Delaware | 001-38668 | 82-4919553 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
303 W. Wall Street, Suite 1800 Midland, Texas (Address of principal executive offices) | 79701 (Zip Code) |
Title of each class | Ticker symbol(s) | Name of each exchange on which registered |
Common stock, par value $0.01 | LGCY | NASDAQ Stock Market LLC |
Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Item 9.01. | Financial Statements and Exhibits |
(d) | Exhibits |
Exhibit No. | Description | |
Legacy Reserves Inc. | |||
Date: May 23, 2019 | By: | /s/ James Daniel Westcott | |
James Daniel Westcott | |||
Chief Executive Officer |
a. | “Cause,” with respect to a given Participant, shall have the meaning set forth in such Participant’s employment agreement in effect as of the Effective Date (whether or not such employment agreement remains in effect at the time of Participant’s termination), except that if the Participant’s employment agreement is superseded by a subsequent or amended employment agreement that includes a definition of “Cause,” then “Cause” shall have the meaning set forth in such subsequent or amended employment agreement. |
b. | “Code” means the Internal Revenue Code of 1986, as amended from time to time. |
c. | “Committee” shall have the meaning specified in Section 7. |
d. | “Development Capital” means capital expended to expand the Company’s operations, as recorded in accordance with the Company’s usual accounting practices, as such figures may be adjusted for M&A activity at the discretion of the Company, as approved by the Board (or the Committee). |
e. | “EBITDA,” for purposes of this Plan, means the Company’s Adjusted EBITDA as determined on a basis consistent with that reported in the Company’s 10-Q before (i) expenses incurred for professional services firms engaged or paid by the Company pursuant to its restructuring activities (including but not limited to Alvarez & Marsal, Sidley Austin, Perella Weinberg Partners, and Tudor Pickering Holt) and (ii) any payments to employees pursuant to (A) this Plan, (B) the Employer’s Key Employee Retention Plan, or (C) the Retention Agreements entered into with certain executives in or about May 2019; as such figures may be adjusted for M&A activity at the discretion of the Company, as approved by the Board (or the Committee). |
f. | “Incentive Awards” shall have the meaning specified in Section 1. |
g. | “Incentive Components” shall have the meaning specified in Section 4(a). |
h. | “LOE” means the Company’s lease operating expenses, as recorded in accordance with the Company’s usual accounting practices, as such figures may be adjusted for M&A activity at the discretion of the Company, as approved by the Board (or the Committee). |
i. | “Participant” means each person identified on Exhibit A hereto. |
j. | “Performance Period” means each of: (i) January 1, 2019 through March 31, 2019 (the “First Performance Period”); (ii) April 1, 2019 through June 30, 2019 (the “Second Performance Period”); (iii) July 1, 2019 through September 30, 2019 (the “Third Performance Period”); and (iv) October 1, 2019 through December 31, 2019 (the “Fourth Performance Period”). |
k. | “Production” means the amount of oil, natural gas, and natural gas liquids produced by the Company, expressed in MBoe (thousand barrels of oil equivalent), as such figures may be adjusted for M&A activity at the discretion of the Company, as approved by the Board (or the Committee). |
l. | “Terminating Performance Period” shall have the meaning specified in Section 5. |
m. | “Target Incentive Award” shall have the meaning specified in Section 4(b). |
n. | “Total and Permanent Disability” shall have the meaning specified in Section 5. |
o. | “True-Up Level” shall have the meaning specified in Section 4(c)(iii). |
a. | Types of Incentive Awards. Participants are eligible to receive Incentive Awards based upon the Company’s performance relative to four separate components: (i) EBITDA; (ii) LOE; (iii) Production; and (iv) Development Capital (collectively, the “Incentive Components”). Each of the Incentive Components provides opportunities for Participants to receive Incentive Awards at quarterly intervals for performance relative to specific pre-established goals for the EBITDA, LOE, Production, and Development Capital components (subject to the adjustment of such goals for M&A activity at the discretion of the Company, as approved by the Board (or the Committee)). The goals, including, threshold, target and stretch goals, for EBITDA, LOE, Production, and Development Capital with respect to each Performance Period are set forth in Exhibit B. |
b. | Target Amount of Incentive Awards. The Plan establishes a “Target Incentive Award” for each Participant, representing the designated payout if the Company’s performance is at the targeted goals. The Target Incentive Award is divided into four equal target amounts corresponding to each of the Incentive Components: EBITDA, LOE, Production, and |
c. | Payout of Incentive Awards. |
i. | Payouts Generally. Participants are eligible to receive varying payout levels of Incentive Awards with respect to each Incentive Component (ranging from 50% to 200% of the quarterly target with respect to each Incentive Component) for each of the Performance Periods, determined by reference to the Company’s performance relative to the goals set forth in Exhibit B with respect to each Incentive Component; provided, however, that if the threshold goal is not reached with respect to a particular Incentive Component for a particular Performance Period, then no Incentive Award shall be payable with respect to such Incentive Component for such Performance Period, subject only to the “true-up” adjustment set forth in Section 4(c)(iii). |
ii. | Quarterly Payouts for Each Performance Period. Each quarterly Incentive Award payout (the “Incentive Payout Amount”) shall be calculated by comparing the Company’s performance with respect to each Incentive Component against the threshold, target and stretch goals set forth in Exhibit B, utilizing straight-line interpolation between the Company’s actual performance and the level of Incentive Award payout designated for the Company’s performance relative to its pre-established goals to calculate the percentage of the quarterly Target Incentive Award achieved with respect to each Incentive Component. As soon as practicable after the end of each Performance Period, the Committee shall compare the Company’s actual performance during the Performance Period against the goals set forth in Exhibit B with respect to each Incentive Component to determine an Incentive Payout Amount with respect to each Incentive Component for the relevant Performance Period. For the avoidance of doubt, performance at the threshold goal equates to payout at 50% of the targeted amount, performance at the target goal equates to payout at 100% of the targeted amount, and performance at the stretch goal equates to payout at the maximum payout level of 200% of the targeted amount. |
iii. | True-Up Adjustment. Notwithstanding the foregoing, with respect to the Fourth Performance Period, the Committee shall adjust the Incentive Payout Amount, either increasing or decreasing the amount, to account for the Company’s actual performance during 2019 against the annual goals set forth in Exhibit C with respect to each Incentive Component, to ensure that the total of the payments made to the Participants under this Plan is consistent with the Company’s annual performance. Specifically, the Committee shall compare the Company’s 2019 performance with respect to a given Incentive Component against the threshold, target and maximum goals set forth in Exhibit C, utilizing straight-line interpolation between the Company’s actual performance and the level of Incentive Award payout designated for the Company’s performance relative to its pre-established goals to calculate the payout percentage achieved on an annual basis with respect to each Incentive Component. Such percentage shall then be applied to the cumulative targeted amount for all Performance Periods with respect to such Incentive Component to arrive at a “True- |
iv. | Timing of Payouts. If payable, the Incentive Award for each Performance Period, calculated as set forth above, will be paid by the Employer within sixty (60) days after the conclusion of the relevant Performance Period. |
a. | Administration. Employer, acting through the Board or a Compensation Committee appointed by the Board (in either case, the “Committee”), shall administer the Plan, shall in such capacity be responsible for the general administration and management of the Plan, and shall have all powers and duties necessary to fulfill its responsibilities, including the discretion to determine all questions relating to the eligibility of employees to collect Incentive Awards, and the calculation and payment of all such Incentive Awards. The Committee shall accordingly have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion the Committee deems to be appropriate in its sole and absolute discretion, to revise any form associated with this Plan in any manner that the Committee determines to be appropriate, and to make any findings of fact needed in the administration of the Plan. The validity of any such interpretation, construction, decision, or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall instead be upheld unless clearly arbitrary or capricious. The Committee’s prior exercise of discretionary authority shall not obligate it to exercise its authority in a like fashion thereafter. Unless arbitrary and capricious, all actions taken and all determinations made by the Committee shall be final and binding on all persons claiming any interest in or under the Plan. |
b. | Manner of Payment and Tax Withholding. Any amounts payable under this Plan shall be paid to Participants in the same manner as they receive regular payroll (or by mail to the last known address of any Participant whose employment has terminated). The Employer will deduct from any Incentive Award payment all required withholdings for state, federal, and local employment, income, payroll, or other taxes. |
c. | No Guarantee of Employment or Other Benefits. Except for Participants subject to a written employment agreement which states otherwise, employment with Employer is on an “at will” basis. This means that the employment relationship may be terminated at any time by either the Participant or Employer for any reason not expressly prohibited by law. Any representation to the contrary is invalid and unenforceable and should not be relied upon, unless set forth in a written contract of employment, signed on behalf of Employer by an authorized officer. Participation in this Plan and the receipt of benefits under this Plan shall not automatically be deemed employment for purposes of any other employee benefit plan including, without |
d. | Governing Law. This Plan shall be governed by and construed and enforced in accordance with the laws of the State of Texas, without reference to conflict of law principles which would require application of the law of another jurisdiction (except to the minimum extent that the law of the State of Texas specifically and mandatorily requires otherwise). |
e. | Notices. All notices, requests, demands and other communications required or permitted to be given under this Plan shall be in writing and shall be deemed given (i) when personally delivered to the recipient (provided a written acknowledgement of receipt is obtained), (ii) one (1) business day after being sent by a nationally recognized overnight courier (provided that a written acknowledgement of receipt is obtained by the overnight courier) or (iii) four (4) business days after mailing by certified or registered mail, postage prepaid, return receipt requested, to the party concerned at the address indicated below (or such other address as the recipient shall specify by ten days’ advance written notice given in accordance with this Section 7(e)): |
f. | Successors and Assigns. Employer shall be entitled to assign this Plan to its affiliates and shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Employer to assume and agree to perform this Agreement in the same manner and to the same extent that the Employer would have been required to perform it if no such succession had taken place; provided, however, such assignment or assumption shall not relieve the Employer of its obligations under the |
g. | Anti-alienation Clause. No payment under the Plan may be anticipated, assigned (either at law or in equity), alienated, or subject to attachment, garnishment, levy, execution or other legal or equitable process whether pursuant to a “qualified domestic relations order” as defined in Section 414(p) of the Code or otherwise. |
h. | Amendment and Termination. Employer, through the Board or the Committee, may amend this Plan at any time and from time to time, and may terminate this Plan at any time; provided that any amendment or termination that adversely and materially affects a Participant will be subject to the Participant’s written consent thereto. |
i. | Indemnification of Administrator. Employer agrees to indemnify and to defend to the fullest extent permitted by law any employee of the Company serving on the Board or on the Committee against all liabilities, damages, costs and expenses (including attorneys’ fees and amounts paid in settlement of any claims approved by Employer) occasioned by any act or omission to act in connection with the Plan if such act or omission is taken in good faith, is consistent with the direction and authority of their respective position as well as the duties imputed under this Plan, and is neither criminal nor willful misconduct. |