By Order of the Board of Directors |
|
|
Securities Exchange Act of 1934
_)
☐
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material Pursuant to §240.14a-12 | |
PENN VIRGINIA CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| PENN VIRGINIA CORPORATION |
| (Name of Registrant as Specified in Its Charter) |
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
| ☒ | No fee required. | |||
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
| (1) | Title of each class of securities to which transaction applies: | |||
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: |
| (5) | Total fee paid: |
| ☐ | Fee paid previously with preliminary materials. | |||
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
| (1) | Amount Previously Paid: | |||
| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
PRELIMINARY COPY
SUBJECT TO COMPLETION
Four Radnor Corporate Center
100 Matsonford Road
Radnor, Pennsylvania 19087
275
By Order of the Board of Directors |
|
|
Radnor, Pennsylvania
April [·], 2015
| /s/ Katherine Ryan | ||||
| Corporate Secretary |
| Page | ||||
| 1 | ||||
| 1 | ||||
| 1 | ||||
| 1 | ||||
| 2 | ||||
| 2 | ||||
| 2 | ||||
| 3 | ||||
| 3 | ||||
| 3 | ||||
| 3 | ||||
| 4 | ||||
| 4 | ||||
| 4 | ||||
| 6 | ||||
| 6 | ||||
| 6 | ||||
| 6 | ||||
| 7 | ||||
| 7 | |||
| 7 | ||||
| 8 | ||||
| 8 | ||||
| 8 | ||||
| 8 | ||||
| 8 | ||||
| 9 | ||||
| 9 | ||||
| 9 | ||||
| 10 | ||||
| 11 | ||||
| 12 | ||||
| 12 | ||||
| 13 |
| 13 | ||||
| 13 | ||||
| 14 | ||||
| 21 | ||||
| 22 | ||||
| 23 | ||||
| 23 | ||||
| 24 | ||||
| 25 | ||||
| 26 | ||||
| 26 | ||||
| 27 | ||||
| 28 | ||||
| 28 | ||||
| 28 | ||||
| 29 | ||||
| 29 | ||||
| 29 | ||||
| 30 | ||||
| 30 | ||||
| 30 | ||||
| 31 | ||||
| 31 | ||||
| 32 | ||||
2, 2018
275, Houston, Texas 77079.
of the outstanding shares of our common stock. Annual Meeting.
Abstentions and broker non-votes are treated asthis proposal. Broker shares that are voted on any matter at the Annual Meeting will be included in determining the number of shares present for purposes of determining whether a quorum is present at the Annual Meeting. However, for purposes ofBroker shares that are not voted on any matter at the Annual Meeting will not be included in determining whether a proposalquorum is approved, abstentions and broker non-votes are tabulated separately. The effect of abstentions and broker non-votes depends onpresent at the vote required for a particular proposal. See the “Vote Required” section of each proposal in this Proxy Statement for a description of the effect of abstentions and broker non-votes on such proposal.
Annual Meeting.
Age, Business Experience, Other Directorships and Qualifications | Director of the Company Since | |
| John 56 | 2017 | |
Mr.
|
| ||
| ||
| ||
| ||
| ||
| ||
| 2018(1) | |
| Mr. Geenberg has served on the Board since January 2018 and as co-Chairman of the Board since February 2018. He was designated as a director by Strategic Value Partners, LLC (“SVP”) pursuant to a Support Agreement entered into in January 2018. Mr. Geenberg is also the co-head of the US Investment Team of SVP. Mr. Geenberg joined SVP in 2009, and since such time, he has led the firm’s investment efforts in the infrastructure, energy, and power sectors in North America, serving on the steering committees of more than a dozen significant restructurings. Previously, Mr. Geenberg worked at Goldman, Sachs & Co., most recently in the Infrastructure Investment Group and Principal Investment Area focused on energy and transportation infrastructure businesses, and, prior to that, in the investment bank’s Natural Resources Group. Mr. Geenberg received a B.A. in Economics summa cum laude from Dartmouth College in 2005. The Board believes that Mr. Geenberg’s prior experience in advising and investing in the energy industry and his affiliation with | ||
| Age, Business Experience, Other Directorships and Qualifications | Director of the Company Since | |
| one of the Company’s larger shareholders provides significant contributions to our Board. | ||
| Michael Hanna, age 38 | 2018(2) | |
| Mr. | ||
| Darin G. Holderness, age 54 | 2016 (1)(2)(3) | |
| Mr. Darin G. Holderness has served on the Board since September 2016 and as co-Chairman of the Board since February 2018. Mr. Holderness was the Senior Vice President, Chief Financial Officer and Treasurer of Concho Resources Inc., an oil and gas exploration and development company, until May 2016. Mr. Holderness has over 20 years of experience in the energy sector, including nine years with KPMG LLP where his practice was focused in the energy industry, and over 17 years in the industry in increasing roles of responsibility, including serving as Vice President and Controller of Pure Resources, Inc., Vice President and Chief Financial Officer of Basic Energy Services, Inc., Vice President and Chief Accounting Officer of Pioneer Natural Resources Company, and most recently as Senior Vice President and Chief Financial Officer of Eagle Rock Energy Partners, L.P. Mr. Holderness is a 1986 graduate of Boise State University with a Bachelor of Business Administration in Accounting and is a Certified Public Accountant. The Board believes that Mr. Holderness’s prior experience as an executive and his past audit, accounting and financial reporting experience provide significant contributions to our Board. | ||
| Jerry R. Schuyler, age 62 | 2016 (1)(2)(3) | |
| Mr. Jerry R. Schuyler has served on the Board since October 2016. Mr. Schuyler is currently Executive Chairman of the Board of Gastar Exploration Inc. He served as Executive Vice President, Chief Operating Officer and Director of Laredo Petroleum, Inc. beginning in June 2007, was promoted to President and Chief Operating Officer in July 2008 and retired in July 2013. Mr. Schuyler served as an independent |
| Age, Business Experience, Other Directorships and Qualifications | Director of the Company Since | |
| Coast Energy Resources, LLC from
|
| (1) | Member of the Nominating |
| (2) | Member of the Compensation |
| (3) | Member of the Audit Committee |
Board.
Notwithstanding the advisory nature of this vote, the foregoing resolution will be deemed approved, on an advisory basis, with the affirmative vote of the majority of the votes cast on the proposal at the Annual Meeting. Abstentions and broker non-votes will not be included in determining the number of votes cast and, therefore, will not have any effect on the outcome of the vote.
APPROVAL OF AN AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATION
(Authorized Shares)
On February 12, 2015, the Board approved, subject to shareholder approval, an amendment to our Articles of Incorporation to increase the number of authorized shares of our common stock from 128 million to 228 million and directed that the amendment be submitted to a vote of the Company’s shareholders at the Annual Meeting. To affect such increase, paragraph one of Article 6 of our Articles of Incorporation would be amended and restated to read in its entirety as follows:
The Board has determined that the amendment is in the best interest of the Company and our shareholders and recommends approval by our shareholders.
Outstanding and Reserved Shares
The authorized capital stock of the Company currently consists of 128 million shares of common stock, par value $0.01 per share, and 100,000 shares of preferred stock, par value $100 per share. The number of shares of our common stock outstanding as of March 12, 2015 was 71,581,690. Allowing for the number of shares of our common stock outstanding as well as those reserved for future issuance, only approximately 18.3 million authorized shares of our common stock remain freely available for issuance. The table set forth below shows the uses of our currently authorized shares of common stock:
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
As demonstrated in the table above, over 85% of our authorized shares of common stock are either issued or reserved for issuance. The Board has determined that the number of unreserved shares of our common stock currently available for issuance is not sufficient to provide for our needs. As discussed more fully below, an increase in the authorized shares available for issuance would give us greater flexibility to respond to future business needs without the expense and delay of a special meeting of our shareholders.
Purpose of Amendment and Use of Shares
We do not have any immediate plans to issue any shares of our common stock other than those currently reserved for issuance. However, as shown above, we have only a small number of authorized but unissued shares that would be available for future issuance in the event that such plans arise. At $7.03 per share, the closing price of our common stock on March 12, 2015, the record date for the Annual Meeting, we would have available for issuance only approximately $128.5 million worth of our common stock. The Board and management believe that additional shares of our common stock should be authorized for issuance to provide the flexibility to issue
our common stock for proper corporate purposes. Such purposes could include securing additional financing for working capital or capital expenditures, effecting mergers or acquisitions of other businesses or properties, entering into strategic joint ventures, paying stock dividends or providing incentives through shareholder-approved equity-based incentive plans. The Board believes that increasing the number of shares of our common stock available for future issuance will enable us to take advantage of favorable opportunities without the delay and expense associated with holding a special meeting of our shareholders at the time such additional shares may be needed.
As of March 12, 2015, there were 7,945 shares of our 6% Series A convertible perpetual preferred stock and 6% Series B Convertible Perpetual Preferred Stock outstanding and 32,500 shares of our 6% Series B convertible perpetual preferred stock outstanding. The amendment will have no effect on the number of shares of preferred stock we are authorized to issue. The additional shares of common stock for which authorization is sought would be identical to the shares of our common stock now authorized. The holders of our common stock do not currently have preemptive rights to subscribe for any of our securities and will not have any such rights to subscribe for the additional shares proposed to be authorized. If the amendment is approved by the required vote of our shareholders, it will become effective upon the filing of a Certificate of Amendment with the Secretary of the Commonwealth of the Commonwealth of Virginia.
If the amendment is approved, the increase in our authorized shares will not, by itself, have any effect on the rights of holders of presently issued and outstanding shares of our common stock. However, the actual issuance of additional shares of our common stock in the future may have a dilutive effect on earnings per share and on the equity and voting rights of the present holders of our common stock.
Authorized but unissued shares of our common stock could be used by the Board to make a change in control of the Company more difficult, even if our shareholders viewed such change in control as favorable to their interests. Under certain circumstances, such shares could be used to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of the Company. Such shares could be privately placed with purchasers who might side with the Board in opposing a hostile takeover bid. Notwithstanding the foregoing, we are not aware of any effort to accumulate our common stock or obtain control of the Company by a tender offer, proxy contest or otherwise, and we have no present intention to use the increased number of available shares for any anti-takeover purposes. We do not have a shareholder rights plan.
Approval of the amendment of our Articles of Incorporation will require the affirmative vote of the holders of more than two-thirds of the outstanding shares of our common stock. Because the proposal requires the vote of outstanding shares, as opposed to votes cast, abstentions and broker non-votes will have the effect of a negative vote on the proposal.
The Board unanimously approved the amendment of our Articles of Incorporation, subject to shareholder approval, and has determined that the amendment is advisable and in the best interests of the Company and our shareholders. The Board recommends that our shareholders vote FOR the proposed amendment.
Ratification of the appointment of KPMG as our registered independent public accounting firm for the fiscal year ended December 31, 2015 will require the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting. Abstentions and broker non-votes will not be included in determining the number of votes cast and, therefore, will not have any effect on the outcome of the vote.
2018.
Shareholders except for one director.
the Company. In making this determination, the Board took into account the affiliation of Messrs. Hanna and Geenberg with certain shareholders of the Company and determined that these transactions did not result in a relationship that interferes with the exercise of their independent judgment in carrying out the responsibilities of a director of the Company and therefore did not preclude a finding of independence.
Secretary of the Company reviews communications to the Board and forwards the communications to the Board as appropriate. All such communications should identify the author as a shareholder and clearly state whether the intended recipients are all members of the Board or just certain specified individual directors. Our Corporate Secretary will make copies of all such communications and circulate them to the appropriate director or directors. Communications involving substantive accounting or auditing matters will be immediately forwarded to the Chairperson of the Audit Committee. Communications that pertain to non-financial matters will be forwarded promptly to the appropriate committee. Certain items that are unrelated to the duties and responsibilities of the Board will not be forwarded such as: business solicitation or advertisements; product related inquiries; junk mail or mass mailings; resumes or other job related inquiries; spam and overly hostile, threatening, potentially illegal or similarly unsuitable communications.
2017.
directors continues to grow, we believe that it is most prudent to have an independent chairman whose primary service to us is Board leadership and a CEO who can focus all the Board.
www.pennvirginia.com.
2017.
2017.
2017.
20142017:
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | All Other Compensation ($) (2) | Total ($) | ||||||||||||
John U. Clarke | 88,000 | 120,000 | (3) | 0 | 208,000 | |||||||||||
Edward B. Cloues, II | 168,000 | 120,000 | (4) | 5,000 | 293,000 | |||||||||||
Steven W. Krablin | 68,000 | 120,000 | (5) | 0 | 188,000 | |||||||||||
Marsha R. Perelman | 74,000 | 120,000 | (6) | 5,000 | 199,000 | |||||||||||
Gary K. Wright | 88,000 | 120,000 | (7) | 2,500 | 210,500 | |||||||||||
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
| Darin G. Holderness | 75,000 | ¾ | 75,000 | |||||||||
Marc McCarthy(2) | 70,000 | ¾ | 70,000 | |||||||||
| Jerry Schuyler | 75,000 | ¾ | 75,000 | |||||||||
| (1) |
|
| during 2017. As of December 31, |
package provided for the following for 2017:
| · | an annual cash retainer of $60,000 to each non-employee director, payable quarterly in arrears and pro-rated for any periods of partial service; and |
| · | annual cash retainers of $15,000, $15,000 and $10,000 for the Chairman of the Audit, C&B and N&G Committees, respectively, payable quarterly in arrears and pro-rated for any periods of partial service. |
Directors may elect to take their equity compensation in shares of our common stock or deferred common stock units, or a combination thereof. The actual number of deferred common stock units awarded in any given year is based upon the NYSE closing price of our common stock on the dates on which such awards are granted. Each deferred common stock unit represents one share of our common stock, which vests immediately upon issuance and is distributed to the holder upon termination or retirement from the Board. Directors are restricted from selling such shares until six months after such termination or retirement.
Directors appointed during a year, or who cease to be directors during a year, receive a pro rata portion of cash and deferred common stock units. Directors, including the Chairman of the Board, may elect to receive any cash payments in common stock or deferred common stock units.
$18,500.
Non-Employee Directors Deferred Compensation Plan
Until 2011, the Penn Virginia Corporation Amended and Restated Non-Employee Directors Deferred Compensation Plan permitted our non-employee directors to defer the receipt ofBoard (excluding any or all cash and shares of our common stock they received as compensation. All deferrals, and any distributions with respect to deferred shares of our common stock, were credited to a deferred compensation account, the cash portion of which is credited quarterly with interest calculated at the prime rate.chair premium). Our non-employee directors are fully vested at all times in any cash or deferred shares of common stock creditednot required to their deferred compensation accounts. Amounts held in a non-employee director’s deferred compensation account will be distributed tomeet these ownership thresholds until the director ondate that is five years from the January 1st following the earlier to occuradoption of the director reaching age 70guidelines, or the retirement, resignation or removal of the
director from the Board. Upon the death of a non-employee director, all amounts held in the deferred compensation account of the non-employee director will be distributed to the director’s estate.
On May 4, 2011, we amended the plan to freeze it as to participation such that no future appointed non-employee directors will be eligible to participate in the plan and no existing non-employee directors will be eligible to elect further fee deferrals or share grant deferrals under the plan.
October 2021.
Name of Beneficial Owners | Shares Beneficially Owned (1) | Percent of Class (2) | ||||||
5% Holders (3): | ||||||||
JVL Advisors, LLC 10000 Memorial Drive, Suite 550 Houston, TX 77024 | 8,364,998 | 11.7 | % | |||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10022 | 6,922,493 | 9.7 | % | |||||
Soros Fund Management LLC 888 Seventh Avenue, 33rd Floor New York, NY 10106 | 6,003,509 | 8.4 | % | |||||
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 | 5,716,353 | 8.0 | % | |||||
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | 4,741,289 | 6.6 | % | |||||
Franklin Resources, Inc. (4) One Franklin Parkway San Mateo, CA 94403-1906 | 4,633,945 | 6.1 | % | |||||
Nokomis Capital, L.L.C. (5) 2305 Cedar Springs Road, Suite 420 Dallas, TX 75201 | 4,315,063 | 6.0 | % | |||||
LionEye Capital Management LLC 152 West 57th Street, 10th Floor New York, NY 10019 | 3,990,980 | 5.6 | % | |||||
Directors: | ||||||||
John U. Clarke | 128,877 | (6) | — | |||||
Edward B. Cloues, II | 132,022 | (7) | — | |||||
Steven W. Krablin | 70,167 | (8) | — | |||||
Marsha R. Perelman | 158,886 | (9) | — | |||||
H. Baird Whitehead | 737,598 | (10) | 1.0 | % | ||||
Gary K. Wright | 81,900 | (11) | — | |||||
Executive Officers: | ||||||||
Steven A. Hartman | 308,200 | (12) | ||||||
John A. Brooks | 291,817 | (13) | — | |||||
Nancy M. Snyder | 398,284 | (14) | — | |||||
All directors and executive officers as a group (9 persons) | 2,314,360 | (15) | 3.2 | % | ||||
| Name of Beneficial Owners | Shares Beneficially Owned(1) | Percent of Class(2) | ||||||
| 5% Holders: | ||||||||
Contrarian Capital Management, L.L.C.(3) | 1,118,075 | 7.4 | % | |||||
KLS Diversified Asset Management LP(4) | 1,163,554 | 7.7 | % | |||||
Mangrove Partners Master Fund, Ltd(5) | 1,437,243 | 9.5 | % | |||||
Strategic Value Partners, LLC(6) | 1,534,180 | 10.2 | % | |||||
| Directors/Executive Officers | ||||||||
| Darin G. Holderness | 2,781 | * | ||||||
| Jerry R. Schuyler | 2,781 | * | ||||||
| Michael Hanna | ¾ | * | ||||||
| David Geenberg | ¾ | * | ||||||
| Harry Quarls | 37,976 | * | ||||||
| John A. Brooks | 5,518 | * | ||||||
| Steven A. Hartman | 12,925 | * | ||||||
| Directors and Executive Officers as a group (7 persons) | 61,981 | * |
| * | Represents less than 1%. |
| (1) | Unless otherwise indicated, all shares are owned directly by the named holder and such holder has the sole power to vote and dispose of such shares. |
| (2) | Based on |
| (3) |
| (4) |
| (5) |
| (6) | Based solely on a Schedule 13D/A filed with the SEC on January 18, 2018 by Strategic Value Partners, LLC. Such filing indicates that Strategic Value Partners, LLC has shared voting and |
2017 except for one Form 3 and one Form 4 reporting six transactions, which were subsequently filed by Strategic Value Partners, LLC and affiliated parties.
Age, Position with the Company and Business Experience | Officer of the Company Since | |||
| 2011 | ||||
Steven A. Hartman, age 50 | 2010 | |||
| Mr. Hartman has served as our Senior Vice President, | ||||
| Age, Position with the Company and Business Experience | Officer of the Company Since | |||
| from September 2006 to June 2010 and of Penn Virginia Resource GP, LLC, the general partner of Penn Virginia Resource Partners, L.P., from July 2006 to June 2010. Prior to joining the Company, Mr. Hartman was employed by El Paso Corporation and its publicly traded spin-off, GulfTerra Energy Partners, L.P., in a variety of financial and corporate-development related positions. |
| · | Harry Quarls, our former Executive Chairman who retired effective February 28, 2018; |
| · | John A. Brooks, our President and Chief Executive |
| · | Steven A. Hartman, our Senior Vice President, | |||||
| Treasurer. | |||||
H. Baird Whitehead, President and Chief Executive Officer
Steven A. Hartman, Senior Vice President and Chief Financial Officer
John A. Brooks, Executive Vice President and Chief Operating Officer
Nancy M. Snyder, Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary
Executive Summary
Overviewextent any of Our 2014 Performance
2014 was a particularly volatile year for the oil and gas industry. The price of oil plummeted during the second halfour NEOs held stock of the yearCompany as of that date, it was cancelled, and remains severely depressed. Notwithstandingno consideration was provided for this lost value. Following our emergence from bankruptcy, in January 2017, our NEOs and other key employees were granted long-term equity incentives under the decline in oil prices, we ended 2014 with $470 million of financial liquidity to help fund our capital expenditures program and hedges in place that protect our cash flow on approximately 85% of our expected 2015 oil production. Highlights of the year included the following:
We increased our total proved oil reserves in the Eagle Ford by approximately 25%, about 72% of which were proved oil reserves.
We expanded our Eagle Ford lease position by approximately 31% to approximately 102,000 mostly contiguous net acres located principally in the highly valued “volatile oil window.”
We evaluated the potential of the Upper Eagle Ford and determined, based on current information, that the Upper and Lower Eagle Ford appear to be separate reservoirs.
We believe that we increased our Eagle Ford drilling inventory by approximately 204% to about 3,400 locations, including an estimated 1,850 Upper Eagle Ford locations.
We completed several transactions in 2014 that increased our financial liquidity:
In January, we sold our Eagle Ford natural gas gathering and gas lift assets for $100 million (approximately $94 million net to us), or our “Natural Gas Gathering Disposition.”
We completed a $325 million convertible preferred stock offering in June,newly-adopted Penn Virginia 2016 Management Incentive Plan, or the “Preferred Offering.“Incentive Plan,”
In July, we sold our Eagle Ford oil gathering and transportation rights for $150 million, or our “Oil Rights Disposition.”
In August, we sold our Mississippi Selma Chalk oil and gas assets for $72.7 million, or our “Mississippi Disposition.”
In August, we redeployed capital to acquire approximately 11,500 net acres which included a grant of property contiguous to our then current Eagle Ford acreage for $45.6 million (including a $10.6 million drilling carry payable over three years), or our “Eagle Ford Acquisition.”
We made important strides in improving our operational execution as the year progressed.
In spite of these efforts, our stock price suffered generally along with our peers’ stock prices as the weak industry environment far outweighed ourboth time-vested and our peers’ achievements during the year.
Key 2014 Compensation Decisions
The Committee approved the following 2014-related compensation for our NEOs:
In February 2014, the Committee recognized that our NEOs’ base salaries generally fell below the median of our peer group. Accordingly, the Committee approved increases in our NEOs’ 2014 base salaries averaging 8.2%. Note that in February 2015, the Committee determined to hold NEOs’ base salaries at 2014 levels for 2015.
Based on the Company’s performance against pre-established objectives, in February 2015, the Committee approved bonus payouts for NEOs well below their target levels, averaging 58% of target.
Consistent with our practice in 2013, in May 2014, the Committee approved awards of long-term equity compensation to NEOs’ comprised of 50% performance-based restricted stock units payable in cash, 30% time-based restricted stock units payable in stockintended to immediately align executive and 20% stock options.
Our 2014 Say-on-Pay Vote
Atshareholder interests. In addition, our Annual Meeting of Shareholders held on May 7, 2014, approximately 97% of our shareholders voting on our “say-on-pay” proposal voted FOR the compensation paid to our NEOs as set forth in the “Executive Compensation” section of our 2014 Proxy Statement. We believe that this positive vote was a result of our 2013 total shareholder return, or “TSR,” of 144%, our strong commitment to aligning executive compensation with shareholder interests, our significant accomplishments in 2013 as described in our 2014 Proxy Statement, our long history of paying our NEOs compensation that is reasonable both in light of our and their performance and as compared to our peers and the conservative character of our compensation program in general. Key features of our program include the following:
We focus on “pay-for-performance,” particularly with respect to TSR performance.
70% of the long-term equity compensation awarded to our NEOs in 2014 was “at risk,” comprised of 50% performance-based restricted stock units and 20% stock options. See “—Executive Compensation.”
We maintain stock ownership guidelines which require executives to hold a meaningful amount of stock at all times.
|
Our Amended and Restatednewly formed C&B Committee adopted new Annual Incentive Cash Bonus and Long-Term Equity CompensationAward Guidelines orfor the “Incentive Award Guidelines,” provide for a bonus pool which limits the aggregate amountpayment of annual cash bonuses that we can pay to all employees and the sizebonuses. These compensation programs are discussed in further detail below.
Our NEOs do not have employment agreements.
The Change of Control Severance Agreements for our executive officers provide for double-triggered payouts with no “tax gross ups.” See “Change-in-Control Arrangements.”
We do not reimburse our executive officers for any tax obligations.
We prohibit our executive officers and other employees from engaging in any hedging activities. See “—Policy Prohibiting Hedging.”
The differential between our CEO’s total annual compensation and that of all of our other employees is appropriate. See “—Internal Pay Equity at Our Company.”
We provide limited perquisites to our executive officers, other employees and retired executives. See “Summary Compensation Table.”
We do not have a pension plan, and we do not contribute to our Supplemental Employee Retirement Plan. See “Nonqualified Deferred Compensation.”
We have never repriced or replaced options, and we are prohibited from doing so by our 2013 Amended and Restated Long-Term Incentive Plan, or the “Equity Plan.”
Compensation Philosophy
To implement our corporate long-term strategy to exploit and continue to grow our oil and NGL reserves, we must be able to attract, retain and develop employees with the appropriate experience, motivation and skills to grow an oil and natural gas exploration and production company that operates safely in an environmentally conscious and cost and time efficient manner and has the ability to react to economic and other developments in a cyclical and volatile industry. The Committee believes that setting appropriate compensation levels consistent with our objectives involves balancing several competing needs and desires, including:
Our desire to increase shareholder value;
Our shareholders’ desire for attractive rates of return;
Our desire to attract and retain personnel with the skills, educational qualifications and experience to enable us to grow and achieve our business goals;
Our employees’ desire to be adequately compensated for their services, consistent with comparable positions in the market;
Our employees’ desire for career advancement; and
Our competitors’ demand for the services of our employees.
This philosophy is reflected in our compensation program objectives described below.
Objectives of Our Compensation Program
Accountability—Executives should be held accountable for our annual performance and the achievement of our longer-term strategic goals as well as their own individual performance over both the |
Drive Desired Behaviors—Our compensation program, particularly regarding incentive compensation, should be designed to drive desired behaviors consistent with our values and to achieve stated goals. We satisfy this objective by setting performance metrics for us and our executives that we believe will drive these behaviors and help us achieve our goals. |
Align Interests of Executives and Shareholders—Executive compensation should |
Flexible Enough to Respond to Changing Circumstances—We are in a cyclical and volatile business, so we should have a flexible compensation program that is responsive to different circumstances at various points in time. To meet this objective, the C&B Committee retains |
or lower compensation than performance metrics would indicate if circumstances so |
Industry Competitive—Total executive compensation should be industry-competitive so that we can attract, retain and motivate talented executives with the experience and skills necessary for our success. We satisfy this objective by staying apprised, through our own research and with the assistance of the C&B Committee’s independent compensation consultant, of the amounts and types of executive compensation that our peers pay as well as general industry trends. |
Internally Consistent and Equitable—Executive compensation should be internally consistent and equitable. We satisfy this objective by considering not only peer benchmarks, but also our NEOs’ capabilities, levels of experience, tenures, positions, responsibilities and contributions when setting their compensation. |
|
|
Because all of our NEOs other than our CEO report directly to, and work on a daily basis with, our CEO, the Committeeannually reviews and discusses with our CEO his evaluation of the performance of each of our other NEOs against their individual performance goals. The Committeeofficers, including Mr. Hartman, and gives considerable weight to our CEO’s evaluations when assessing our other NEOs’officers’ performance and determining their compensation. The C&B Committee bases its
independent evaluation of our CEO, and our CEO bases his evaluation of each of our other NEOs,officers, primarily on whether we met or exceeded certain quantitative corporate performance metrics
market competitiveness.
The Committee directly retained and has the authority to terminate Meridian.
Meridian reports directly to the Committee and its Chairperson.
Meridian meets regularly in executive sessions with the Committee.
Meridian has direct access to all membersconduct a market comparison analysis of the Committee during and between meetings.
Interactions between Meridian and management generally are limited to data gathering and discussions regarding information which has or will be presented to the Committee.
The amount of fees paid by the Company to Meridian in 2014 were insignificant as a percentage of Meridian’s 2014 total revenue.
The Committee confirmed that Meridian consultants do not own any of our stock.
Meridian confirmed that neither Meridian nor any Meridian consultant has any business or personal relationship with any of our executive officers or any Committee member.
Meridian has in place policies and procedures that are designed to prevent conflicts of interest.
Peer BenchmarksGroup. Set forth below is a list of the companies comprising our peer group for purposes of 20142017 compensation, which is referred to in this Proxy Statement as our “PeerPeer Group.” The appropriate peer group wasPeer Group companies were selected based on revenues, assets, capitalizationmarket cap and scope of operations.enterprise value. Compensation data for the Peer Group was presented to the C&B Committee in late 2013 and was used by the C&B Committee to help direct its compensation decisions for NEOs in early 2014. This Peer Group was also used as the performance peer group for our performance-based restricted stock units granted in May 2014. Our 2014 Peer Group was the same as our 2013 Peer Group, except that we deleted Berry Petroleum Company, which was acquired by Linn Energy in 2013.
| Carrizo Oil & Gas, Inc. | Callon Petroleum Company | ||
| Extraction Oil & Gas, Inc. | |||
| Eclipse Resources Corporation | Comstock Resources, Inc. | ||
| Northern Oil and Gas, Inc. | |||
Rex Energy Corporation SRC Energy Inc. PetroQuest Energy, Inc. Earthstone Energy, Inc. Clayton Williams Energy, Inc. | Jones Energy, Inc. Approach Resources, Inc. | Contango Oil & Gas Lonestar Resources US Inc. |
Characteristics | Primary Objective | |||||
| Attract and retain highly talented individuals | ||||||
Short-Term Incentives | Cash bonus | Reward individual and corporate performance | ||||
Long-Term Incentives | Time and service-based equity awards | Align the interests of our employees and shareholders by providing employees with incentives to perform in a manner that promotes share price appreciation and achieves corporate objectives | ||||
| Other Benefits | Participation in broad based 401(k) and employee health benefit plans | Provide competitive benefits that promote employee health and support employees in attaining financial security |
Incentive Award Guidelines. The Incentive Award Guidelines
Executive Compensation
We pay our NEOs with a baseregular source of income
 |  |
2014 and 2015 Base Salaries
In February 2014, the Committee raised our NEOs’ base salaries generally to make them more competitive with those of our peers. In February 2015, the Committee determined that, in lightimportance of the severely depressed of oil prices and general downturn ofposition to the industry, there would be no increase in theCompany. The base salaries payable to our NEOs in 2015. The 2013, 20142017 and 2015 base salaries paid or payable to our NEOs are2016 were as follows:
| Salary ($) | ||||||||
Name and Principal Position | 2015/2014 | 2013 | ||||||
H. Baird Whitehead | 625,000 | 550,000 | ||||||
President and Chief Executive Officer | ||||||||
Steven A. Hartman | 345,000 | 325,000 | ||||||
Senior Vice President and Chief Financial Officer | ||||||||
John A. Brooks | 385,000 | 350,000 | ||||||
Executive Vice President and Chief Operating Officer | ||||||||
Nancy M. Snyder | 335,000 | 325,000 | ||||||
Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary | ||||||||
We strive to make our NEOs’ base salaries both industry-competitive and reflective
| Salary ($) | ||||||||
| Name and Principal Position | 2017 | 2016 | ||||||
| Harry Quarls | 250,000 | N/A | ||||||
| Former Executive Chairman | ||||||||
| John A. Brooks | 400,231 | 385,000 | ||||||
| President and Chief Executive Officer | ||||||||
| Steven A. Hartman | 275,000 | 285,621 | ||||||
| Senior Vice President, Chief Financial Officer and Treasurer | ||||||||
In raising Messrs. Whitehead’s and Hartman’s 2014published survey data as discussed above under “—How Compensation is Determined—Peer Group.” The C&B Committee targeted the 50th percentile of base salary levels from such data and then multiplied the resulting amount by 60% as Mr. Quarls was expected to devote only 60% of an average work week to Company matters.
2014-Relatedmarket. Mr. Hartman’s salary was increased to $275,000 for 2017, which was still less than the 25th percentile in part due to the fact that Mr. Hartman’s incentive compensation was significantly greater than the 50th percentile of such market data. See “—Employment Contracts—Hartman Employment Agreement.”
| Cash Bonus | ||||||||||||||||
| (% of 2014 Salary) | ($) | |||||||||||||||
Name | Target | Target | Paid | % of Target Paid | ||||||||||||
H. Baird Whitehead | 100 | 625,000 | 360,000 | 57.6 | ||||||||||||
Steven A. Hartman | 80 | 276,000 | 195,000 | 70.6 | ||||||||||||
John A. Brooks | 90 | 346,500 | 155,000 | 44.7 | ||||||||||||
Nancy M. Snyder | 80 | 268,000 | 160,000 | 59.7 | ||||||||||||
as follows:
Performance Metric (1) | Weighting Factor | Target Performance | Actual Performance | Percent of Target Achieved | Payout Level Percent (2) | |||||
Production | 25% | 9,184 MBOE | 7,934 MBOE | 86% | 0% | |||||
Drilling finding and development costs per BOE (3) | 25% | $32.38 | $36.48 | 118% | 70% | |||||
Cash costs per BOE (4)(5) | 25% | $17.45 | $17.10 | 98% | 110% | |||||
Leverage Ratio (6)(7)(8)(9) | 25% | 3.10 | 3.78 | 122% | 0% | |||||
Total Payout Level | 45% |
Performance Metric | Weighting Factor | Threshold Performance 50% | Target Performance 100%(1) | Maximum 200% | Actual Performance | Payout | Payout Level Percent (2) | |||||||||||||||||||||
| Production (MBOE) | 20 | % | -15 | % | 4,116 | +15 | % | 3,779 | 72.7 | % | 14.5 | % | ||||||||||||||||
Drilling Capital Efficiency per BOE (3) | 20 | % | +15 | % | $ | 13.27 | -15 | % | $ | 15.73 | 0.0 | % | 0 | % | ||||||||||||||
Adjusted EBITDAX per BOE (4) | 20 | % | -20 | % | $ | 24.51 | +20 | % | $ | 27.04 | 151.5 | % | 30.3 | % | ||||||||||||||
LOE per BOE (5) | 5 | % | +15 | % | $ | 5.15 | -15 | % | $ | 5.76 | 60.3 | % | 3.0 | % | ||||||||||||||
G&A ($MM) (6) | 5 | % | +15 | % | $ | 15.50 | -15 | % | $ | 14.50 | 143.0 | % | 7.2 | % | ||||||||||||||
| Discretionary | 30 | % | 100 | % | 30 | % | ||||||||||||||||||||||
| Total Payout Level | 85 | % | ||||||||||||||||||||||||||
| (1) |
| (2) | Represents the bonus pool payout percentage based on the percent of target |
| (3) | Drilling Capital Efficiency is defined as (A) the total well cost, net to the Company’s working interest, with respect to wells turned in-line during the twelve-month period ending September 30 of the applicable year, divided by (B) the Company’s technical estimated ultimate recovery, net to the Company’s working interests (as determined by Degolyer & McNaughton or another independent reserve engineering firm) as of the last day of the applicable plan year with respect to such wells, net of royalties. |
| (4) | Adjusted EBITDAX is as defined in the Company’s Credit Agreement dated September 12, 2016; provided however, that for purposes of determining the Consolidated Net Income of the Company under such definition, non-recurring general and administrative expenses and share-based compensation are excluded. |
| (5) | LOE means the Company’s lease operating expense, as set forth in the |
| (6) | G&A means the |
expense, in each case as set forth in |
In February 2015, the Committee reviewedfinancial statements for the types and weightings of our cash bonus pool performance metrics in light of what it determined to be the most important behaviors to drive in 2015 given 2014 results and our 2015 corporate goals and strategy and decided that the 2015 cash bonus pool metrics would remain the same as they were for 2014.
applicable plan year.
Name | 2017 Target (% of Base Salary) | |||
| ||||
| Harry Quarls | 80 | |||
| John. A. Brooks | 100 | |||
Steven A. Hartman | ||||
| ||||
| ||||
Peer Comparison Data—As described above under “How Compensation is Determined,” the Committee targets our NEOs’ total compensation to fall at approximately the 50th percentile of executive officers in our Peer Group with comparable experience, responsibilities and position within the organization. The cash bonus targets shown above are intended to result in our NEOs receiving annual cash bonuses in amounts that are competitive with our Peer Group when target performance goals are met and which constitute a reasonable and Peer Group-comparable portion of our NEOs’ total compensation.
| · | The Company’s significant efforts to manage the drilling program and support functions with limited staffing; |
| · | The successful testing of slickwater completions in Area 2; |
| · | The growth in production and proved reserves in 2017 as compared to 2016; |
| · | The successful consummation of one acquisition and entrance into a purchase agreement for another, both of which required significant company resources; and |
| · | Entry into a $200 million second lien term loan and increase in the borrowing base under the Company’s credit agreement from $128 million to $237.5 million. |
the 2017 annual incentive cash bonuses, he did not receive a bonus for such year.
The opportunity to earn an annual long-term2017
The Committee grants long-term equity incentive compensation awards to our NEOs in May of each year after our Annual Meeting of Shareholders so that it has the opportunity to consider shareholder views on any compensation-related matters that may be included in our annual Proxy Statement. Our equity awards are performance-based on both an historical basis, since the Committee considers performance during the previous year to set the grant date value of long-term equity awarded, and a forward-looking basis, since (i) the Committee also considers our NEOs’ continuing services over time, (ii) awards that vest over time will increase or decrease
in value depending on our future stock price and (iii) awards that are paid outunits, based on performance measures will pay at a much lower rate if our performance duringan incentive target of 375% of his base salary. Mr. Brooks’ aggregate incentive award places him between the specified performance period is below expectations25th and at a higher rate if our performance is above expectations.
The chart below shows the amounts of long-term equity incentive compensation awarded by the Committee to our NEOs in May 2014 as compared to their long-term equity incentive compensation targets.
Name | 2013 Target % | Eligible $ | Amount Paid $ | % of 2013 Base Salary Paid | ||||||||||||
H. Baird Whitehead | 300-600 | 1,650,000 – 3,300,000 | 2,650,000 | 482 | ||||||||||||
Steven A. Hartman | 200-400 | 650,000 – 1,300,000 | 1,100,000 | 339 | ||||||||||||
John A. Brooks | 200-400 | 700,000 – 1,400,000 | 1,500,000 | 429 | ||||||||||||
Nancy M. Snyder | 200-400 | 650,000 – 1,300,000 | 1,000,000 | 308 | ||||||||||||
As required by the Incentive Award Guidelines, the Committee considered the following factors when awarding our NEOs the foregoing amounts of long-term equity compensation:
Our NEOs’ Target Equity Compensation Percentage—As with annual cash bonus targets, our NEOs’ long-term equity incentive compensation targets are intended to result in them receiving long-term equity awards that are industry-competitive. According to information50th percentile based on market data provided by Meridian, our NEOs’ 2014 long-term equity compensation targets were generally comparable to those of our Peer Group. See “Peer Comparison Data” below.
Individual Performance Metrics—L&A. The C&B Committee considered whether our NEOs met their individual performance metrics, which had been approved by the Committee in February 2013. A detailed discussion of the individual performance metrics applicable to the amounts of the May 2014 equity awardsdetermined that this amount was included under the heading “Individual Performance Metrics” on pages 27-29 in our 2014 Proxy Statement.
Peer Comparison Data—As a percent of base salary, our NEOs’ long-term equity compensation awarded in May 2014 was generally between the 50th and 75th percentiles of officers in our Peer Group with comparable experience, responsibilities and position.
Contribution to the Company—The Committee considered theappropriate given Mr. Brooks’ relative importance to the success of our execution of our strategic objectives of retaining and incentivizing each NEO beyond the current year.
Individual Performance Metrics
The Incentive Award Guidelines require that the Committee set individual performance metrics for each NEOinexperience in the first quarter of each year. The charts below showChief Executive Officer role.
MR. WHITEHEAD
Corporate Measures | Quantitative Criteria | Target Performance | Actual Performance | Percent of Target | ||||
Weighted at | Production | 9,184 MBOE | 7,934 MBOE | 86% | ||||
50% | Drilling F&D per BOE | $32.38 | 36.48 | 118% | ||||
| Cash costs per BOE | $17.45 | $17.10 | 98% | |||||
| Leverage Ratio | 3.10 | 3.78 | 122% |
In addition to the quantitative metrics above, the Committee considered, among others, the following accomplishments of Mr. Whitehead, which are weighted, in the aggregate, at 50%:
Promptly redirected our strategy to reflect the decline in oil prices, including reducing costs and capital spending and high-grading our drilling operations.
Promoted the expansion of our Eagle Ford acreage by 31% to 102,000 net acres.
Promoted and oversaw our successful evaluation of our Upper Eagle Ford potential, which added approximately 1,700 new locations to our drilling inventory.
Promoted and oversaw our Oil Rights Disposition, Natural Gas Gathering Disposition, Mississippi Chalk Disposition (collectively, the “Dispositions”), the Eagle Ford Acquisition and the Preferred Offering.
Promoted our aggressive hedging strategy.
Participated in an active investor relations program, including four quarterly public teleconferences and 16 investor conferences, with more than 330 “one-on-one” investor meetings, three sales force presentation and nine road shows held during 2014.
Did not achieve goals related to the Company’s meeting public guidance metrics.
MR. HARTMAN
Corporate Measures | Quantitative Criteria | Target Performance | Actual Performance | Percent of Target | ||||
Weighted at | Cash costs per BOE | $17.45 | $17.10 | 98% | ||||
40% | Leverage Ratio | 3.10 | 3.78 | 122% | ||||
Borrowing Base Liquidity | >$150 million | $470 million | >100% |
In addition to the quantitative metrics above, the Committee considered that Mr. Hartman had fulfilled all of his individual goals and objectives, which were weighted, in the aggregate, at 60%, including the following:
Devised and executed a financial plan which maintained our liquidity and resulted in credit availability at year end of more than $425 million.
Managed our spring and fall borrowing base redetermination processes each of which resulted in increases to our borrowing base that exceeded market expectations.
Oversaw the hedging of approximately 80% of our 2015 oil production at a weighted average floor price of over $90 per barrel.
Oversaw the Preferred Offering, which was well timed and includes very competitive terms.
Together with the Executive Vice President and Chief Administrative Officer, managed a significant accounting-related arbitration matter related to a previous acquisition, which resulted in an award to us of over $30 million.
MR. BROOKS
Corporate Measures | Quantitative Criteria | Target Performance | Actual Performance | Percent of Target | ||||
Weighted at | Production | 9,184 MBOE | 7,934 MBOE | 86% | ||||
| 50% | Drilling F&D per BOE | $32.38 | $36.48 | 118% | ||||
| Cash costs per BOE | $17.45 | $17.10 | 98% | |||||
Leverage Ratio
| 3.10
| 3.78
| 122%
|
In addition to the quantitative metrics above, the Committee considered, among other things, whether Mr. Brooks had fulfilled several other individual goals and objectives, which were weighted, in the aggregate, at 50%, including the following:
Oversaw our leasehold and reserve growth in the Eagle Ford, including our successful evaluation of our Upper Eagle Ford potential.
Directed the continuing implementation of a comprehensive water resource management program.
After encountering execution issues during the first three quarters, oversaw areas of improvement in our operations execution later in the year, including a significant reduction in casing failures.
Reduced drilling costs per foot of more than 8.0% while drilling feet per day increased 14.5%.
Did not achieve goals regarding capital cost reduction, stimulation cost reduction, increase in initial production rate per stage, decrease in non-productive hours or decrease in unit operating costs.
MS. SNYDER
Corporate Measures | Quantitative Criteria | Target Performance | Actual Performance | Percent of Target | ||||
Weighted at | Cash costs per BOE | $17.45 | $17.10 | 98% | ||||
40% | Leverage Ratio | 3.10 | 3.78 | 122% |
In addition to the quantitative metrics above, the Committee considered, among other things, that Ms. Snyder had fulfilled all of her individual goals and objectives, which are weighted, in the aggregate, at 60%, including the following:
Oversaw the in-house negotiation and documentation of the Dispositions and the Eagle Ford Acquisition.
Together with our CFO, managed a significant accounting-related arbitration matter related to a previous acquisition which resulted in an award to us of over $30 million.
Assisted the Committee with the structuring and administration of our executive compensation program.
Oversaw the legal, human resources, information technology and oil and gas marketing functions.
Oversaw SEC, NYSE and other regulatory compliance and governance matters with no non-compliance issues.
Compensation Risk Assessment
| · | We pay a mix of compensation which includes near-term cash and long-term equity-based compensation. |
We base our annual incentive cash bonus and long-term equity compensation awards on several different performance metrics, which discourages our employees from placing undue emphasis on any one metric or aspect of our business at the expense of others.
| · | We base our annual incentive cash bonus and long-term equity compensation awards on several different performance metrics, which discourages our employees from placing undue emphasis on any one metric or aspect of our business at the expense of others. |
We believe that our performance metrics are reasonably challenging, yet should not require undue risk-taking to achieve.
Our performance metrics include quantitative financial and operational metrics as well as qualitative metrics related to our operations, strategy and other aspects of our business.
| · | We believe that our performance metrics are reasonably challenging, yet should not require undue risk-taking to achieve. |
The performance periods in our new performance-based restricted stock units overlap, and our stock options and time-based restricted stock units vest over a three-year period. This mitigates the motivation to maximize performance in any one period at the expense of others.
Our NEOs are required to own our stock as provided in our Executive Stock Ownership Guidelines.
| · | Our performance metrics include quantitative financial and operational metrics as well as qualitative metrics related to our operations, strategy and other aspects of our business. |
We believe that we have an effective management process for developing and executing our short-and long-term business plans.
Our compensation policies and programs are overseen by the Committee.
| · | The performance periods under our performance-based restricted stock units overlap, and our time-vested restricted stock units generally vest over a five-year period. This mitigates the motivation to maximize performance in any one period at the expense of others. |
The Committee retains an independent compensation consultant.
Executive Stock Ownership Guidelines
We require our executive officers to own shares of our common stock valued at four times base salary, in the case of our CEO, and two times base salary, in the case of our other executive officers, or the “Ownership Guidelines.” As of December 31, 2014, all of our NEOs were in compliance with the Ownership Guidelines.
Internal Pay Equity at Our Company
As discussed above, the Committee believes that comparing our NEOs’ compensation to that of our peers is necessary to assess the overall competitiveness of our compensation programs. However, the Committee also believes that our compensation programs must be internally consistent and equitable.
In implementing this philosophy, the Committee discussed with our Vice President, Human Resources a study conducted by our human resources department which compared our CEO’s total 2014 annual compensation to the total 2014 annual compensation of our employee whose total 2014 annual compensation fell at the median of all of our employees other than our CEO, or our “Median Employee.” For this purpose, total compensation was computed in the same manner as it is computed for the Summary Compensation Table. Our study demonstrated that, for 2014, our CEO’s total annual compensation was approximately 35 times greater than the total annual compensation of our Median Employee. The Committee felt that these results reflected an appropriate differential in executive compensation given the wide range of responsibilities and accountability of our CEO and our other employees.
programs as a result of this vote. Statement and incorporated by reference into the Annual Report on Form 10-K. Name and Principal Position H. Baird Whitehead President and Chief Executive Officer Steven A. Hartman Senior Vice President and Chief Financial Officer John A. Brooks Executive Vice President and Chief Operating Officer Nancy M. Snyder Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary Name Whitehead Hartman Brooks Snyder Name Whitehead Hartman Brooks Snyder Name Estimated Future Payouts Under Equity H. Baird Whitehead Steven A. Hartman John A. Brooks Nancy M. Snyder its terms in November 2017. February 28, 2018. Name H. Baird Whitehead Steven A. Hartman John A. Brooks Nancy M. Snyder Name H. Baird Whitehead Steven A. Hartman John A. Brooks Nancy M. Snyder Vesting Date February 16, 2014 February 17, 2014 May 1, 2014 Vesting Date February 16, 2014 May 1, 2014 Vesting Date February 16, 2014 February 17, 2014 May 1, 2014 Plan Category Equity compensation plans approved by shareholders Equity compensation plans not approved by shareholders Name H. Baird Whitehead Steven A. Hartman John A. Brooks Nancy M. Snyder Name of Executive Officer H. Baird Whitehead Steven A. Hartman John A. Brooks Nancy M. Snyder Company. Audit Fees (1) Audit-Related Fees (2) Tax Fees (3) All Other Fees Total Fees November 28, 2018. 275, Houston, Texas 77079. (vi) all other information with respect to such shareholder that would be required to be provided in a Proxy Statement prepared in accordance with SEC Regulation 14A. 2, 2018. Reconciliation of GAAP “Net loss from continuing operations” to Non- GAAP “EBITDAX” Net loss from continuing operations Adjustments to net loss: Non-consolidated net income, net of cash dividends received Extraordinary loss (gain) Loss (gain) on sale of assets Loss (gain) on purchase or sale of equity Loss on extinguishment of debt Derivative loss (gain), net of cash settlements received (paid) Loss (gain) attributable to write-ups or write-downs of assets Cumulative pro forma effect of acquisitions and divestitures Interest expense Income tax benefit Depreciation, depletion and amortization Exploration Impairments Acquisition transaction expenses Other non-cash expenses (share-based compensation) Other (loss on firm transportation commitment and related accretion) EBITDAX · Our NEOs are required to own our stock as provided in our Executive Stock Ownership Guidelines. · We believe that we have an effective management process for developing and executing our short and long-term business plans. · Our compensation policies and programs are overseen by the C&B Committee. · The C&B Committee retains an independent compensation consultant. Policy Prohibiting HedgingWe believe that derivative transactions, including puts, calls and options, for our securities carry a high risk of inadvertent securities laws violations and also could afford the opportunity for our employees and directors to profit from a market view that is adverse to us. For these reasons, we prohibit our employees and directors from engaging in any type of derivative transaction in respect of our securities.Tax ImplicationsSection 162(m) of the Internal Revenue Code generally precludes a publicly held company from taking a federal income tax deduction for compensation paid in excess of $1 million per year to certain covered officers. Under this section, compensation that qualifies as performance-based is excludable in determining what compensation amount qualifies for tax deductibility. Covered officersemployees, which include each of our NEOs, except our CFO.The Committee considers our abilityNEOs. There was an exception to fully deduct compensation in accordance with the $1 million dollar limitationslimitation for performance-based compensation meeting certain requirements. For taxable years beginning after December 31, 2017, this exemption has been repealed for all but certain grandfathered compensation arrangements that were in effect as of November 2, 2017. However, the rules and regulations promulgated under Section 162(m) in structuring our compensation programs. However, the Committee retains the authorityare complicated and subject to authorize the payment of compensation that may not be deductible if it believes such payments would be in our best interestschange and the best interestsscope of our shareholders.The Committeerelief for grandfathered arrangements is currently uncertain. As such, there can be no assurance that any compensation awarded or paid in prior years will continuebe fully tax deductible. In addition, to consider ways to maximizemaintain flexibility in compensating the deductibility of executive compensation while retaining the flexibility to compensateCompany’s executive officers in a manner deemed appropriate relativedesigned to their performancepromote varying corporate goals, the C&B Committee has not adopted a policy requiring all compensation to be tax deductible.Our 2017 Say-on-Pay VoteAt our 2017 Annual Meeting of Shareholders, approximately 99.9% of our shareholders voting on our “say-on-pay” proposal voted FOR the compensation paid to our NEOs as set forth in the “Executive Compensation” section of our 2017 Proxy Statement (excluding abstentions and broker non-votes). The C&B Committee considered the outcome of this vote generally, and did not make any changes to competitiveour compensation levels and practices at peer companies.Compensation and Benefits Committee ReportUnder the rules established by the SEC, we are required to discuss the compensation and benefits of our executive officers, including our CEO, our CFO and our other NEOs. The Compensation and Benefits Committee is furnishing the following report in fulfillment of the SEC’s requirements.The Compensation and Benefits Committee has reviewed the information contained above under theheading “Compensation Discussion and Analysis” and has discussed the Compensation Discussion and Analysis with management. Based upon its review and discussions with management, the Compensation and Benefits Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.Compensation and Benefits CommitteeJohn U. ClarkeJerry Schuyler (Chairman)Steven W. KrablinGary K. WrightMichael HannaDarin HoldernessThe following table sets forth the compensation paid, during or with respect to the years ended December 31, 2014, 20132017, 2016 and 2012,2015, to our CEO, our CFO and our two other executive officersNEOs for services rendered to us and our subsidiaries:Summary Compensation Table Year Salary
($) Bonus
($) Stock
Awards
($) (1)(2) Option
Awards
($) (3) All Other
Compensation
($) (4) Total
($) 2014 625,000 360,000 2,120,010 530,001 41,500 3,676,511 2013 550,000 575,000 1,919,996 480,000 41,200 3,566,196 2012 450,000 500,000 801,548 141,450 40,900 1,933,898 2014 345,000 195,000 880,009 219,997 34,900 1,674,906 2013 325,000 270,000 879,992 219,999 36,600 1,731,591 2012 285,000 230,000 386,752 68,250 36,300 1,006,302 2014 385,000 155,000 1,199,996 300,002 38,500 2,078,498 2013 350,000 290,000 1,119,995 279,999 213,200 2,253,194 2012 300,000 250,000 248,203 43,800 36,300 878,303 2014 335,000 160,000 799,999 200,002 38,500 1,533,501 2013 325,000 260,000 799,995 199,998 41,200 1,626,193 2012 310,000 245,000 498,102 87,901 39,900 1,180,903 Name and Principal Position Year Salary($) Bonus($) StockAwards($) (1)(2) OptionAwards($) (3) All OtherCompensation($) (4) Total($) Harry Quarls(5) 2017 95,192 — 840,644 — 37,500 973,336 Former Executive Chairman John A. Brooks 2017 400,231 300,944 4,386,084 — 38,800 5,126,059 President and 2016 385,000 777,200 (6) — — 38,800 1,021,000 Chief Executive Officer 2015 385,000 — 799,998 200,000 38,800 1,423,798 Steven A. Hartman 2017 275,000 187,000 573,150 — 18,400 1,053,550 Senior Vice President and 2016 285,621 170,000 600,000 — 31,000 1,086,621 Chief Financial Officer 2015 345,000 — 1,039,999 261,001 38,200 1,683,200 (1) Represents the aggregate grant date fair value of time-basedtime-vested restricted stock units and performance-based restricted stock units granted by the C&B Committee to our NEOseach NEO in consideration for services rendered to us. These amounts were computed in accordance with FASB ASC Topic 718 and were based on the NYSE closing prices of our common stockCommon Stock on the dates of grant, in the case of the time-basedtime-vested restricted stock units, and a Monte Carlo simulation of potential outcomes, in the case of the performance-based restricted stock units. See Note 14 in the Notes17 to our Consolidated Financial Statements in our Annual Report onForm 10-K for the year ended December 31, 2014.2017.(2) Performance-based restricted stock units are reported in this column based on target level achievement, which was the probable outcome of such conditions on the dates of grant. The grant date values of the performance-based restricted stock units assuming that the highest level of performance conditions will be achieved was as follows: 2014 2013 2012 $ 1,350,806 $ 1,146,717 $ 943,556 560,723 525,574 455,267 764,592 668,915 292,175 509,739 477,794 586,346 Name 2017 2016 2015 Quarls $ 468,590 N/A N/A Brooks $ 2,417,609 — $ 571,946 Hartman $ 314,600 — $ 743,535 (3) Represents the aggregate grant date fair value of stock options granted by the C&B Committee to our NEOs in consideration for services rendered to us. These amounts were computed in accordance with FASB ASC Topic 718 and were based on the Black-Scholes-Merton option-pricing formula. For a description of the assumptions used under the Black-Scholes-Merton option-pricing formula, see Note 1417 in the Notes to Consolidated Financial Statements in our Annual Report onForm 10-K10‑K for the year ended December 31, 2014.2017.(4) ReflectsFor 2017, includes (i) amounts paid by us for automobile allowances and executive health exams and (ii) our matching and other contributions to our NEOs’ 401(k) Plan accounts. The amountplan accounts, and (iii) for Mr. Brooks for 2013 also includes $175,000Quarls, $37,500 in annual retainers paid to Mr. Brookshim for his service on our Board prior to his appointment as Executive Chairman in connection with his Employment Retention Agreement. See “Employment Retention Agreement.”August of 2017. We contributed the following amounts to the 401(k) Planplan accounts of our NEOs in 2014, 20132017:Name 2017 Quarls - Brooks $ 18,400 Hartman $ 18,400 (5) Mr. Quarls was elected Executive Chairman effective August 15, 2017. The amounts shown above for Mr. Quarls reflect amounts paid to him from and 2012:after August 15, 2017 in his capacity as Executive Chairman, and prior to such date, in his capacity as a non-employee director of the Company. 2014 2013 2012 $ 18,100 $ 17,800 $ 17,500 18,100 17,800 17,500 18,100 17,800 17,500 18,100 17,800 17,500 The cash components(6) Includes a $500,000 retention bonus paid to Mr. Brooks upon the Company’s emergence from bankruptcy on September 12, 2016. The following table sets forth information concerning the grant date and number of all performance-based units, time-basedrestricted stock units and time-vested restricted stock options, and the exercise price of all stock options,units granted to our NEOs in 20142017 by the C&B Committee, all of which were with respect to services rendered to us in 2013:2014 Grants of Plan-Based Awards Grant
Date
Incentive Plan Awards (1) All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#) (2) All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) (3) Exercise
or Base
Price of
Option
Awards
($/Sh) Grant
Date
Fair
Value of
Stock
and
Option
Awards
($) (4) Threshold (#) Target (#) Maximum (#) 5/6/14 20,693 41,385 82,770 795,006 5/6/14 81,189 1,325,004 5/6/14 70,055 16.32 530,001 5/6/14 8,590 17,179 34,358 330,009 5/6/14 33,701 550,000 5/6/14 29,079 16.32 219,997 5/6/14 11,713 23,425 46,850 449,994 5/6/14 45,956 750,002 5/6/14 39,654 16.32 300,002 5/6/14 7,809 15,617 31,234 300,003 5/6/14 30,637 499,996 5/6/14 26,436 16.32 200,002 Estimated Future Payouts UnderEquity Incentive Plan Awards (1)All Other StockAwards: Number ofShares of Stock or Units(#) (2) Grant Date FairValue of StockAwards($) (3)Name GrantDate Threshold(#) Target(#) Maximum(#) Harry Quarls 8/15/17 - 9,455 18,910 468,590 8/15/17 9,455 372,054 John A. Brooks 1/26/17 - 27,920 55,840 1,756,726 1/26/17 27,920 1,443,743 8/15/17 13,335 26,670 660,883 8/15/17 13,335 524,732 Steven A. Hartman 1/26/17 - 5,000 10,000 314,600 1/26/17 5,000 258,550 (1) These wereare awards of performance-based restricted stock units granted under the EquityIncentive Plan. AllThe estimated future payout assumes a target payout of these performance-based100% of restricted stock units willgranted. The awards could be settled in cash on the vesting date. earned at up to a maximum payout of 200% of restricted stock units granted. See “Narrative“—Narrative Discussion of Equity Awards.”(2) These wereare awards of time-basedtime-vested restricted stock units granted under the EquityIncentive Plan.(3) These were awards of stock options granted under the Equity Plan.(4)The grant date fair value of the performance-based restricted stock units was calculated in accordance with FASB ASC Topic 718, using a per share price of $19.21,$62.92 or $49.56, which waswere the valuevalues of the performance-based units on the grant datedates using a Monte Carlo simulation of potential outcomes. The grant date fair value of the time-basedtime-vested units was calculated using a per share price of $16.32,$51.71 or $39.35, which waswere the NYSE closing priceprices of our common stockCommon Stock on the grant date. The grant date fair value of the stock options was calculated using a per option value of $7.57, which was the value of the options on the grant date using the Black-Scholes-Merton option-pricing formula.dates.Time-Vested Restricted Stock UnitsWe granted time-basedtime-vested restricted stock units to all of our NEOs in 2012, 2013 and 2014. The values2017. In determining the number of units to provide to each NEO, we considered the volume weighted average price per share of our time-based units reflected in the Summary Compensation Table and the Grants of Plan-Based Awards Table were basedCommon Stock on the NYSE closing prices of our common stock onNasdaq for the dates of grant.Time-based unit awards represent the right to receive shares of our common stock or an amount of cash equal to the fair market value of our shares of common stock, as determined by the C&B Committee and subject to the termination of the restriction period relating to such restricted stock units. The restriction periods for restricted stock units will terminate as determined by the C&B Committee and evidenced in an award agreement; however, restriction periods will not terminate before one year afterten trading days preceding the date of grant, except as described below. Unless otherwise determined by the C&B Committee and specified in an award agreement, if (i) a grantee ceases to be an employee for any reason other than death, disability or qualified retirement (with respect to grants prior to 2014 only), which is defined as retiring after reaching age 62 and completing 10 years of consecutive service with us or our affiliate, all unvestedgrant. All time-vested restricted stock units are forfeited, or (ii) a grantee dies, becomes disabled or becomes retirement eligible (with respect to grants prior to 2014 only), which is defined as reaching age 62 and completing 10 years of consecutive service with us or our affiliate, all restrictions terminate. In addition, if a change in control of us occurs, all restrictions terminate. Payments with respect to restricted stock unit awards will be made in cash, shares or any combination thereof, as determined by the C&B Committee.All time-based units ever granted to our NEOs in 2017 vest over a five-year period, with one-fifth of each award vesting each January 26 of 2018, 2019, 2020, 2021 and 2022, subject to the officer’s continuous service with the Company through the applicable vesting date. Additionally, time-vested restricted stock units were granted to Mr. Hartman in 2016 pursuant to his Employment Agreement which vest over a three-year period, with one-third of each award vesting on the first, second and third anniversaries of the grant date unless forfeited or earlier vested in accordance with their terms. our emergence from bankruptcy. Please read “—Employment Contracts—Hartman Employment Agreement.” All time-basedtime-vested restricted stock units ever granted to our NEOs provide that payments on such time-based restricted stock units will be made in shares (or, atshares. Upon the requestoccurrence of a change of control, all unvested time-vested restricted stock units will vest as of the date of the change of control. Upon an NEO’s termination of service by the Company without cause (as defined in the award agreement) or by the officer for good reason (as defined in the award agreement), the next tranche of restricted stock units scheduled to vest will vest as of the date of such termination. Upon an officer’s termination of service by the Company due to the officer’s death or disability (as defined in the award agreement), a pro-rated portion of the restricted stock unitholder and upon the approvalunits will vest as of the C&B Committee, an amountdate of cash equalsuch termination. For information on the accelerated vesting of certain time-vested restricted stock units granted to the fair market valueMr. Quarls, see “—Employment Contracts—Separation and Consulting Agreement” below.Performance-Based Restricted Stock UnitsWe granted performance-based restricted stock units to all of our NEOs in 2012, 2013 and 2014.2017. The values of our performance-based units reflectedvest (if at all) in the Summary Compensation Table and the Grants of Plan-Based Awards Table were computed using a Monte Carlo simulation of potential outcomes. For a description1/3 increments ranging from 0% to 200% of the assumptions used under our Monte Carlo simulationtarget amount based on the Company’s share price appreciation relative to the share price appreciation of potential outcomes, see Note 14the Dow Jones iShares U.S. Oil & Gas Exploration & Production ETF (the “IEO ETF”) for, with respect to the grants in the Notes to Consolidated Financial Statements in our Annual Report onForm 10-K for the yearJanuary of 2017, each of three separate three-year performance periods ended December 31, 2014. The performance-based units cliff vest on the third anniversary of the date of grant2019, December 31, 2020 and are paid based on the relative ranking of our TSR as compared to the TSR of our Peer GroupDecember 31, 2021, or with respect to each of a one-year, two-year and three-year performance period,grants in each case commencing on the date of grant. The performance-based units are payable solely in cash. The amount of cash payable with respect to performance-based units is equal tothe sum of the payout values for each of the three performance periods. The payout value for each performance period is equal to one-third of the vested performance-based units, multiplied by the value of our common stockAugust 2017, ½ increments at the end of the applicableeach of two separate three-year performance period (calculated as the average of the closing prices of our common stock on the 20 trading days immediately preceding the last day of the applicable performance period), multiplied by the applicable percentage correspondingperiods ending December 31, 2020 and December 31, 2021, subject to the relative rankingofficer’s continuous service with the Company through the end of our TSR for the applicableeach performance period. The applicable percentages range from 0% to 200%. The “target” percentage is 100% and corresponds to our TSR ranking inUpon the 60th percentileoccurrence of our Peer Group with respect to the 2012 awards and the 55th percentilea change of our Peer Group with respect to the 2013 and 2014 awards. The performance-based units will not have any value unless our TSR ranking is in at least the 40th percentile of our Peer Group with respect to the 2012 awards and the 35th percentile of our Peer Group with respect to the 2013 and 2014 awards, and our TSR ranking must be in at least the 80th percentile of our Peer Group with respect to the 2012 awards and the 75th percentile of our Peer Group with respect to the 2013 and 2014 awards for the performance-based units to pay out at the 200% maximum.Except as noted below, if the grantee’s employment terminates for any reason prior to the third anniversary of the grant date, then the grantee’s performance-based units will be forfeited and no cash will be payable with respect to the performance-based units. With respect to grants prior to 2014 only, if the grantee is or becomes retirement eligible, and his or her employment terminates for any reason other than cause prior to third anniversary of the grant date, then all of the grantee’s performance-basedcontrol, unvested restricted stock units will vest and become payable in the amounts and at the time that the performance-based units would have otherwise vested and been payable. If the grantee dies or becomes disabled prior to the third anniversaryas of the grant date, a pro-rated share (based on the number of days employed during the three-year vesting period) of the performance-based units will vest and the grantee will be paid for such performance-based units at the target percentage at the end of the original three-year vesting period. In the event of a change in control of us, all of the grantee’s performance-based units will immediately vest and the grantee will be paid for such performance-based units following the change in control at the target percentage (regardless of our actual relative TSR ranking) and using the value of our common stock on the effective date of the change in control (calculated as the closing price of our common stock on the effective date of the change of control).Stock OptionsWe granted stock optionscontrol based on the Company’s share price appreciation relative to all of our NEOs in 2012, 2013 and 2014. The values of our stock options reflected in the Summary Compensation Table and the Grants of Plan-Based Awards Table were computed using the Black-Scholes-Merton option-pricing formula. For a description of the assumptions used under the Black-Scholes-Merton option-pricing formula, see Note 14 in the Notes to Consolidated Financial Statements in our Annual Report onForm 10-KIEO ETF for the year ended December 31, 2014.The exercise priceapplicable performance period ending as of a stock option will be greater than or equal to the NYSE closing price of our common stock on the date the stock option is awarded. Stock options will be exercisable as determined by the C&B Committee and specified in an award agreement; however, no stock option is exercisable after 10 years after the date of grant. Unless otherwise determinedthe change of control. Upon an NEO’s termination of service by the C&B Committee and specifiedCompany without cause (as defined in anthe award agreement, if (i)agreement) or by the officer for good reason (as defined in the award agreement), or due to such NEO’s death or disability (as defined in the award agreement), a grantee ceases to be an employee for any reason other than cause, death, disability or qualified retirement (with respect to grants prior to 2014 only), all unvested options are forfeited and all vested options immediately become exercisable and remain exercisable untilpro-rated portion of the earlierrestricted stock units will vest as of (A) 90 days after the date of such cessation or (B)termination. For information on the expirationaccelerated vesting of certain performance-based restricted stock units granted to Mr. Quarls, see “—Employment Contracts—Separation and Consulting Agreement” below.The following table sets forth the performance criteria applicable to the performance-based restricted stock units granted in 2017: Payout as a Percentage of the Target Restricted Stock Units Performance Delta(1) Positive Share Price Appreciation Negative Share Price Appreciation 30 or Greater 200% 100% 25 180% 90% 20 160% 80% 15 140% 70% 10 120% 60% 0 100% 50% -5 75% 38% -10 50% 25% Less than -10.01 0% 0% (1) Equal to the difference between the share price appreciation of the Company and the share price appreciation of the peer group index for the period beginning on the first day of the performance period and ending on the last day of the applicable performance period. The Company currently maintains no employment agreements with any of its executive officers; however, Mr. Hartman was party to an employment agreement that expired in 2017 and the Company has entered into the Separation Agreement with Mr. Quarls in connection with his retirement from the Company in early 2018.Hartman Employment AgreementOn May 9, 2016, the Company entered into an employment agreement with Mr. Hartman pursuant to which Mr. Hartman agreed to continue to serve as the Company’s Senior Vice President and Chief Financial Officer for an 18-month term ending on November 9, 2017, unless Mr. Hartman was terminated earlier in accordance with the terms of the employment agreement. During the term of his employment agreement, Mr. Hartman was entitled to receive an annual base salary of not less than $250,000.Within 30 days of the Company’s emergence from bankruptcy, the Company was obligated to grantMr. Hartman an award of restricted stock (or economic equivalent) with a grant date fair value equal to $600,000 as of such stock options, (ii) we terminate a grantee’s employment for cause, all unexercised options are forfeited, (iii) a grantee dies or becomes disabled, all unexercised options immediately become exercisable and remain exercisable until the earlier of (A) one year after the date of death or disability or (B) the expiration dateCompany’s emergence. Pursuant to such requirement, the Company granted Mr. Hartman an award of such63,762 restricted stock options, (iv) a grantee becomes retirement eligible (with respect to grants prior to 2014 only), all unexercised options immediately become exercisable and remain exercisable until the expiration date of such stock options, or (v) a grantee ceases to be a non-employee director, all unvested options are forfeited and all vested options immediately become exercisable and remain exercisable until the expiration date of such stock options, exceptunits on October 12, 2016. Such equity award vests in the event of the grantee’s death, in which case, the options shall remainexercisable until the earlier of (A) six months after the grantee’s death or (B) the expiration date of such stock options. In addition, if a change in control of us occurs, all unexercised options immediately become exercisable and remain exercisable until the expiration date of such stock options. The exercise price for a stock option must be paid in full at the time of exercise. Payment must be made in cash or, subject to the approval of the C&B Committee, in shares of our common stock valued at their fair market value, or a combination thereof. Any taxes required to be withheld must also be paid at the time of exercise. An optionee may enter into an agreement with a brokerage firm acceptable to us whereby the optionee will simultaneously exercise the stock option and sell the shares acquired thereby and the brokerage firm executing the sale will remit to us from the proceeds of sale the exercise price of the shares as to which the stock option has been exercised as well as the required amount of withholding. Stock option awards may not be granted with dividend equivalent rights.All stock options ever granted to our NEOs have a 10-year term with an exercise pricethree equal to the NYSE closing price of our common stock on the date the stock option is awarded. All stock options granted to our NEOs since 2004 vest over a three-year period, with one-third becoming exercisableinstallments on each of the first second and thirdthree anniversaries of the grant date unless forfeitedof emergence, or earlierSeptember 12 of each of 2017, 2018 and 2019, based solely on Mr. Hartman’s continued employment with the Company as of the applicable vesting date. In the event that Mr. Hartman is terminated by the Company without “cause” or resigns for “good reason” (as such terms are defined in the employment agreement) before the award has fully vested, the installment scheduled to vest on the next vesting date shall vest as of Mr. Hartman’s date of termination. Mr. Hartman’s Employment Agreement expired in accordance with their terms.Separation and Consulting AgreementTimingOn January 19, 2018, Mr. Quarls announced that he would retire from his positions as Executive Chairman and as a director of GrantsThe C&B Committee has historically granted annual compensation-related stock options, time-based units or performance-based units during the first quarterCompany, effective February 28, 2018. In connection therewith, Mr. Quarls entered into the Separation Agreement with the Company pursuant to which Mr. Quarls agreed to provide through the remainder of each year upon conclusion of its analysis of executive compensation with respect2018 certain transition and support services to the preceding year,Company as reasonably requested by the Board. The Company agreed to pay Mr. Quarls a consulting fee of $250,000 for up to fifty business days of such consulting services and a mutually agreed-upon amount for any consulting services performed in excess of fifty business days. Under the timing of the C&B Committee’sSeparation Agreement, Mr. Quarls vested in (i) 12,515 restricted stock option grantsunits previously granted to our NEOs has been historically consistent with the timing of stock option grants to other employees. The C&B Committee decided to defer the awarding of 2013 long-term equity incentive compensation to our NEOs until after the 2013 Annual Meeting in May 2013 so that it could consider the resultshim as Chairman of our shareholders’ vote on the Equity Plan when granting those awards. In 2014 and 2015, the C&B Committee decided again to wait to grant equity awards to our NEOs and other employees until after the Annual Meeting so that it could consider the results of our shareholders’ say-on-pay vote prior to granting those awards. The C&B Committee generally grants stock options from time to timeBoard in connection with the hiring, promotion or retentionour emergence from bankruptcy in December of employees, and it has in the past, and may in the future, grant time-based2016, (ii) 1,891 time-vested restricted stock units or performance-based unitspreviously granted to him in connection with such events. The C&B Committee may also consider grants at suchhis appointment as our Executive Chairman in August of 2017, and (iii) 1,968 performance-based restricted stock units previously granted to him in connection with his appointment as our Executive Chairman in August of 2017. All other timesunvested restricted stock units held by Mr. Quarls were forfeited as it may deem appropriate.DividendsWe paid quarterly dividends of $0.05625 per share on each time-based unit through June 2012, at which time we ceased paying any dividends on our common stock. The dividends were paid at the same times and in the same amounts as dividends paid to the other holders of our common stock and were taken into consideration when determining the values of the time-based units shown previously in the Summary Compensation Table and in the Grants of Plan-Based Awards Table.The following table sets forth, certainfor each of our NEOs, information regarding the numbers and values of unexercised stock options and time-based units and performance-based units not vestedoutstanding equity awards as of December 31, 2014, in each case held by our NEOs on December 31, 2014. The market value of non-vested time-based units and performance-based units is based on the NYSE closing price of our common stock on December 31, 2014.Outstanding Equity Awards at Fiscal Year-End 2014 Option Awards Stock Awards Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable Option
Exercise
Price
($) Option
Expiration
Date Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#) Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($) Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($) 13,332 (1) 24.545 3/2/15 81,189 (2) 542,343 83,206 (3) 1,192,196 (4) 8,738 (5) 31.535 2/26/16 146,639 (6) 2,936,697 (7) 10,864 (8) 35.205 2/26/17 41,385 (9) 138,226 (10) 37,991 (11) 42.270 2/21/18 92,011 (12) 15.060 2/24/19 41,182 (13) 24.380 2/23/20 84,688 (14) 17.140 2/16/21 18,134 (15) 5.670 2/15/22 225,352 (16) 3.910 4/30/23 70,055 (17) 16.320 5/5/24 8,000 (18) 24.545 3/2/15 134,164 (19) 896,216 40,147 (3) 575,232 (4) 5,086 (20) 31.535 2/26/16 67,209 (6) 1,345,972 (7) 5,308 (8) 35.205 2/26/17 17,179 (9) 57,378 (10) 5,845 (11) 42.270 2/21/18 10,745 (12) 15.060 2/24/19 7,319 (13) 24.380 2/23/20 15,000 (21) 23.370 5/10/20 40,650 (14) 17.140 2/16/21 8,750 (15) 5.670 2/15/22 34,428 (22) 68,858 (23) 3.910 4/30/23 29,079 (17) 16.320 5/5/24 5,332 (20) 31.535 2/26/16 169,599 (24) 1,132,921 25,765 (3) 369,162 (4) 9,966 (8) 35.205 2/26/17 85,539 (6) 1,713,061 (7) 15,586 (11) 42.270 2/21/18 23,425 (9) 78,240 (10) 28,725 (25) 15.060 2/24/19 23,256 (13) 24.380 2/23/20 40,650 (14) 17.140 2/16/21 5,616 (15) 5.670 2/15/22 87,637 (23) 3.910 4/30/23 39,654 (17) 16.320 5/5/24 19,030 (20) 31.535 2/26/16 124,500 (26) 831,666 51,706 (3) 740,853 (4) 19,804 (8) 35.205 2/26/17 61,099 (6) 1,223,623 (7) 20,885 (11) 42.270 2/21/18 15,617 (9) 52,161 (10) 49,596 (12) 15.060 2/24/19 23,619 (13) 24.380 2/23/20 57,588 (14) 17.140 2/16/21 11,270 (15) 5.670 2/15/22 31,298 (22) 62,598 (23) 3.910 4/30/23 26,436 (17) 16.320 5/5/24 Stock Awards Name Number of Shares orUnits of Stock ThatHave Not Vested (#) Market Value of Shares orUnits of Stock That Have NotVested (1) Equity Incentive Plan Awards:Number of Unearned Shares,Units or Other Rights That HaveNot Vested (#) Equity Inventive PlanAwards: Market orPayout Value of UnearnedShares, Units or OtherRights That Have NotVested (1) Harry Quarls 9,455(2 ) $ 369,785 9,455(3 ) $ 369,785 12,515(4 ) $ 489,462 John A. Brooks 27,920(5 ) $ 1,091,951 27,920(6 ) $ 1,091,951 13,335(7 ) $ 521,532 13,335(8 ) $ 521,532 Steven A. Hartman 42,508(9 ) $ 1,662,488 5,000(10 ) $ 195,550 5,000(6 ) $ 195,550 (1) One-halfThe value of these options vestedawards is based on eachthe number of March 3, 2007 and March 3, 2008.shares reported multiplied by $39.11, the closing price of our Common Stock on December 29, 2017, the last trading day of our fiscal year.(2) Of these time-basedtime-vested restricted stock units, 27,063 will1,891 vested on January 26, 2018. Pursuant to the terms of the awards, 1,891 were scheduled to vest on May 6, 2015, 27,063 will vest on May 6, 2016January 26 of each of 2019, 2020, 2021 and 27,063 will vest on May 6, 2017.2022. However, in connection with Mr. Quarls’ retirement in February 2018 and pursuant to the Separation Agreement entered into with the Company, 1,891 time-vested restricted stock units vested and the remaining awards were forfeited as of his termination date.(3) The performance period for one-thirdone-half of these performance-based restricted stock units expired or willwas scheduled to expire on each of December 31, 2020 and December 31, 2021. However, in connection with Mr. Quarls’ retirement in February 15, 2013, February 15, 20142018 and February 15, 2015. All of thesepursuant to the Separation Agreement, 1,968 performance-based restricted stock units will vest on February 15, 2015. Because Mr. Whitehead is retirement eligible under the Equity Plan, if his employment terminates for any reason other than cause prior to February 15, 2015, he will vest in all of the performance-based units earned as though he had remained employed through February 15, 2015.(4)The performance period for one-third of these performance-based units expired on February 15, 2013. The payout percentage for such performance period was 150%vested and the payout price was $4.55. The performance period for another one-thirdremaining awards were forfeited as of these performance-based units expired on February 15, 2014. The payout percentage for such performance period was 200% and the payout price was $12.18. The performance period for the final one-third of these performance-based units expired on February 15, 2015. The payout percentage for such performance period was 200% and the payout price was $5.90.his termination date. The market value of these performance-based restricted stock units reflectsas set forth in the actualtable above reflect an assumed payout valuespercentage of these performance units.100%.(4) Of these time-vested restricted stock units, 6,257 were scheduled to vest on December 19 of 2018 and 2019. However, in connection with Mr. Quarls’ retirement in February 2018 and pursuant to the Separation Agreement entered into with the Company, all 12,515 time-vested restricted stock units vested as of his termination date. (5) These optionsOf these time-vested restricted stock units, 5,584 vested on February 27, 2009.January 26, 2018 and 5,584 will vest on January 26 of each of 2019, 2020, 2021 and 2022.(6) The performance period for one-third of these performance-based restricted stock units expired or will expire on each of April 30, 2014, April 30, 2015December 31, 2019, December 31, 2020 and April 30, 2016. All of these performance-based units will vest on April 30, 2016. Because Mr. Whitehead is retirement eligible under the Equity Plan, if his employment terminates for any reason other than cause prior to April 30, 2016, he will vest in all of the performance-based units earned as though he had remained employed through April 30, 2016.(7)The performance period for one-third of these performance-based units expired on May 1, 2014. The payout percentage for such performance period was 200% and the payout price was $16.68. The performance period for another one-third of these performance-based units will expire on May 1, 2015. The performance period for the final one-third of these performance-based units will expire on May 1, 2016.December 31, 2021. The market value of these performance-based restricted stock units reflect (x) the actual payout value of one-third of these performance units and (y) an assumed payout value of two-thirds of these performance-based units, assuming a payout percentage of 200%100%.(7) Of these time-vested restricted stock units, 2,667 vested on January 26, 2018 and a payout price equal to the year-end 2014 price2,667 will vest on January 26 of $6.68.each of 2019, 2020, 2021 and 2022.(8) One-third of these options vested on each of February 27, 2008, February 27, 2009 and February 27, 2010.(9)The performance period for one-thirdone-half of these performance-based restricted stock units expired or will expire on each of May 5, 2015, May 5, 2016 and May 5, 2017. All of these performance-based units will vest on May 5, 2017.(10)None of the performance periods for these performance-based units had expired by December 31, 2014.2020 and December 31, 2021. The market value of these performance-based restricted stock units assume that allreflect an assumed payout percentage of these performance-based units payout at the threshold level of 50% at a payout price equal to the year-end 2014 price of $6.68.100%.(11)(9)One-third ofOf these options vested on each of February 22, 2009, February 22, 2010 and February 22, 2011.(12)One-third of these options vested on each of February 25, 2010, February 25, 2011 and February 25, 2012.(13)One-third of these options vested on each of February 24, 2011, February 24, 2012 and February 24, 2013.(14)One-third of these options vested on each of February 17, 2012, February 17, 2013 and February 17, 2014.(15)These options vested on February 16, 2015.(16)These options vested on May 1, 2013.(17)One-third of these options vested on ortime-vested restricted stock units, 21,254 will vest on each of May 6, 2015, May 6, 2016September 12, 2018 and May 6, 2017.September 12, 2019.(18)One-third of these options vested on each of March 3, 2006, March 3, 2007 and March 3, 2008.(19)(10)Of these time-basedtime-vested restricted stock units, 6,6871,000 vested on February 16, 2015, 46,888January 26, 2018 and 1,000 will vest on May 1, 2015, 11,234 will vest on May 6, 2015, 46,888 will vest on May 1, 2016, 11,234 will vest on May 6, 2016 and 11,233 will vest on May 6, 2017.(20)One-thirdJanuary 26 of these options vested on each of February 27, 2007, February 27, 20082019, 2020, 2021 and February 27, 2009.2022.(21)One-third of these options vested on each of May 11, 2011, May 11, 2012 and May 11, 2013.(22)These options vested on May 1, 2014.(23)One-half of these options vested on or will vest on each of May 1, 2015 and May 1, 2016.(24)Of these time-based units, 4,291 vested on February 16, 2015, 59,676 will vest on May 1, 2015, 15,319 will vest on May 6, 2015, 59,676 will vest on May 1, 2016, 15,319 will vest on May 6, 2016 and 15,318 will vest on May 6, 2017.(25)One-half of these options vested on each of February 25, 2011 and February 25, 2012.(26)Of these time-based units, 8,612 vested on February 16, 2015, 42,626 will vest on May 1, 2015, 10,213 will vest on May 6, 2015, 42,625 will vest on May 1, 2016, 10,212 will vest on May 6, 2016 and 10,212 will vest on May 6, 2017.The following table sets forth the number of shares of our common stockCommon Stock acquired, and the values realized, by our NEOs upon the exercise of stock options or the vesting of time-basedtime-vested restricted stock units during 2014:Option Exercises and Stock Vested in 2014 Option Awards Stock Awards Number of
Shares Acquired
on Exercise
(#) Value Realized
on Exercise
($) Number of
Shares Acquired
on Vesting
(#) Value Realized
on Vesting
($) 36,270 314,356 0 0 25,550 166,684 59,409 (1) 922,668 55,048 567,073 63,968 (2) 1,025,270 22,538 210,676 59,504 (3) 909,121 Stock Awards Name Number of SharesAcquired on Vesting(#) Value Realized on Vesting(1) Harry Quarls 6,257 $ 236,077 John A. Brooks ¾ ¾ Steven A. Hartman 21,254 $ 828,693 (1) RepresentsAmount is based on the number of shares of our commonrestricted stock acquired uponunits vested multiplied by the market value of the underlying shares on the vesting of time-based units:date. Shares (#) Market Price ($) Market Value ($) 6,687 12.80 85,594 5,834 12.80 74,675 46,888 16.26 762,399 (2)Represents shares of our common stock acquired upon the vesting of time-based units: Shares (#) Market Price ($) Market Value ($) 4,292 12.80 54,938 59,676 16.26 970,332 (3)Represents shares of our common stock acquired upon the vesting of time-based units: Shares (#) Market Price ($) Market Value ($) 8,613 12.80 110,246 8,265 12.80 105,792 42,626 16.26 693,083 The following table sets forth certain information as of December 31, 20142017 regarding the restricted stock options outstandingunits and securities issued and to be issued under our equity compensation plans approved by the our shareholders.plans. We do not have any equity compensation plans which were notrequired to be approved by our shareholders. Number of Securities To Be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(a) Weighted-Average Exercise
Price of Outstanding
Options, Warrants and
Rights
(b) Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c) 3,094,016 16.89 2,899,309 N/A N/A N/A Plan Category Number of Securities ToBe Issued Upon Vesting ofOutstanding Options,Warrants and Rights (a) Weighted-AverageExercise Price ofOutstandingOptions, Warrantsand Rights (b) Number of Securities RemainingAvailable for Future IssuanceUnder Equity CompensationPlans (Excluding SecuritiesReflected in Column (a))(c)Equity compensation plans approved by shareholders ¾ ¾ ¾ Equity compensation plans not approved by shareholders(1) 356,624(2) N/A(3) 357,122 26Table of ContentsNonqualified Deferred CompensationThe following table sets forth certain information regarding compensation deferred by our NEOs under our Supplemental Employee Retirement Plan:2014 Nonqualified Deferred Compensation Executive
Contributions
in Last FY
($) (1) Registrant
Contributions
in Last FY
($) Aggregate
Earnings
(Loss) in
Last FY
($) Aggregate
Withdrawals/
Distributions
($) Aggregate
Balance at
Last FYE
($) (2) 0 0 88,840 0 2,114,669 0 0 0 0 0 0 0 67,803 0 362,553 0 0 61,412 0 1,368,454 (1) AllIn accordance with our Plan of these amounts are included inReorganization which was supported by our prior creditors and current equityholders and confirmed by the amountsBankruptcy Court, we reserved for issuance 5% of salary and bonusour outstanding Common Stock for 2014 reported inissuance under the Summary Compensation Table.Incentive Plan, which is described further below.(2) Except with respect to aggregate contributions by usThis amount consists of $21,906 on behalfoutstanding time- and performance-based restricted stock units and includes the maximum number of Mr. Whitehead in 2001shares that may be issued upon settlement of outstanding performance-based restricted stock units granted under the Incentive Plan.(3) Restricted stock units do not have an exercise price and 2002, these amounts reflect only salaries and bonuses paid to our NEOs and earnings on those salaries and bonuses. All such salary and bonus amounts were previously reported as compensation to our NEOs in the Summary Compensation Table.thus are not reflected here.2016 Management Incentive PlanOn October 4, 2016, we adopted the Incentive Plan. The Penn Virginia Corporation Supplemental Employee Retirement Plan, or the “SERP,” allows all of our and our affiliates’ employees whose salaries exceeded $175,000 in 2014 to defer receipt of up to 100% of their salary, net of their salary deferrals under our 401(k) Plan, and up to 100% of their annual cash bonuses. All deferrals under the SERP are credited to an account maintained by us and are invested by us, at the employee’s election, in our common stock or in certain mutual funds made available by us and selected by the employee. Since all amounts deferred under the SERP consist of previously earned salary or bonus, all SERP participants are fully vested at all times in all amounts credited to their accounts. Amounts held in a participant’s account will be distributed to the participant on the earlierpurpose of the date on which such participant’s employment terminates or there occurs a changeIncentive Plan is to assist the Company in attracting and retaining qualified employees, directors and consultants and to align their financial interests with the financial interests of controlthe Company’s shareholders. The selection of us, unless earlier distributedparticipants in accordance with the Incentive Plan, the awards granted to those participants, and the vesting and other terms of the SERP. We are not required to make any contributionsawards granted is determined by the C&B Committee and/or the Board. The Incentive Plan provides for the following types of awards: options; restricted stock; restricted stock units; and other stock awards.The aggregate number of shares of Common Stock reserved for issuance pursuant to the SERP. Since we establishedIncentive Plan is 749,600. The Incentive Plan expires on, and no new awards may be granted after, October 4, 2026, unless earlier terminated by the SERP in 1996, we have contributed an aggregate of $43,816 in 2001 and 2002 to the SERP in connection with offers of employment to Mr. Whitehead and another former executive officer, but have made no other contributions to the SERP.We have established a rabbi trust to fund the benefits payableBoard. The Incentive Plan contemplates that any award granted under the SERP. Other than the $43,816 of Company contributions described above, the assets of the rabbi trust consist of the cash amounts of salary andbonus already earned and deferred by our NEOs and other employees under the SERP and the securities in which those amounts have been invested. Assets held in the rabbi trust are designatedplan may provide for the payment of benefits under the SERP and are not available for our general use. However, the assets held in the rabbi trust are subject to the claims of our general creditors, and SERP participants may not be paid in the event of our insolvency.Change-in-Control ArrangementsThe C&B Committee and we believe that our senior management and other key employees are a primary reason for our success and that it is important for us to protect them in the event of certain circumstances upon a change of control. We compete for executive talent in a highly competitive market in which companies routinely offer similar benefits to senior executives. We believe that, by providing change of control protection, our executive officers will be able to evaluate objectively every Company opportunity, including a change of control, that may likely result in theearlier termination of their employment, without the distractionrestrictions and acceleration of personal considerations. It allows them to focus on the negotiations during such a transaction when we would require thoughtful leadership to ensure a successful outcome. For these reasons, we have entered into change of control severance agreements with our executive officers that entitle them to the benefits described below. As noted below, our change in control severance benefits are not triggered unless employment is terminated or adversely changed in a significant manner, and we do not pay tax gross upsvesting in the event of a change of control. Qualified Liquidity Event (as defined in the Incentive Plan), as may be described in the particular award.We believe that thedo not have any change in control severance benefits described below provide important protection to our executive officers, are consistentagreements with any NEO or director. However, under the practicesIncentive Plan and related award agreements, upon a “Qualified Liquidity Event,” all time-vested restricted stock units issued automatically vest in full and all performance-based restricted stock units will vest anywhere from 0-200% based on the Company’s achievement of our peer companies and are appropriate for the retention of executive talent.Executive Change of Control Severance AgreementsWe have entered into an Executive Change of Control Severance Agreement, referred to as an “Executive Severance Agreement,” with each of Messrs. Whitehead, Hartman and Brooks and Ms. Snyder containing the terms and conditions described below. Messrs. Whitehead and Hartman and Ms. Snyder entered into their Executive Severance Agreements on December 20, 2012, and Mr. Brooks entered into his Executive Severance Agreement on January 29, 2013.Term. Each Executive Severance Agreement has a two-year term, which is automatically extended for consecutive one-day periods until terminated by notice from us. If such notice is given, the Executive Severance Agreement will terminate two years afterperformance criteria through the date of the Qualified Liquidity Event. A “Qualified Liquidity Event” is generally defined as a sale of at least 40% in total gross fair market value of our assets, the acquisition by a person or group of more than 50% of the voting power of our stock, or certain changes in the composition of our Board.In addition, under such notice.Triggering Events. Each Executive Severance Agreement provides severance benefitsaward agreements, upon an NEO’s termination of employment without Cause (as defined in the Incentive Plan) or resignation for Good Reason (as defined in the Incentive Plan), the executive will vest in the next tranche of time-vested restricted stock units scheduled to vest under the applicable award agreement. Upon an NEO’s termination due to the individual’s death or disability, the executive is to vest in a pro-rated number of time-vested restricted stock units based on the individual’s period of service with the Company during the applicable vesting period.Under our performance-based restricted stock units, upon an NEO’s termination of employment without Cause, resignation for Good Reason, or due to the individual’s death or disability, the executive will vest in a pro-rata portion of the target number of restricted stock units granted based on the individual’s period of service with the Company during the applicable performance periods.Estimated PaymentsThe table below and the discussion that follows reflect the amount of compensation payable to each NEO upon the occurrence of two events, or the “Executive Dual Triggering Events.” Specifically, if a change of control of us occurs and, within two years after the date of such change of control, either (a) we terminate the NEO’s employment for any reason other than for cause or the NEO’s inability to perform his or her duties for at least 180 days due to mental or physical impairment or (b) the NEO terminates his or her employment due to a material reduction in his or her authority, duties, title, status or responsibility, a greater than 5% reduction in his or her base salary, a discontinuation of a material incentive compensation plan in which he or she participated, our failure to obtain an agreementtermination from our successor to assume his or her Executive Severance Agreement or the relocation by more than 100 miles of our office at which he or she was working at the time of the change of control, then the NEO will receive the change of control severance payments and other benefits described below.Change of Control Severance Benefits. Upon the occurrence of the Executive Dual Triggering Events, the NEO will receive a lump sum, in cash, of an amount equal to three times the sum of the NEO’s annual base salary plus the highest cash bonus paid to him or her during the two-year period prior to termination, subject to reduction as described below under “Excise Taxes.” In addition, all options to purchase shares of our common stock then held by the NEO will immediately vest and will remain exercisable for remainder of the options’ respective terms and all other outstanding equity awards held by the NEO will immediately vest and all restrictions will lapse and we will promptly deliver any cash or stock payable thereunder. We will also provide certain health and dental benefit related payments to the NEO as well as certain outplacement services.Excise Taxes. The Executive Severance Agreements do not include “gross up” benefits to cover excise taxes. If our independent registered public accounting firm determines that any payments to be made or benefits to be provided to the NEO under his or her Executive Severance Agreement would result in him or her being subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, such payments or benefits will be reduced to the extent necessary to prevent him or her from being subject to such excise tax.Restrictive Covenants and Releases. Each Executive Severance Agreement prohibits the NEO from (a) disclosing, either during or after his or her term of employment, confidential information regarding us or our affiliates and (b) until two years after the NEO’s employment has ended, soliciting or diverting business from us or our affiliates. Each Executive Severance Agreement also requires that, upon payment of the severance benefits to the NEO, the NEO and the Company release each other from all claims relating to the NEO’s employment or theunder several scenarios assuming such termination of such employment.Estimated PaymentsThe following table sets forth the estimated aggregate payments to our NEOs under their respective Executive Severance Agreements assuming that the Executive Dual Triggering Events occurred onwas effective December 31, 2014: Salary and Bonus
($) (1) Accelerated
Vesting of
Restricted Stock
and Units
($) Other Benefits
($) (2) Total Estimated
Severance
Payment
($) 2,983,225 4,247,949 97,101 7,328,275 1,811,618 1,927,681 113,439 3,852,738 1,753,989 2,281,334 113,439 4,148,762 1,785,000 1,874,294 64,846 3,724,140 Name of Executive Officer Accelerated Vesting ofRestricted Stock Units(#) Total EstimatedValue of AcceleratedVesting (1) Harry Quarls(2) Death or Disability 14,254 $ 557,474 Change in Control 21,970 $ 859,247 Termination by Employee Without Good Reason or by Company for Cause - - Termination for Good Reason or by Company Without Cause 15,342 $ 600,026 John A. Brooks Death or Disability 14,929 $ 583,873 Change in Control 41,255 $ 1,613,483 Termination by Employee Without Good Reason or by Company for Cause - - Termination for Good Reason or by Company Without Cause 16,862 $ 659,473 Steven A. Hartman Death or Disability 2,233 $ 87,333 Change in Control 47,508 $ 1,858,038 Termination by Employee Without Good Reason or by Company for Cause - - Termination for Good Reason or by Company Without Cause 23,559 $ 921,392 (1) The amounts reflected inReflects value of accelerated vesting of equity grants at $39.11 per share (closing price on December 29, 2017, the Salary and Bonus column were reduced to prevent Messrs. Whitehead, Hartman and Brooks] from being subject to the excise tax imposed by Section 4999last trading day of the Internal Revenue Code. But for such reduction, the amount reflected in the Salary and Bonus column for Messrs. Whitehead, Hartman and Brooks would have been $3,600,000, $1,845,000 and $2,025,000.fiscal year).(2) Other benefits include medicalAs previously discussed, Mr. Quarls retired from the Company effective February 28, 2018. Please see “Executive Compensation—Employment Contracts—Separation and dental insurance-relatedConsulting Agreement” for a description of actual payments and benefits received in connection with his separation. The accelerated vesting of Restricted Stock Units column for Mr. Quarls also reflects the valueaccelerated vesting of outplacement services.12,515 restricted stock units previously granted to him in connection with his service as a director that would accelerate and vest upon a termination of his status as a member of the Board as a result of death, disability, removal or re-election that is other than for Cause (as defined in the applicable award agreement) or a resignation or unwillingness to serve.Change of Location Severance ArrangementOn December 20, 2012, we entered into an Amended and Restated Change of Location Severance Agreement, referred to as the “Change of Location Agreement,” with Ms. Snyder. Pursuant to the Change of Location Agreement, we agreed that, in the event of the relocation of our executive offices by more than 50 miles, Ms. Snyder may elect to receive the severance benefits described above in “Executive Change of Control Severance Agreements,” except that only a pro rata portion of Ms. Snyder’s equity awards will vest.Employment Retention AgreementOn August 9, 2011, we entered into an Employment Retention Agreement, referred to as the “Employment Retention Agreement,” with Mr. Brooks. Pursuant to the Employment Retention Agreement, we agreed to pay Mr. Brooks $175,000 in the event that he was still employed by us on second anniversary of the Employment Retention Agreement. In August 2013, we paid Mr. Brooks $175,000 less applicable taxes in satisfaction of our obligations under the Employment Retention Agreement.During 2014,2017, Messrs. Clarke, Garrett, KrablinSchuyler, Holderness, McCarthy and WrightQuarls served on the CompensationC&B Committee, all of whom were independent directors at the time of such service. Mr. Quarls was appointed Executive Chairman in August of 2017, at which time he became an executive officer and Benefitsno longer continued to serve on the C&B Committee. None of theseThere are no compensation committee interlocks involving members is a former or current officer or employee of us or any of our subsidiaries or had any relationship requiring disclosure under Item 404 of Regulation S-K, “Transactions with Related Persons, Promoters and Certain Control Persons.” In 2014, none of our executive officers served as a member of the boardCompensation Committee or other directors of directors or compensation committee of any entity that has one or more executive officers serving on the Board or the Compensation and Benefits Committee.TRANSACTIONS WITH RELATED PERSONSWe have not entered into any transaction since January 1, 2014 requiring disclosure under Item 404 of Regulation S-K, “Transactions with Related Persons, Promoters and Certain Control Persons.”The Audit Committee has appointed KPMGGrant Thornton as the independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2015.2018. Shareholders are being asked to ratify the appointment of KPMGGrant Thornton at the Annual Meeting under Proposal No. 3. Arepresentative of KPMGGrant Thornton is expected to be present at the Annual Meeting with the opportunity to make a statement if he or she desiresthey desire to do so and to be available to respond to appropriate questions.Audit FeesIn connection with the audits of our financial statements and internal control over financial reporting, or “ICFR,” for 2014, we entered into an agreement with KPMG which sets forth the terms by which KPMG will perform audit services for us. That agreement provides for alternative dispute resolution procedures. The following table showsis a summary and description of fees for services renderedprovided by Grant Thornton and KPMG for the audit of our consolidated financial statements for 2014years ended December 31, 2017 and 2013, the audit of our ICFR for 2014 and 2013 and other services rendered by KPMG: 2014 2013 $ 1,165,030 $ 1,112,800 6,000 6,000 — — — — $ 1,171,030 $ 1,118,800 2017 2016 Audit Fees (1) $ 574,142 $ 876,327 Audit-Related Fees — — Tax Fees (2) — $ 763,702 All Other Fees — — Total Fees $ 574,142 $ 1,640,029 (1) Audit fees consist of fees for the audit of our consolidated financial statements, reviews of interim financial statements, implementation of fresh-start accounting, the audit of our ICFR andinternal control over financial reporting, consents for registration statements and comfort letters related to public offerings. Also included in audit fees are reimbursementsreviews of travel-related expenses.acquisition financials.(2) Audit-related fees consist of fees pertaining to debt compliance letters issued by KPMG for our revolving credit facility.(3)Tax fees consist ofIncludes fees for a review of a federal incomebankruptcy-related tax refund application.services.Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting FirmThe Audit Committee’s policy is to pre-approve all audit, audit-related and non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committee may also pre-approve particular services on a case-by-case basis. Our independent registered public accounting firm is required to periodically report to the Audit Committee regarding the extent of services provided by our independent registered public accounting firm in accordance with such pre-approval. The Audit Committee may also delegate pre-approval authority to one or more of its members. Such member(s) must report any decisions to the Audit Committee at the next scheduled meeting. All services rendered for us by KPMGGrant Thornton in 20142017 were pre-approved by the Audit Committee.Under the rules established by the SEC, we are required to provide certain information about the Company’s independent registered public accounting firm and the Company’s financial statements for its most recently ended fiscal year. The Audit Committee of the Board is furnishing the following report in fulfillment of the SEC’s requirements.As discussed above under the heading “Corporate Governance—Committees of the Board—Audit Committee,” the responsibilities of the Audit Committee include recommending that the Company’s financial statements be included in its Annual Report onForm 10-K. The Audit Committee took a number of steps in making this recommendation for the fiscal year ended December 31, 2014.2017. First, the Audit Committee reviewed and discussed with the Company’s management and KPMG,Grant Thornton, the Company’s independent registered public accounting firm for 2014,2017, the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2014.2017. Second, the Audit Committee discussed with KPMGGrant Thornton the matters required to be discussed by Auditing Standard No. 16, as adopted byapplicable standards of the Public Company Accounting Oversight Board, or the “PCAOB,” including information regarding the scope and results of the audit. These discussions were intended to assist the Audit Committee in overseeing the Company’s financial reporting and disclosure process. Finally, the Audit Committee received the written disclosures and the letter from KPMGGrant Thornton required by the applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding KPMG’sGrant Thornton’s communications with the Audit Committee concerning independence, and has also discussed with KPMGGrant Thornton its independence. Through its discussions with KPMGGrant Thornton and management, including discussions with KPMGGrant Thornton and management regarding the financial statements, discussions with KPMGGrant Thornton regarding the scope andresults of the audit and KPMG’sGrant Thornton’s independence and such other matters deemed relevant and appropriate by the Audit Committee, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s 20142017 Annual Report onForm 10-K to be filed for filing with the SEC.Audit CommitteeGary K. WrightDarin G. Holderness (Chairman)John U. ClarkeSteven W. KrablinMarsha R. PerelmanJerry SchuylerWe plan to hold our 20162019 Annual Meeting of Shareholders on or about May 4, 2016.1, 2019. Any shareholder who wishes to submit a proposal for consideration at our 20162019 Annual Meeting of Shareholders, and who wishes to have such proposal included in our proxy statement,Proxy Statement, must comply with the provisions of Rule 14a-8 of the proxy rules of the SEC and must deliver such proposal in writing to our Corporate Secretary at our principal executive offices in Radnor, Pennsylvania,Houston, Texas, not later than December 8, 2015.Our Bylaws prescribe the procedures that a shareholder must follow to nominate directors for election at an annual meeting of shareholders or to bring other business before an annual meeting (other than matters that have been included in our proxy statementProxy Statement for such meeting). The Chairman of the meeting may refuse to acknowledge the nomination of any person as a director or any other proposal by a shareholder not made in compliance with these procedures. The following summary of these procedures is qualified by reference to our Bylaws, a copy of which may be obtained, without charge, upon written request to Penn Virginia Corporation, Attention: Corporate Secretary, Four Radnor Corporate Center,14701 St. Mary’s Lane, Suite 200, 100 Matsonford Road, Radnor, Pennsylvania 19087.Our Bylaws require that to have a proposal voted upon at the 20162019 Annual Meeting of Shareholders, including a proposal relating to nominations for the elections of directors, the proposing shareholder must have delivered in writing to the Company (a) notice of such proposal by notno later than February 7, 20161, 2019 or earlier than November 9, 2015, (b) ifJanuary 2, 2019 and must include the proposal relatesfollowing information: (A) a brief description of the business desired to a change to our Articles of Incorporation or Bylaws,be brought before the text of anyannual meeting and the reasons for conducting such change and an opinion of counselbusiness at the annual meeting; (B) with respect to the effect that neithershareholder giving the Articles of Incorporation nor Bylaws resulting from such proposal would be in conflict with Virginia law, (c) evidencenotice, (i) the name and address of such shareholder’s status assuchshareholder, (ii) the class or series and of the number of shares of capital stock owned beneficially ownedand of record by such person, (iii) a description of all arrangements or understandings between such shareholder and (d) a listany other person or entity in connection with the ownership of the namescapital stock of the Company and addressesthe proposal and any material interest of any other beneficial owners with whom such shareholder in such proposal, (iv) whether such shareholder intends to deliver a form of proxy to other equityholders of the Company of at least the percentage of the Company’s voting shares required to approve the proposal, (v) a representation that the shareholder is actinga holder of record of stock of the Company entitled to vote at such meeting and that such shareholder intends to appear in concertperson or by proxy at the meeting to introduce the business specified in the notice and the number of shares owned by them.If you wish to nominate a director for election at our 20162019 Annual Meeting of Shareholders, you must follow the procedures set forth under “Shareholder Proposals.” In addition, any such nomination must be received by our Corporate Secretary by February 7, 20151, 2019 and must include the following information: (a) the name and address of(A) with respect to the shareholder who intends to make the nomination, (b)(i) the name and address of such shareholder, (ii) the class or series and number of shares of capital stock owned beneficially and of record by such person, (iii) a description of all arrangements or understandings between such shareholder and any other person or entity in connection with respectthe ownership of the capital stock of the Company and anymaterial interest of such shareholder in such nomination, (iv) whether such shareholder intends to each proposeddeliver a form of proxy to other equityholders of the Company to elect such nominee or nominees, (v) a representation that the shareholder is a holder of record of stock of the Company entitled to vote at such meeting and that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (vi) all other information that would be required to be provided in a proxy statementProxy Statement prepared in accordance with SEC Regulation 14A, (B) with respect to each proposed nominee, (i) the name, age, business address and residential address of such person, (ii) such person’s principal occupation, (iii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such person and (iv) all other information that would be required to be provided in a Proxy Statement prepared in accordance with SEC Regulation 14A and (c)(C) a notarized affidavitwritten consent executed by each proposed nominee to the effect that, if elected as a member of the Board, such proposed nominee will serve and is eligible for such election. Only candidates nominated by shareholders for election as a member of the Board in accordance with the BylawBylaws provisions summarized herein will be eligible to be nominated for election as a member of the Board at our 20162019 Annual Meeting of Shareholders, and any candidate not nominated in accordance with such provisions will not be considered or acted upon for election as a director at such meeting of shareholders.In addition, as a shareholder, you may recommend nominees for consideration by the Board’s Nominating and Governance Committee. The Nominating and Governance Committee will accept recommendations of director candidates throughout the year and may, in its discretion, consider such director nominees, but it is not obligated to do so.We know of no matters which are to be presented for consideration at the Annual Meeting other than those specifically described in the Notice of Annual Meeting. If any other matters properly come before the Annual Meeting, however, it is the intention of the persons designated as proxies to vote on them in accordance with their best judgment.We are sending a copy of our 20142017 Annual Report to shareholders along with the proxy materials, but such Annual Report is not part of the proxy materials. The Annual Report contains a copy of our Annual Report onForm 10-K (without exhibits) as filed with the SEC.We are permitted by SEC regulations to deliver a single Annual Report or Proxy Statement to any household at which two or more registered shareholders have the same last name and address, unless we have received instructions to the contrary from one or more of the shareholders. We will continue to include a separate proxy card for each registered shareholder account.We will deliver promptly, upon written or oral request, a separate copy of our 20142017 Annual Report or this Proxy Statement, as applicable, to a shareholder at a shared address to which a single copy of the documents was delivered. The shareholder should send a written request to Investor Relations, Penn Virginia Corporation, Four Radnor Corporate Center,14701 St. Mary’s Lane, Suite 200, 100 Matsonford Road, Radnor, Pennsylvania 19087,275, Houston, Texas 77079, or call us at (610) 687-8900,(713) 772-6500, if the shareholder (i) wishes to receive a separate copy of our 20142017 Annual Report or this Proxy Statement; (ii) would like to receive separate copies of those materials for future meetings; or (iii) is sharing an address and wishes to request delivery of a single copy of Annual Reports or Proxy Statements if the shareholder is now receiving multiple copies of Annual Reports or Proxy Statements.Important notice regarding the availability of proxy materials for the Shareholder Meeting to be held on May 7, 2015.If you wish to attend the meeting in person, you can obtain driving directions to the Omni Hotel at 13210 Katy Freeway in Houston, Texas at www.omnihotels.com/hotels/houston-westside/property-details/directionsThis Proxy Statement, the proxy card and our 20142017 Annual Report are available athttp://www.pennvirginia.com/annualmeeting.By Order of the Board of Directors
Nancy M. SnyderCorporate SecretaryApril [·], 2015Appendix A Year ended December 31, 2014 2013 (in thousands) $ (409,592 ) $ (143,070 ) — — — — (120,769 ) 266 — — — 29,174 (169,636 ) 19,810 — — — 26,256 88,831 78,841 (131,678 ) (77,696 ) 300,299 245,594 17,063 20,994 791,809 132,224 — 2,587 3,627 5,781 1,301 1,674 $ 371,255 $ 342,435 PENN VIRGINIA CORPORATIONFOUR RADNOR CORPORATE CENTER,SUITE 200100 MATSONFORD ROADRADNOR, PA 19087VOTE BY INTERNET - www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope wehave provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:KEEP THIS PORTION FOR YOUR RECORDSDETACH AND RETURN THIS PORTION ONLYTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. By Order of the Board of Directors The Board of Directors recommends you vote FOR the following:/s/ Katherine Ryan Katherine Ryan 1. Election of DirectorsForAgainstAbstain01 John U. Clarke¨¨¨4 To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2015.NOTE:Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.For¨Against¨Abstain¨02 Edward B. Cloues, II¨¨¨03 Steven W. Krablin¨¨¨04 Marsha R. Perelman¨¨¨05 H. Baird Whitehead¨¨¨06 Gary K. Wright¨¨¨The Board of Directors recommends you vote FOR proposals 2, 3 and 4.ForAgainstAbstain2To hold an advisory vote on executive compensation.¨¨¨
3Amendment to Articles of Incorporation.¨¨¨For address change/comments, mark here.(see reverse for instructions)¨PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK.Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)DateCorporate Secretary
|
| |||||||||||
| ||||||||||||
