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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2010
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 0-16203
DELTA PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation or organization)
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84-1060803
(I.R.S. Employer Identification No.) |
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370 17th Street, Suite 4300, Denver, Colorado
(Address of principal executive offices)
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80202
(Zip Code) |
Registrants telephone number, including area code: (303) 293-9133
Securities registered under Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered |
Common Stock, $0.01 par value
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NASDAQ Capital Market |
Securities registered under to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). o Yes
o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or smaller reporting company. See definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o | |
Accelerated filer þ | |
Non-accelerated filer o | |
Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
As of June 30, 2010, the aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $159.7 million, based on the closing price of the Common Stock on the
NASDAQ National Market of $0.86 per share. As of April 26, 2011, 286,027,476 shares of the
registrants Common Stock, $0.01 par value, were issued and outstanding.
Documents incorporated by reference: None
TABLE OF CONTENTS
EXPLANATORY NOTE
The purpose of this Amendment No. 1 on Form 10-K/A (Amended Report) is to amend Part III, Items
10 through 14 of our annual Report on Form 10-K for the fiscal year ended December 31, 2010, which
was filed with the Securities and Exchange Commission (the SEC) on March 16, 2011 (the 2010
10-K), to include information previously omitted from the 2010 10-K in reliance on General
Instruction G to Form 10-K, which provides that registrants may incorporate by reference certain
information from a definitive proxy statement filed with the SEC within 120 days after the end of
the fiscal year. The Companys definitive proxy statement will not be filed within 120 days after
the end of the Companys 2010 fiscal year.
As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the Exchange
Act), new certifications by our principal executive officer and principal financial officer are
filed as exhibits to this Annual Report on Form 10-K/A under Item 15 of Part IV hereof.
Except as stated herein, the Company has not modified or updated disclosures presented in the 2010
10-K in this Amended Report. Accordingly, this Amended Report does not reflect events occurring
after the filing of our 2010 10-K or modify or update those disclosures, including the exhibits to
the 2010 10-K, affected by subsequent events. As such, our 2010 10-K continues to speak as of March
16, 2011 (the date it was filed with the SEC). Accordingly, this Amended Report should be read in
conjunction with the 2010 10-K and our other reports filed with the SEC subsequent to the filing of
our 2010 10-K, including any amendments to those filings.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The following is biographical information as to the business experience of each of our current
directors and executive officers:
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Positions |
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Period of Service |
Carl E. Lakey
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Chief Executive
Officer and Director
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July 2010 to Present |
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Kevin K. Nanke
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Treasurer and Chief
Financial Officer
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December 1999 to Present |
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Stanley F. Freedman
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Executive Vice President,
General Counsel and
Secretary
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January 2006 to Present |
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Daniel J. Taylor
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Chairman of the
Board
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February 2008 to Present |
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Hank Brown
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Director
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June 2007 to Present |
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Kevin R. Collins
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Director
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March 2005 to Present |
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Jerrie F. Eckelberger
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Director
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September 1996 to Present |
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Jean-Michel Fonck
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Director
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May 27, 2009 to Present |
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Aleron H. Larson, Jr.
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Director
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May 1987 to Present |
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Russell S. Lewis
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Director
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June 2002 to Present |
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Anthony Mandekic
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Director
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May 27, 2009 to Present |
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James J. Murren
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Director
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February 2008 to Present |
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Jordan R. Smith
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Director
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October 2004 to Present |
Carl E. Lakey became Chief Executive Officer of the Company effective as of July 6, 2010 and
became a Director of the Company on August 4, 2010. Mr. Lakey most recently served as Senior Vice
President of Operations for Delta and has been with the Company since 2007. Prior to joining Delta,
Mr. Lakey served from 2001 to 2007 in various capacities with El Paso Production Company, most
recently as the Manager of Operations and Engineering for its Western Onshore Division. Prior to
that, he served in various capacities with Mobil and ExxonMobil from 1985 to 2001. Mr. Lakey also
serves as the President, CEO and a Director of Amber Resources of Colorado (Amber
Resources), our 91.68% owned subsidiary. He received a bachelors degree in Petroleum
Engineering from Colorado School of Mines in 1985.
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Kevin K. Nanke joined Delta in April 1995 as our Controller and has served as the Treasurer
and Chief Financial Officer of Delta and Amber Resources since 1999. Since April 1, 2005 he has
also served as Chief Financial Officer, Treasurer and Director of DHS. Since 1989, he has been
involved in public and private accounting with the oil and gas industry. Mr. Nanke received a
Bachelor of Arts degree in Accounting from the University of Northern Iowa in 1989. Prior to
working with Delta, he was employed by KPMG LLP. He is a member of the Colorado Society of CPAs
and the Council of Petroleum Accounting Society.
Stanley F. (Ted) Freedman has served as Executive Vice President, General Counsel and
Secretary since January 1, 2006 and has also served in those same capacities for DHS since that
same date. He also serves as Executive Vice President and Secretary of Amber Resources and formerly
as a director of Direct Petroleum Exploration, Inc., a privately-held oil and gas company with
projects in Morocco, Bulgaria, Russia and southeastern Colorado. He graduated from the University
of Wyoming with a Bachelor of Arts degree in 1970 and a Juris Doctor degree in 1975. From 1975 to
1978, Mr. Freedman was a staff attorney with the United States Securities and Exchange Commission.
From 1978 to December 31, 2005, he was engaged in the private practice of law, and was a
shareholder and director of the law firm of Krys Boyle, P.C. in Denver, Colorado.
Daniel J. Taylor has been an executive of Tracinda Corporation since February 2006 and has
served as a Director of MGM Resorts International since March 2007. Mr. Taylor does not have a
specific title at Tracinda but his primary responsibilities include assisting with the management
of Tracindas investments. He was initially employed by Tracinda from May 1991 until July 1997,
and has been employed in his current position at Tracinda since February 2006. During the interim
period he was employed by Metro-Goldwyn-Mayer Inc., a then public corporation (MGM), first as
Executive Vice President-Finance, and then as Chief Financial Officer from August 1997 to April
2005, at which time MGM was sold. He then served as President of MGM until January 2006. Mr.
Taylor received a Bachelor of Science degree in Business Administration with an emphasis in
Accounting from Central Michigan University in 1978. He served as a director of Inforte Corp. until
July 2007.
Hank Brown has served as Senior Counsel to the law firm of Brownstein Hyatt Farber Schreck
P.C. since June 1, 2008 and is a member of that firms Government Relations and Natural Resources
groups. He served as the President of the University of Colorado from August 2005 to March 2008.
Prior to joining CU, he was President and CEO of the Daniels Fund and served as the President of
the University of Northern Colorado from 1998 to 2002. He served Colorado in the United States
Senate (elected in 1990) and served five consecutive terms in the U.S. House representing
Colorados 4th Congressional District (1980-1988). He also served in the Colorado Senate from 1972
to 1976. Mr. Brown was a Vice President of Monfort of Colorado from 1969 to 1980. For more than the
past five years, he has served as a member of the Board of Directors of Sealed Air Corporation and
of Sensient Technology Corporation, and during 2008 and 2009 he served on the Board of Directors of
Guaranty Bank and Trust Company. He is both an attorney and a C.P.A. He earned a Bachelors degree
in Accounting from the University of Colorado in 1961 and received his Juris Doctorate degree from
the University of Colorado Law School in 1969. While in Washington, D.C., Mr. Brown earned a Master
of Law degree in 1986 from George Washington University.
Kevin R. Collins currently serves as Executive Vice President and Chief Financial Officer of
Bear Tracker Energy, a position he has held since July 1, 2010. Prior to his current position, Mr.
Collins served as President and Chief Executive Officer of Evergreen Energy, Inc. from September
2006 until his retirement on June 1, 2009. He also served on Evergreens Board of Directors until
he resigned effective July 1, 2009. Prior to that, he served as Evergreens Executive Vice
President Finance and Strategy from September 2005 to September 2006, and acting Chief Financial
Officer from November 2005 until March 31, 2006. From 1995 until 2004, Mr. Collins was an
executive officer of Evergreen Resources, Inc., serving as Executive Vice President and Chief
Financial Officer until Evergreen Resources merged with Pioneer Natural Resources Co. in September
2004. He became a Certified Public Accountant in 1983 after receiving his Bachelor of Science
degree in Business Administration and Accounting from the University of Arizona. Mr. Collins has
over 13 years of public accounting experience and has also served as Vice President and a board
member of the Colorado Oil and Gas Association, President of the
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Denver Chapter of the Institute of Management Accountants, and a board member and Chairman of
the Finance Committee of the Independent Petroleum Association of Mountain States.
Jerrie F. Eckelberger is an investor, real estate developer and attorney who has practiced law
in the State of Colorado since 1971. He graduated from Northwestern University with a Bachelor of
Arts degree in 1966 and received his Juris Doctor degree in 1971 from the University of Colorado
School of Law. From 1972 to 1975, Mr. Eckelberger was a staff attorney with the Eighteenth
Judicial District Attorneys Office in Colorado. From 1975 to the present, Mr. Eckelberger has
been engaged in the private practice of law in the Denver area. Mr. Eckelberger currently serves
as a Director of Amber and previously served as an officer, director and corporate counsel for
Roxborough Development Corporation. Since March, 1996, Mr. Eckelberger has engaged in the
investment and development of Colorado real estate through several private companies in which he is
a principal.
Jean-Michel Fonck is President of Geopartners SAS, a service company for petroleum studies
located in France, and is consulting with the firm of JMF-Conseil SARL to various oil companies
since 2001. Mr. Fonck was previously employed by TOTAL SA (TOTAL), serving in various capacities
there from 1968 until 2000. During his tenure at TOTAL, he worked in Paris in mathematical
applications to geology and exploration venture appraisals, in Indonesia as chief geologist, in
Argentina and Egypt as exploration manager and in Paris again as division manager for Exploration
New Ventures and International Exploration Coordination. In 1991, Mr. Fonck became President and
CEO of the TOTAL exploration and production branch in Houston, and then returned to Paris in 1994
to serve as Vice President of Exploration and Reservoir Evaluation for the TOTAL group. Mr. Fonck
graduated from Ecole des Mines (Nancy) in 1963.
Aleron H. Larson, Jr. has operated as an independent in the oil and gas industry individually
and through public and private ventures since 1978. Mr. Larson served as Chairman of the Board,
Secretary and Director of Delta, as well as Amber Resources, until his retirement on July 1, 2005,
at which time he resigned as Chairman of the Board and as an executive officer of the Company. He
ceased to be an officer or director of Amber Resources on January 3, 2006. Mr. Larson practiced law
in Breckenridge, Colorado from 1971 until 1974. During this time he was a member of a law firm,
Larson & Batchellor, engaged primarily in real estate law, land use litigation, land planning and
municipal law. In 1974, he formed Larson & Larson, P.C., and was engaged primarily in areas of law
relating to securities, real estate, and oil and gas until 1978. Mr. Larson received a Bachelor of
Arts degree in Business Administration from the University of Texas at El Paso in 1967 and a Juris
Doctor degree from the University of Colorado in 1970.
Russell S. Lewis is Executive Vice President, Strategic Development for VeriSign, Inc.,
located in Dulles, Virginia, which is a provider of Internet infrastructure services. Mr. Lewis
has held a variety of senior executive level roles at VeriSign since 1999, including the GM of
VeriSigns Naming and Directory Services Group and Senior Vice President of Corporate Development.
Mr. Lewis has been a member of the Board of Directors of Delta Petroleum since June 2002. For the
preceding 15 years, Mr. Lewis was President and CEO of TransCore, a wireless transportation systems
integration company. Prior to that, Mr. Lewis managed an oil and gas exploration subsidiary of a
publicly traded utility and was Vice President of EF Hutton in its Municipal Finance group. Mr.
Lewis also serves on the Board of Directors of Braintech, Inc., NameMedia, Inc., and Dropps, Inc.
Mr. Lewis has a Bachelors of Arts degree in Economics from Haverford College and an MBA from the
Harvard School of Business.
Anthony Mandekic currently serves as the Secretary/Treasurer of Tracinda Corporation and has
held such position since Tracinda Corporations inception in 1976. Mr. Mandekic also currently
serves as Chairman of the Lincy Foundation, a charitable organization founded by Mr. Kirk
Kerkorian, and has served as its Chief Financial Officer and a Director since 1989. Since May of
2006 he has served as a member of the Board of Directors of MGM Resorts International and as a
member of its Executive Committee, Diversity Committee and Compensation Committee. In May of 2007,
Mr. Mandekic became Chairman of the MGM Resorts International Compensation Committee and also
became a member of the MGM Resorts International Corporate Governance and Nominating
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Committee in 2009. Mr. Mandekic is a graduate of the University of Southern California with a
bachelors degree in Science-Accounting and is a Certified Public Accountant.
James J. Murren is the Chairman and CEO of MGM Resorts International, where he is also a
member of the Board of Directors and the Executive Committee. Mr. Murren previously served in the
following capacities for MGM Resorts International: President (1999-2008), Chief Operating Officer
(2007-2008), Chief Financial Officer (1998-2007), and Treasurer (2001-2007). Prior to his
employment at MGM Mirage, Mr. Murren spent 14 years on Wall Street as a top-ranked equity analyst
and was appointed to Director of Research and Managing Director of Deutsche Bank. Mr. Murren
received a Bachelor of Arts degree in Art History and Urban Studies from Trinity College in 1983.
Jordan R. Smith is President of Ramshorn Investments, Inc., a wholly owned subsidiary of
Nabors Drilling USA LP located in Houston, Texas, where he is responsible for drilling and
development projects in a number of producing basins in the United States. He has served in such
capacity for more than the past five years. Mr. Smith has served on the Board of the University of
Wyoming Foundation and the Board of the Domestic Petroleum Council, and is also Founder and
Chairman of the American Junior Golf Association. He has also served as a director of Clayton
Williams Energy, Inc. from July 2000 to the present. Mr. Smith received Bachelor and Master
degrees in Geology from the University of Wyoming in 1956 and 1957, respectively.
All directors hold office until the next annual meeting of stockholders. All executive
officers hold office until the next annual meeting of the Board of Directors or their earlier
resignation or removal by the Board of Directors.
In conjunction with the February 2008 equity issuance to Tracinda Corporation, and in
accordance with the related Company Stock Purchase Agreement, Tracinda designated Messrs. Mandekic,
Murren and Taylor to serve on our Board of Directors. There are no other arrangements or
understandings pursuant to which any other person was selected to serve on our Board of Directors.
In connection with the last annual meeting of stockholders, the Nominating and Corporate
Governance Committee determined that Mr. Smith should be nominated because of his experience in the
oil and gas business, Mr. Collins because of his business experience and acumen with respect to
financial matters, Mr. Fonck because of his experience in the oil and gas business, Mr. Larson
because of his business experience and his familiarity with legal matters and his perspective on
the Company as one of its founders, Mr. Eckelberger because of his business experience and
knowledge of legal matters, Mr. Lewis because of his knowledge and experience with respect to
financial matters, and Mr. Brown because of his knowledge of legal and financial matters and his
business and political experience. The Committee acknowledged that, although Messrs. Taylor,
Mandekic and Murren are designated as nominees by Tracinda Corporation pursuant to its contractual
relationship with the Company, each of them is eminently qualified to serve as a Director and
brings significant outside business experience to the Board that has proved to be invaluable to
date.
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CORPORATE GOVERNANCE
Committees of the Board of Directors
Our Board of Directors has established an Audit Committee, a Compensation Committee and a
Nominating and Corporate Governance Committee. The full text of all of the charters of the Board
Committees is available on the Companys website at www.deltapetro.com. The Board has determined
that each of the directors who serve on these Committees is independent under The NASDAQ Stock
Market® listing standards. The directors who serve on each of these Committees are as follows:
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Nominating and |
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Compensation |
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Corporate Governance |
Name of Director |
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Audit Committee |
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Committee |
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Committee |
Kevin R. Collins
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Chairman
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Member
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Member |
Jerrie F. Eckelberger
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Member
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Chairman
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Member |
Russell S. Lewis
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Member
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Member |
Jordan R. Smith
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Member
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Member
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Chairman |
James J. Murren
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Member
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Member |
Daniel J. Taylor
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Member
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Member |
Hank Brown
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Member
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Anthony Mandekic
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Member
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Audit Committee. We have a standing Audit Committee established in accordance with applicable
SEC and NASDAQ Stock Market® rules. The Audit Committee oversees and monitors our independent
audit process and assists the Board of Directors in fulfilling its responsibilities with respect to
matters involving the accounting, financial reporting and internal control functions of the Company
and its subsidiaries. It is also charged with the responsibility for reviewing all related party
transactions for potential conflicts of interest.
The Board has determined that each of Messrs. Lewis and Collins is an audit committee
financial expert as defined by rules adopted by the SEC.
Compensation Committee. The Compensation Committee reviews the performance of our executives,
sets compensation and compensation-related policies and makes recommendations to the Board of
Directors in the area of executive compensation and for all employees, on bonus and equity incentives. The specific
nature of the Compensation Committees roles and responsibilities as they relate to executive
officers is set forth under Compensation Discussion and Analysis.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance
Committee makes recommendations to the Board of Directors regarding the persons who shall be
nominated for election as
directors. The Committee has not established any minimum qualifications for persons to be
considered for nomination but will be guided by the following criteria: that the individual (i) be
of the highest character and integrity, (ii) be free of any conflict of interest that would violate
any applicable law or regulation or interfere with proper performance of the responsibilities of a
director, (iii) possess substantial and significant experience that would be of particular
importance to Delta in the performance of the duties of a director, (iv) have sufficient time
available to devote to the affairs of Delta, and (v) have a desire to represent the balanced best
interests of the stockholders as a whole.
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Code of Ethics
Our Board of Directors adopted a Code of Business Conduct and Ethics in November 2003 (amended
in October 2004 and January 2007), which applies to all of our executive officers, directors and
employees. A copy of the Code of Business Conduct and Ethics is available on our website at
www.deltapetro.com or by writing to our Secretary at 370 Seventeenth Street, Suite 4300, Denver,
Colorado 80202.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee has ever been an officer of Delta or any of its
subsidiaries, and no Delta employee served on the Compensation Committee during the last fiscal
year. The Company does not have any interlocking relationships between its executive officers and
the compensation committee and the executive officers and compensation committee of any other
entities, nor has any such interlocking relationship existed in the past.
Compliance with Section 16(A) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers, directors and persons who beneficially own more than ten percent (10%) of a registered
class of our equity securities, to file initial reports of ownership of Delta securities and
reports of changes in ownership of Delta securities with the SEC.
To our knowledge, during the fiscal year ended December 31, 2010, our officers and directors
complied with all applicable Section 16(a) filing requirements on a timely basis.
These statements are based solely on a review of the copies of such reports furnished to us by
our officers and directors and their written representations that such reports accurately reflect
all reportable transactions.
Material Changes to Procedures to Recommend Nominees for Director
There have been no material changes to the procedures by which stockholders may recommend
nominees to the Companys Board of Directors from those disclosed in the Companys Proxy Statement
for the annual meeting held on May 25, 2010.
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Item 11. Executive Compensation.
Compensation Discussion and Analysis
Overview
The following Compensation Discussion and Analysis describes the material elements of
compensation for the named executive officers identified in the Summary Compensation Table below.
As more fully described below, the Compensation Committee of the Board of Directors reviews and
recommends to the full Board of Directors the total direct compensation programs for our named
executive officers. Our chief executive officer also reviews the base salary, annual bonus and
long-term compensation levels for the other named executive officers.
Compensation Philosophy and Objectives
Our compensation philosophy has been to encourage growth in our oil and natural gas reserves
and production, encourage growth in cash flow and profitability, and enhance stockholder value
through the creation and maintenance of compensation opportunities that attract and retain highly
qualified executive officers. To achieve these goals, the Compensation Committee believes that the
compensation of executive officers should reflect the growth and entrepreneurial environment that
has characterized our industry in the past, while ensuring fairness among the executive management
team by recognizing the contributions each individual executive makes to our success.
Based on these objectives, the Compensation Committee has recommended an executive
compensation program that includes the following components:
a base salary at a level that is competitive with the base salaries being paid
by other oil and natural gas exploration and production enterprises that have some
characteristics similar to Delta and could compete with Delta for executive officer level
employees;
annual incentive compensation to reward achievement of Company objectives,
individual responsibility and productivity, high quality work, reserve growth, performance
and profitability and that is competitive with that provided by other oil and natural gas
exploration and production enterprises that have some characteristics similar to Delta; and
long-term incentive compensation in the form of stock-based awards that is
competitive with that provided by other oil and natural gas exploration and production
enterprises that have some characteristics similar to Delta.
As described below, the Compensation Committee, with the assistance of an outside
compensation consultant, periodically reviews data about the compensation of executives in the oil
and gas industry. Based on these reviews, we believe that the elements of our executive
compensation program have been comparable to those offered by our industry competitors.
Outside Advisor
The Compensation Committee has retained Effective Compensation Incorporated, or ECI, as an
outside advisor to review our executive compensation program including base salary, bonus and equity compensation
practices and to assist in ongoing development of our executive compensation philosophy. The
Compensation Committee developed a group of oil and gas exploration and production companies with
certain characteristics similar to Delta and that could potentially compete with Delta for
executive officer level employees with which to compare compensation
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programs. ECI has performed analyses of compensation levels for these peer companies. Most
recently, this group of companies has included the following:
Berry Petroleum Company
Bill Barrett Corporation
Forest Oil Corporation
Rosetta Resources, Inc.
Venoco, Inc.
Cimarex Energy Co., SM Energy Company and Whiting Petroleum Corp., which were previously part
of the peer group, were removed from the group and Rosetta Resources, Inc. and Venoco, Inc. were
added to the group in order to provide a peer group of companies with characteristics more similar
to Delta.
Elements of Deltas Compensation Program
The three principal components of Deltas compensation program for its executive officers,
base salary, annual incentive compensation and long-term incentive compensation in the form of
stock-based awards, are discussed below.
Base Salary. Base salaries (paid in cash) for our executive officers have been established
based on the scope of their responsibilities, taking into account competitive market compensation
paid by the peer companies for similar positions. We have reviewed our executives base salaries in
comparison to salaries for executives in similar positions and with similar responsibilities at
companies which have certain characteristics similar to Delta. Base salaries are reviewed annually, and typically are adjusted from time to
time to realign salaries with market levels after taking into account individual responsibilities,
performance, experience and other criteria.
The Compensation Committee reviews with the chief executive officer his recommendations for
base salaries for the named executive officers, other than himself, each year. New base salary
amounts have historically been based on an evaluation of individual performance and expected future
contributions and a review of survey data provided by ECI to ensure competitive compensation
against the external market, including the companies in our industry with which we compete. The
Compensation Committee has targeted base salaries for executive officers, including the chief
executive officer, to be competitive with the base salaries being paid by other oil and natural gas
exploration and production enterprises that have some characteristics similar to Delta. We believe
this is critical to our ability to attract and retain top level talent.
In July 2009, ECI provided a comprehensive review of our compensation structure, including
2010 compensation. Our executive officer compensation was compared to data from the annual proxies
and subsequent disclosures of comparable companies, as well as compensation surveys prepared by
ECI. In connection with this review, in November 2009, the Compensation Committee made a
recommendation to the Board of Directors that the base salary of each of the named executive
officers be increased by 6% effective January 1, 2010. This recommendation was based on the
Compensation Committees determination that such an increase was fair and necessary for Delta to be
competitive with other companies and because there had been no salary increase in 2009 due to the
general economic environment and low oil and gas commodity prices. The increases brought the
base salaries for our named executive officers to a level that the Compensation Committee, after
reviewing the ECI analysis, concluded were generally competitive with those being paid by other oil
and natural gas exploration and production companies with certain characteristics similar to Delta.
In November 2010, the Compensation Committee made a recommendation to the Board of Directors
that the base salary of each of the named executive officers be increased by 3% effective January
1, 2011. This recommendation was based on the Compensation Committees determination that such an
increase was fair and necessary for Delta to be competitive with other oil and gas companies with certain characteristics similar to those of Delta. In March
2011, ECI provided a comprehensive
10
review of our compensation structure in place for 2011. Our executive officer compensation for
2011 was compared to data from the annual proxies and subsequent disclosures of comparable
companies, as well as compensation surveys prepared by ECI. Base salaries for our named executive
officers were generally compared to comparable positions or comparable pay rank. For 2011, our
named executive officers base salaries were determined to be generally competitive with the base
salaries being paid by other oil and natural gas exploration and production enterprises that have
some characteristics similar to Delta, except for our chief executive officers salary, which was
determined to be less than what such peer companies paid their principal executive officers, which
the Compensation Committee determined to be appropriate because Mr. Lakey had been recently
appointed to the CEO position.
Annual Incentive Compensation. In prior years, we utilized a performance-based annual
incentive plan referred to as the Capital Management System (CMS), which was modified in 2009 to
include certain CMS components as well other specified performance targets, and referred to as the
Annual Bonus Award Plan. The CMS contained objective goals based on the Companys net present
value of the Companys proved reserve base and adding new proved producing reserves through the
drilling of non-proved properties and the acquisition of proved reserves. The Annual Bonus Award
Plan was a discretionary bonus plan that gave the Board of Directors full discretion as to whether
bonuses were to be paid, and if it was determined bonuses were to be paid, the amounts of such
bonuses for named executive officers were 25% tied to fixed metrics and 75% discretionary. The
fixed metrics under the Annual Bonus Award Plan consisted of the net present value objective, but
changed the new reserve objective to an objective based on the rate of return on all of the
Companys oil and gas wells, regardless of reserve category.
For 2009, the 25% fixed metric portion of the bonus consisted of CMS Goal 1 and CMS Goal 2
which each represented 25% and the remaining 50% consisted of accomplishing specific
transactions that increase the value of the Company. As under the CMS, the minimum threshold
for CMS Goal 1 was 95% of our reserve base. The minimum threshold for Goal 2 was an overall
rate of return of at least 10%. The specific transactions category was subjective and was based
on a review of accomplishments during the year. In February 2010, the Compensation
Committee determined that the goals for the named executive officers for the portion of bonuses
under the fixed matrix category had been met as follows: CMS Goal 1 of 95% - 78%; New CMS
Goal 2 - 0%; and specific transactions - 50%. Based on this assessment, the Compensation
Committee determined that overall the targets for the named executive officers had been met and
recommended that the full 25% portion of their bonuses be paid. In making its recommendations
with regard to the discretionary portion of the named executive officers bonuses, the
Compensation Committee considered a number of factors including the practices of competing
companies, the current commodity price levels, the market price of Deltas common stock, and
the Companys financial condition.
In 2010, the Company was
facing severe capital constraints affecting our business and was involved in a strategic
alternative process that made it difficult to set objective goals under the Annual Bonus Award Plan
adopted in 2009.
Accordingly, at the conclusion of the strategic alternatives process in August 2010, the Board
of Directors paid a special bonus to the named executive officers for their extraordinary efforts in
connection with such process and the resulting sale of assets. These special bonuses were as follows: Carl Lakey $250,000; Kevin Nanke -
$200,000 and Stanley F. Freedman $150,000.
In addition, in November 2010 the Compensation Committee recommended that, given the Companys
challenges, the annual incentive bonus awards for 2010 be 100% discretionary and take into account
positive and negative factors during 2010. The full target bonus for each of the named executive
officers was set at 70% of his base salary.
In April 2011, the Compensation Committee recommended, and the Board of Directors approved,
that a total of $1,600,000 be paid for annual bonuses for 2010 to all of Deltas employees and that
each of the named executive officers receive a bonus equal to approximately 58% of his base salary.
In making this recommendation, the Compensation Committee evaluated performance of the executive
officers for 2010, the amount of the bonuses paid for calendar year 2009 performance to these
particular officers, total cash compensation paid to the executive officers, bonuses and total cash
compensation paid for the same type of positions by peer and similar companies provided to the
Compensation Committee by its compensation consultant, and metrics illustrative of the effect of
the performance on the value of Delta. The Compensation Committee also took into consideration the
cash bonus payments made in August 2010 upon completion of the strategic alternatives process.
Long Term Incentive Compensation. We believe the use of stock-based awards creates an
ownership culture that encourages the long-term performance of our executive officers. In December
2009, our stockholders approved the 2009 Performance and Equity Incentive Plan (the 2009 Plan).
The 2009 Plan is designed to be an omnibus plan allowing Delta to grant a wide range of
compensatory awards including stock options, stock appreciation rights, phantom stock, restricted
stock, stock bonuses and cash bonuses to persons who contribute, and are expected to contribute, to
our success and to create stockholder value, including the named executive officers.
11
September 2010 Retention Stock Awards
In September 2010, restricted stock awards were made under the 2009 Plan to all of the
employees of Delta, including the named executive officers, all of which will vest on July 1, 2011.
In its recommendations to the Board of Directors concerning shares granted in September 2010, the
Compensation Committee based the recommended number of shares on the market price of Deltas Common
Stock at that time. In recommending the awards to the named executive officers, the Compensation
Committee took into account prior year awards of restricted stock, base salaries, bonuses and long
term incentive compensation awarded to executive officers by companies with some characteristics
similar to Delta.
The number of restricted shares granted to each of the named executive officers in September
2010 was as follows:
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of |
|
Fair Market Value |
Named Executive Office |
|
Common Stock Granted |
|
on Date of Grant |
Carl E. Lakey, President & CEO |
|
|
1,000,000 |
|
|
$ |
700,000 |
|
Kevin K. Nanke, Treasurer & CFO |
|
|
800,000 |
|
|
|
560,000 |
|
Stanley F. Freedman, Executive Vice
President, General Counsel and
Secretary |
|
|
700,000 |
|
|
|
490,000 |
|
Performance Share Awards
In February 2007, the named executive officers (other than Mr. Lakey who was not an officer at
such time) received performance share grants providing that the shares of restricted Common Stock
awarded vest if the market price of Delta stock reaches and maintains certain price levels during
the 10-year period following the date of grant (the Term). The awards were intended to provide
incentive compensation to the named executive officers tied to significant increases in stockholder
value. The price thresholds chosen were $40, $50, $60, $75 and $90. The grants provided that if the
market price for Deltas Common Stock reached and remained at these price thresholds for a certain
period, then the associated Common Stock award would vest. These awards were based on the principle
that stock price increases would reward both the stockholders and the executive officers.
As of March 31, 2009, four of the tranches of performance shares had been forfeited because
the vesting conditions had not been met within the required periods. The only shares of Common
Stock included in the performance share grants that continued to be outstanding for the named
executive officers were those included in the first tranche. The first tranche of restricted Common
Stock was to vest in full as of the date that the average daily closing price of our Common Stock
on NASDAQ equals or exceeds $40.00 for trading days within any period of 90 calendar days during
the Term, provided that the average closing price over the last 20 trading days of such period
shall have equaled or exceeded $40.00.
The numbers of shares held by the named executive officers under the performance shares grants
as of December 31, 2010 was as follows:
|
|
|
|
|
|
|
Number of Shares |
Named Executive Officer |
|
of Common Stock |
Kevin K. Nanke |
|
|
40,000 |
|
Stanley F. Freedman |
|
|
40,000 |
|
12
In April 2011, Messrs Nanke and Freedman offered to forfeit their remaining performance
shares, and Deltas Board of Directors accepted that offer.
Change in Control and Severance. We have employment agreements with each of our executive
officers pursuant to which the officer will receive benefits if his employment is terminated (other
than for misconduct) due to death, disability, and certain employment terminations following a
change in control. The details and amount of such benefits are described in Employment Agreements
and Change in Control Agreements below.
Other Benefits. All employees may participate in our 401(k) Retirement Savings Plan, or
401(k) Plan. Each employee may make before tax contributions in accordance with the Internal
Revenue Service limits. We provide this 401(k) Plan to help our employees save a portion of their
cash compensation for retirement in a tax efficient manner. Effective January 1, 2010, Delta agreed
to make a matching contribution in an amount equal to 100% of the employees elective deferral
contribution below 3% of the employees compensation and 50% of the employees elective deferral
that exceeds 3% of the employees compensation but does not exceed 6% of the employees
compensation..
All fulltime employees, including our named executive officers, may participate in our health
and welfare benefit programs, including medical, dental and vision care coverage, disability
insurance and life insurance.
Accounting and Tax Considerations
Our restricted stock award policies have been impacted by the implementation of Statement of
Financial Accounting Standards No. 123(R), which we adopted on July 1, 2005.
We have structured our compensation program to comply with Internal Revenue Code Sections
162(m) and 409A. Under Section 162(m) of the Internal Revenue Code, a limitation is placed on tax
deductions of any publicly-held corporation for individual compensation to certain executives of
such corporation exceeding $1,000,000 in any taxable year, unless the compensation is
performance-based. If an executive officer is entitled to nonqualified deferred compensation
benefits that are subject to Section 409A, and such benefits do not comply with Section 409A, then
the benefits are taxable in the first year they are not subject to a substantial risk of
forfeiture. In such case, the executive officer is subject to regular federal income tax, interest
and an additional federal income tax of 20% of the benefit included in income. Delta has no
individuals with non-performance based compensation paid in excess of the Internal Revenue Code
Section 162(m) tax deduction limit.
13
COMPENSATION COMMITTEE REPORT
The following Compensation Committee Report does not constitute soliciting material and should
not be deemed filed or incorporated by reference into any other Company filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this Report.
The Compensation Committee of the Board of Directors has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of SEC Regulation S-K with management.
The Compensation Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in the Companys Annual Report on Form 10-K.
Respectfully submitted by the Compensation Committee of the Board of Directors:
Jerrie F. Eckelberger (Chairman)
Hank Brown
Russell S. Lewis
Anthony Mandekic
James J. Murren
Kevin R. Collins
Jordan R. Smith
Summary Compensation Table
The following table sets forth summary information concerning compensation awarded to, earned
by, or accrued for services rendered to the Company in all capacities by our principal executive
officer, principal financial officer, our one other executive officer, and our former chief
executive officer who served during fiscal year 2010 (collectively, the named executive
officers), for fiscal years 2008, 2009 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
All Other |
|
|
Name and |
|
|
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
Compensation |
|
Compensation |
|
Total |
Principal Position |
|
Year |
|
($) |
|
($) |
|
($)(1) |
|
($)(1) |
|
($)(2) |
|
($)(3) |
|
($) |
Carl E. Lakey, |
|
|
2010 |
|
|
$ |
338,585 |
|
|
$ |
|
|
|
$ |
700,000 |
|
|
$ |
|
|
|
$ |
480,500 |
|
|
$ |
19,768 |
|
|
$ |
1,538,853 |
|
President and Chief
Executive Officer* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin K. Nanke, |
|
|
2010 |
|
|
|
328,600 |
|
|
|
|
|
|
|
560,000 |
|
|
|
|
|
|
|
395,000 |
|
|
|
25,339 |
|
|
|
1,308,939 |
|
Treasurer and Chief |
|
|
2009 |
|
|
|
297,083 |
|
|
|
|
|
|
|
793,637 |
|
|
|
|
|
|
|
169,900 |
|
|
|
25,939 |
|
|
|
1,286,559 |
|
Financial Officer |
|
|
2008 |
|
|
|
310,000 |
|
|
|
|
|
|
|
1,276,558 |
|
|
|
|
|
|
|
13,563 |
|
|
|
74,293 |
|
|
|
1,674,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley F. Freedman, |
|
|
2010 |
|
|
|
293,750 |
|
|
|
|
|
|
|
490,000 |
|
|
|
|
|
|
|
323,500 |
|
|
|
21,259 |
|
|
|
1,128,509 |
|
Executive Vice |
|
|
2009 |
|
|
|
263,542 |
|
|
|
|
|
|
|
703,930 |
|
|
|
|
|
|
|
141,800 |
|
|
|
21,859 |
|
|
|
1,131,131 |
|
President, General |
|
|
2008 |
|
|
|
275,000 |
|
|
|
|
|
|
|
1,448,594 |
|
|
|
|
|
|
|
12,031 |
|
|
|
69,325 |
|
|
|
1,804,950 |
|
Counsel and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Wallace, |
|
|
2010 |
|
|
|
216,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,610,847 |
|
|
|
1,827,264 |
|
Former President and |
|
|
2009 |
|
|
|
335,417 |
|
|
|
|
|
|
|
895,987 |
|
|
|
|
|
|
|
180,500 |
|
|
|
24,307 |
|
|
|
1,436,211 |
|
Chief Operating Officer** |
|
|
2008 |
|
|
|
350,000 |
|
|
|
|
|
|
|
2,027,847 |
|
|
|
|
|
|
|
15,313 |
|
|
|
69,555 |
|
|
|
2,462,715 |
|
|
|
|
* |
|
Mr. Lakey became President and Chief Executive Officer on July 6, 2010. |
|
** |
|
Mr. Wallace resigned as President and Chief Operating Officer on July 6, 2010. |
|
(1) |
|
These amounts shown represent the aggregate grant date fair value for stock awards and option
awards granted to the named executive officers computed in accordance with FASC ASC Topic 718. |
14
|
|
|
(2) |
|
The amounts reflect the cash bonus awards to the named executive officers, discussed above
under the heading Elements of Deltas Compensation Program under the caption Annual
Incentive Compensation. Awards under the Companys bonus plans were accrued and earned in the
year represented and paid in the following year. |
|
(3) |
|
Amounts in the All Other Compensation column consist of the following payments we paid to
or on behalf of the named executive officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance |
|
|
|
|
|
|
|
|
Contributions to |
|
Auto |
|
Auto Maintenance |
|
|
|
|
|
Agreement |
|
|
|
|
|
|
|
|
Retirement Plans |
|
Allowance |
|
and Insurance |
|
Health Club |
|
Payments |
|
Total |
Name |
|
Year |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Carl E. Lakey* |
|
|
2010 |
|
|
$ |
5,961 |
|
|
$ |
9,000 |
|
|
$ |
4,807 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
19,768 |
|
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin K. Nanke |
|
|
2010 |
|
|
|
|
|
|
|
18,000 |
|
|
|
4,939 |
|
|
|
2,400 |
|
|
|
|
|
|
|
25,339 |
|
|
|
|
2009 |
|
|
|
|
|
|
|
18,000 |
|
|
|
5,539 |
|
|
|
2,400 |
|
|
|
|
|
|
|
25,939 |
|
|
|
|
2008 |
|
|
|
47,000 |
|
|
|
18,000 |
|
|
|
6,893 |
|
|
|
2,400 |
|
|
|
|
|
|
|
74,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley F. Freedman |
|
|
2010 |
|
|
|
|
|
|
|
18,000 |
|
|
|
3,259 |
|
|
|
|
|
|
|
|
|
|
|
21,259 |
|
|
|
|
2009 |
|
|
|
|
|
|
|
18,000 |
|
|
|
3,859 |
|
|
|
|
|
|
|
|
|
|
|
21,859 |
|
|
|
|
2008 |
|
|
|
47,000 |
|
|
|
18,000 |
|
|
|
4,325 |
|
|
|
|
|
|
|
|
|
|
|
69,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Wallace** |
|
|
2010 |
|
|
|
|
|
|
|
9,000 |
|
|
|
1,847 |
|
|
|
|
|
|
|
1,600,000 |
(1) |
|
|
1,610,847 |
|
|
|
|
2009 |
|
|
|
|
|
|
|
18,000 |
|
|
|
6,307 |
|
|
|
|
|
|
|
|
|
|
|
24,307 |
|
|
|
|
2008 |
|
|
|
47,000 |
|
|
|
18,000 |
|
|
|
4,555 |
|
|
|
|
|
|
|
|
|
|
|
69,555 |
|
|
|
|
* |
|
Mr. Lakey became President and Chief Executive Officer on July 6, 2010. |
|
** |
|
Mr. Wallace resigned as President and Chief Operating Officer on July 6, 2010. |
|
(1) |
|
Amounts paid to Mr. Wallace under his severance agreement. See details below under
Severance Agreement. |
Grants of Plan-Based Awards
The following table provides additional information about restricted stock awards and equity
and non-equity incentive plan awards granted to our named executive officers during fiscal 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under |
|
|
Option Awards |
|
Stock Awards |
|
Grant Date |
|
|
|
|
|
|
Non-Equity Incentive Plan Awards(1) |
|
|
Number of |
|
Number of |
|
Fair Value of |
|
|
Grant Date or |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of |
|
Shares of |
|
Stock and |
|
|
Performance |
|
Threshold |
|
Target |
|
Max |
|
Stock or Units |
|
Stock or Units |
|
Option Awards |
Name |
|
Period |
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
($)(4) |
Carl E. Lakey, |
|
|
01/01/10-12/31/10 |
|
|
$ |
68,250 |
|
|
$ |
273,000 |
|
|
$ |
546,000 |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
President and Chief |
|
|
07/06/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000 |
(2) |
|
|
|
|
|
|
109,206 |
|
Executive Officer* |
|
|
09/16/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000 |
(3) |
|
|
700,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin K. Nanke, |
|
|
01/01/10-12/31/10 |
|
|
$ |
59,000 |
|
|
|
236,000 |
|
|
|
472,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasurer and Chief |
|
|
09/16/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800,000 |
(3) |
|
|
560,000 |
|
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley F. Freedman, |
|
|
01/01/10-12/31/10 |
|
|
$ |
52,550 |
|
|
|
210,200 |
|
|
|
420,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President, |
|
|
09/16/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,000 |
(3) |
|
|
490,000 |
|
General Counsel and
Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Wallace, |
|
|
01/01/10-12/31/10 |
|
|
$ |
61,250 |
|
|
|
245,000 |
|
|
|
490,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Former President
and
Chief
Operating Officer** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Mr. Lakey became President and Chief Executive Officer on July 6, 2010. |
|
** |
|
Mr. Wallace resigned as President and Chief Operating Officer on July 6, 2010. |
15
|
|
|
(1) |
|
Non-Equity Incentive Plan Awards were determined at the full
discretion of the company, with a threshold, target and maximum bonus potential set forth above. In April 2011, the 2010 bonuses were paid as described above in Compensation Discussion and Analysis. |
|
(2) |
|
Options were granted pursuant to the 2009 Plan and vested upon issuance on July 6, 2010.
Options are exercisable for ten years from the date of issuance, subject to continuing
employment or service with the Company as defined in the 2009 Plan, and certain other
conditions. |
|
(3) |
|
Shares of restricted stock that vest in full on July 1, 2011. |
|
(4) |
|
The grant date fair value of option and stock awards were computed in accordance with FAS
123R. |
Outstanding Equity Awards at Fiscal Year-End
|
|
|
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|
|
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|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
Market or |
|
|
|
|
|
|
|
|
Market |
|
Awards: |
|
Payout Value |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
Number of |
|
of Unearned |
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
Number of |
|
Shares or |
|
Unearned |
|
Shares, Units |
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
Shares or |
|
Units of |
|
Shares, Units or |
|
or Other |
|
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
|
|
Units of Stock |
|
Stock That |
|
Other Rights |
|
Rights That |
|
|
Options |
|
Options |
|
Exercise |
|
Option |
|
That Have |
|
Have Not |
|
That Have Not |
|
Have Not |
|
|
(#) |
|
(#) |
|
Price |
|
Expiration |
|
Not Vested |
|
Vested(6) |
|
Vested |
|
Vested |
Name |
|
Exercisable |
|
Unexercisable |
|
($) |
|
Date |
|
(#) |
|
($) |
|
(#) |
|
($) |
Carl E. Lakey,
President and Chief
Executive Officer* |
|
|
250,000 |
|
|
|
|
|
|
|
0.79 |
|
|
|
07/06/20 |
|
|
|
1,301,734 |
(1) |
|
|
989,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin K. Nanke, |
|
|
55,000 |
|
|
|
|
|
|
|
3.29 |
|
|
|
01/09/11 |
|
|
|
1,159,134 |
(2) |
|
|
880,942 |
|
|
|
40,000 |
(3) |
|
|
1,600,000 |
|
Treasurer and Chief |
|
|
137,500 |
|
|
|
|
|
|
|
5.29 |
|
|
|
08/26/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer |
|
|
87,500 |
|
|
|
|
|
|
|
15.34 |
|
|
|
12/21/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley F. Freedman,
Executive Vice
President, General
Counsel and
Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,024,934 |
(4) |
|
|
778,950 |
|
|
|
40,000 |
(5) |
|
|
1,600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Wallace, |
|
|
200,000 |
|
|
|
|
|
|
|
5.44 |
|
|
|
12/03/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former President
and Chief Operating
Officer** |
|
|
87,500 |
|
|
|
|
|
|
|
15.34 |
|
|
|
12/21/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Mr. Lakey became President and Chief Executive Officer on July 6, 2010. |
|
** |
|
Mr. Wallace resigned as President and Chief Operating Officer on July 6, 2010. |
|
(1) |
|
The vesting dates for Mr. Lakeys unvested restricted stock awards at fiscal year-end are as
follows: 15,000 shares vest on 4/23/11, 1,138,868 shares vest on 7/1/11, 15,000 shares vest on
4/23/12 and 132,866 shares vest on 7/1/12. |
|
(2) |
|
The vesting dates for Mr. Nankes unvested restricted stock awards at fiscal year-end are as
follows: 1,007,900 shares vest on 7/1/11 and 151,234 shares vest on 7/1/12. |
|
(3) |
|
The first and only remaining tranche of Mr. Nankes equity incentive plan awards consisting
of 40,000 shares vests as of the date that the average daily closing price of our common stock
on NASDAQ equals or exceeds $40.00 for trading days within any period of 90 calendar days
during the term of the award, provided that the average closing price over the last 20 trading
days of such period shall have equaled or exceeded $40.00. On April 20, 2011, these shares
were voluntarily forfeited by Mr. Nanke. |
|
(4) |
|
The vesting dates for Mr. Freedmans unvested restricted stock awards are as follows:
890,800 shares vest on 7/1/11 and 134,134 shares on 7/1/12. |
|
(5) |
|
The first and only remaining tranche of Mr. Freedmans equity incentive plan awards
consisting of 40,000 shares vests as of the date that the average daily closing price of our
common stock on NASDAQ is traded equals or exceeds $40.00 for trading days within any period
of 90 calendar days during the term of the award, provided that the average closing price over
the last 20 trading days of such period shall have equaled or exceeded $40.00. On April 20,
2011, these shares were voluntarily forfeited by Mr. Freedman. |
|
(6) |
|
Based on the closing price of our common stock on December 31, 2010 of $0.76 per share. |
16
Option Exercises and Stock Vested
The following table provides information about the value realized by the named executive
officers for option award exercises and stock award vesting during fiscal 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
|
|
|
Option Awards |
|
|
|
|
|
Number of Shares |
|
Value |
|
|
Number of Shares |
|
Value Realized |
|
Acquired |
|
Realized |
|
|
Acquired on Exercise |
|
on Exercise |
|
on Vesting |
|
on Vesting |
Name |
|
(#) |
|
($) |
|
(#) |
|
($) |
Carl E. Lakey* |
|
|
|
|
|
$ |
|
|
|
|
224,619 |
|
|
$ |
195,888 |
|
Kevin K. Nanke |
|
|
|
|
|
|
|
|
|
|
261,839 |
|
|
|
214,708 |
|
Stanley F. Freedman |
|
|
|
|
|
|
|
|
|
|
234,133 |
|
|
|
191,989 |
|
John R. Wallace** |
|
|
|
|
|
|
|
|
|
|
238,768 |
|
|
|
195,790 |
|
|
|
|
* |
|
Mr. Lakey became President and Chief Executive Officer on July 6, 2010. |
|
** |
|
Mr. Wallace resigned as President and Chief Operating Officer on July 6, 2010. |
Employment Agreements
Carl Lakey. On July 15, 2010, we entered into an Amended and Restated Employment Agreement
with Carl Lakey, who was appointed as the Companys Chief Executive Officer on July 6, 2010. The
Amended and Restated Employment Agreement amended Mr. Lakeys previous employment agreement dated
as of October 1, 2009. The initial term of Mr. Lakeys amended agreement was through December 31,
2010, and such term automatically extends for additional one year terms thereafter unless notice of
termination is given by either party at least sixty days prior to the end of the then-applicable
term. The base annual salary for Mr. Lakey provided for in the amended agreement is $390,000. Mr.
Lakey is also entitled to a bonus based on a percentage of his base salary as determined by the
Compensation Committee of the Board of Directors upon satisfaction of performance criteria
established by the Compensation Committee.
In the event Mr. Lakeys employment is terminated other than for cause or if he resigns for
good reason (both as defined in the agreement), then Mr. Lakey will be entitled to receive a
payment equal to two times the sum of his annual base salary and his average annual bonus. In the
event that Mr. Lakeys agreement is not renewed at the end of any term, then at the time that his
employment is terminated Mr. Lakey will receive the same severance payment as stated above, reduced
proportionately by the number of months that Mr. Lakey continues to be employed by the Company
after expiration of the applicable term. The agreement also includes non-solicitation and
non-competition obligations on the part of Mr. Lakey that survive for one year following the date
of termination.
Kevin K. Nanke. On May 5, 2005, we entered into an employment agreement with Kevin K. Nanke,
our Chief Financial Officer. The initial term of employment under Mr. Nankes employment agreement
was through December 31, 2006, and the term automatically extends for additional one-year terms
thereafter unless either party gives notice of termination at least 60 days prior to the end of a
term. The current term expires on December 31, 2011. The base annual salary payable under the
employment agreement for Mr. Nanke is currently $337,145. Mr. Nanke is entitled to receive bonuses
based on a percentage of his base salary as determined by the
Compensation Committee of the Board of Directors upon satisfaction of performance criteria
established by the Compensation Committee.
17
In the event the employment of Mr. Nanke is terminated other than for cause or if he resigns
for good reason (both as defined in the agreement), then he will be entitled to receive a payment
equal to two times his annual base salary, annual automobile allowance and his average annual bonus
for the three fiscal years preceding the fiscal year in which the termination occurs, but not less
than the greater of Mr. Nankes (i) highest annual target bonus during any of these three preceding
fiscal years or (ii) target bonus for the fiscal year in which the termination occurs. In the event
that his employment agreement is not renewed and he is terminated within 24 months following the
last day of employment under the expired employment agreement, at the time that his employment is
terminated Mr. Nanke will receive the same payment as stated above, reduced proportionately by the
number of months he continues to be employed by us during such 24 month period. The employment
agreement also includes non-solicitation and non-competition obligations on the part of Mr. Nanke
that survive for one year following the date of termination.
Stanley F. Freedman. On January 11, 2006, we entered into an employment agreement with
Stanley F. Freedman, who became Executive Vice President, General Counsel and Secretary of Delta on
January 3, 2006. The initial term of employment under Mr. Freedmans employment agreement was
through December 31, 2006, and the term automatically extends for additional one-year terms
thereafter unless either party gives notice of termination at least 60 days prior to the end of a
term. The current term expires on December 31, 2011. The base annual salary payable under the
employment agreement for Mr. Freedman is currently $291,500. He also received 40,000 shares of
restricted Common Stock pursuant to the terms of his employment agreement that vested three years
after the date of grant. Mr. Freedman is entitled to receive bonuses based on a percentage of his
base salary, as determined by the Compensation Committee of the Board of Directors, upon
satisfaction of performance criteria established by the Compensation Committee.
In the event the employment of Mr. Freedman is terminated other than for cause (as defined in
the Employment Agreement) or if he resigns for good reason (as defined in the Employment
Agreement), then he will be entitled to receive a payment equal to two times his annual base
salary, annual automobile allowance and his average annual bonus for the three years preceding the
fiscal year in which the termination occurs, but not less than the greater of his (i) highest
annual target bonus during any of these three preceding fiscal years or (ii) target bonus for the
fiscal year in which the termination occurs. In the event that his Employment Agreement is not
renewed and he is terminated within 24 months following the last day of employment under the
expired Employment Agreement, at the time that his employment is terminated he will receive the
same payment as stated above, reduced proportionately by the number of months he continues to be
employed by us during such 24 month period. The Employment Agreement also includes non-solicitation
and non-competition obligations on the part of Mr. Freedman that survive for one year following the
date of termination.
Change in Control Agreements
On April 30, 2007, we entered into Change in Control Executive Severance Agreements (CIC
Agreements) with Messrs. Nanke and Freedman, and on October 1, 2009, we entered into a CIC
Agreement with Mr. Lakey, which provide that, following a change in control of the Company as
defined in the CIC Agreements and the termination of employment of the executive officer during the
period beginning 6 months prior to and ending 24 months after the change in control, the executive
officer would not receive a payment under the Employment Agreement. Instead, he would receive a
payment equal to three times his annual base salary, annual automobile allowance and his average
annual bonus for the three years preceding the fiscal year in which the change in control occurs,
but not less than the greater of that executive officers (i) highest annual target bonus during
any of these three preceding fiscal years or (ii) target bonus for the fiscal year in which the
change in control occurs, in addition to the continuation of certain benefits including medical
insurance and other benefits provided to the executive officer for a period of three years. The CIC
Agreements also include non-solicitation
and non-competition obligations on the part of the executive officer that survive for one year
following the date of termination. The CIC Agreements also provide that if a payment under the CIC
Agreements would be subject to excise tax payments, the executive officer will receive a gross-up
payment equal to such excise tax imposed by
18
Section 4999 of the Internal Revenue Code of 1986, as
amended, and all taxes, including any interest, penalties or income tax imposed on the gross-up
payment.
The CIC Agreements define a change in control as the occurrence of any of the following: (1)
any Person becomes a beneficial owner of 35% or more of Deltas voting securities, except as the
result of any acquisition of voting securities by Delta or any acquisition of voting securities of
Delta directly from Delta (as authorized by the Board); (2) the persons who constitute the
incumbent Board cease for any reason to constitute at least a majority of the Board unless such
change was approved by at least two-thirds (2/3) of the incumbent Board; (3) the consummation of a
reorganization, merger, share exchange, consolidation, or sale or disposition of all or
substantially all of the assets of Delta unless the persons who beneficially own the voting
securities of Delta immediately before that transaction beneficially own, immediately after the
transaction, at least 70% of the voting securities of Delta or any other corporation or other
entity resulting from or surviving the transaction; or (4) Deltas stockholders approve a complete
liquidation or dissolution of Delta or a sale of substantially all of its assets.
Amendments to Employment Agreements and Change in Control Agreements
On December 29, 2010, Delta entered into amendments (the Amendments) to the employment
agreements and CIC agreements with Carl E. Lakey, Kevin K. Nanke and Stanley F. Freedman. These
Amendments are intended to bring the CIC agreements and the employment agreements into compliance
with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), and related
guidance issued by the Internal Revenue Service. The Amendments revise the timing of payments to be
made upon a separation from service and the timing and amount of payments to be made if a gross-up
is due to the executive due to the effect of Code Sections 280G and 4999, amend the provisions
related to the six-month waiting period required under Code Section 409 with respect to payments to
certain specified key employees upon a separation from service, and make other technical revisions
in conformance with Code Section 409A. In addition, certain provisions were amended to ensure that
payments under the CIC and employment agreements would not be duplicated.
Severance Agreement
On October 19, 2010, Delta entered into a Severance Agreement with John R. Wallace, Deltas
former President and Chief Operating Officer. Mr. Wallace resigned from all of his positions as a
director, officer and employee of Delta and any of its subsidiaries as of the close of business on
July 6, 2010. In consideration for Mr. Wallaces resignation and his agreement to (a) relinquish
certain rights under his employment agreement, his change-in-control agreement, certain stock
agreements, and any and all rights he may have had to any other salary, bonus or other
compensation, and (b) make himself reasonably available to answer questions and assist in
transitional matters, Delta paid Mr. Wallace $1,600,000 in cash and to maintain continued group
health plan coverage under COBRA for Mr. Wallace. The Severance Agreement also contains mutual
releases and non-disparagement provisions, as well as other customary terms.
19
Potential Payments Upon Termination or Change in Control
The following table reflects the potential payments and benefits upon termination (i) for
cause, and (ii) other than for cause or death, disability or retirement, within and not within the
period beginning six months prior to and ending 24 months following a change in control
(Measurement Period) of Delta under the respective CIC Agreement for each named executive
officer. The amounts payable assume termination of employment on December 31, 2010.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within The Measurement Period |
|
Not Within The Measurement Period |
|
|
|
|
|
|
Acceleration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Options |
|
|
|
|
|
Excise |
|
|
|
|
|
|
|
|
|
of Options |
|
|
|
|
|
Excise |
|
|
|
|
Severance |
|
& Stock |
|
|
|
|
|
Tax & |
|
|
|
|
|
Severance |
|
& Stock |
|
|
|
|
|
Tax & |
|
|
|
|
& Bonus |
|
Awards |
|
Benefits |
|
Gross-Ups |
|
Total |
|
& Bonus |
|
Awards |
|
Benefits |
|
Gross-Ups |
|
Total |
|
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Carl E. Lakey
For Cause |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause |
|
|
1,989,000 |
|
|
|
989,318 |
|
|
|
141,487 |
|
|
|
850,202 |
|
|
|
3,970,007 |
|
|
|
1,427,500 |
|
|
|
989,318 |
|
|
|
94,325 |
|
|
|
850,202 |
|
|
|
3,361,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin K. Nanke
For Cause |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause |
|
|
1,719,440 |
|
|
|
880,942 |
|
|
|
141,226 |
|
|
|
|
|
|
|
2,741,607 |
|
|
|
1,239,190 |
|
|
|
880,942 |
|
|
|
94,151 |
|
|
|
|
|
|
|
2,214,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley F.
Freedman
For Cause |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause |
|
|
1,531,250 |
|
|
|
778,950 |
|
|
|
144,727 |
|
|
|
671,413 |
|
|
|
3,129,339 |
|
|
|
1,065,790 |
|
|
|
778,950 |
|
|
|
96,485 |
|
|
|
671,413 |
|
|
|
2612,638 |
|
|
|
|
* |
|
Cause is defined in the CIC Agreement, and Not For Cause means resignation by the
executive for Good Reason (as defined in the CIC Agreement) or termination of the executive
by the Company without Cause. |
Director Compensation
The following table sets forth a summary of the compensation we paid to our non-employee
directors in 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned |
|
Stock |
|
|
|
|
or Paid in Cash |
|
Awards |
|
Total |
Name |
|
($) |
|
($)(1) |
|
($) |
Hank Brown |
|
$ |
52,500 |
|
|
$ |
49,920 |
|
|
$ |
102,420 |
|
Kevin R. Collins |
|
|
60,000 |
|
|
|
84,920 |
|
|
|
144,920 |
|
Jerrie F. Eckelberger |
|
|
60,000 |
|
|
|
49,920 |
|
|
|
109,920 |
|
Jean-Michel Fonck |
|
|
50,000 |
|
|
|
29,952 |
|
|
|
79,952 |
|
Aleron H. Larson Jr. |
|
|
50,000 |
|
|
|
49,920 |
|
|
|
99,920 |
|
Russell S. Lewis |
|
|
52,500 |
|
|
|
49,920 |
|
|
|
102,420 |
|
Anthony Mandekic |
|
|
52,500 |
|
|
|
29,952 |
|
|
|
82,452 |
|
James J. Murren |
|
|
52,500 |
|
|
|
49,920 |
|
|
|
102,420 |
|
Jordan R. Smith |
|
|
55,000 |
|
|
|
49,920 |
|
|
|
104,920 |
|
Daniel J. Taylor |
|
|
52,500 |
|
|
|
90,665 |
|
|
|
143,165 |
|
|
|
|
(1) |
|
On the first business day of 2010 each of the non-employee directors except for Messrs.
Mandekic and Fonck (but including Mr. Taylor) received a grant of 48,000 shares of common stock,
and each of Messrs. Mandekic and Fonck received a grant of 28,800 shares of common stock as
equity compensation for their services as directors during 2010. Mr. Taylor also received a
grant of 39,178 shares of common stock on the first business day of 2010 as equity compensation
for his services as Board Chairman during 2010. On September 16, 2010, Mr Collins also received
50,000 shares of common stock for his role as chairman of the special committee overseeing the
strategic alternatives process which resulted in the July 2010 sale of oil and gas properties.
The fair value of such common stock was computed based on the closing price on the date the
award vests. |
20
Annual Retainers
In 2010, each non-employee director of the Company received an annual retainer of $50,000. For
2011, the annual retainer has been set to remain at $50,000, and it is anticipated that it will
be paid in cash on a monthly basis.
Each Board Committee chair also receives an additional retainer each year in the following
amounts: chair of the Audit Committee and chair of the Compensation Committee, $10,000; and
chair of the Nominating and Corporate Governance Committee, $5,000. In addition, each
non-employee director who is not a chairman but serves on one or more Committees of the Board
receives an annual retainer of $2,500. The additional retainer amounts are also paid to the
directors in cash in equal monthly installments. The Company reimburses the directors for costs
incurred by them in traveling to Board and Committee meetings.
Stock Grants
In addition, at the discretion of the Board of Directors, each non-employee director is eligible
to receive an annual grant of shares of Common Stock. For 2011, each non-employee Director is
entitled to receive 75,000 shares and, in addition, the non-executive Chairman of the Board is
entitled to receive 90,000 shares for services rendered in 2011. The shares are to be issued on
the first business day of 2012 and pro-rated in the event of the earlier termination of any
Director to such date and issued within ten days thereof. All such Common Stock is granted
pursuant to the Companys 2009 Performance and Equity Incentive Plan. Each grant of Common Stock
is fully vested upon grant.
Indemnification of Directors
Pursuant to the Companys certificate of incorporation, the Company provides indemnification of
its directors and officers to the fullest extent permitted under the Delaware General
Corporation Law and provides certain indemnification to its executive officers under their
employment agreements. The Company believes that this indemnification is necessary to attract
and retain qualified directors and officers.
Narrative Disclosure of Compensation Policies and Practices as they Relate to Risk Management
In accordance with the requirements of Regulation S-K, Item 402(s), to the extent that risks may
arise from the Companys compensation policies and practices that are reasonably likely to have
a material adverse effect on the Company, we are required to discuss those policies and
practices for compensating the employees of the Company (including employees that are not named
executive officers) as they relate to the Companys risk management practices and the
possibility of incentivizing risk-taking. We have determined that the compensation policies and
practices established with respect to the Companys employees are not reasonably likely to have
a material adverse effect on the Company and, therefore, no such disclosure is necessary. The
Compensation Committee and the Board are aware of the need to routinely assess our compensation
policies and practices and will make a determination as to the necessity of this particular
disclosure on an annual basis.
21
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table presents information concerning persons known by us to own beneficially
5% or more of our issued and outstanding Common Stock as of April 26, 2011:
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature |
|
Percent of |
Name and Address |
|
of Beneficial Ownership |
|
Class(1) |
Tracinda Corporation (2)
|
|
|
93,797,701 |
|
|
|
32.8 |
% |
150 South Rodeo Drive, Suite 250
Beverly Hills, CA 90212 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
We have authorized 600,000,000 shares of $.01 par value Common Stock, of which
286,027,476 shares were issued and outstanding as of April 26, 2011. We also have
authorized 3,000,000 shares of $.01 par value preferred stock, of which no shares are
outstanding. |
|
(2) |
|
This disclosure is based on an amendment to Schedule 13D filed with the SEC on April
21, 2011. The Schedule 13D was filed on behalf of Tracinda Corporation and Kirk Kerkorian,
both of which reported having sole voting and dispositive power over 93,797,701 shares.
Tracinda Corporation is wholly owned by Kirk Kerkorian. |
Security Ownership of Management
The following table contains information about the beneficial ownership (unless otherwise
indicated) of our Common Stock as of April 26, 2011 by:
|
|
|
each of our current directors; |
|
|
|
|
each named executive officer; and |
|
|
|
|
all current directors and current executive officers as a group. |
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of |
|
Percent of |
Name and Address of Beneficial Owner |
|
Beneficial Ownership(1) |
|
Class(2) |
Carl E. Lakey |
|
|
1,704,515 |
(3) |
|
|
* |
|
Kevin K. Nanke |
|
|
1,682,796 |
(4) |
|
|
* |
|
Stanley F. Freedman |
|
|
1,162,345 |
(5) |
|
|
* |
|
Aleron H. Larson, Jr. |
|
|
520,491 |
(6) |
|
|
* |
|
Daniel J. Taylor |
|
|
336,432 |
(7) |
|
|
* |
|
Russell S. Lewis |
|
|
294,413 |
(8) |
|
|
* |
|
John R. Wallace |
|
|
250,000 |
(9) |
|
|
* |
|
Kevin R. Collins |
|
|
219,017 |
(10) |
|
|
* |
|
Jerrie F. Eckelberger |
|
|
202,772 |
(11) |
|
|
* |
|
Jordan R. Smith |
|
|
202,772 |
(12) |
|
|
* |
|
Hank Brown |
|
|
181,254 |
(13) |
|
|
* |
|
James J. Murren |
|
|
154,254 |
(14) |
|
|
* |
|
Anthony Mandekic |
|
|
133,527 |
(15) |
|
|
* |
|
Jean-Michel Fonck |
|
|
123,527 |
(16) |
|
|
* |
|
|
All executive officers and current directors as a Group (14 persons) |
|
|
7,168,115 |
(17) |
|
|
2.51 |
% |
|
|
|
* |
|
Represents beneficial ownership of less than one percent 1.0% of the outstanding
shares of our Common Stock. |
|
(1) |
|
If a stockholder holds options or other securities that are exercisable or otherwise
convertible into our Common Stock within 60 days of April 26, 2011, we treat the Common
Stock underlying those securities as owned by that stockholder, and as outstanding shares
when we calculate the stockholders percentage ownership of our Common Stock. However, we
do not consider that Common Stock to be outstanding when we calculate the percentage
ownership of any other stockholder. |
|
(2) |
|
We have 600,000,000 shares of $.01 par value Common Stock, of which 286,027,476
shares were issued and outstanding as of April 26, 2011. We also have an authorized
capital of 3,000,000 shares of $.01 par value preferred stock, of which no shares are
outstanding. |
|
(3) |
|
Includes 167,780 shares of Common Stock owned directly and 1,286,735 unvested
restricted shares owned by Mr. Carl E. Lakey. Also includes options to purchase 250,000
shares of Common Stock that are currently exercisable or exercisable within 60 days of
April 26, 2011. |
22
|
|
|
(4) |
|
Includes 338,662 shares of Common Stock owned directly and 1,119,134 unvested
restricted shares owned by Mr. Nanke. Also includes options to purchase 225,000 shares of
Common Stock that are currently exercisable or exercisable within 60 days April 26, 2011. |
|
(5) |
|
Includes 177,411 shares of Common Stock owned directly and 984,934 unvested restricted
shares owned by Mr. Freedman. |
|
(6) |
|
Includes 150,491 shares of Common Stock owned by Mr. Larson directly. Also includes
options to purchase 370,000 shares of Common Stock that are currently exercisable or
exercisable within 60 days of April 26, 2011. Also includes 4,500 shares held by his
daughter. |
|
(7) |
|
Includes 336,432 shares of Common Stock owned directly by Mr. Taylor. |
|
(8) |
|
Includes 240,413 shares of Common Stock owned directly by Mr. Lewis and options to
purchase 54,000 shares of Common Stock that are currently exercisable or exercisable
within 60 days of April 26, 2011. |
|
(9) |
|
Includes 250,000 shares of Common Stock owned by Mr. Wallace directly. |
|
(10) |
|
Includes 219,017 shares of Common Stock owned directly by Mr. Collins. |
|
(11) |
|
Includes 188,772 shares of Common Stock owned directly by Mr. Eckelberger and options
to purchase 14,000 shares of Common Stock that are currently exercisable or exercisable
within 60 days of April 26, 2011. |
|
(12) |
|
Includes 188,772 shares of Common Stock owned directly by Mr. Smith and options to
purchase 14,000 shares of Common Stock that are currently exercisable or exercisable
within 60 days of April 26, 2011. |
|
(13) |
|
Includes 181,254 shares of Common Stock owned directly by Mr. Brown. |
|
(14) |
|
Includes 154,254 shares of Common Stock owned directly by Mr. Murren. |
|
(15) |
|
Includes 133,527 shares of Common Stock owned directly by Mr. Mandekic. |
|
(16) |
|
Includes 123,527 shares of Common Stock owned directly by Mr. Fonck. |
|
(17) |
|
Includes all warrants, options and shares referenced in footnotes (3) through (16)
above, except for footnote (6), as if all warrants and options had been exercised and as
if all resulting shares were voted as a group. |
Plan Information
We maintain the following equity-based compensation plans: 2008 New-Hire Equity Incentive
Plan and 2009 Performance and Equity Incentive Plan. Our stockholders approved the 2009 Plan,
and the 2008 New-Hire Equity Incentive Plan was approved solely by our Board of Directors.
The following table sets forth our equity compensation plans in the aggregate, the number
of shares of our Common Stock subject to outstanding options and rights under these plans, the
weighted-average exercise price of
outstanding options, and the number of shares remaining available for future award grants
under these plans as of December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
|
|
|
|
Remaining Available |
|
|
|
Number of Securities |
|
|
Weighted-Average |
|
|
for Issuance Under |
|
|
|
to be Issued Upon |
|
|
Exercise Price of |
|
|
Equity Compensation |
|
|
|
Exercise of Outstanding |
|
|
Outstanding |
|
|
Plans (Excluding |
|
|
|
Options, Warrants and |
|
|
Options, Warrants |
|
|
Securities Reflected |
|
|
|
Rights |
|
|
and Rights |
|
|
in Column (a)) |
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans
approved by security holders |
|
|
1,608,000 |
|
|
$ |
7.26 |
|
|
|
19,826,710 |
|
Equity compensation plans
not approved by security holders |
|
|
|
|
|
|
|
|
|
|
472,109 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,608,000 |
|
|
|
|
|
|
|
20,298,819 |
|
|
|
|
|
|
|
|
|
|
|
|
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Review, Approval or Ratification of Transactions with Related Persons
The Board of Directors has recognized that transactions between the Company and certain
related persons present a heightened risk of conflicts of interest. In order to ensure that the
Company acts in the best interests of its stockholders, the Board has delegated the review and
approval of related party transactions to the Audit Committee in accordance with the Companys
written Audit Committee Charter. After its review, the Audit Committee will only approve or
ratify transactions that are fair to the Company and not inconsistent with the best interests of
the Company
23
and its stockholders. Any director who may be interested in a related party
transaction shall recuse himself from any consideration of such related party transaction.
Transactions with Related Persons
During fiscal years 2001 and 2000, Aleron H. Larson, Jr., an officer of the Company at the
time, guaranteed certain borrowings which have subsequently been repaid. As consideration for
the guarantee of the Companys indebtedness, Mr. Larson was assigned a 1% overriding royalty
interest (ORRI) in the properties acquired with the proceeds of the borrowings. Mr. Larson
earned approximately $90,000 for his 1% ORRI during the year ended December 31, 2010.
Director Independence
Our Board of Directors has determined that each of Hank Brown, Kevin R. Collins, Jerrie F.
Eckelberger, Jean-Michel Fonck, Russell S. Lewis, Anthony Mandekic, James J. Murren, Jordan R.
Smith and Daniel J. Taylor qualifies as an independent director under rules promulgated by the
SEC and The NASDAQ Stock Market® listing standards, and has concluded that none of
these directors has a material relationship with the Company that would interfere with the
exercise of independent judgment in carrying out the responsibilities of a director.
Item 14. Principal Accounting Fees and Services.
The following table summarizes the aggregate fees billed by KPMG LLP for the 2010 and 2009
fiscal years:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
Fiscal Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Audit fees |
|
$ |
684,000 |
|
|
$ |
723,000 |
|
Audit-related fees |
|
|
5,000 |
|
|
|
167,000 |
|
Tax fees |
|
|
195,652 |
|
|
|
116,000 |
|
All other fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
884,652 |
|
|
$ |
1,006,000 |
|
|
|
|
|
|
|
|
Audit Fees. Fees for audit services consisted of the audit of our annual financial
statements and reports on internal controls required by the Sarbanes-Oxley Act of 2002 and
reviews of our quarterly financial statements.
Audit Related Fees. Fees billed for audit related services related to professional
services rendered by KPMG LLP for assurance and related services that are reasonably related to
the performance of the audit or review of Deltas financial statements but are not included in
audit fees above.
Tax Fees. Fees for tax services consisted of tax preparation for Delta and its
subsidiaries.
Audit Committee Pre-Approval Policy
The Companys independent registered public accounting firm may not be engaged to provide
non-audit services that are prohibited by law or regulation to be provided by it, nor may the
Companys independent registered public accounting firm be engaged to provide any other
non-audit service unless it is determined that the engagement of the principal accountant
provides a business benefit resulting from its inherent knowledge of the Company while not
impairing its independence. Our Audit Committee must pre-approve permissible non-audit services.
During fiscal year 2010, our Audit Committee approved 100% of the non-audit services provided to
Delta by its independent registered public accounting firm.
24
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(1) |
|
Financial Statements. The financial statements of Delta Petroleum Corporation were included
in the 2010 10-K. |
|
(a)(2) |
|
Financial Statement Schedules. None. |
|
(a)(3) |
|
Exhibits. The exhibits listed in the 2010 10-K are required by Item 601 of Regulation S-K.
Management contracts and compensatory plans required to be filed as exhibits were marked
with a *. A list of the exhibits filed with this Amendment No. 1 is provided below. |
INDEX TO EXHIBITS
31.1 |
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. |
|
31.2 |
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. |
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange of Act of 1934, we
have caused this Form 10-K/A to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Denver and State of Colorado on the 29th day of April, 2011.
|
|
|
|
|
|
DELTA PETROLEUM CORPORATION
|
|
|
By: |
/s/ Carl E. Lakey
|
|
|
|
Carl E. Lakey, President and Chief |
|
|
|
Executive Officer |
|
|
|
|
|
|
By: |
/s/ Kevin K. Nanke
|
|
|
|
Kevin K. Nanke, Treasurer and |
|
|
|
Chief Financial Officer |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K/A has been
signed below by the following persons on our behalf and in the capacities and on the dates
indicated.
|
|
|
Signature and Title |
|
Date |
|
|
|
/s/ Hank Brown
Hank Brown, Director
|
|
April 29, 2011 |
|
|
|
/s/ Kevin R. Collins
Kevin R. Collins, Director
|
|
April 29, 2011 |
|
|
|
/s/ Jerrie F. Eckelberger
Jerrie F. Eckelberger, Director
|
|
April 29, 2011 |
|
|
|
/s/ Jean-Michel Fonck
Jean-Michel Fonck, Director
|
|
April 29, 2011 |
|
|
|
/s/ Aleron H. Larson, Jr.
Aleron H. Larson, Jr., Director
|
|
April 29, 2011 |
|
|
|
Russell S. Lewis, Director
|
|
April 29, 2011 |
|
|
|
/s/ Anthony Mandekic
Anthony Mandekic, Director
|
|
April 29, 2011 |
|
|
|
/s/ James J. Murren
James J. Murren, Director
|
|
April 29, 2011 |
|
|
|
/s/ Jordan R. Smith
Jordan R. Smith, Director
|
|
April 29, 2011 |
|
|
|
/s/ Daniel J. Taylor
Daniel J. Taylor, Director
|
|
April 29, 2011 |
|
|
|
/s/ Carl E. Lakey
Carl E. Lakey, Director
|
|
April 29, 2011 |