Wojahn 59 PROPOSAL TWO: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT The Audit Committee has selected Deloitte & Touche LLP (“Deloitte”) as the independent registered public accounting firm of the Company for the year ending December 31, The Audit Committee has the sole authority and responsibility to retain, evaluate, and replace the Company’s auditors. The stockholders’ ratification of the appointment of Deloitte does not limit the authority of the Audit Committee to change auditors at any time, if it determines that such a change would be in the best interests of the Company or our stockholders. Audit and Other Fees The following tables set forth the aggregate fees paid by the Company for audit and other permitted services provided by Deloitte for the years ended December 31, Deloitte
(1) Services rendered in (2) Includes fees for audits of, and related to, attest engagements, comfort letters, and similar items. (3) Represents professional services in connection with income tax compliance and assistance with tax matters related to the The charter of the Audit Committee requires that the Audit Committee review and pre-approve the plan and scope of the independent auditor’s audit, tax, and other services. The Audit Committee pre-approved 100% of the services described above under the captions “Audit Fees,” “Audit-Related Fees, Audit and Non-Audit Services Pre-Approval Policy. The Audit Committee has adopted a Pre-Approval Policy (the “Policy”) for the approval of services of the independent registered public accounting firm (“Independent Auditor”). This Policy outlines the scope of services the Independent Auditor may provide to the Company. The Audit Committee must pre-approve the audit and non-audit services performed by its Independent Auditor in order to assure that the provision of such service does not impair the Independent Auditor’s independence. Before the Company engages an Independent Auditor to render any non-audit service, the engagement must be either: (1) specifically approved by the Audit Committee, or (2) entered into pursuant to the Policy. The Policy also specifies certain non-audit services that are prohibited from being performed by its Independent Auditor. The Policy describes the Audit, Audit-Related, and Tax services, and All Other Services that have the pre-approval of the Audit Committee. The term of any pre-approval is twelve months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee will periodically revise the list of pre-approved services, based on subsequent determinations. The Audit Committee shall review the Policy annually with management and its Independent Auditor for purposes of assuring its continued appropriateness and compliance with applicable listing standards, including regulations of the SEC and Public Company Accounting Oversight Board (the “PCAOB”). The Audit Committee may delegate CIVITAS RESOURCES, INC. 2024 Proxy Statement 60 pre-approval authority to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not delegate to management the Audit Committee’s responsibilities to pre-approve services performed by the Independent Auditor. The Company’s management shall inform the Audit Committee of each service performed by the Independent Auditor pursuant to the Policy or performed in violation of the Policy. Requests or applications to provide services that require separate approval by the Audit Committee shall be submitted to the Audit Committee by both the Independent Auditor and the Chief Financial Officer or the Chief Accounting Officer and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s and the PCAOB’s rules on registered public accounting firm independence. The Company expects that representatives of Deloitte will be present at the Annual Meeting to respond to appropriate questions and to make a statement if they desire to do so. The Board unanimously recommends that stockholders vote “FOR” Proposal Two and approve the ratification of the selection of Deloitte as the independent registered public accountant of the Company for 2024. CIVITAS RESOURCES, INC. 2024 Proxy Statement 61 PROPOSAL THREE: APPROVAL OF THE CIVITAS RESOURCES, INC. 2024 LONG TERM INCENTIVE PLAN Overview We are asking our stockholders to approve the Civitas Resources, Inc. 2024 Long Term Incentive Plan (the “Plan”), which, if approved by our stockholders, will supersede and replace the Civitas Resources, Inc. 2021 Long Term Incentive Plan (the “Prior Civitas Plan”), the Extraction Oil & Gas, Inc. 2021 Long Term Incentive Plan (the “Prior Extraction Plan”) and the Bonanza Creek Energy, Inc. 2017 Long Term Incentive Plan (the “Prior Bonanza Creek Plan” and, together with the Prior Civitas Plan and the Prior Extraction Plan, the “Prior Plans”) in their entirety. The Compensation Committee adopted the Plan on April 11, 2024, subject to the approval of our stockholders at the Annual Meeting. The Compensation Committee and the Board believe that adopting the Plan is in the best interests of the Company and its stockholders because it will permit the Company to continue to provide incentive equity-based grants to promote the growth and success of the Company by aligning the interests of the Plan participants with those of the Company’s stockholders, and enable the Company to recruit, reward, and retain employees, officers, consultants, and directors of the Company and its affiliates. If the Plan is approved by our stockholders at the Annual Meeting, the Plan will become effective on the date of the Annual Meeting, and the Prior Plans will terminate with respect to new awards effective on the date of the Annual Meeting, and from such date, no new awards will be granted under the Prior Plans. If the Plan is not approved by our stockholders at the Annual Meeting, the Plan will not become effective, and the Prior Civitas Plan will remain in effect until its expiration on June 2, 2031 and the Prior Extraction Plan will remain in effect until its expiration on January 20, 2031, in each case, in accordance with their terms (or, if occurring earlier, their termination), after which date no further awards may be granted under the Prior Civitas Plan or the Prior Extraction Plan. The Prior Bonanza Creek Plan was previously superseded and replaced by the Prior Civitas Plan, and no further awards will be granted under the Prior Bonanza Creek Plan regardless of whether the Plan is approved by our stockholders at the annual meeting. Whether or not the Plan is approved by our stockholders, each award granted under the Prior Plans prior to their expiration (or, if occurring earlier, their termination) will continue to be subject to the terms and provisions applicable to such award under the applicable award agreement and the applicable Prior Plan. If the Plan is approved by our stockholders, we intend to file, pursuant to the Securities Act, a registration statement on Form S-8 to register the additional shares of common stock as soon as reasonably practicable thereafter. Historical Information The Prior Bonanza Creek Plan provided that the aggregate number of shares of common stock that were authorized for issuance thereunder was 2,467,430, and the Prior Civitas Plan, which replaced and superseded the Prior Bonanza Creek Plan in 2021, authorized for issuance an incremental 700,000 shares of common stock to those previously reserved under the Prior Bonanza Creek Plan. If any award granted under the Prior Civitas Plan or the Prior Bonanza Creek Plan expires or is canceled or forfeited, or if an award granted under the Prior Civitas Plan or the Prior Bonanza Creek Plan is settled in cash or otherwise terminates without delivery of any shares of common stock subject thereto, then the number of shares of common stock counted against the aggregate number of shares available under the Prior Civitas Plan with respect to such award shall again be available for issuance under the Prior Civitas Plan. The number of shares authorized for issuance under the Prior Civitas Plan is subject to adjustment in accordance with the terms of the Prior Civitas Plan upon certain changes in capitalization and similar events. In addition, in the event the Company substitutes or assumes awards in connection with a merger or similar event, the total number of shares of common stock reserved for issuance shall be increased by the corresponding number of awards assumed and, in the case of a substitution, by the net increase in the number of shares of common stock subject to awards before and after the substitution. In conjunction with the Extraction Merger, the Company assumed the Prior Extraction Plan, which reserved 3,305,080 shares of common stock that became issuable by the Company. Shares of common stock subject to an award granted under the Prior Extraction Plan that expire or are canceled, forfeited, exchanged, settled in cash, or otherwise terminated (including shares forfeited with respect to restricted stock and the number of shares withheld or surrendered in payment of any exercise or purchase price of an award or taxes relating to an award) will again be available for awards under the Prior Extraction Plan. The number of shares authorized for issuance CIVITAS RESOURCES, INC. 2024 Proxy Statement 62 under the Prior Extraction Plan is subject to adjustment in accordance with the terms of the Prior Extraction Plan upon certain changes in capitalization and similar events. If the Plan is approved by our stockholders, 3,100,000 shares of common stock will be authorized for issuance thereunder, subject to adjustment in accordance with the terms of the Plan. This number includes 1,250,000 shares of common stock newly reserved for issuance under the Plan. The market price per share of the securities underlying the shares as of April 8, 2024 was $75.72. For additional information regarding equity-based awards previously granted under the Prior Plans, please see Note 7 to our consolidated financial statements filed with our Form 10-K for the fiscal year ended December 31, 2023. The following table provides certain additional information regarding awards outstanding and unvested under the Prior Plans as of April 8, 2024.
(1) The total number of full value awards outstanding as of April 8, 2024 includes RSUs, DSUs, and PSUs. The number of shares subject to outstanding PSUs assumes performance at the target performance level. (2) No SARs were outstanding as of April 8, 2024. (3) The Prior Civitas Plan and the Prior Extraction Plan are our only active equity plans. The Company commits to grant no more than 20,000 shares subject to awards granted under the Prior Civitas Plan and the Prior Extraction Plan between April 8, 2024 and the date of the Annual Meeting. No additional shares may be granted under the Prior Civitas Plan and the Prior Extraction Plan subject to the approval of the Plan. The number of shares remaining available for future grant under the Prior Civitas Plan and the Prior Extraction Plan reflects PSUs at target payout. Equity Use Equity-based incentive awards represent a significant portion of our named executive officers’ compensation, representing approximately 87.5% of their total target compensation. Expected Plan Duration. Based on our historic and projected future use of equity-based compensation, we estimate that the shares requested under the Plan will be sufficient to provide awards for approximately three years. However, the actual duration of the share reserve will depend on currently unknown factors, such as the Company’s future stock price, changes in participation, our hiring and promotion activity, future grant practices, award type mix and levels, competitive market practices, acquisitions and divestitures, and the rate of returned shares due to forfeitures. Burn Rate. Our burn rate over the last three years has averaged 1.42%. “Burn rate” is calculated by dividing the total number of shares subject to equity awards granted in a given year by the total weighted average number of shares of common stock outstanding during the period and does not reflect any forfeitures or cancellations.
Overhang Calculation. Our existing overhang as of April 8, 2024 is 1.76%. “Overhang” is a measure of potential dilution from equity compensation plans and is calculated by dividing the number of shares of common stock subject to equity awards outstanding plus the number of shares available for future grants under our equity plans by the total number of shares of common stock outstanding. Following the approval of the Plan, total potential overhang is expected to increase by 3.10% to 4.86%. CIVITAS RESOURCES, INC. 2024 Proxy Statement 63
(1) The number of shares subject to outstanding PSUs assumes performance at the target performance level. (2) No additional shares may be granted under the Prior Plans upon approval of the Plan. Key Features of the Plan • No new awards will be granted under the Prior Plans following the Annual Meeting if the Plan is approved by our stockholders; • No automatic awards are promised to any eligible individual (other than automatic annual grants of deferred stock units to our non-employee directors in accordance with our Amended & Restated Independent Director Compensation Program, which grants will not be made prior to stockholder approval of the Plan); • Administered by the Compensation Committee, an independent committee of our Board; • No evergreen or automatic reload provision for the share reserve; • Ten-year term; • No automatic acceleration of vesting of awards in the event of a change in control of the Company unless the awards are not assumed or substituted in connection with the change in control; • Awards are subject to the Company’s Clawback Policy, Recoupment Policy or any similar policies adopted by the Company or required by applicable law or regulation; • No re-pricing of stock options or stock appreciation rights without stockholder approval; • Meaningful annual limits on total director compensation; • No granting of stock options and SARs with a per share exercise price of less than 100% of the fair market value of a share of common stock on the date of grant; • Awards granted under the Plan will not be eligible to vest earlier than first anniversary of the date of grant (subject to exceptions for (i) awards granted to non-employee directors that vest on the earlier of the one-year anniversary of the grant date and the first annual meeting of the Company’s stockholders following the grant date (provided that such vesting period may not be less than 50 weeks) and (ii) up to 5% of the shares reserved for issuance under the Plan may be issued pursuant to Awards that do not comply with such minimum one-year vesting period or clause (i) of this bullet point); • No liberal share recycling for stock option awards or SARs; • No payment of dividends or dividend equivalents until the underlying award is vested; • No “golden parachute” or tax gross ups; and • Awards are generally non-transferrable. Summary of the Material Terms of the Plan The following is a summary of the material terms of the Plan and is qualified in its entirety by reference to the Plan included as Appendix A to this proxy statement, which is incorporated by reference into this Proposal Three. Purpose The purpose of the Plan is to promote the success of the Company’s business for the benefit of its stockholders by enabling the Company to offer eligible individuals cash and stock-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders. CIVITAS RESOURCES, INC. 2024 Proxy Statement 64 Awards The Plan provides for the grant of the following types of awards (each, an “Award”): (i) stock options (in the form of either incentive stock options, within the meaning of Section 422 of the Code (“ISOs”) or non-qualified stock options (“NSOs”)), (ii) SARs, (iii) restricted stock, (iv) RSUs, (v) performance awards, (vi) other stock-based awards and (vii) cash awards. Securities Offered Subject to adjustment pursuant to the Plan in the event of certain changes in our capitalization or corporate transactions or events, a total of 3,100,000 shares of our common stock have been reserved for issuance pursuant to Awards under the Plan. No more than 3,100,000 shares of our common stock under the Plan may be issued pursuant to ISOs. Any shares of our common stock subject to an Award that expires or is canceled, forfeited or otherwise terminated without issuance of the full number of shares to which such Award relates or subject to Award other than an option or a SAR that is delivered, withheld or surrendered to satisfy any tax withholding obligations, will, in each case, again be available for issuance or delivery pursuant to other Awards under the Plan. Any shares of our common stock subject to an option or a SAR under the Plan will not again be available for issuance or delivery under the Plan if such shares are tendered, withheld or surrendered in payment of the exercise price of such option or SAR or taxes relating to such option or SAR, shares that were not issued or delivered as a result of the net settlement or net exercise of such option or SAR or shares repurchased on the open market with the proceeds of an option’s exercise price. Administration The Plan is administered by a committee of our Board that has been duly authorized to administer the Plan, except if no such committee is authorized by our Board, our Board will administer the Plan (as applicable, the “Committee”). The Committee has broad discretion to administer the Plan, including, but not limited to, the power to determine the eligible individuals to whom Awards will be granted, the number and type of Awards to be granted and the terms and conditions of Awards. The Committee may also accelerate the vesting or exercise of any Award and make all other determinations and take all other actions necessary or advisable for the administration of the Plan. Eligibility Employees and consultants of the Company and its affiliates, as well as non-employee members of our Board, are eligible to receive Awards under the Plan, as determined by the Committee in its sole discretion. As of April 8, 2024, the Company and its affiliates had 585 employees, 255 consultants, and 8 non-employee directors who would be eligible to participate in the Plan. Non-Employee Director Compensation Limits Under the Plan, in a single calendar year, a non-employee director may not be granted Awards for such individual’s service on our Board having a value in excess of $750,000 (except that, (a) the Committee may make exceptions to this limit, but the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous decisions involving compensation for non-employee directors and (b) for any year in which a non-employee director first commences services on our Board, serves on a special committee of our Board or serves as lead director or non-executive chair of our Board, this limit will be increased to $1,000,000). Minimum Vesting Schedule The Plan provides that a vesting period of at least one year will apply to all Awards issued under the Plan, except that (i) an award granted to a non-employee director may vest on the earlier of (a) the date that is one year following the date on which such award is granted or (b) the first annual meeting of the Company’s stockholders that occurs following the date such award is granted, provided that such vesting period may not be less than 50 weeks following the date such award is granted and (ii) up to 5% of the shares reserved for issuance under the Plan may be issued pursuant to Awards that do not comply with such minimum one-year vesting period or clause (i) of this sentence. Types of Awards Options. We may grant options to eligible individuals under the Plan, except that ISOs may only be granted to individuals who are our employees or employees of one of our subsidiaries, in accordance with Section 422 of the Code. The exercise price of an option cannot be less than 100% of the fair market value of a share of our CIVITAS RESOURCES, INC. 2024 Proxy Statement 65 common stock on the date on which the option is granted, and the option must not be exercisable for longer than ten years following the date of grant. However, in the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our equity securities, the exercise price of the option must be at least 110% of the fair market value of a share of common stock on the date of grant, and the option must not be exercisable for longer than five years from the date of grant. The Committee has the discretion to determine other terms and conditions of an option Award. SARs. A SAR is the right to receive an amount equal to the excess of the fair market value of one share of our common stock on the date of exercise over the grant price of the SAR. The grant price of a SAR cannot be less than 100% of the fair market value of a share of our common stock on the date on which the SAR is granted. The term of a SAR may not exceed ten years. SARs may be granted in connection with, or independent of, other Awards. The Committee has the discretion to determine other terms and conditions of a SAR Award. Restricted Stock Awards. A restricted stock Award is a grant of shares of our common stock subject to certain restrictions on transferability and risk of forfeiture as determined by the Committee. Unless otherwise determined by the Committee and specified in the applicable Award agreement, the holder of a restricted stock Award will have all of the rights of a stockholder, including, without limitation, the right to vote the shares of our common stock subject to the restricted stock Award and the right to receive dividends on the shares of our common stock subject to the restricted stock Award during the applicable restriction period. The Committee may determine on what terms and conditions the participant will be entitled to dividends payable on the shares of restricted stock, provided that any dividends payable with respect to an Award of restricted stock will be payable to the participant only if and when the underlying Award vests, and any dividends payable with respect to Awards of restricted stock that do not vest will be forfeited. The Committee has the discretion to determine other terms and conditions of a restricted stock Award. Restricted Stock Units. An RSU is a right to receive cash, shares of our common stock or other consideration as determined by the Committee, subject to certain vesting conditions and other restrictions, equal to the fair market value of one share of our common stock on the date of vesting. RSUs may be subject to certain restrictions, including, without limitation, a risk of forfeiture, as determined by the Committee. The Committee may determine that a grant of RSUs will provide a participant a right to receive dividend equivalents, which entitles the participant to receive the equivalent value (in cash or shares of our common stock) of dividends paid on the underlying shares of our common stock. Dividend equivalents will be subject to the same restrictions as the RSUs with respect to which the dividend equivalents are granted. Any dividend equivalents payable with respect to an award of RSUs will be payable to the participant only if and when the underlying Award vests, and any dividend equivalents payable with respect to awards of RSUs that do not vest will be forfeited. The Committee has the discretion to determine other terms and conditions of an RSU Award. Performance Awards. A performance award is an Award that vests and/or becomes exercisable or distributable subject to the achievement of certain performance goals during a specified performance period, as established by the Committee. Performance awards may be granted alone or in addition to other Awards under the Plan, and may be paid in cash, shares of our common stock, other property, or any combination thereof, in the sole discretion of the Committee. Dividend equivalents will be subject to the same restrictions as the performance award. Any dividend equivalents payable with respect to a performance award will be payable to the participant only if and when the underlying performance award vests, and any dividend equivalents payable with respect to performance awards that do not vest will be forfeited. The Committee has the discretion to determine other terms and conditions of a performance award. Other Stock-Based Awards. Other stock-based awards are Awards payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of our common stock. Other stock-based awards may be granted alone or in addition to other Awards under the Plan. Dividend equivalents will be subject to the same restrictions as the other stock-based award. Any dividend equivalents payable with respect to any other stock-based award will be payable to the participant only if and when the underlying other stock-based award vests, and any dividend equivalents payable with respect to other stock-based awards that do not vest will be forfeited. The Committee has the discretion to determine other terms and conditions of any other stock-based award. Cash Awards. Cash awards may be granted under the Plan in such amounts, on such terms and conditions, and for such consideration as the Committee will determine in its sole discretion. Certain Transactions In the event of certain changes in our capitalization or corporate transactions or events, such as a split, recapitalization, combination, merger, consolidation, statutory exchange, spin-off, reorganization, sale or transfer of all or substantially all the Company’s assets or business, or other corporate transaction or event, appropriate adjustments will be made by the Committee to the number of shares available for issuance under the Plan and/or the shares subject to Awards granted under the Plan. CIVITAS RESOURCES, INC. 2024 Proxy Statement 66 Change in Control The Plan does not provide for the automatic acceleration of vesting of outstanding Awards upon a change in control solely with respect to the occurrence of the change in control unless the successor company fails to assume or substitute the Awards in connection with such change in control, unless otherwise provided in an award agreement or any applicable employment agreement, severance agreement, or similar agreement. To the extent the successor company fails to assume or substitute the Awards, any performance-based awards will be deemed earned at the greater of (i) the target level of performance as set forth in the award agreement, and (ii) the actual performance achieved, as determined by the Compensation Committee immediately prior to the change in control in its sole discretion. Unless the individual award agreement or any applicable employment agreement, severance agreement or similar agreement provides otherwise, if the successor company assumes or substitutes the Awards, vesting of the assumed Award granted prior to such change in control or substituted awards granted in connection with such change in control will be accelerated upon a subsequent termination of the participant’s service, consulting relationship or employment without cause, or, if the participant resigns for good reason, in each case, within 24 months following the change in control, with any performance-based awards deemed earned at the greater of (i) the target level of performance as set forth in the award agreement, and (ii) the actual performance achieved, measured, and calculated as of the date of such termination pursuant to a shortened performance period ending on the date of such termination. For purposes of the Plan, an Award generally will be considered assumed or substituted by the successor company if following the change in control the Award (i) relates to publicly traded equity securities of the Company or the surviving entity or an affiliate thereof and (ii) confers the right to purchase or receive, for each share of common stock subject to the Award immediately prior to such change in control, on substantially the same vesting and other terms and conditions as were applicable to the Award immediately prior to such change in control, the consideration received in such change in control by the Company’s stockholders, however, if the consideration received by the Company’s stockholders is not solely common stock of the successor company, the Compensation Committee may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an Award will be solely common stock of the successor company, substantially equal in fair market value to the per share consideration received by the Company’s stockholders in the change of control. Clawback All Awards granted under the Plan are subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the Company’s Clawback Policy, Recoupment Policy or similar policies or any applicable law related to such actions. Amendment and Termination Our Board or the Committee may at any time amend, suspend, or terminate the Plan, provided that the rights of a participant granted an Award prior to such amendment, suspension, or termination may not be materially impaired without such participant’s consent. In addition, stockholder approval will be required for any amendment to the extent necessary to comply with applicable law or applicable exchange listing standards. Our Board or the Committee will not have the authority, without the approval of the Company’s stockholders, to amend any outstanding option or SAR to reduce its exercise price per share or to take any action that would be considered a “repricing” of an option or SAR under the applicable exchange listing standards. The Plan will remain in effect for a period of ten years (unless earlier terminated in accordance with its terms). Material U.S. Federal Income Tax Consequences The following is a general summary under current law of the principal U.S. federal income tax consequences related to awards under the Plan. This summary deals with the general federal income tax principles that apply and is provided only for general information. Some kinds of taxes, such as state, local, and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors. Tax Consequences to Participants Non-Qualified Stock Options If a participant is granted an NSO under the Plan, the participant should not have taxable income on the grant of the option. Generally, the participant should recognize ordinary income at the time of exercise in an CIVITAS RESOURCES, INC. 2024 Proxy Statement 67 amount equal to the fair market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The participant’s basis in the common stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the fair market value of our common stock on the date the participant exercises such option. Any subsequent gain or loss will be taxable as a long-term or short-term capital gain or loss. Subject to the discussion under “Tax Consequences to the Company” below, the Company and its subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the participant recognizes ordinary income. Incentive Stock Options A participant receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are met, the participant should not recognize taxable income at the time of exercise. However, the excess of the fair market value of the shares of our common stock received over the option exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the stock will be treated as a long-term capital gain or loss, and we will not be entitled to any deduction. If the holding period requirements are not met, the ISO will be treated as one that does not meet the requirements of the Code for ISOs and the participant will recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the date the ISO is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss. We or our subsidiaries or affiliates generally are not entitled to a federal income tax deduction upon either the exercise of an ISO or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares. Other Awards The current federal income tax consequences of other awards authorized under the Plan generally follow certain basic patterns: SARs are taxed and deductible in substantially the same manner as NSOs; nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid, if any, only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant through a Section 83(b) election); RSUs, dividend equivalents and other stock or cash based awards are generally subject to tax at the time of payment. Subject to the discussion under “Tax Consequences to the Company” below, we or our subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the award recipient recognizes ordinary income. Section 409A of the Code Certain types of awards under the Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest, penalties, and additional state taxes). To the extent applicable, the Plan and awards granted under the Plan are intended to be structured and interpreted in a manner intended to either comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance that may be issued under Section 409A of the Code. To the extent determined necessary or appropriate by the plan administrator, the Plan and applicable award agreements may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from Section 409A of the Code. Tax Consequences to the Company Reasonable Compensation. For the amounts described above to be deductible by the Company, such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses. Golden Parachute Payments. The Company’s ability (or the ability of one of our subsidiaries) to obtain a deduction for future payments under the Plan could also be limited by the golden parachute rules of Section 280G of the Code, which prevent the deductibility of certain excess parachute payments made in connection with a change in control of an employer-corporation. Compensation of Covered Employees. Our ability to obtain a deduction for amounts paid under the Plan could be limited by Section 162(m) of the Code. Section 162(m) of the Code limits our ability to deduct CIVITAS RESOURCES, INC. 2024 Proxy Statement 68 compensation, for federal income tax purposes, paid during any year to a “covered employee” (within the meaning of Section 162(m) of the Code) in excess of $1,000,000. New Plan Benefits No awards have been granted or promised under the Plan. Awards are subject to the discretion of the Compensation Committee and no determination has been made as to the awards that will be granted in the future to specific individuals pursuant to the Plan. It presently is not possible to determine the benefits or amounts that will be received by or allocated to participants under the Plan or would have been received by or allocated to participants for the last completed fiscal year if the Plan then had been in effect because awards under the Plan will be made at the discretion of the Compensation Committee. Therefore, a New Plan Benefits table is not provided. Vote Required for Approval The affirmative vote of stockholders holding at least a majority of the shares present and entitled to be voted on the proposal is required for approval of Proposal Three. If you own shares through a bank, broker, or other holder of record, you must instruct your bank, broker, or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal. The Board unanimously recommends that the stockholders vote “FOR” Proposal Three and approve the adoption of the Civitas Resources, Inc. 2024 Long Term Incentive Plan as disclosed in this proxy statement. CIVITAS RESOURCES, INC. 2024 Proxy Statement 69 PROPOSAL FOUR: ADVISORY VOTE ON EXECUTIVE COMPENSATION We are asking our stockholders to provide advisory, non-binding approval of the compensation paid to our named executive officers, as described in the “Compensation Discussion and Analysis” section of this proxy statement (the “CD&A”). Our Board recognizes that executive compensation is an important matter for our stockholders. As described in detail in the CD&A section of this proxy statement, the Compensation Committee is tasked with the implementation of our executive compensation philosophy. In particular, the Compensation Committee strives to attract, retain, and motivate the best executives we can identify and recruit, to reward past performance measured against established goals and provide incentives for future performance and to align executives’ long-term interests with the interests of our stockholders. To do so, the Compensation Committee uses a combination of short-term and long-term incentive compensation to reward excellent performance and to encourage executives’ commitment to our long-range, strategic business goals. It is the intention of the Compensation Committee that our named executive officers be compensated competitively with the market and consistently with our strategy, sound corporate governance principles, and stockholder interests and concerns. As described in the CD&A, we believe our compensation program is effective, appropriate, and strongly aligned with the long-term interests of our stockholders and that the total compensation packages provided to our named executive officers (including potential payouts upon a termination or change in control) are reasonable and not excessive. As you consider this Proposal • performance-based and time-based equity awards, weighted predominantly to performance-based, incorporating a three-year vesting period to emphasize long-term performance and named executive officer commitment and retention; • annual performance-based cash awards incorporating operational, financial, and performance metrics in order to properly balance risk with the incentives needed to drive our key annual • double-trigger requirement for any acceleration of vesting of equity upon a change in control (i.e., a termination without cause or resignation for good reason is required in connection with a change in control); • stock ownership policy to further align the interests of our named executive officers with the interests of our stockholders; and • a policy requiring recoupment of certain incentive compensation paid to named executive officers under circumstances wherein named executive officers’ conduct constitutes “Detrimental Conduct” under the policy. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies, and practices described in this proxy statement. As an advisory vote, Proposal We are asking stockholders to vote “FOR” the following resolution: “RESOLVED, that the stockholders approve, on an advisory basis, the compensation philosophy, policies, and procedures and the compensation of the named executive officers as disclosed in the proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables, and any related material disclosed in the proxy statement.” CIVITAS RESOURCES, INC. 2024 Proxy Statement 70 The affirmative vote of stockholders holding at least a majority of the shares present and entitled to be voted on the proposal is required for approval of Proposal The Board unanimously recommends that the stockholders vote “FOR” Proposal
71 PROPOSAL FIVE: ADVISORY VOTE ON THE In addition to the advisory “Say-on-Pay” vote, the Dodd-Frank Wall Street Reform and Consumer Protection Act also requires a Setting a one-year period for holding this stockholder vote will enhance stockholder communication by providing a clear, simple means for us to obtain information on investor sentiment about our executive compensation philosophy. Annual voting provides for a higher level of accountability and allows for direct and immediate feedback on the Company’s executive compensation philosophy, policies, and practices as disclosed in the As an advisory vote, Proposal Five is not binding on our Board, will not overrule any decisions made by our Board, and will not require our Board to take any specific action. Although the vote is non-binding, our Board values the opinions of our stockholders and will carefully consider the outcome of the We are soliciting your advice on the following resolution: “RESOLVED, that an advisory “Say-on-Pay” vote of our stockholders to (1) every three years; Although non-binding, the Board and the Compensation Committee will carefully review the voting results on this Proposal Five. Notwithstanding the Board’s recommendation and the outcome of the The affirmative vote of stockholders holding at least a majority of the The Board unanimously recommends that, “EVERY YEAR
72 OTHER MATTERS Stockholder Proposals; Identification of Director Candidates Stockholder Proposals to be Included in Next Year’s Proxy Statement. Pursuant to the various rules promulgated by the SEC, stockholders interested in submitting a proposal (a “Rule 14a-8 Proposal”) to be considered for inclusion in our proxy materials and for presentation at the Director Nominations to be Included in Next Year’s Proxy Statement. Our bylaws allow eligible stockholders to nominate a candidate for election to our Board for inclusion in our proxy materials in accordance with the “proxy access” provisions of our bylaws, which are contained in Section 2.6(B). The “proxy access” provisions allow a stockholder that satisfies, or a group of stockholders that collectively satisfy, the requirements of Section 2.6(B) of our bylaws and who has or have owned (as defined in our bylaws) continuously for at least three years that number of shares of capital stock constituting three percent or more of our outstanding capital stock (as of both (a) a date within seven calendar days prior to the date of the Nomination Notice (as defined in our bylaws) and (b) the record date for determining stockholders entitled to vote at the annual meeting), to nominate and include in our proxy materials director candidates constituting up to two directors or 20% of the Board (rounded down to the nearest whole number), whichever is greater, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in our bylaws (including similar information requirements to those set forth in Section 2.6(B) of our bylaws). If a stockholder or group of stockholders wishes to nominate one or more director candidates to be included in the Company’s proxy statement for the Director Nominations and Stockholder Proposals for Presentation at the Identification of Director Candidates. It is the responsibility of the Nominating and Corporate Governance Committee to identify, evaluate, and recommend to the Board the director nominees for election at the annual meeting of stockholders, as well as to fill vacancies or additions on the Board that may occur between annual meetings. The Nominating and Corporate Governance Committee endeavors to recommend only director candidates who possess the highest personal values and integrity; who have experience and have exhibited achievements in one or more of the key professional, business, financial, legal, and other challenges that face a U.S. independent oil and gas company; who exhibit sound judgment, intelligence, personal character, and the ability to make independent analytical inquiries; who demonstrate a willingness to devote adequate time to Board duties; and who are likely to be able to serve on the Board for a sustained period. The Board is committed CIVITAS RESOURCES, INC. 2024 Proxy Statement 73 to actively seeking women and minority candidates as well as individuals with diverse backgrounds, skills, and experiences. In general, the Nominating and Corporate Governance Committee will use the same process to evaluate candidates recommended by stockholders as it uses to evaluate all other director candidates. However, if a candidate is recommended by a stockholder or a group of stockholders, the Governance Committee also will review the information required of such nominees pursuant to our bylaws. The Nominating and Corporate Governance Committee’s charter includes consideration of diversity of viewpoint on the Board. In that regard, the Nominating and Corporate Governance Committee endeavors to achieve an overall balance of diversity of experiences, skills, attributes, and viewpoints among our directors. The Nominating and Corporate Governance Committee believes it has achieved that balance through the representation on the Board of members having experience in the oil and gas industry, finance and accounting, and investment analysis, among other areas. The Nominating and Corporate Governance Committee does not discriminate based upon race, religion, sex, national origin, age, disability, citizenship, or any other legally protected status. In identifying potential director candidates, the Nominating and Corporate Governance Committee will rely on any source available for the identification and recommendation of candidates, including current directors and officers. In addition, the Nominating and Corporate Governance Committee from time to time may engage a third-party search firm to identify or evaluate, or assist in identifying or evaluating potential candidates, for which the third-party search firm will be paid a fee. Solicitation of Proxies Solicitation of proxies on behalf of the Company may be made via the Internet, by mail or by personal interview or telephone by officers, directors, and employees of the Company, who will not receive any additional compensation for such solicitation activities. The Company may also request banking institutions, brokerage firms, custodians, nominees, and fiduciaries to forward solicitation material to the beneficial owners of the common stock that those companies or persons hold of record, and the Company will reimburse the forwarding expenses. Stockholder List In accordance with the Delaware General Corporation Law and the Company’s bylaws, the Company will maintain at its corporate offices in Denver, Colorado, a list of the stockholders entitled to vote at the Annual Meeting. The list will be open to the examination of any stockholder, for purposes germane to the Annual Meeting, during ordinary business hours for ten days before the Annual Meeting. Proxy Materials, Annual Report and Householding The Company’s Annual Report to Stockholders for the year ended December 31, The SEC has adopted rules that permit companies and intermediaries (such as brokers) to satisfy the delivery requirements for proxy statements with respect to two or more security holders sharing the same address by delivering a single proxy statement addressed to those security holders. This process, which is commonly referred to as “householding,” potentially means extra convenience for security holders and cost savings for companies. This year, a number of brokers with account holders who are our stockholders will be householding our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholder. Once you have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If you would prefer to receive a separate copy of the proxy materials or if you are receiving multiple copies and would like to receive a single copy, please notify your broker or direct your request to us as follows: 555 17th Street, Suite 3700, Denver, Colorado, 80202, Attention: Investor Relations, IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE A COPY OF THE PROXY STATEMENT, THE FORM OF PROXY, AND THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, CIVITAS RESOURCES, INC. 2024 Proxy Statement 74 VOTING METHODS Voting over the Internet. For shares of stock that are registered in your name, you may vote by Internet by following the instructions set forth on the enclosed proxy card. You will need to use the control number appearing on your proxy card to vote via the Internet. Votes submitted by Internet must be received by 11:59 Voting by Telephone. Using a touch-tone telephone, you may transmit your voting instructions to the number provided in the proxy card. Votes submitted by telephone number must be received by 11:59 Voting by Mail. If you received a printed proxy card, you can vote by marking, dating and signing it, and returning it in the postage-paid envelope provided. Please promptly mail your proxy card to ensure that it is received prior to the closing of the polls at the Annual Meeting. Voting at the Meeting. If you attend the Annual Meeting online and plan to vote, you will be able to vote virtually. If you are considered a stockholder of record, you have the right to vote online at the Annual Meeting. If you are considered the beneficial owner and you wish to vote at the Annual Meeting, you will need a legal proxy from your broker or other nominee authorizing you to vote those shares online at the Annual Meeting. For further information concerning stockholders of record and beneficial owners see “ Forward-Looking Statements This proxy statement may include “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995). The forward-looking statements include matters to be presented at the Annual Meeting; amount and allocation of forecasted capital expenditures; executive sessions of the Board; director attendance at the Annual Meeting; potential payments upon termination or change in control; statements regarding Section 162(m), Section 409A and Section 280G of the Code and ASC Topic 718; and impact of the compensation program on the Company. These statements are based on our current expectations and involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements, including changes in governmental regulations and interpretations thereunder and other risks identified in the Risk Factors section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO VOTE BY INTERNET, BY PHONE, OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIAL, BY COMPLETING, SIGNING, AND RETURNING THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. By Order of the Board, Adrian Milton SVP, General Counsel and Assistant Corporate Secretary Denver, Colorado April CIVITAS RESOURCES, INC. 2024 Proxy Statement 75 CIVITAS RESOURCES, INC. 2024 LONG TERM INCENTIVE PLAN PURPOSE The date set forth in Article ARTICLE II DEFINITIONS For purposes of this Plan, the following terms shall have the following meanings: 2.1 “Affiliate” means a corporation or other entity controlled by, controlling, or under common control with the Company. The 2.3 “Award” means any award under this Plan of any Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Units, Performance Award, Other Stock-Based Award, or Cash Award. All Awards shall be evidenced by and subject to the terms of an Award Agreement, except as otherwise expressly provided in the Plan. 2.5 “Board” means the Board of Directors of the 2.6 “Cash Award” means an Award granted to an Eligible Individual pursuant to Section 9.3 of this Plan and 2.7 “Cause”means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination of Service, the following: (a) in the case where there is no Service Agreement applicable to the Participant (or where there is such Service Agreement in effect but it does not define “cause” (or words of like import)), (i) the Participant has failed or refused to substantially perform the Participant’s duties, responsibilities, or authorities (other than any such refusal or failure resulting from the Participant’s becoming Disabled); (ii) any commission by or indictment of the
2.8 “Change in Control” means, (a) the acquisition after the Effective Date by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (i) the then outstanding shares of Common Stock (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”). For purposes of this Section 2.8, the following acquisitions by a Person will not constitute a Change in Control: (A) any acquisition directly from the Company; (B) any acquisition by the Company; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of Section 2.8(c) below; (b) the individuals who, as of the later of the Effective Date or the last amendment to this Plan approved by the Committee, constitute the board of directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors. Any individual becoming a director subsequent to the later of the Effective Date or the last amendment to this Plan approved by the Committee whose election, or nomination for election by the Company’s stockholders, is approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered a member of the Incumbent Board as of the later of the Effective Date or the last amendment to this Plan approved by the Committee, but any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board will not be deemed a member of the Incumbent Board as of the later of the Effective Date or the last amendment to this Plan approved by the Committee; (c) the consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company after the Effective Date (a “Business Combination”), unless following such Business Combination: (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding
2.9 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. Any reference to any section of the Code shall also be a reference to any successor provision and any guidance and treasury regulation promulgated thereunder. 2.10 “Committee” means any committee of the Board duly authorized by the Board to administer this Plan; provided, however, that unless otherwise determined by the Board, the Committee shall consist solely of two or more members of the Board who are each (a) a “non-employee director” within the meaning of Rule 16b-3(b), and (b) “independent” under the listing standards or rules of the securities exchange upon which the Common Stock is traded, but only to the extent such independence is required in order to take the action at issue pursuant to such standards or rules. If no committee is duly authorized by the Board to administer this Plan, the term “Committee” shall be deemed to refer to the Board for all purposes under this Plan. The Board may abolish any Committee or re-vest in itself any previously delegated authority from time to time, and will retain the right to exercise the authority of 2.11 “Common Stock” means the common stock, par value $0.01 per share, of the Company. 2.12 “Company” means Civitas Resources, Inc., a Delaware corporation, and its successors by operation of law. 2.13 “Consultant” means any natural person who is an advisor or consultant or other service provider to the Company or any 2.14 “Disability” or “Disabled” means, unless otherwise determined by the 2.15 “Dividend Equivalent Rights” means a right granted to a Participant under this Plan to receive the equivalent value (in cash or Shares) of dividends paid on Shares. 2.16 “Effective Date” means the effective date of this Plan as defined in Article XIV. 2.17 “Eligible Employee” means each employee of the Company or any of its Affiliates. An employee on a leave of absence may be an Eligible Employee. 2.19 “Exchange Act” means the Securities Exchange Act of 2.20 “Fair Market Value” means, for purposes of this Plan, unless otherwise required by any applicable provision of the
2.21 “Family Member” means “family member” as defined in Section A.1.(a)(5) of the 2.23 “Non-Employee Director” means a director on the 2.24 “Non-Qualified Stock Option” means any Stock Option granted under this 2.26 “Participant” means an Eligible Individual to whom an Award has been granted pursuant to this Plan. 2.27 “Performance Award” means an Award granted under Article VIII of this Plan. 2.28 “Performance Goals” means goals established by the 2.29 “Performance Period” means the 2.30 “Person”means any “person” as such 2.31 “Prior Plan Award” means an award outstanding under any Prior Plan as of the 2.32 “Restricted Stock” means an Award of 2.34 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the 2.35 “Section 409A of the Code” means the nonqualified deferred compensation rules under Section 409A of the Code and any applicable treasury regulations and other official guidance thereunder. 2.36 “Securities Act” means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder. Reference to a specific section of the Securities Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation. 2.37 “Service Agreement” means, with respect to a Participant, any employment agreement, offer letter, consulting agreement, change in control agreement, severance agreement, or similar agreement in effect between the Company or an Affiliate and the Participant or any severance plan, change in control plan or similar plan of the Company or an Affiliate in which the Participant participates. 2.38 “Shares” means shares of Common Stock.
3.2 Guidelines. Subject to Article XI of this Plan, the Committee shall have the authority to adopt, alter, and repeal such administrative rules, guidelines, and practices governing this Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by Applicable Law and applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of this Plan and any Award issued under this Plan (and any agreements or sub-plans relating thereto); and to otherwise supervise the administration of this Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in this Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of this Plan. The Committee may adopt special rules, sub-plans, guidelines, and provisions for persons who are residing in or employed in, or subject to, the taxes of any domestic or foreign jurisdictions to satisfy or accommodate applicable foreign laws or to qualify for preferred tax treatment of such domestic or foreign jurisdictions. 3.3 Decisions Final. Any decision, interpretation, or other action made or taken in good faith by or at the direction of the 3.4 Designation of Consultants/Liability; Delegation of Authority. (a) The Committee may employ such legal counsel, consultants, and agents as it may deem desirable for the (b) The Committee may delegate any or all of its powers and duties under this Plan to a subcommittee of directors or to any officer of the Company, including the power to perform administrative functions (including executing agreements or other documents on behalf of the Committee) and grant Awards; provided, that such delegation does not (i) violate Applicable Law, or (ii) result in the 3.5 Indemnification. To the maximum extent permitted by Applicable Law and to the extent not covered by insurance directly insuring such person,
(iii) If there shall occur any change in the capital structure of the Company other than those covered by Section 4.3(b)(i) (iv) In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other extraordinary transaction or change affecting the Shares or the Share price, including any securities offering or other similar transaction, for administrative convenience, the Committee may refuse to permit the exercise of any Award for up to sixty (60) days before or after such transaction. (v) The Committee may adjust the Performance Goals applicable to any Awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis, or other Company public filing. (vi) Any such adjustment determined by the 4.4 Annual Limit on Non-Employee Director Compensation. In each calendar year during any part of which this Plan is in effect, a Non-Employee Director may not receive Awards for such individual’s service on the Board that, taken together with any cash fees paid to such Non-Employee Director during such calendar year for such individual’s service on the Board, have a value in excess of $750,000 (calculating the value of any such 4.5 Minimum Vesting Schedule. A vesting period of at least one (1) year shall apply to all Awards issued under this Plan; provided that (a) an Award granted to a Non-Employee Director may
6.8 Termination. Unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, subject to the provisions of the applicable Award Agreement and this Plan and any applicable Service Agreement, upon a Participant’s Termination of Service for any reason, Stock Options and Stock Appreciation Rights may remain exercisable following a Participant’s Termination of Service as follows: (a) Termination by Death or Disability. Unless otherwise provided in the applicable Award Agreement or any (b) Involuntary Termination Without Cause. Unless otherwise provided in the applicable Award Agreement or any (c) Voluntary Resignation. Unless otherwise provided in the applicable Award Agreement or any applicable Service Agreement or otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participant’s Termination of Service is voluntary (other than a voluntary termination described in Section 6.8(d) hereof), all Stock Options and Stock Appreciation Rights that are held by such Participant that are vested and exercisable at the time of the Participant’s
(f) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year under this Plan and/ (g) Modification, Extension and Renewal of Stock Options. The Committee may (i) modify, extend, or 6.9 Automatic Exercise. The Committee may include a provision in an Award Agreement providing for the ARTICLE VII RESTRICTED STOCK; RESTRICTED STOCK UNITS 7.1 Awards of Restricted Stock and Restricted Stock Units
The 7.2 Awards and Certificates. Restricted Stock and Restricted Stock Units granted under this Plan shall be evidenced by an Award Agreement and subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions not inconsistent with the terms of this Plan, as the Committee shall deem desirable: (a) Restricted Stock. (i) Purchase Price. The purchase price of Restricted Stock shall be fixed by the Committee. The purchase price for shares of Restricted Stock may be zero to the extent permitted by Applicable Law, and, to the extent not so permitted, such purchase price may not be less than par value. (ii) Legend. Each Participant receiving Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock, unless the Committee elects to use another system, such as book entries by the Company’s transfer agent, as evidencing ownership of shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and shall, in addition to such legends required by Applicable Law, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. (iii) Custody. If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that any stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any grant of Restricted Stock, the Participant shall have delivered a duly signed stock power or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares subject to the Award of Restricted Stock in the event that such Award is forfeited in whole or part. (iv) Rights as a Stockholder. Except as provided in Section 7.3(a) and this Section 7.2(a) or as otherwise determined by the Committee in an Award Agreement, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a holder of Shares, including, without limitation, the right (v) (b) Restricted Stock Units. (i) Settlement. The Committee may (ii) Rights as a Stockholder. A Participant will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until Shares are (iii) Dividend Equivalent Rights. If the Committee so provides, a grant of Restricted Stock Units may provide a Participant with the right to receive Dividend Equivalent Rights. Dividend Equivalent Rights shall be subject to the
7.3 Restrictions and Conditions. (a) Restriction Period. (i) The Participant shall not be permitted to transfer shares of Restricted Stock awarded under this Plan or vest in Restricted Stock Units during the period or periods set by the Committee (the “ (ii) If the grant of shares of Restricted Stock or Restricted Stock Units or the lapse of restrictions or vesting schedule is based on the attainment of Performance Goals, the Committee shall establish the objective Performance Goals and the applicable vesting percentage applicable to each Participant or class of Participants in the applicable Award Agreement prior to the beginning of the applicable fiscal year or at such later date as otherwise determined by the Committee and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions), and other similar types of events or circumstances. (b) Termination. Unless otherwise provided in the applicable Award Agreement or any applicable Service Agreement or determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, upon a Participant’s Termination of Service for any reason during the relevant Restriction Period, all Restricted Stock or Restricted Stock Units still subject to restriction will be forfeited in accordance with the terms and ARTICLE VIII PERFORMANCE AWARDS The Committee may grant a Performance Award to a Participant payable upon the attainment of OTHER STOCK-BASED AND CASH AWARDS
![[MISSING IMAGE: px_proxypg1civitas-4c.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/px_proxypg1civitas-4c.jpg) 9.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this Article IX shall be evidenced by an Award Agreement and subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions not inconsistent with the terms of this Plan, as the Committee shall deem desirable: (a) Non-Transferability. Subject to the applicable provisions of the Award Agreement and this Plan, Shares subject to Other Stock-Based Awards may not be transferred prior to the date on which the Shares are issued or, if later, the date on which any applicable restriction, performance, or deferral period lapses. (b) Dividends. Unless otherwise determined by the Committee at the time of the grant of an Other Stock-Based Award, subject to the provisions of the Award Agreement and this Plan, the recipient of an Other Stock-Based Award shall not be entitled to receive, currently or on a deferred basis, dividends or Dividend Equivalent Rights in respect of the number of Shares covered by the Other Stock-Based Award. If the Committee does provide that a grant of Other Stock-Based Award provides a Participant with the right to receive dividends or Dividend Equivalent Rights, any such dividends or Dividend Equivalent Rights credited with respect to an Other Stock-Based Award shall be subject to the same restrictions on transferability and forfeitability to the same extent as the Other Stock-Based Award and subject to other terms and conditions as set forth in the Award Agreement. Any dividends or Dividend Equivalent Rights granted with respect to an Award shall be payable to the Participant only if, when and to the extent such underlying Award vests. The Dividend Equivalent Rights granted with respect to Awards that do not vest shall be forfeited. (c) Vesting. Any Other Stock-Based Award and any Shares covered by any such Other Stock-Based Award shall vest or be forfeited to the extent so provided in the Award Agreement, as determined by the Committee, in its sole discretion. (d) Price. Shares under this Article IX may be issued for no cash consideration. Shares purchased pursuant to a purchase right awarded pursuant to an Other Stock-Based Award shall be priced, as determined by the Committee in its sole discretion. 9.3 Cash Awards. The Committee may from time to time grant Cash Awards to Eligible Individuals in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by Applicable Law, as it shall determine in its sole discretion. Cash Awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any time in its sole discretion. Cash Awards that are awarded purely as a bonus and not subject to restrictions or conditions do not need to be evidenced by an Award Agreement. The grant of a Cash Award shall not require a segregation of any of the Company’s assets for satisfaction of the Company’s payment obligation thereunder. ARTICLE X CHANGE IN CONTROL PROVISIONS 10.1 Treatment of Awards Assumed or Substituted by a Successor Entity. Unless otherwise provided by the Committee in an Award Agreement or provided for in any applicable Service Agreement: (a) In the event of a Change in Control in which the surviving entity (together with its affiliates, the “Surviving Entity”) assumes outstanding Awards or substitutes similar awards under the Surviving Entity’s equity compensation plan for outstanding Awards on the same terms and conditions as the original Awards, such Awards that are assumed or substituted shall not vest solely as a result of the occurrence of the Change in Control. (b) If, within twenty-four (24) months following the date on which such Change in Control occurs, a Participant’s service, consulting relationship or employment with the Surviving Entity is terminated by the Surviving Entity without Cause or the Participant resigns for Good Reason, any outstanding assumed Awards granted prior to such Change in Control or substitute awards granted in connection with such Change in Control shall become immediately vested and exercisable, as applicable. Unless the applicable Award Agreement or applicable Service Agreement specifically provides for different treatment upon the A-14 circumstances described in this Section 10.1(b), Awards that vest based on performance shall be settled at the greater of (i) the target level of performance as set forth in the Award Agreement, and (ii) the actual performance achieved, measured and calculated as of the date of such termination pursuant to a shortened performance period ending on the date of such termination. With regard to each Award, “Good Reason” shall have the meaning set forth in the applicable Award Agreement or the Participant’s applicable Service Agreement, and a Participant shall not be considered to have resigned for Good Reason unless either (A) the Award Agreement governing such Award includes such provision or (B) the Participant is covered by a Service Agreement that includes provisions in which the Participant is permitted to resign for Good Reason. 10.2 Treatment of Awards not Assumed or Substituted. Unless otherwise provided by the Committee in an Award Agreement or provided for in any applicable Service Agreement, upon a Change in Control in which outstanding Awards are not assumed or substitute awards are not granted by the Surviving Entity as provided in Section 10.1 above, any such Awards shall become immediately vested and exercisable, as applicable, and any restrictions then in force will lapse, with performance-based Awards deemed earned at the greater of (a) the target level of performance as set forth in the Award Agreement, and (b) the actual performance achieved, as determined by the Committee immediately prior to the Change in Control in its sole discretion, which determination shall be conclusive and binding. 10.3 Meaning of Assumed or Substituted. For the purposes of this Plan, an Award shall be considered assumed or substituted by the Surviving Entity if following the applicable transaction the Award (a) relates to publicly traded equity securities of (i) the Company or an Affiliate or (ii) the Surviving Entity and (b) confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the applicable transaction, on substantially the same vesting and other terms and conditions as were applicable to the Award immediately prior to the applicable transaction, the consideration (whether stock, cash or other securities or property) received in the applicable transaction by holders of shares of Common Stock for each share of Common Stock held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if such consideration received in the applicable transaction is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company or its parent or subsidiary, provide that the consideration to be received upon the exercise or vesting of an Award, for each share of Common Stock subject thereto, will be solely common stock of the successor company or its parent or subsidiary substantially equal in fair market value to the per share consideration received by holders of shares of Common Stock in the applicable transaction. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. ARTICLE XI TERMINATION OR AMENDMENT OF PLAN Notwithstanding any other provision of this Plan, the Board or the Committee may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of this Plan (including any amendment deemed necessary to ensure that the Company may comply with any Applicable Law), or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by Applicable Law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension, or termination may not be materially impaired without the consent of such Participant and, provided, further, that without the approval of the holders of the Shares entitled to vote in accordance with Applicable Law, no amendment may be made that would (a) increase the aggregate number of Shares that may be issued under this Plan (except by operation of Section 4.1); (b) change the classification of individuals eligible to receive Awards under this Plan; (c) reduce the exercise price of any Stock Option or Stock Appreciation Right; (d) grant any new Stock Option, Stock Appreciation Right, or other award in substitution for, or upon the cancellation of, any previously granted Stock Option or Stock Appreciation Right that has the effect of reducing the exercise price thereof; (e) exchange any Stock Option or Stock Appreciation Right for Common Stock, cash, or other consideration when the exercise price per Share under such Stock Option or Stock Appreciation Right exceeds the Fair Market Value of a Share; or (f) take any action that would be considered a “repricing” of a Stock Option or Stock Appreciation Right under the applicable listing standards of the national exchange on which the Common Stock is listed (if any). Notwithstanding anything herein to the contrary, the Board or the Committee may amend this Plan or any Award Agreement at any time without a Participant’s consent to comply with Applicable Law, including Section 409A of the Code. The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV or as otherwise specifically provided herein, no such amendment or other action by the Committee shall materially impair the rights of any Participant without the Participant’s consent. A-15 ARTICLE XII UNFUNDED STATUS OF PLAN This Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but which is not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any right that is greater than those of a general unsecured creditor of the Company. ARTICLE XIII GENERAL PROVISIONS 13.1 Lock-Up; Legend. The Committee may require each person receiving Shares pursuant to a Stock Option or other Award under this Plan to represent to and agree with the Company in writing that the Participant is acquiring the Shares without a view to distribution thereof. The Company may, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during any period determined by the underwriter or the Company. In addition to any legend required by this Plan, the certificates for such Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer. All certificates for Shares delivered under this Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or any national securities exchange system upon whose system the Common Stock is then quoted, and any Applicable Law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. If the Shares are held in book-entry form, then the book-entry will indicate any restrictions on such Shares. 13.2 Other Plans. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases. 13.3 No Right to Employment/Directorship/Consultancy. Neither this Plan nor the grant of any Award hereunder shall give any Participant or other employee, Consultant or Non-Employee Director any right with respect to continuance of employment, consultancy or directorship by the Company or any Affiliate, nor shall there be a limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate such employment, consultancy, or directorship at any time. 13.4 Withholding of Taxes. A Participant shall be required to pay to the Company or one of its Affiliates, as applicable, or make arrangements satisfactory to the Company regarding the payment of, any income tax, social insurance contribution or other applicable taxes that are required to be withheld in respect of an Award. The Committee may (but is not obligated to), in its sole discretion, permit or require a Participant to satisfy all or any portion of the applicable taxes that are required to be withheld with respect to an Award by (a) the delivery of Shares (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for at least six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment under applicable accounting standards) having an aggregate Fair Market Value equal to such withholding liability (or portion thereof); (b) having the Company withhold from the Shares otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the grant, exercise, vesting, or settlement of the Award, as applicable, a number of Shares with an aggregate Fair Market Value equal to the amount of such withholding liability; or (c) by any other means specified in the applicable Award Agreement or otherwise determined by the Committee. 13.5 Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan. The Committee shall determine whether cash, additional Awards, or other securities or property shall be used or paid in lieu of fractional Shares or whether any fractional shares should be rounded, forfeited, or otherwise eliminated. 13.6 No Assignment of Benefits. No Award or other benefit payable under this Plan shall, except as otherwise specifically provided in this Plan or under Applicable Law or permitted by the Committee, be transferable in any manner, and any attempt to transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such person. 13.7 Clawbacks. All awards, amounts, or benefits received or outstanding under this Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with A-16 the Company’s Clawback Policy, Recoupment Policy or similar policies (each as amended from time to time) or any Applicable Law related to such actions. A Participant’s acceptance of an Award will constitute the Participant’s acknowledgement of and consent to the Company’s application, implementation, and enforcement of the Company’s Clawback Policy, Recoupment Policy or similar policies (each as amended from time to time), as applicable, that may apply to the Participant, whether adopted before or after the Effective Date, and any Applicable Law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Participant’s agreement that the Company may take any actions that may be necessary to effectuate any such policy or Applicable Law, without further consideration or action. 13.8 Listing and Other Conditions. (a) Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of Shares pursuant to an Award shall be conditioned upon such Shares being listed on such exchange or system. The Company shall have no obligation to issue such Shares unless and until such Shares are so listed, and the right to exercise any Option or other Award with respect to such Shares shall be suspended until such listing has been effected. (b) If at any time counsel to the Company advises the Company that any sale or delivery of Shares pursuant to an Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on the Company under Applicable Law, the Company shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to Shares or Awards, and the right to exercise any Option or other Award shall be suspended until, based on the advice of said counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on the Company. (c) Upon termination of any period of suspension under this Section 13.8, any Award affected by such suspension which shall not then have expired or terminated shall be reinstated as to all Shares available before such suspension and as to Shares which would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any Award. (d) A Participant shall be required to supply the Company with certificates, representations, and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent, or approval that the Company deems necessary or appropriate. 13.9 Governing Law. This Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. 13.10 Construction. Wherever any words are used in this Plan in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. 13.11 Other Benefits. No Award granted or paid out under this Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates or affect any benefit or compensation under any other plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation. 13.12 Costs. The Company shall bear all expenses associated with administering this Plan, including expenses of issuing Shares pursuant to Awards hereunder. 13.13 No Right to Same Benefits. The provisions of Awards need not be the same with respect to each Participant, and such Awards to individual Participants need not be the same in subsequent years. 13.14 Death/Disability. The Committee may in its discretion require the transferee of a Participant to supply it with written notice of the Participant’s death or Disability and to supply it with a copy of the will (in the case of the Participant’s death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require the agreement of the transferee to be bound by all of the terms and conditions of this Plan. 13.15 Section 16(b) of the Exchange Act. It is the intent of the Company that this Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of this Plan would conflict with the A-17 intent expressed in this Section 13.15, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict. 13.16 Deferral of Awards. The Committee may establish one or more programs under this Plan to permit selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant to payment or receipt of Shares or other consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules, and procedures that the Committee deems advisable for the administration of any such deferral program. 13.17 Section 409A of the Code. This Plan and Awards are intended to comply with or be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed, and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code. Notwithstanding anything herein to the contrary, any provision in this Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with or be exempt from Section 409A of the Code and, to the extent such provision cannot be amended to comply therewith or be exempt therefrom, such provision shall be null and void. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under this Plan becomes subject to penalties under Section 409A of the Code, responsibility for payment of such penalties shall rest solely with the affected Participants and not with the Company. Notwithstanding any contrary provision in this Plan or Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under this Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of such employee’s separation from service (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, until the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period. 13.18 Data Privacy. As a condition of receipt of any Award, each Participant explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of personal data as described in this Section 13.18 by and among, as applicable, the Company and its Affiliates, for the exclusive purpose of implementing, administering, and managing this Plan and Awards and the Participant’s participation in this Plan. In furtherance of such implementation, administration, and management, the Company and its Affiliates may hold certain personal information about a Participant, including, but not limited to, the Participant’s name, home address, telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title(s), information regarding any securities of the Company or any of its Affiliates, and details of all Awards (the “Data”). In addition to transferring the Data amongst themselves as necessary for the purpose of implementation, administration, and management of this Plan and Awards and the Participant’s participation in this Plan, the Company and its Affiliates may each transfer the Data to any third parties assisting the Company in the implementation, administration, and management of this Plan and Awards and the Participant’s participation in this Plan. Recipients of the Data may be located in the Participant’s country or elsewhere, and the Participant’s country and any given recipient’s country may have different data privacy laws and protections. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain, and transfer the Data, in electronic or other form, for the purposes of assisting the Company in the implementation, administration, and management of this Plan and Awards and the Participant’s participation in this Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Company or the Participant may elect to deposit any shares of Common Stock. The Data related to a Participant will be held only as long as is necessary to implement, administer, and manage this Plan and Awards and the Participant’s participation in this Plan. A Participant may, at any time, view the Data held by the Company with respect to such Participant, request additional information about the storage and processing of the Data with respect to such Participant, recommend any necessary corrections to the Data with respect to the Participant, or refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Company may cancel the Participant’s eligibility to participate in this Plan, and in the Committee’s discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents described herein. For more information on the consequences of refusal to consent or withdrawal of consent, Participants may contact their local human resources representative. 13.19 Successor and Assigns. This Plan shall be binding on all successors and permitted assigns of a Participant, including, without limitation, the estate of such Participant and the executor, administrator, or trustee of such estate. A-18 13.20 Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included. 13.21 Headings and Captions; References; Interpretation. The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Plan, shall refer to this Plan as a whole and not to any particular provision of this Plan. All references herein to Sections shall, unless the context requires a different construction, be deemed to be references to the Sections of this Plan. The word “or” as used herein is not exclusive and is deemed to have the meaning “and/or.” All references to “including” shall be construed as meaning “including without limitation.” Unless the context requires otherwise, all references herein to a law, agreement, instrument or other document shall be deemed to refer to such law, agreement, instrument or other document as amended, supplemented, modified and restated from time to time to the extent permitted by the provisions thereof. All references to “dollars” or “$” in this Plan refer to United States dollars. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. ARTICLE XIV EFFECTIVE DATE OF PLAN This Plan shall become effective on June 4, 2024, which is the date this Plan is approved by the stockholders of the Company in accordance with the requirements of the laws of the State of Delaware. If this Plan is not approved by the Company’s stockholders, this Plan will not become effective and no Awards will be granted under this Plan and the Prior Plans will continue in full force and effect in accordance with their terms. ARTICLE XV TERM OF PLAN No Award shall be granted pursuant to this Plan on or after the tenth (10th) anniversary of the earlier of the date that this Plan is adopted by the Compensation Committee of the Board or the date of stockholder approval, but Awards granted prior to such tenth (10th) anniversary may extend beyond that date. * * * * * A-19 ![[MISSING IMAGE: px_24civitasannual01-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/px_24civitasannual01-bw.jpg) THIS PROXY CARD each sign personally. All holders mustsign. If a corporation or partnership, please sign in full corporate orpartnership name by authorized officer. ![[MISSING IMAGE: px_proxypg2civitas-4c.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-23-045656/px_proxypg2civitas-4c.jpg) ![[MISSING IMAGE: px_24civitasannual02-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-050585/px_24civitasannual02-4c.jpg) 0001509589 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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