DEF 14A of RPC Inc
Filed Mar 14, 2024 · FY20230001558370-24-003185
Overview of the Non-Employee Director Compensation Program
Overview of the Non-Employee Director Compensation Program Members of the Board who are not employees (Non-Employee Directors) receive compensation for their service. As RPC employees, Messrs. Hubbell and Palmer do not receive compensation for their service as Board members. The compensation program for our Non-Employee Directors is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders. All Non-Employee Directors are also entitled to reimbursement of expenses for all services as a director, including reasonable travel expenses incurred in connection with required in-person attendance at board and committee meetings, committee participation or special assignments. The Human Capital Management and Compensation Committee annually reviews each element and the total of our Non-Employee Director Compensation Program and periodically makes recommendations for any changes to the Board. There were no changes made to the Non-Employee Director Compensation Program for 2024.
2023 Annual Non-Employee Director Compensation Program
2023 Annual Non-Employee Director Compensation Program
Cash and Equity Compensation
Cash and Equity Compensation Under the Director Compensation Program in effect in 2023, our Non-Employee Directors received an annual cash retainer and an annual equity grant in the form of fully vested Company common shares under the Company’s 2014 Equity Stock Incentive Plan (SIP); Committee Chairs and members received additional annual cash retainers. All cash retainers are payable in equal quarterly installments in arrears. For each Non-Employee Director who is elected or appointed for the first time, the first quarterly installment of the annual cash retainers will be paid for the first quarter that ends on or after the date of his or her initial election or appointment, prorated based on service during the quarter. In addition, equity retainers are not granted to the Non-Employee Director who is elected to the Board during the latter half of a year. The following table sets forth the 2023 Non-Employee Director Compensation Program:
Cash and Equity Compensation
| | Annual | Annual | Annual | Committee | | | Chair | Board Member | Equity | Member Annual | | | Retainer | Retainer | Retainer | Cash Retainer | | Board/Committee | ($) | ($) | ($) | ($) | | Board of Directors | — | 75,000 | 50,000 | — | | Lead Independent Director | 10,000 | — | — | — | | Audit Committee | 20,000 | — | — | 6,000 | | Human Capital Management and Compensation Committee | 10,000 | — | — | 3,000 | | Nominating and Corporate Governance Committee | 6,000 | — | — | 2,000 |
Cash and Equity Compensation
| 2024 ANNUAL PROXY STATEMENT | |
2023 Director Compensation Table
2023 Director Compensation Table The following table sets forth the compensation paid to our directors for services rendered as a director for the year ended December 31, 2023. Two of our directors, Richard A. Hubbell and Ben M. Palmer are employees of the Company and each of their employee compensation information is set forth in the Summary Compensation Table under the Executive Compensation section of this Proxy Statement. Directors that are Company employees do not receive any additional compensation for services rendered as a director. All of the directors shown below have never been employed by the Company or paid a salary or bonus by the Company and do not participate or have never participated in any Company-sponsored retirement plans.
2023 Director Compensation Table
| | Fees Earned or | Stock | Option | | | | Paid in Cash | Awards(1) | Awards | Total | | Name | ($) | ($) | ($) | ($) | | Susan R. Bell | 81,000 | 50,000 | — | 131,000 | | Patrick J. Gunning | 100,000 | 50,000 | — | 150,000 | | Amy R. Kreisler | 77,000 | 50,000 | — | 127,000 | | Jerry W. Nix | 107,000 | 50,000 | — | 157,000 | | Gary W. Rollins | 75,000 | 50,000 | — | 125,000 | | Pamela R. Rollins | 75,000 | 50,000 | — | 125,000 | | Timothy C. Rollins | 77,000 | 50,000 | — | 127,000 | | John F. Wilson | 86,000 | 50,000 | — | 136,000 |
2023 Director Compensation Table
| (1) All stock awards are fully vested at grant. |
Key Attributes, Experience and Skills of Director Nominees and Continuing Directors
Key Attributes, Experience and Skills of Director Nominees and Continuing Directors
Director Nominees
Director Nominees
Director Nominees
| Gary W. Rollins | | | | Chairman of the Board, Rollins, Inc. Non-Independent Member of the Board of Directors | | Gary W. Rollins has served as a Director of RPC, Inc. since 1984. Mr. Rollins has extensive knowledge of the Company’s business and industry having served on the Board of the Company for over 38 years. He served as the Non-Executive Chairman of the Board from August 2020 until May 17, 2022. Mr. Rollins currently serves as the Chairman of the Board of Rollins, Inc., a role he has held since 2021, and previously served as its Vice Chairman from 2013 to 2020 and its Chief Executive Officer from 2001 to 2022. Mr. Rollins previously served as the Non-Executive Chairman of Marine Products Corporation from August 2020 until May 17, 2022 and currently is a member of the Board at Marine Products Corporation. Mr. Rollins previously served as a Director of Genuine Parts Company from 2013 to 2017. Mr. Rollins received a Bachelor of Science in Business Administration from the University of Tennessee. | |
Director Nominees
| 2024 ANNUAL PROXY STATEMENT | |
Director Nominees
| Richard A. Hubbell | | | | Executive Chairman of the Board Chairperson of the Executive Committee Non-Independent Member of the Board of Directors | | Richard A. Hubbell has been Executive Chairman of the Board since May 17, 2022. Prior to that, he served as a Director, the Company’s President since 1987 and its Chief Executive Officer since 2003. This experience has given Mr. Hubbell extensive knowledge of the Company’s business and industry. He is also the Executive Chairman of the Board at Marine Products Corporation and previously served as its President and Chief Executive Officer since 2001. Previously, he was Executive Vice President of Rollins Communications, Inc., a media company. He joined Rollins, Inc. in 1970. Mr. Hubbell received a Bachelor of Arts in Economics from Westminster College. | |
Director Nominees
| John F. Wilson | | | | Vice Chairman, Rollins, Inc. Independent Member of the Board of Directors Member of the Audit Committee Member of the Nominating and Corporate Governance Committee Member of the Human Capital Management and Compensation Committee | | John F. Wilson has served as Director of RPC, inc. since 2022. Mr. Wilson has served as a Director of Rollins, Inc. since 2013, and as Vice Chairman of that company since 2020. He previously served as Vice President of Rollins, Inc. from 2011 to 2013, President and Chief Operating Officer from 2013 to 2020, and as President of Orkin, LLC., from 2009 to 2013. Prior to these executive roles, Mr. Wilson held roles at Rollins, Inc. as sales inspector, Branch Manager, Central Commercial Region Manager, Atlantic Division Vice President, and President of the Southeast Division. Mr. Wilson’s experience at Rollins has provided him with significant business management and public company expertise. Mr. Wilson is currently a member of the Board at Marine Products Corporation, and has served on that Board since 2022. Mr. Wilson received a Bachelor of Business Administration in Business Management from the University of Tennessee. | |
Director Nominees
| | 2024 ANNUAL PROXY STATEMENT |
Continuing Directors
Continuing Directors
Continuing Directors
| Amy R. Kreisler | | | | Executive Director, The O. Wayne Rollins Foundation Non-Independent Member of the Board of Directors Member of the Nominating and Corporate Governance Committee | | Amy R. Kreisler has served as a Director of RPC, Inc. since 2016. Ms. Kreisler is a Vice President at LOR, Inc., a private family investment company. She is the Executive Director of The O. Wayne Rollins Foundation and a Trustee of The Ma-Ran Foundation; and Trustee of The Lovett School Board of Trustees, also serving on their Executive Committee. In each of these roles, she oversees grant-making activities and directs the administration of foundation assets. Ms. Kreisler brings both legal and business experience to the Board. She is a long-standing member of the Rollins School of Public Health’s Dean’s Council and a former Board member of the Emory University Board of Visitors. Ms. Kreisler is currently a member of the Board at Marine Products Corporation. Ms. Kreisler is a former attorney of the law firm Arnall Golden Gregory LLP. She holds an English Degree from Hollins University and a Law Degree from The College of William and Mary Law School. | |
Continuing Directors
| Pamela R. Rollins | | | | Community Leader Non-Independent Member of the Board of Directors | | Pamela R. Rollins has served as a Director of RPC, Inc. since 2019. Ms. Rollins is a Trustee of Young Harris College, where she is the Chairperson of the Development and Investing in the Future Campaign Committees of the Board of Trustees. In these roles, she directs and supervises the activities of both Committees with the goal of securing endowments to Young Harris College for the support of its general educational activities. Ms. Rollins brings leadership and oversight experience to the Board. She is also a Trustee of The O. Wayne Rollins Foundation, a Trustee Emeritus of The Schenck School, a board member of The National Monuments Foundation and a former board member of The Lovett School. Ms. Rollins is currently a member of the Boards at Rollins, Inc. and Marine Products Corporation. Ms. Rollins received a Bachelor of Arts in Family Community Studies from Stephens College. | |
Continuing Directors
| 2024 ANNUAL PROXY STATEMENT | |
Continuing Directors
| Susan R. Bell | | | | Retired Partner, Ernst & Young LLP Independent Member of the Board of Directors Member of the Audit Committee | | Susan R. Bell has served as a Director of RPC, Inc. since 2021. Ms. Bell brings extensive risk oversight, financial and strategic experience to our Board of Directors. Ms. Bell retired as Partner from Ernst & Young LLP in 2021 after a 36-year career in public accounting. At Ernst & Young LLP, Ms. Bell served as both an audit and advisory partner, led the Southeast Risk Advisory practice and served as the Atlanta Office Managing Partner. Prior to working at Ernst & Young LLP, Ms. Bell started her career at Arthur Andersen LLP in 1984 where she served as an audit partner from 1996 to 2002. Ms. Bell currently serves as a member of the Board of Directors of Marine Products Corporation, Rollins, Inc. and First Advantage Corporation. She also serves on the Board compensation committee of First Advantage Corporation and Board audit committee of Marine Products Corporation and chairs the audit committees of Rollins, Inc. and First Advantage Corporation. In addition, Ms. Bell serves on the boards of the non-profit, National Center for Civil & Human Rights and IWF Georgia, an international women’s forum. Ms. Bell graduated summa cum laude from Mississippi State University with a Bachelor of Professional Accountancy and is a Certified Public Accountant in the states of Georgia and Tennessee. | |
Continuing Directors
| Timothy C. Rollins | | | | Vice President, LOR, Inc. Non-Independent Member of the Board of Directors Member of the Nominating and Corporate Governance Committee | | Timothy C. Rollins has served as a Director of RPC, Inc. since 2022. Mr. Rollins is a Vice President at LOR, Inc., a private family investment company, and manages its investments in fluid power distribution and cattle operations. In this role, he manages the Executive Team of Operations and approves major capital expenditures. He brings management and financial experience to the Board. He is also a Trustee of Emory University and of Woodruff Health Sciences Center. He is currently a member of the Board at Marine Products Corporation. Mr. Rollins is also a former Board member of both Emory Board of Visitors and of Emory Department of Psychiatry Board of Visitors. Mr. Rollins holds a Bachelor of Science in Business Administration from Boston University. | |
Continuing Directors
| | 2024 ANNUAL PROXY STATEMENT |
Continuing Directors
| Jerry W. Nix | | | | Former Vice Chairman, Executive Vice President and Chief Financial Officer of Genuine Parts Company Lead Independent Director of the Board of Directors Chairperson of the Human Capital Management and Compensation Committee Chairperson of the Nominating and Corporate Governance Committee Member of the Audit Committee | | Jerry W. Nix has served as a Director of RPC, Inc. since 2020. Mr. Nix brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Nix retired from Genuine Parts Company in 2013 where he served as Vice Chairman from 2005 to 2013, Chief Financial Officer from 2000 to 2013 and as Executive Vice President from 2000 to 2005. Prior to joining Genuine Parts in 1978, Mr. Nix was an auditor with Ernst & Young from 1974 to 1978 and a pilot in the U.S. Air Force from 1968 to 1974. Mr. Nix currently serves on the Board of Directors of Marine Products Corporation and Rollins, Inc., roles he has held since 2020, and on various civic and non-profit boards. Mr. Nix received a Bachelor of Science in Education from Mississippi State University and a Bachelor of Science in Accounting from the University of Florida. | |
Continuing Directors
| Patrick J. Gunning | | | | Former Chief Financial Officer at The Woodruff Arts Center Retired Partner, Ernst & Young LLP Independent Member of the Board of Directors Chairperson of the Audit Committee Member of the Nominating and Corporate Governance Committee Member of the Human Capital Management and Compensation Committee | | Patrick J. Gunning has served as a Director of RPC, Inc. since 2021. Mr. Gunning brings extensive risk oversight, financial and strategic experience to our Board of Directors. Mr. Gunning served as the Chief Financial Officer of the Woodruff Arts Center, a non-profit organization, from November 2020 to June 2022. Mr. Gunning retired as a Partner from Ernst & Young LLP in June 2020, a role he had held since May 2002, after a 39-year career in public accounting. Mr. Gunning held multiple leadership roles at Ernst & Young LLP including Southeast Region Leader of the Financial Accounting Advisory Services practice, Southeast Area Industry Leader of the Retail and Consumer Products practice, and lead audit partner for numerous publicly traded and privately owned companies. Prior to joining Ernst & Young LLP, Mr. Gunning worked at Arthur Andersen LLP from 1981 to 2002, where he served as a partner, lead audit partner and Assurance Division Leader. Mr. Gunning currently serves on the Board of Directors of Marine Products Corporation and Rollins, Inc., roles he has held since 2021. Mr. Gunning received a Bachelor of Business Administration in Accountancy from the University of Notre Dame and is a Certified Public Accountant in the state of Georgia. | |
Continuing Directors
| 2024 ANNUAL PROXY STATEMENT | |
Continuing Directors
| Served | | | Ben M. Palmer | | | | President and Chief Executive Officer Member of the Executive Committee Non-Independent Member of the Board of Directors | | Ben M. Palmer has served as a Director of RPC, Inc. since 2022. Mr. Palmer has been serving as President and Chief Executive Officer of the Company since May 17, 2022. Previously, he served as Vice President, Chief Financial Officer, and Treasurer of the Company beginning in 1996 and assumed responsibility as Corporate Secretary in 2018. This experience has given Mr. Palmer extensive knowledge of the Company’s business and industry. He is also the President and Chief Executive Officer of Marine Products Corporation and previously served as its Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Mr. Palmer is currently a member of the Board at Marine Products Corporation. Prior to joining RPC, Inc., he served for three years as the CFO of EQ Services, a commercial mortgage and asset management subsidiary of The Equitable Companies. Prior to that he spent ten years with Arthur Andersen LLP in its audit and business advisory services division. Mr. Palmer has a Bachelor of Science in Business Administration from Auburn University. | |
Continuing Directors
| | 2024 ANNUAL PROXY STATEMENT |
Continuing Directors
PROPOSAL 1: ELECTION OF DIRECTORS
Description of the 2024 Stock Incentive Plan
Description of the 2024 Stock Incentive Plan A copy of the 2024 Plan is attached to this Proxy Statement as Appendix A, and a summary of the 2024 Plan is set forth below. The summary is qualified in its entirety by reference to the 2024 Plan. The Company intends to register the shares available for issuance under the 2024 Plan on a Registration Statement on Form S-8 under the Securities Act of 1933, as amended, as soon as is practicable after receiving stockholder approval.
Summary Description of the 2024 Plan
Summary Description of the 2024 Plan The following summarizes the major provisions of the 2024 Plan and is qualified in its entirety by the text of the 2024 Plan, which is attached as Appendix A to this Proxy Statement. Generally, the 2024 Plan authorizes the Human Capital Management and Compensation Committee (or, if so designated by the Board of Directors, the full Board of Directors or some other committee of Non-Employee Directors) to grant to directors, officers and other key employees ("Participants”) stock options and other equity compensation more fully described below. The Human Capital Management and Compensation Committee may delegate its powers and duties under the 2024 Plan subject to the limitations set forth in the 2024 Plan. Eligibility. Directors, officers and other key employees of the Company or its subsidiaries and affiliates who are responsible for or contribute to the growth and/or profitability of the business of the Company are eligible to be granted awards under the 2024 Plan. Notwithstanding the foregoing, incentive stock options (as defined in the 2024 Plan) may only be granted to employees of the Company and any of its subsidiaries or affiliates that are a "subsidiary corporation” (within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code”) and stock options and stock appreciation rights may be granted only to individuals with respect to whom the Shares will qualify as "service recipient stock” (within the meaning of Section 409A of the Code). Furthermore, no director who is not also an employee of the Company is eligible to receive incentive stock options.
Summary Description of the 2024 Plan
Awards That May Be Issued Under the 2024 Plan. The 2024 Plan authorizes the grant of stock options, stock appreciation rights ("SARs”), and any other type of award valued by reference to (or otherwise based on) Shares, including, without limitation, restricted stock, restricted stock units, performance accelerated restricted stock, performance stock and performance units, as well as performance-based incentives payable in cash. If the Shares covered by an award are not delivered because the award is forfeited or canceled, or because the award is settled in cash or because such Shares are withheld from the award or otherwise tendered, physically or by attestation, to pay the exercise or purchase price of an award granted under the 2024 Plan or to satisfy applicable tax withholding obligations incurred in connection with the award, such Shares will not be deemed delivered for purposes of determining the number of Shares remaining available for delivery. The maximum number of Shares available for delivery under the 2024 Plan will be unaffected by the availability of Shares under any plan assumed in connection with the acquisition of an interest in another company or awards granted upon assumption of, or in substitution for, outstanding awards previously granted by a company or other entity acquired directly or indirectly by the Company or with which the Company combines. The Human Capital Management and Compensation Committee has full authority to grant, pursuant to the terms of the 2024 Plan (i) stock options, including, without limitation, incentive stock options ("ISO”), non-qualified options ("NQOs”) and premium stock options, (ii) SARs and/or (iii) other stock-based awards, including, without limitation, restricted stock, restricted stock units (stock units are grants of a right to receive shares of stock in the future), performance-accelerated restricted stock, performance stock and performance units (as such terms are defined in the 2024 Plan), as well as performance-based incentives payable in cash. Additional Plan Limitations. The 2024 Plan imposes additional limitations. Under the 2024 Plan, no more than 8 million Shares may be issued pursuant to ISOs. In addition, no one individual may be granted options, SARs or other stock-based awards representing over 200,000 Shares during any fiscal year. There is no maximum number of persons eligible to receive awards under the 2024 Plan. The Company estimates that approximately 220 persons are currently eligible, including three executive officers and eight Non-Employee Directors. Plan Administration. The 2024 Plan may be administered by the Board of Directors, or any committee (the "Committee”) of at least two "Non-Employee Directors” (as that term is defined by Rule 16b-3 under the Exchange Act). The Company expects the 2024 Plan to be administered by the Human Capital Management and Compensation Committee which will have the authority to select participants and determine the timing, type, size and terms of each award, and to make all other determinations necessary or desirable in the interpretation and administration of the 2024 Plan. The Committee may also determine whether awards may be settled in cash. Repricing and Amendment of Awards. If the exercise or base prices of any options or SARs exceed the current fair market value (as defined in the 2024 Plan) of the Shares, the Committee may, without stockholder approval, reprice such options or SARs to a price no lower than the then-current fair market value of the Shares. The Committee may also, without stockholder approval, amend any award to provide its holder with additional rights or benefits of the type otherwise permitted by the 2024 Plan, including extending its term. However, no amendment to the terms of any outstanding award that is subject to Section 409A of the Code may cause the award to violate such Section, no amendment to the terms of an outstanding award that is not subject to Section 409A of the Code may cause the award to become subject to such Section, and the term of an outstanding award may not be extended beyond the earlier of the latest date the award would have expired by its original terms or the tenth anniversary of the original grant date of the award, except to the extent that an award cannot be exercised because such exercise would violate the federal, state or local laws, then the expiration of such award shall automatically be tolled for the period in which such exercise would violate applicable law but not more than thirty (30) days. Termination of the Plan. The 2024 Plan will terminate ten years from the date of stockholder approval. Transferability. Except as may be provided by the Human Capital Management and Compensation Committee, awards will not be transferable except by will or by the laws of descent and distribution.
Summary Description of the 2024 Plan
The Human Capital Management and Compensation Committee has discretion to alter the extension periods. Unless otherwise determined by the Committee, all unvested other stock-based awards, including without limitation restricted stock, restricted stock units and performance-accelerated restricted stock, are forfeited upon termination of the Participant’s employment for any reason other than death, disability or normal or approved early retirement. In the event of death, the 2024 Plan provides that all restricted stock will vest unless otherwise determined and, in the event of disability or normal or approved early retirement for restricted stock and restricted stock units, the 2024 Plan provides that a pro rata portion of such restricted stock or restricted stock units will vest based on the elapsed portion of the applicable vesting period unless otherwise determined. Performance stock units will generally vest as set forth above based on assumption that target performance levels have been achieved. Option Pricing. The Human Capital Management and Compensation Committee has the authority to fix the exercise price of option awards. Generally, the exercise price of an ISO must be at least 100 percent of the fair market value of the Shares at the time of grant. However, if the grantee is a person with over ten percent of the voting power of the Company (or any subsidiary or parent of the Company), then the exercise price must be at least 110 percent of such fair market value. The exercise price of NQOs must be at least 100 percent of such fair market value. On March 1, 2024, the closing price of the Shares on the New York Stock Exchange was $7.51 per share. Option Term. The term of each stock option will be fixed by the Human Capital Management and Compensation Committee, but no stock option shall be exercised more than ten years (or, in the case of an ISO granted to an employee who owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any of its subsidiary or parent corporations, more than five years) after the date the option is granted. Options will become exercisable at such times and in such installments as the Human Capital Management and Compensation Committee shall determine. Payment of the option price must be made in full at the time of exercise in such form (including, but not limited to, cash, unrestricted common stock held for at least six months, or any combination thereof) as the Committee may determine. Certain ISO Restrictions. In order to comply with certain federal tax restrictions, no employee may be granted an incentive stock option if, taking into account such option, the aggregate fair market value of the stock with respect to which incentive stock options are exercisable for the first time by such employee during any given calendar year, under this and all other incentive stock option plans of the Company, would exceed $100,000.
Summary Description of the 2024 Plan
Cashless Exercises. Payment in full or in part of the exercise price of a Stock Option may be made in the form of unrestricted Shares, including shares withheld in connection with the exercise of the Stock Option, based, in each case, on the fair market value of the shares on the date the Stock Option is exercised, unless it shall be determined by the Human Capital Management and Compensation Committee, at or after grant, in its sole discretion, that unrestricted Shares are not a permissible form of payment with respect to any Stock Option or Options. If permitted by the Committee, a Participant may also elect to pay the exercise price upon the exercise of an option by irrevocably authorizing a third party to sell shares of stock (or a sufficient portion of the shares) acquired upon exercise of the option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise. SARs. Upon the exercise of a SAR, the holder shall be entitled to receive an amount in cash and/or Shares equal in value to the excess of the fair market value of the Shares on the date of exercise over the fair market value of the Shares on the date of grant, multiplied by the number of SARs exercised, with the Committee having the right to determine the form of payment. Restricted Stock Awards. A restricted stock award is an award of a given number of shares of common stock which are subject to a restriction against transfer and to a risk of forfeiture during a period set by the Human Capital Management and Compensation Committee. During the restriction period, the Participant generally has the right to vote, and receive dividends on the shares. Performance-Based Compensation. The Human Capital Management and Compensation Committee may designate whether any awards being granted to any Participant are intended to be “performance-based compensation,” as determined by the Human Capital Management and Compensation Committee in its sole discretion. Any such awards designated as intended to be “performance-based compensation” may be conditioned on the achievement of one or more performance measures. The performance measures that may be used by the Human Capital Management and Compensation Committee for such awards may be based on any one or more of the following, as selected by the Committee, or such other measures as the Human Capital Management and Compensation Committee shall determine: increase in stock price, return on capital or increase in pretax earnings of the Company and/or one or more divisions and/or subsidiaries, return on stockholders’ equity of the Company, increase in earnings per share of the Company, sales of the Company and/or one or more divisions and/or subsidiaries, pretax earnings of the Company and/or one or more divisions and/or subsidiaries, earnings before interest, taxes, depreciation and amortization (“EBITDA”) of the Company and/or one or more divisions and/or subsidiaries, adjusted EBITDA of the Company and/or one or more divisions, net earnings of the Company and/or one or more divisions and/or subsidiaries, control of operating and/or non-operating expenses of the Company and/or one or more divisions and/or subsidiaries, margins of the Company and/or one or more divisions and/or subsidiaries, cash flow of the Company and/or one or more divisions and/or subsidiaries, including without limitation, operating cash flow, free cash flow, and non-GAAP operating cash flow, and market price of the Company’s securities. Amendment and Termination. The 2024 Plan is subject to amendment or termination by the Board of Directors without stockholder approval but no amendment may without stockholder approval (i) increase the number of Shares that may be issued under the 2024 Plan (except by certain adjustments provided for under the 2024 Plan); (ii) change the class of persons eligible to receive ISOs under the 2024 Plan; (iii) change the requirements regarding the exercise price; or (iv) amend the 2024 Plan in a manner that would require approval of the Company’s stockholders under applicable law, regulation or rule. Options may not be granted under the 2024 Plan after the date of termination of the 2024 Plan, but options granted prior to that date shall continue to be exercisable according to their terms.
Securities Authorized for Issuance Under Equity Compensation Plans
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth certain information regarding equity compensation plans as of December 31, 2023:
Securities Authorized for Issuance Under Equity Compensation Plans
| | | | (C) | | | | | Number of Securities | | | | | Remaining Available for | | | (A) | (B) | Future Issuance Under | | | Number of Securities To | Weighted Average | Equity Compensation | | | Be Issued Upon Exercise of | Exercise Price of | Plans (Excluding | | | Outstanding Options, | Outstanding Options, | Securities Reflected in | | Plan category | Warrants and Rights | Warrants and Rights | Column (A)) (1) | | Equity compensation plans approved by security holders | — | $— | 911,997 | | Equity compensation plans not approved by security holders | — | — | — | | Total | — | $— | 911,997 |
Securities Authorized for Issuance Under Equity Compensation Plans
| (1) All of the securities can be issues in the form of restricted stock or other stock awards. |
Securities Authorized for Issuance Under Equity Compensation Plans
Our Board of Directors recommends a vote FOR the Proposal to Approve the 2024 Stock Incentive Plan.
Securities Authorized for Issuance Under Equity Compensation Plans
| | 2024 ANNUAL PROXY STATEMENT |
Securities Authorized for Issuance Under Equity Compensation Plans
EXECUTIVE OFFICERS The following narratives summarize the business experience over at least the last five years of our current executive officers, other than Messrs. Palmer and Hubbell whose business experience is described above in the section titled Information Regarding Director Nominees and Continuing Directors of this Proxy Statement.
Securities Authorized for Issuance Under Equity Compensation Plans
| Michael L. Schmit | | | | Vice President, Chief Financial Officer, Treasurer and Corporate Secretary | | Michael L. Schmit has been Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of the Company since May 17, 2022. He has also served as the Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of Marine Products Corporation since May 17, 2022. Previously, he served as Chief Accounting Officer at Schweitzer-Mauduit International, Inc., a global performance materials engineering and manufacturing company, since 2019. In addition, he served as the Chief Accounting Officer and Controller of Chart Industries, Inc., a global manufacturer of highly engineered equipment servicing the clean energy and industrial gas markets in 2019 and 2018 and as Corporate Controller in 2017. Earlier in his career, Mr. Schmit worked for other public and private companies, including Georgia-Pacific, LLC, in various financial and risk management roles. He also worked in public accounting with Ernst & Young, both in the U.S. and Australia. Mr. Schmit holds a B.S. in Business Administration from the University of Nebraska with a major in accounting and holds a CPA certification as well as several other related professional designations. | |
Securities Authorized for Issuance Under Equity Compensation Plans
| 2024 ANNUAL PROXY STATEMENT | |
Securities Authorized for Issuance Under Equity Compensation Plans
COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis describes our executive compensation program and provides an overview of how the Human Capital Management and Compensation Committee made compensation decisions in 2023 for each of our named executive officers (NEOs) which consist of our Principal Executive Officer, our Principal Financial Officer and our Executive Chairman of the Board who were serving in such capacities in fiscal 2023. For a complete understanding of the executive compensation program, this disclosure should be read in conjunction with the Summary Compensation Table and other executive compensation-related disclosures included in this Proxy Statement. In fiscal year 2023, our named executive officers were:
Securities Authorized for Issuance Under Equity Compensation Plans
| Named Executive Officer | Position with the Company in 2023 | | Ben M. Palmer | President and Chief Executive Officer | | Michael L. Schmit | Vice President, Chief Financial Officer, Treasurer and Corporate Secretary | | Richard A. Hubbell | Executive Chairman of the Board |
Executive Compensation Practices and Governance Policies
| RPC Goals | How Goal was Reinforced in Our 2023 Compensation Program | | Generate strong financial performance and returns for our stockholders | ➢ Most of the executive compensation was delivered in the form of Annual Cash Incentives and Long-Term Incentive Compensation which align with stockholder interests. ➢ All of the 2023 Annual Incentive Compensation payouts were based on financial performance metrics. Our 2023 Annual Incentive Compensation rewarded executives for cash flow generation and profitability using Operating Cash Flow (OCF), a non-GAAP measure, as the primary performance metric. ➢ Our Long-Term Incentive Compensation incentivizes the creation of stockholder value through the grant of equity compensation including the use of absolute and relative TSR performance goals for a portion of the Performance Share Unit awards (PSU). | | Attract and retain highly qualified individuals, with a strong emphasis on teams working together to capitalize on opportunities and solve problems | ➢ We did not target a specific market percentile for executive compensation. Instead, executive compensation was set based on a holistic review of several factors, including market pay levels, individual performance and qualifications, and executive tenure. ➢ Our annual and long-term Incentive programs generally reward company-wide results rather than performance against individual objectives. ➢ Our named executives’ compensation includes Long-Term Incentives that vest over a multi-year period to encourage their retention. |
General Compensation Objectives and Guidelines
| > | align the interests of our executives with the long-term interests of the Company’s stockholders. |
General Compensation Objectives and Guidelines
| > | annual performance-based cash incentive compensation (cash incentive); and |
General Compensation Objectives and Guidelines
| > | grants of stock-based awards such as restricted stock and performance share units (equity incentive). |
Compensation Elements
| Compensation Element | Description | | Base Salary | Fixed cash compensation based on each executive officer’s role, responsibilities, competitive market positioning, and individual performance. | | Annual Incentive Compensation | Annual performance-based incentive cash compensation with target award amounts for each executive officer. Actual bonus amounts may be higher or lower than target based on the achievement of certain Company performance goals. | | Long-Term Incentive Compensation | Grants of stock-based awards in the form of Time-Based Restricted Share Unit awards (RSUs) and PSUs. Like annual incentive compensation, PSUs provide for target award payouts, but actual payout levels may be higher or lower than target based on achievement of Company performance goals and stock performance over a three-year term. |
Annual incentive Compensation
Annual incentive Compensation The Company has awarded Performance-Based Incentive Cash Compensation to the executive officers since 2006. On an annual basis, the Human Capital Management and Compensation Committee establishes performance goals after the commencement of the performance period to which such goals relate. Performance goals for each participant may be based on corporate, business unit/function or individual performance, or a combination of one or more such measures. In connection with the annual establishment of performance goals, the Committee sets a target award for each participant for the applicable year, which is expressed as a percentage of the participant’s base compensation (the “Target Award”) in effect on the last day of the final pay period of that year. If the participant’s performance goals are based upon a combination of performance measures, the Committee will weigh the importance of each performance measure by assigning a percentage (the “Weighted Percentage”) to each performance measures (“Target Performance Goal”). The participant’s cash award amount will also depend in part upon the level of achievement that the participant attained with respect to each such performance measure, based on a performance value (“Performance Value”) which ranges from:
Annual incentive Compensation
| > | threshold performance level (with a Performance Value of 50% of the Target Award); |
Annual incentive Compensation
| > | target performance level (with a Performance Value of 100% of the Target Award); to |
Annual incentive Compensation
| > | maximum performance level (with a Performance Value of 200% of the Target Award). |
Annual incentive Compensation
To calculate a participant’s cash award amount for a given year where there is more than one performance measure, the amount earned for each such measure will be calculated individually first, and then they are totaled to determine the total payout. The amount earned for each performance measure equals the product of the Target Award multiplied by the Weighted Percentage assigned to that performance measure, multiplied by the Performance Value attained for that performance measure, multiplied by base salary. However, no bonus is earned if performance is below threshold level, and the bonus is capped at the maximum amount. The Committee determines the maximum cash award as a percentage of a participant’s base salary for each applicable year. In 2023, there was only one performance goal, so the Weighted Percentage multiplier was 100%. See diagram below for a visualization of the Performance-Based Incentive Cash Compensation calculation for 2023:
Annual incentive Compensation
| | 2024 ANNUAL PROXY STATEMENT |
Annual incentive Compensation
For 2023, the Committee established the target incentive award for the Chief Executive Officer and for the other members of executive management at the amounts shown in the following table:
Annual incentive Compensation
| | Award Opportunity | | | | | Base Salary | Target Award | Target Award | | Executive Officer | ($) | (as a % of base salary) | ($) | | Ben M. Palmer | 600,000 | 100 | 600,000 | | Michael L. Schmit | 300,000 | 70 | 210,000 | | Richard A. Hubbell | 500,000 | 100 | 500,000 |
Annual incentive Compensation
The performance criteria applicable to the participants for 2023 were determined based solely on corporate performance. The Human Capital Management and Compensation Committee established a corporate financial performance goal for 2023 using OCF as described below. OCF was used for determining the Target Performance Goal in 2023 since there has been recent strong interest from the investment community. OCF is computed as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) minus cash paid for capital expenditures, with discretionary adjustments totaling approximately $24.5 million related to pension plan termination, litigation settlement and expenses related to an acquisition. These calculations are subject to adjustments for unusual items, as approved by the Human Capital Management and Compensation Committee. EBITDA is a widely used financial performance of short-term corporate profitability and is calculated by adding interest, tax, depreciation and amortization expenses to net income. For 2023, the Target Performance Goal was set considering recent OCF achieved by the company and was more than 50% higher than the average achieved in the last ten years. The Company was required to achieve at least 79% of the target performance goal for executive officers to be eligible for any incentive cash compensation. These awards are determined on a sliding scale between the threshold performance level and maximum performance level, which corresponds to 196% of the target performance goal. To be eligible for the bonus award for 2023, OCF was required to be at of $110.0 million to be at the threshold and increased to maximum if OCF was at $275.0 million. The actual performance achieved in 2023 was the second highest OCF achieved in the last six years The Company has consistently established Target Performance Goals for Executive compensation, and
Annual incentive Compensation
| 2024 ANNUAL PROXY STATEMENT | |
Annual incentive Compensation
the Committee has not typically exercised discretion to waive the performance goals based on difficult industry conditions or other factors. The target criteria and actual fiscal 2023 results for OCF are as follows:
Annual incentive Compensation
| C | | | | | | | Metrics | Threshold (50%) | Target (100%) | Maximum (200%) | Results | Percent Attained | | Operating Cashflow | $110 million | $140 million | $275 million | $199.6 million | 142% |
Annual incentive Compensation
The actual fiscal 2023 result for OCF was calculated as follows:
Annual incentive Compensation
| 2023 OCF Calculation (in Millions $’s) | | | EBITDA | $356.1 | | Cash Capital Expenditures | (181.0) | | Pension Plan Termination | 18.3 | | Vendor Settlement | 5.4 | | Acquisition Costs (External) | 0.8 | | OCF | $199.6 |
Annual incentive Compensation
The Company operates in a cyclical business where financial performance is influenced by, among other things, changes in oil and natural gas prices. The Company generated OCF at 142% of target that resulted in incentive compensation of 128% of the target award in 2023. The table below sets forth the threshold, target and maximum percentages of base salary for awards, together with the achievement and actual Annual Cash Incentives paid to our named executive officers, based on actual Company results.
Annual incentive Compensation
| | Award Opportunity | | | | Bonus Earned | | | Name | Threshold | Target | Maximum | Actual | % of Target Award | | | Ben M. Palmer | 50% of Target Award | 100% of Target Award | 200% of Target Award | 142% | 128% | 768,000 | | Michael L. Schmit | 50% of Target Award | 100% of Target Award | 200% of Target Award | 142% | 128% | 268,800 | | Richard A. Hubbell | 50% of Target Award | 100% of Target Award | 200% of Target Award | 142% | 128% | 640,000 |
Annual incentive Compensation
For 2022, our NEO were paid 150% of the target cash incentive, based on the performance achieved that year. The Company did not achieve return on invested capital (ROIC) performance goals for 2021 and therefore no bonuses were earned by executive officers in that year.
Annual incentive Compensation
| | 2024 ANNUAL PROXY STATEMENT |
Long-term incentive compensation
Long-term incentive compensation Our Stock Incentive Plan (SIP) allows for a wide variety of stock-based awards including RSUs and PSUs. The terms and conditions of awards granted under the SIP are described in more detail below. Awards under the Company’s SIP are purely discretionary, are not based upon any specific formula and may or may not be granted in any given fiscal year. For the past few years, we have granted RSUs to various employees, including our executive officers, during our regularly scheduled meeting of the Human Capital Management and Compensation Committee in which the Committee reviews executive compensation, and more recently incorporated PSUs into the executive compensation program. In order to balance performance and retention incentives, awards made during fiscal 2023 consisted of 75% RSUs and 25% PSUs. The Human Capital Management and Compensation Committee believes that RSUs promote an “ownership” culture, align executives’ interests with those of our shareholders and provide retention incentives for our executive officers, while PSUs act as an additional tool for linking individual interests of our executive officers to those of our shareholders. Consistent with this practice, we granted the following awards to our executive officers:
Long-term incentive compensation
| RSUs: | | | | Name | 2023 | 2022 | | Ben M. Palmer | 78,000 | 90,000 | | Michael L. Schmit | 34,500 | 35,000 | | Richard A. Hubbell | 56,250 | 75,000 | | PSUs: | | | | Name | 2023* | 2022 | | Ben M. Palmer | 26,000 | — | | Michael L. Schmit | 11,500 | — | | Richard A. Hubbell | 18,750 | — |
Long-term incentive compensation
* Represents target levels and assumes no adjustment due to the TSR modifier. For 2023, total equity compensation granted is comprised of RSUs and PSUs that will be earned over time as described below: RSUs –The RSUs granted in 2023 vested ratably over a period of four years and RSUs granted in 2022 vested over five years. Prior to 2022, the RSUs vested one-fifth per year beginning on the second anniversary of the grant date. RSUs granted in 2024 will vest over three years. RSUs have full voting and dividend rights. However, until the RSUs vest, they cannot be sold, transferred or pledged. Should the executive leave our employment for any reason prior to the vesting dates (other than due to disability or retirement on or after age 65), the unvested RSUs will be forfeited. In the event of death, or “change in control” as determined by the Board of Directors, all unvested RSUs shall vest immediately. PSUs – For 2023 each of the officers was granted a target number of PSUs with each such unit representing the right to receive, to the extent then vested, an amount payable in stock, subject to certain performance conditions measured over the 3-yearending in 2025. Potential payouts under the PSUs are based on levels of performance using “3-Year Cumulative EBITDA," which is calculated by adding interest, tax, depreciation and amortization expenses to net income. This computation is, subject to potential adjustments approved by the Human Capital and Compensation Committee and if such an adjusted measure is disclosed in the Company’s SEC filings. The adjustments for fiscal 2023 are disclosed in Annual Cash Incentive section titled Compensation Discussion and Analysis - Annual Cash Incentive Compensation. The award provides for threshold, target and maximum levels of payout, so that attainment of 75% of the target 3-Year Cumulative EBITDA will result in a payout at 50% of target level, while attaining 120% of the target 3-Year Cumulative EBITDA will result in a payout at 200% of target level; subject to further adjustment based upon a TSR Modifier. The TSR Modifier adjusts the payout levels upward or downward by an amount up to 20%, based on the applicable relative percentile ranking
Long-term incentive compensation
| 2024 ANNUAL PROXY STATEMENT | |
Long-term incentive compensation
of our stock benchmarked against the Philadelphia Oil Services Sector. TSR is calculated as profit or loss from the net price change in the market price for our shares over the 3 year period, based on the 20-trading day average price at the beginning of 2023 and the end of 2025. With respect to both measures, interpolation is used to determine the payouts associated with performance between the threshold, target and maximum levels. After taking 2023 performance into consideration, we think it is likely that performance will exceed threshold, although actual performance could be higher or lower than our estimates. See section titled Grants of Plan-Based Awards in 2023 below for threshold, target, and maximum share numbers and grant date fair values. The shares granted in 2023 are set to cliff-vest on December 31, 2025. Should the executive leave our employment for any reason prior to the vesting dates (other than due to death or disability as defined in the agreements), the unvested PSUs will be forfeited. In the event of death or disability as defined in the agreements, all unvested PSUs shall vest immediately at 100% of target levels, without regard to the actual EBITDA performance, and with no adjustment for the TSR modifier. In addition, the Committee has the discretion to determine the treatment of the PSUs in the event of a change of control, and currently intends that such awards would be accelerated in the event of a change of control and pay out at target levels in the same manner as described for death and disability. PSU awards also include the right to “Dividend Equivalents” with respect to the underlying shares. Dividend equivalents are accrued over the performance period, in cash, based upon target payout level, subject to a true-up at the end of the three-year cycle. Accrued Dividend Equivalents will be paid out upon vesting of the PSUs, but no such Dividend Equivalents will be payable to the extent the awards fail to vest or are forfeited, or the performance goals are not met. PSUs confer no voting rights with respect to the underlying shares prior to vesting and payout. The amount of the aggregate stock-based awards to our executive officers in any given year is influenced by the Company’s overall performance: for both RSUs and PSUs, the Committee takes into consideration both our historical performance and our projected goals and plans; in the case of PSUs, a certain minimum performance must be achieved in order for any shares to be issued. The amount of each grant to our executive officers is influenced in part by the Committee’s assessment of each individual’s respective contributions to achievement of the Company’s long-term goals and objectives, in addition to the recent prices of the Company’s common shares. In evaluating individual performance for these purposes, the Committee considers the overall contributions of executive management as a group and the Committee’s subjective assessment of each individual’s relative contribution to that performance rather than specific aspects of each individual’s performance over a short-term period. We expect to continue annual grants of RSUs and PSUs, although we reserve the right to modify or discontinue these or any of our other compensation practices at any time. Grants of RSUs and PSUs are made under our SIP which is administered pursuant to Rule 16b-3 under the Exchange Act.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| | | | | | Change in | | | | | | | | | Pension | | | | | | | | | Value and | | | | | | | | Non-Equity | Nonqualified | | | | | | | | Incentive | Deferred | | | | | | | Stock | Plan | Compensation | All Other | | | | | Salary | Awards | Compensation | Earnings | Compensation | Total | | Name and Principal Position | Year | ($) | ($)(1) | ($)(2) | ($)(4) | ($)(5) | ($) | | Ben M. Palmer (3) | 2023 | 600,000 | 998,400 | 768,000 | — | 25,050 | 2,391,450 | | President and | 2022 | 543,750 | 804,600 | 900,000 | — | 24,040 | 2,272,390 | | Chief Executive Officer | 2021 | 450,000 | 259,290 | — | — | 23,860 | 733,150 | | Michael L. Schmit (3) | 2023 | 300,000 | 441,600 | 268,800 | — | 11,030 | 1,021,430 | | Vice President, | 2022 | 186,460 | 312,900 | 315,000 | — | 5,310 | 819,670 | | Chief Financial Officer, Treasurer | 2021 | — | — | — | — | — | — | | and Corporate Secretary | | | | | | | | | Richard A. Hubbell (3) | 2023 | 500,000 | 720,000 | 640,000 | — | 33,690 | 1,893,690 | | Executive Chairman | 2022 | 668,750 | 670,500 | 750,000 | — | 49,110 | 2,138,360 | | of the Board | 2021 | 950,000 | 387,000 | — | — | 34,410 | 1,371,410 |
SUMMARY COMPENSATION TABLE
| (1) Represents the fair value of the award at the date of grant computed in accordance with ASC Topic 718. See Note titled “Employee Benefit Plans” to our Financial Statements contained in our Form 10-K for the period ended December 31, 2023 for a discussion of assumptions used in these computations. For this computation, we do not include an assumption for estimated forfeitures. For the PSUs, the fair value presented assumes that all of the awards will pay out at target levels with no adjustment for the TSR modifier. The maximum number of shares that could be paid out under the 2023 PSUs assuming maximum upward adjustment for TSR modifier is 112,500. If the maximum level of performance is achieved, including maximum upward adjustment pursuant to the TSR Modifier, the grant date fair values of the PSUs would be $499,200 for Mr. Palmer; $220,800 for Mr. Schmit; and $360,000 for Mr. Hubbell. |
SUMMARY COMPENSATION TABLE
| (2) Annual incentive compensation is accrued in the fiscal year earned and paid in the following fiscal year. No bonuses were earned for 2021. |
SUMMARY COMPENSATION TABLE
| (3) Prior to May 17, 2022, Richard A. Hubbell served as the President and Chief Executive Officer and Ben M. Palmer served as the Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Michael L. Schmit has served as the Chief Financial Officer, Treasurer and Corporate Secretary since May 17, 2022. |
SUMMARY COMPENSATION TABLE
| (4) The actuarial present value of Richard A. Hubbell’s accumulated benefit under the defined benefit plan decreased by $330,890 in 2023. This decrease represents the impact of the change in discount rate as no additional benefits are being accrued. The defined benefit pension plan was fully terminated in 2023. |
SUMMARY COMPENSATION TABLE
| (5) All other compensation for 2023 includes the following items for: |
SUMMARY COMPENSATION TABLE
| Ben M. Palmer: | Includes automobile allowance of $8,400, cost of gasoline for personal automobile and 401(k) Plan Company match of $14,850. |
SUMMARY COMPENSATION TABLE
| Michael L. Schmit: | Includes automobile allowance of $7,200 and cost of gasoline for personal automobile of $1,680, and 401(k) Plan Company match of $2,160. |
SUMMARY COMPENSATION TABLE
| Richard A. Hubbell: | Includes insurance on automobile provided by the Company, cost of dining club dues, cost of gasoline for personal automobile, personal use of Company car of $13,940 and 401(k) Plan Company match of $14,850. |
SUMMARY COMPENSATION TABLE
| 2024 ANNUAL PROXY STATEMENT | |
GRANTS OF PLAN-BASED AWARDS in 2023
GRANTS OF PLAN-BASED AWARDS in 2023
GRANTS OF PLAN-BASED AWARDS in 2023
| | | | | | | | | All Other | Grant Date | | | | Estimated Future Payouts | | | Estimated Future Payouts | | | Stock Awards: | Fair Value | | | | Under Non-Equity | | | Under Equity | | | Number of | of Stock | | | | Incentive Plan Awards(1) | | | Incentive Plan Awards(2) | | | Shares | and Option | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | RSU | Awards | | Name | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) (3) | ($)(4) | | Ben M. Palmer | | 300,000 | 600,000 | 1,200,000 | — | — | — | — | — | | | 1/24/2023 | — | — | — | 13,000 | 26,000 | 62,400 | — | — | | | 1/24/2023 | — | — | — | — | — | — | 78,000 | 998,400 | | Michael L. Schmit | | 105,000 | 210,000 | 420,000 | — | — | — | — | — | | | 1/24/2023 | — | — | — | 5,750 | 11,500 | 27,600 | — | — | | | 1/24/2023 | — | — | — | — | — | — | 34,500 | 441,600 | | Richard A. Hubbell | | 250,000 | 500,000 | 1,000,000 | — | — | — | — | — | | | 1/24/2023 | — | — | — | 9,375 | 18,750 | 45,000 | — | — | | | 1/24/2023 | — | — | — | — | — | — | 56,250 | 720,000 |
GRANTS OF PLAN-BASED AWARDS in 2023
| (1) These amounts illustrate the potential bonus awards under the Management Incentive Plan for 2023. See Summary Compensation Table for actual amounts awarded. |
GRANTS OF PLAN-BASED AWARDS in 2023
| (2) PSUs are earned based upon the Company’s performance, over a three-year period, in each case subject to a potential adjustment based upon the application of the TSR modifier. PSUs entitled to certain Dividend Equivalents as described in the section titled Compensation, Discussion and Analysis – Long Term Incentive Compensation section. |
GRANTS OF PLAN-BASED AWARDS in 2023
| (3) These amounts represent shares underlying RSUs granted during 2023 that vest ratably over four years. RSUs have full voting and dividend rights. However, until the shares vest, they cannot be sold, transferred or pledged. |
GRANTS OF PLAN-BASED AWARDS in 2023
| (4) These amounts represent aggregate grant date fair value for grants of RSUs and PSUs awarded in fiscal year 2023 under our SIP computed in accordance with ASC Topic 718. The amounts reported with respect to PSUs are based on the probable outcome of the performance conditions as of the grant date, which is estimated at target, with no adjustment for the TSR modifier. Actual payouts may be different based on the Company’s performance. Please see footnote (1) to the Summary Compensation Table for additional details. |
GRANTS OF PLAN-BASED AWARDS in 2023
We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options.
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END The Company does not have any outstanding option awards made in prior years to the executives named in our Summary Compensation Table. The table below sets forth the total number of unearned and unvested shares underlying PSUs that remained outstanding at December 31, 2023, as adjusted based upon achievement against performance targets to date, as well as restricted shares of Common Stock outstanding at December 31, 2023 that were granted in prior years to the executives, but had not yet vested on that date. The table also presents market values of those awards, calculated based on the $7.28 closing price of our Common Stock on December 29, 2023, the last trading day of the year.
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| | 2024 ANNUAL PROXY STATEMENT |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| | Stock Awards | | | | | | | | Equity Incentive | Equity Incentive | | | Number of | Market Value | Plan Awards: | Plan Awards: | | | Shares or | of Shares or | Number of | Market or Payout | | | Units of | Units of | Unearned Shares, | Value of Unearned | | | Stock That | Stock That | Units or Other | Shares, Units or Other | | | Have Not | Have Not | Rights That | Rights That Have | | | Vested | Vested | Have Not Vested | Not Vested | | Name | (#) (1) | ($) | (#) (2) | ($) | | Ben M. Palmer | 269,800 | 1,964,144 | 26,000 | 189,280 | | Michael L. Schmit | 62,500 | 455,000 | 11,500 | 83,720 | | Richard A. Hubbell | 295,250 | 2,149,420 | 18,750 | 136,500 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (1) RSUs granted prior to 2023 vested one-fifth per year beginning on the second anniversary of the grant date. RSUs granted in 2023 vest one-fourth per year beginning on the first anniversary of the grant date. Shares of RSUs granted to the executive officers that have not vested as of December 31, 2023, are summarized in the table that follows: |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| Name | | Number of shares | Grant date | Date fully vested | | Ben M. Palmer | RSU | 6,000 | 1/23/2018 | 1/23/2024 | | | RSU | 20,000 | 1/22/2019 | 1/22/2025 | | | RSU | 40,200 | 1/28/2020 | 1/28/2026 | | | RSU | 53,600 | 1/26/2021 | 1/26/2027 | | | RSU | 72,000 | 5/18/2022 | 1/26/2027 | | | RSU | 78,000 | 1/24/2023 | 1/24/2027 | | | PSU | 26,000 | 1/24/2023 | 12/31/2025 | | Michael L. Schmit | RSU | 28,000 | 5/18/2022 | 1/26/2027 | | | RSU | 34,500 | 1/24/2023 | 1/24/2027 | | | PSU | 11,500 | 1/24/2023 | 12/31/2025 | | Richard A. Hubbell | RSU | 9,000 | 1/23/2018 | 1/23/2024 | | | RSU | 30,000 | 1/22/2019 | 1/22/2025 | | | RSU | 60,000 | 1/28/2020 | 1/28/2026 | | | RSU | 80,000 | 1/26/2021 | 1/26/2027 | | | RSU | 60,000 | 5/18/2022 | 1/26/2027 | | | RSU | 56,250 | 1/24/2023 | 1/24/2027 | | | PSU | 18,750 | 1/24/2023 | 12/31/2025 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (2) PSU amounts disclosed above are at target with no adjustment for the TSR modifier. The actual number of shares and value realized may be different from the number presented, and will depend upon the company’s actual achievement with respect to the performance criteria and our relative TSR over a three-year performance period. For more information regarding the PSUs, see section titled Compensation Discussion and Analysis – Long-term Incentive Compensation. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| 2024 ANNUAL PROXY STATEMENT | |
OPTION EXERCISES AND STOCK VESTED
OPTION EXERCISES AND STOCK VESTED The following table sets forth:
OPTION EXERCISES AND STOCK VESTED
| > | the number of shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the exercise of stock options during the fiscal year ended December 31, 2023; |
OPTION EXERCISES AND STOCK VESTED
| > | the aggregate dollar amount realized on the exercise date for such options computed by multiplying the number of shares acquired by the difference between the market value of the shares on the exercise date and the exercise price of the options; |
OPTION EXERCISES AND STOCK VESTED
| > | the number of restricted shares of Common Stock acquired by the executives named in the Summary Compensation Table upon the vesting of shares during the fiscal year ended December 31, 2023; |
OPTION EXERCISES AND STOCK VESTED
| > | the aggregate dollar amount realized on the vesting date for such RSUs computed by multiplying the number of shares vested by the market value of the shares on the vesting date; and |
OPTION EXERCISES AND STOCK VESTED
| > | the market value of shares was based on the closing price for the Company’s Common Stock on the date of exercise or vesting, as the case may be. The value realized for awards set forth in the table is calculated in accordance with SEC rules as described above, without regard to whether the NEO has actually transferred the stock or when; accordingly, the actual value realized by the NEOs may be greater or lesser than what is set forth in the table. |
OPTION EXERCISES AND STOCK VESTED
| | Option Awards | | Stock Awards | | | | Number of Shares | | Number of Shares | | | | Acquired on | Value Realized on | Acquired on | Value Realized | | | Exercise | Exercise | Vesting | on Vesting | | Name | (#) | ($) | (#) | ($) | | Ben M. Palmer | — | — | 66,200 | 609,060 | | Michael L. Schmit | — | — | 7,000 | 66,500 | | Richard A. Hubbell | — | — | 88,000 | 805,420 |
OPTION EXERCISES AND STOCK VESTED
| | 2024 ANNUAL PROXY STATEMENT |
OPTION EXERCISES AND STOCK VESTED
BENEFIT PLANS The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under the Retirement Income Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements.
Pension Benefits
Pension Benefits
Pension Benefits
| | | | Present | | | | | Number of | Value of | | | | | Years Credited | Accumulated | Payments During | | | | Service | Benefit | Last Fiscal Year | | Name | Plan Name | (#) | ($) | ($) | | Ben M. Palmer | Retirement Income Plan | — | — | — | | Michael L. Schmit | Retirement Income Plan | — | — | — | | Richard A. Hubbell | Retirement Income Plan | 16 | — | 489,627 |
Pension Benefits
The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon normal retirement at age 65, to eligible employees. The Plan provides reduced early retirement benefits at age 59½, or 55 or older with 15 or more years of service. In 2002 the Company’s Board of Directors approved a resolution to cease all future benefit accruals under the Retirement Income Plan effective March 31, 2002. Retirement Income Plan benefits are based on the average of the employee’s compensation from the Company for the five consecutive complete calendar years of highest compensation during the last ten consecutive complete calendar years (“final average compensation”) immediately preceding March 31, 2002. The benefits are computed as the product of 1.5% of final average compensation multiplied by years of credited service (up to 30 years) reduced by an adjustment for benefits drawn from social security. Adjustments have been made for age and the IRS mandated compensation limitations. Mr. Hubbell is voluntarily receiving distributions from the plan even though he has not retired from the Company. The amount of distributions received during 2023 has been disclosed in the table above and is not subject to change after retirement. In 2020, the Company offered a limited lump-sum payment window for certain vested terminated participants and active employees with a vested balance. Mr. Palmer elected to receive his vested balance immediately as a lump-sum.
NONQUALIFIED DEFERRED COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION The SRP has been established as a nonqualified plan that is designed to comply with the provisions of the American Jobs Creation Act of 2004 (including Section 409A of the Internal Revenue Code) for the cash contributions made to certain longer serviced employees in lieu of freezing the Retirement Income Plan benefit accruals effective in 2002; the SRP also has a compensation deferral option for eligible employees. The contributions and deferrals to the SRP are invested in funds held in a rabbi trust.
NONQUALIFIED DEFERRED COMPENSATION
| | Executive | Registrant | Aggregate | Aggregate | Aggregate | | | Contributions | Contributions | Earnings in | Withdrawals/ | Balance at | | | in Last FY | in Last FY | Last FY | Distributions | Last FYE | | Name | ($)(1) | ($) | ($) | ($) | ($)(2) | | Ben M. Palmer | 45,000 | — | 148,036 | — | 1,234,517 | | Michael L. Schmit | — | — | — | — | — | | Richard A. Hubbell | — | — | 71,577 | — | 556,785 |
NONQUALIFIED DEFERRED COMPENSATION
| (1) Represents the portion of base salary for 2023 disclosed in the Summary Compensation Table which has been deferred by the executive officer pursuant to the SRP. |
NONQUALIFIED DEFERRED COMPENSATION
The deferral option provides that participants may defer up to 50% of their base salary and up to 100% of their annual bonus with respect to any given plan year, subject to a $2,000 per plan year minimum. All of the salary and bonus deferrals are fully vested. Accounts are credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and contributions had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. The benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. To the extent that the Company’s obligations under the SRP exceed assets available under the trust, the Company may be required to seek additional funding sources to fund its liability under the SRP. Generally, the SRP provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (Termination Event). However, for any deferrals of base salary and bonus compensation (but not Company contributions), participants are entitled to designate a distribution date which is prior to a Termination Event. The SRP allows a participant to elect to receive distributions in installments or lump-sum payments.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment or change in control of the Company as of December 31, 2023. Amounts presented in the table include amounts to which the NEOs would become entitled as of such date pursuant to their currently held, but unvested restricted stock awards, as well as the PSUs. The table does not include the value of amounts payable under the SRP. The executive officers can choose to receive the amounts accumulated in the SRP either as a lump-sum or in installments at retirement, death or disability. These amounts have been disclosed under the Nonqualified Deferred Compensation section of this Proxy Statement. The table also does not include the value of benefits that are provided on the same basis to substantially all other salaried employees. There are no other agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment or
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| | 2024 ANNUAL PROXY STATEMENT |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
change in control except as described here. Additional payments or benefits to a terminating executive officer would be at the discretion of the Human Capital Management and Compensation Committee. The terms and vesting of RSUs and PSUs are discussed in the Outstanding Equity Awards At 2023 Fiscal Year-End section of this Proxy Statement. The values presented in the table below were calculated using the closing market price of $7.28 per share for our Common Stock, as of December 29, 2023, which was the last trading day in fiscal year 2023.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| | Stock Awards | | | | | Number of shares underlying | Number of shares underlying | Unrealized value | | | unvested stock | unvested stock | of | | | PSU | RSU | unvested stock | | Name | (#) | (#) | ($) | | Ben M. Palmer | | | | | · Retirement | — | — | — | | · Disability | 26,000 | 91,015 | 851,869 | | · Death | 26,000 | 269,800 | 2,153,424 | | · Change in control | 26,000 | 269,800 | 2,153,424 | | Michael L. Schmit | | | | | · Retirement | — | — | — | | · Disability | 11,500 | 16,295 | 202,348 | | · Death | 11,500 | 62,500 | 538,720 | | · Change in control | 11,500 | 62,500 | 538,720 | | Richard A. Hubbell | | | | | · Retirement | — | 72,417 | 527,196 | | · Disability | 18,750 | 107,788 | 921,197 | | · Death | 18,750 | 295,250 | 2,285,920 | | · Change in control | 18,750 | 295,250 | 2,285,920 |
change in control or severance
| (2) The dollar amounts reported represent the amount of Compensation Actually Paid (CAP), computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our PEO during the applicable year. To calculate the amounts in the CAP to PEO column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the Summary Compensation Table (SCT): |