(4) | Includes the shares held by the Company to own beneficially more than 5% of the outstanding shares ofExecutive in the Company’s common stock.Employee Share Purchase Plan. | | Amount and | | | | | | | Nature of Beneficial | | | Percentage | | Name of Person or Identity of Group | | Ownership | | | of Class(1) | | Entities affiliated with GMT Capital Corp.(2) | | | 57,259,706 | | | | 14.86% | | Luminus Management, LLC(3) | | | 32,908,586 | | | | 8.54% | |
| (1) | Based on 385,394,642 shares of common stock outstanding (excluding Exchangeable Shares). |
| (2) | Based upon information filed on The System for Electronic Disclosure by Insiders (www.sedi.ca) on January 30, 2018, reporting beneficial ownership as of that date. The address of GMT Capital Corp. is 2300 Windy Ridge Parkway, Suite 550, South Atlanta, GA 30339. |
| (3) | Based upon a Schedule 13G/A (Amendment No. 2) filed with the SEC on February 16, 2018 reporting beneficial ownership as of December 31, 2017. The Schedule 13G reports that Luminus Management, LLC has shared voting and dispositive authority with respect to these shares with Luminus Energy Partners Master Fund, Ltd. and Jonathan Barrett. The address of Luminus Management, LLC is 1700 Broadway, 38th Floor, New York, New York 10019. |
Beneficial Ownership of Directors and Named Executive Officers
(5) | The following table sets forth certain information regarding the beneficial ownershipnumber of Gran Tierra common stock as of March 12, 2018 by (i) each executive officer of Gran Tierra named in the Summary Compensation Table on page 43, (ii) each current director of Gran Tierra (including director nominees) and (iii) all of Gran Tierra’s named executive officers and directors as a group as of March 12, 2018. All ownership percentage calculations below assume that all Exchangeable Shares have been converted on a one-for-one basis into correspondingincludes 30,000 shares of our common stock, as such shares vote together with our common stock on all matters as if shares of our common stock. Except as otherwise noted, the persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them.Mr. Ellson’s spouse. Name of Person | | Common Stock | | | Shares Which May Be Acquired Within 60 Days(1) | | | Total Shares Beneficially Owned(2) | | | Percent of Outstanding Common Stock(3) | | Adrian Coral | | | 0 | | | | 148,809 | | | | 148,809 | | | | * | | Peter J. Dey | | | 20,000 | | | | 165,049 | | | | 185,049 | | | | * | | Ryan Ellson(4) | | | 266,030 | | | | 279,333 | | | | 545,363 | | | | * | | Jim Evans(5) | | | 251,405 | | | | 160,533 | | | | 411,938 | | | | * | | Gary S. Guidry | | | 2,527,000 | | | | 463,500 | | | | 2,990,500 | | | | * | | David Hardy(6) | | | 78,527 | | | | 699,100 | | | | 777,627 | | | | * | | Evan Hazell | | | 55,000 | | | | 157,774 | | | | 212,774 | | | | * | | Robert B. Hodgins | | | 10,000 | | | | 146,930 | | | | 156,930 | | | | * | | Ronald W. Royal | | | 254,667 | | | | 195,631 | | | | 450,298 | | | | * | | Sondra Scott | | | — | | | | 19,563 | | | | 19,563 | | | | * | | David P. Smith(7) | | | 187,500 | | | | 118,237 | | | | 305,737 | | | | * | | Brooke Wade(8) | | | 642,600 | | | | 195,631 | | | | 838,231 | | | | * | | Lawrence West | | | 245,030 | | | | 160,533 | | | | 405,563 | | | | * | | Directors and named executive officers as a group (total of 13 persons) | | | 4,537,759 | | | | 2,910,623 | | | | 7,448,382 | | | | 1.9% | |
| (1) | Includes shares which may be acquired as of or within 60 days after January 12, 2018, upon the exercise of stock options and stock awards held by executive officers and directors. |
(6) | The number of common stock includes 61,000 shares owned by Mr. Evans’ spouse. | (2) | Represents the total shares listed under the columns “Common Stock” and “Shares Which May Be Acquired Within 60 Days.” Under SEC rules, beneficial ownership as of any date includes any shares as to which a person, directly or indirectly, has or shares, voting power or dispositive power and also any shares as to which a person has the right to acquire such voting or dispositive power as of or within 60 days after such date through the exercise of any stock option or other right. |
| (3) | Based on 391,302,707 shares of common stock issued and outstanding as of March 12, 2018, which, for purposes of this table includes 5,908,065 Exchangeable Shares issued and outstanding as of March 12, 2018, as such shares are immediately exchangeable for shares of our common stock and vote together with our common stock on all matters as if shares of our common stock. |
| (4) | The number of common stock includes 30,000 shares owned by Mr. Ellson’s spouse. |
| (5) | The number of common stock includes 61,000 shares owned by Mr. Evans’ spouse. |
| (6) | Mr. Hardy ceased to be an employee or officer of Gran Tierra on August 30, 2017. Share ownership is based on last known information provided to the Company. The number of common stock includes 54,527 Exchangeable Shares and common stock owned by Mr. Hardy’s spouse. |
| (7) | The number of common stock includes 122,500 shares owned by Mr. Smith’s spouse. |
| (8) | The number of common stock includes 400,000 shares owned by Wade Capital Corporation, a corporation owned by Mr. Wade. |
(7) | Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Gran Tierra’s directors and executive officers, and persons who own more than ten percent of a registered class of Gran Tierra’s equity securities, to file with the SEC initial reports disclosing the amount and nature of their beneficial ownership and reports of changes of their beneficial ownershipThe number of common stock and other equity securities of Gran Tierra.includes 222,500 shares owned by Mr. Smith’s spouse.
To Gran Tierra’s knowledge, based solely on a review of these reports and written representations from these individuals that no other reports were required, Gran Tierra believes that all required filings were timely made in 2017 except for one late Form 4 that was filed on behalf of Susan Mawdsley with respect to the vesting of an RSU.
Executive Officers
Our executive officers as of March 12, 2018, are as follows:
Name | Age | Title | Gary S. Guidry | 62 | President and Chief Executive Officer | Ryan Ellson | 42 | Chief Financial Officer | Ed Caldwell | 68 | Vice President, Health, Safety and Environment & Corporate Social Responsibility | Adrian Coral | 44 | President, Gran Tierra Energy Colombia | James Evans | 52 | Vice President, Corporate Services | Alan Johnson | 47 | Vice President, Asset Management | Glen Mah | 61 | Vice President, Business Development | Susan Mawdsley | 51 | Vice President, Finance and Corporate Controller | Rodger Trimble | 56 | Vice President, Investor Relations | Lawrence West | 61 | Vice President, Exploration |
(8) | The number of common stock includes 1,706,000 shares owned by Wade Capital Corporation, a corporation owned by Mr. Wade. |
| | | | | 36 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 3: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION EXECUTIVE OFFICERS Our executive officers as of March 7, 2023, are as follows: | | | | | | | | | | Name | | Age | | | Title | | | | Gary S. Guidry. For the biography of Mr. Guidry, see “Proposal 1, Election of Directors.” | | | 67 | | | President and Chief Executive Officer | | | | Ryan Ellson has been our | | | 47 | | | Executive Vice President and Chief Financial Officer since May 2015. Mr. Ellson has 17 years of experience in a broad range of international corporate finance and accounting roles. Mr. Ellson was Chief Financial Officer of Onza Energy Inc. from January 2015 to May 2015. From July 2014 until December 2014, Mr. Ellson was Head of Finance for Glencore E&P (Canada), an oil and gas company, and prior thereto Vice President, Finance at Caracal Energy, an international oil and gas company listed on the London Stock Exchange with operations in Chad, Africa. He held that position from August 2011 until the company was acquired by Glencore plc for $1.8 billion in July 2014. Prior | | | | James (“Jim”) Evans to Caracal, Mr. Ellson was Vice President of Finance at Sea Dragon Energy from April 2010 until August 2011. In these positions, Mr. Ellson oversaw financial and accounting functions, implemented and oversaw internal financial controls, secured a reserve based lending facility and was involved in multiple capital raises. Mr. Ellson has held management and executive positions with companies operating in Chad, Egypt, India and Canada. Mr. Ellson is a Chartered Accountant and holds a Bachelor of Commerce and a Master of Professional Accounting from the University of Saskatchewan.
Ed Caldwell has been our Vice President, Health, Safety and Environment & Corporate Social Responsibility since June 2016. Mr. Caldwell had a distinguished 27-year career with ExxonMobil and Imperial Oil, and most recently worked with Caracal Energy Inc. in Caracal’s efforts and achievement in Chad. Mr. Caldwell has extensive experience in senior Regulatory Approvals and HSE Management roles in Canada, Asia, Russia, and Africa. He has also worked with the Government of Canada and, in that capacity, represented Canada at the OECD Energy/Environment Committee as well as at the Intergovernmental Panel on Climate Change. Mr. Caldwell graduated in Chemical Engineering (Distinction) from Dalhousie University.
Adrian Coral has been President, Gran Tierra Energy Colombia, Ltd., a subsidiary of the Company, since August 2014. Mr. Coral joined Gran Tierra in August 2006 as an operations engineer in Gran Tierra Energy Colombia, Ltd. and served in that capacity until February 2007. Mr. Coral rejoined Gran Tierra in August 2008 as Operations Director of Gran Tierra Energy Colombia, Ltd. He served in that capacity until September 2011, when he was promoted to Production Manager of Gran Tierra Energy Colombia, Ltd. Mr. Coral was promoted to Senior Operations Manager of Gran Tierra Energy Colombia, Ltd. in April 2013. On August 1, 2014, Mr. Coral was promoted to President, Gran Tierra Energy Colombia, Ltd. Mr. Coral has a total of 20 years of experience as an engineer or manager in the oil and gas industry. Mr. Coral graduated from the Universidad de América – Bogotá D.C. with a degree as a Petroleum Engineer and from the School of Business Management – Bogotá D.C with degree in Project Management.
James Evans has been our Vice President, Corporate Services since May 2015. Mr. Evans has over 28 years of experience including working the last 12 years in the international oil and gas industry. Most recently, Mr. Evans was the Head of Compliance & Corporate Services for Glencore E&P (Canada), an oil and gas company, from July 2014 to December 2014, and prior thereto Vice President of Compliance & Corporate Services at Caracal Energy, an international oil and gas company, from July 2011 to June 2014, in each case where he oversaw the execution of corporate strategy and goals, developed and implemented a robust corporate compliance program, and managed all aspects of information technology, document control, security and administration. Mr. Evans also managed the recruitment, training and retention of staff in both Calgary and Chad. He oversaw the growth of Caracal Energy from seven employees to in excess of 400 as Caracal Energy exceeded 20,000 barrels of oil per day at the time of sale to Glencore. Prior to Caracal, Mr. Evans held senior management and executive positions at Orion Oil and Gas and Tanganyika Oil, with operating experience in Egypt, Syria and Canada. Mr. Evans is a Certified General Accountant and holds a Bachelor of Commerce degree from the University of Calgary.
| | | | Rodger Trimble Alan Johnson has been our Vice President, Asset Management since May 2015. Mr. Johnson is a professional engineer with more than 20 years of experience working internationally in the oil and gas industry. His experience includes varied technical, managerial and executive roles in drilling, production, reservoir, reserves, corporate planning and asset management. Most recently Mr. Johnson was Head of Asset Management for Glencore E&P (Canada), an oil and gas company, from April 2014 to April 2015, where he was responsible for all development activities in Chad and prior thereto Director of Asset Management at Caracal Energy, an international oil and gas company, from August 2011 to March 2014, where he was responsible for development activities in the Doba basin in Chad, Africa. Mr. Johnson was instrumental in developing oil and gas assets in remote areas of southern Chad, achieving first production in less than 18 months. Mr. Johnson started his exploration and production career with Shell International in the Dutch North Sea. He then held positions of increasing responsibility with Shell Canada, APF Energy, Rockyview Energy, Delphi Energy and BG Australia. Mr. Johnson graduated with a 1st Class B.Eng (Hons) from Heriot Watt University in Scotland. Mr. Johnson is a Chartered Engineer in the UK and a Professional Engineer in Alberta.
Susan Mawdsley has been our Vice President, Finance and Corporate Controller since June 2016. Ms. Mawdsley is a Chartered Accountant with 25 years of experience in the oil and gas industry. She has been the Corporate Controller of Gran Tierra Energy since 2012 and has direct responsibility for the finance departments in all business units, as well as internal audit. Prior to joining Gran Tierra in 2011, she was an independent consultant providing contract controller, Chief Financial Officer, and other finance related services to publicly
traded domestic and international oil and gas companies. Ms. Mawdsley is a Chartered Accountant and holds a Bachelor of Music in Performance degree from the University of Toronto.
Glen Mah has been our Vice President, Business Development since June 2016. Mr. Mah is a Petroleum Geologist with extensive management experience covering the execution of exploration programs, field development and asset management for conventional and unconventional hydrocarbons. He has worked with onshore and offshore projects in various petroleum basins in the Americas, Africa, Middle East and Asia. From 2005 until 2008, Mr. Mah was the Chief Geologist with the highly successful Tanganyika Oil Company Ltd. Mr. Mah has Alberta-registered Professional designation with APEGA and holds a Bachelor of Science degree Specialization in Geology from the University of Alberta.
Rodger Trimble has been our Vice President, Investor Relations since June 2016. Mr. Trimble is a Professional Engineer with 30+ years of experience in domestic and international basins in various management positions. Prior to joining Gran Tierra, Mr. Trimble was Head of Corporate Planning, Budgeting & Finance with Glencore E&P (Canada) Inc., an oil and gas company. In January 2013, Mr. Trimble became Director Corporate Planning, Budget & Business Development with Caracal Energy Inc., an international oil and gas company, which was acquired by Glencore E&P (Canada) in July 2014. He has held several senior management positions ranging from Country Manager in Argentina with Canadian Hunter Exploration,
| | | | Lawrence West | | | 66 | | | Vice President, Exploitation with Esprit Energy Trust, Manager, Reservoir Engineering with Apache Canada Inc. and Manager, Upstream Evaluations - Exploration |
Gary S. Guidry. For the biography of Mr. Guidry, see “Proposal 1, Election of Directors.” Ryan Ellson has been our Executive Vice President and Chief Financial Officer since May 2015. Mr. Ellson has over 23 years of experience in a broad range of international corporate finance and accounting roles. Mr. Ellson was a Director of PetroTal Corp. (since December 2017). From July 2014 until December 2014 Mr. Ellson was Head of Finance for Glencore E&P (Canada) Inc. and prior thereto Vice President, Finance at Caracal Energy Inc., a London Stock Exchange (“LSE”) listed company with operations in Chad, Africa from August 2011 until July 2014. Glencore E&P (Canada) purchased Caracal in July 2014. Prior to Caracal, Mr. Ellson was Vice President of Finance at Sea Dragon Energy from April 2010 until August 2011. In these positions, over his career, Mr. Ellson has been involved in raising over $2 billion in debt and equity, and over $3 billion in mergers and acquisitions. Mr. Ellson oversaw financial and accounting functions, implemented and oversaw internal financial controls, secured reserve based lending facility’s and was involved in multiple capital raises. Mr. Ellson has held management and executive positions with companies operating in Chad, Egypt, India and Canada. Mr. Ellson is a Chartered Professional Accountant and holds a Bachelor of Commerce and a Master of Professional Accounting from the University of Saskatchewan. Mr. Ellson has completed the Leadership for Senior Executives program at Harvard Business School and the General Management Program at the Wharton School of the University of Pennsylvania. James Evans has been our Vice President, Corporate Services since May 2015. Mr. Evans has over 28 years of finance and corporate experience including working the last 13 years in the international oil and gas industry. Most recently, Mr. Evans was the Head of Compliance & Corporate Services for Glencore E&P (Canada), an oil and gas company, from July 2014 to December 2014, and prior thereto Vice President of Compliance & Corporate Services at Caracal Energy, an international oil and gas company, from July 2011 to June 2014, in each case where he oversaw the execution of corporate strategy and goals, developed and implemented a robust corporate compliance program, and managed all aspects of information technology, document control, security and administration. Mr. Evans also managed the recruitment, training and retention of staff in both Calgary and Chad. He oversaw the growth of Caracal Energy from seven employees to more than 400 employees as Caracal Energy exceeded 20,000 barrels of oil per day at the time of sale to Glencore. Prior to Caracal, Mr. Evans held senior management and executive positions at Orion Oil and Gas and Tanganyika Oil, with operating experience in Egypt, Syria and Canada. Mr. Evans holds a Bachelor of Commerce degree from the University of Calgary. Rodger Trimble has been our Vice President, Investor Relations since June 2016. Mr. Trimble is a Professional Engineer with over 28 years of experience in domestic and international basins in various management positions. Prior to joining Gran Tierra, Mr. Trimble was Head of Corporate Planning, Budgeting & Finance with Glencore E&P (Canada) Inc., an oil and gas company. In January 2013, Mr. Trimble became Director Corporate Planning, Budget & Business Development with Caracal Energy Inc., an international oil and gas company, which was acquired by Glencore E&P (Canada) in July 2014. He has held several senior management positions ranging from Country Manager in Argentina with Canadian Hunter Exploration, Vice President, Exploitation with Esprit Energy Trust, Manager, Reservoir Engineering with Apache Canada Inc. and Manager, Upstream Evaluations—Frontiers & International with Husky Energy. Mr. Trimble is an Alberta-registered Professional Engineer and a member of APEGA. He received a Bachelor of Science in Petroleum Engineering (with Distinction) from Stanford University. Lawrence West has been our Vice President, Exploration since May 2015. Mr. West has over 35 years of experience as an executive, explorationist, and geologist. Most recently, Mr. West was Vice President, Exploration at Caracal Energy, an international oil and gas company, from July 2011 to June 2014. Mr. West built a multi-disciplinary team to assess resources and grow reserves in the interior rift basins within Chad and led a successful exploration program. During his tenure he successfully executed two large 2D/3D seismic shoots in remote frontier basins, on time and on budget. Prior to Caracal he has been involved in starting and growing several public and private companies, including Reserve Royalty Corp., Chariot Energy, Auriga Energy and Orion Oil and Gas. Lawrence worked at Alberta Energy Company (“AEC”), where he was on the team that merged with Conwest. He built and led the | | | | | Gran Tierra Energy 2023 Proxy Statement | | 37 |
PROPOSAL 3: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION Lawrence West has been our Vice President, Exploration since May 2015. Mr. West has 35 years of experience as an executive, explorationist, and geologist. Most recently, Mr. West was Vice President, Exploration at Caracal Energy, an international oil and gas company, from July 2011 to June 2014. Mr. West built a multi-disciplinary team to assess resources and grow reserves in the interior rift basins within Chad and led a successful exploration program. During his tenure he successfully executed two large 2D/3D seismic shoots in remote frontier basins, on time and on budget. Prior to Caracal he has been involved in starting and growing several public and private companies, including Reserve Royalty Corp., Chariot Energy, Auriga Energy and Orion Oil and Gas. Lawrence worked at Alberta Energy Company (“AEC”), where he was on the team that merged with Conwest. He built and led the AEC East team to the Rocky Mountain USA basins. His career began with Imperial Oil working on prospect and reservoir characterization, in multi-disciplinary teams, and as a technical mentor to exploration teams. Mr. West has an Honours Bachelor of Science in Geology from McMaster University and an MBA, specializing in economics, from the University of Calgary.
| | | | 42 | | 38 | | Gran Tierra Energy 2023 Proxy Statement |
Compensation Discussion And Analysis The following discussion provides details regarding our executive compensation program and 2022 compensation arrangements for each of our Named Executive Officers (“NEOs”) who, in 2022 were: Gary S. Guidry President and Chief Executive Officer Ryan Ellson Executive Vice President and Chief Financial Officer Jim Evans Vice President, Corporate Services Rodger Trimble Vice President, Investor Relations Lawrence West Vice President, Exploration | | | | | | | COMPENSATION DISCUSSION AND ANALYSIS The following discussion provides details regarding our executive compensation program and 2017 compensation arrangements for each of our Named Executive Officers (“NEOs”) who, in 2017 were:
Name | Title at December 31, 2017 | Gary S. Guidry | President and Chief Executive Officer | Ryan Ellson | Chief Financial Officer | Adrian Coral | President, Gran Tierra Energy Colombia | Jim Evans | Vice President, Corporate Services | Lawrence West | Vice President, Exploration | David Hardy | Former Vice President, Legal and General Counsel | | | 39 | |
| Philosophy and Objectives of our Executive Compensation Program | | | 39 | | | | Responsibilities for Executive Compensation | | | 40 | | | | Assessment of Company Performance | | | 40 | | | | Role of the Independent Compensation Consultant | | | 41 | | | | Risk Considerations | | | 41 | | | | Compensation Peer Group – 2022 | | | 41 | | | | Elements of Our compensation philosophy is to provide an attractive, flexible, and market-based total compensation program that is tied to performance and aligns the interestsCompensation Program | | | 42 | | | | Base Salary | | | 42 | | | | Short Term Incentives – Cash Bonus | | | 42 | | | | Assessment of our NEOs with those of our stockholders. The Company’s objective is to recruit and retain the caliber of executive officers and other key employees necessary to deliver sustained high performance to our stockholders as well as economic growth and respect for the communities in which we have a strong presence. Our compensation philosophy also serves as a means of communicating our goals and standards of conduct and performance, and for motivating and rewarding our NEOs in relation to their achievements. Our compensation philosophy includes the principles described below:Individual Performance | · | Hire and retain top caliber and highly capable executives: Executive officers should have a total compensation package that is market competitive and permits us to hire and retain high-caliber individuals at all levels. |
| · | Pay for performance: A significant portion of the annual compensation opportunity for our executive officers should be directly tied to the achievement of key operational and financial measures aligned with our strategy, relative TSR and our share price performance. Directly linking pay with our performance is essential to delivering long-term value to our stockholders. |
| · | Create Stockholder Alignment: A significant portion of compensation should be variable (at risk) and equity-based. Executives are also required to meet significant share-ownership guidelines. |
| | 2022 Corporate Performance Goals and Scores | | | 43 | | | | ResponsibilitiesActual Annual Cash Bonuses Earned for Executive Compensation2022
Compensation decisions for our executive officers are made by the Compensation Committee, with input from our independent compensation consultants as well as from our Chief Executive Officer. The specific roles are summarized below:
Compensation Committee | | · | Oversees compensation policies, plans and programs, reviews and determines the compensation to be paid to our executive officers and directors annually. | | | | | | | · | Oversees our annual and long-term incentive plans and programs and periodically assesses our non-employee director compensation program. | | | | | | | · | Approves the goals of our Chief Executive Officer, evaluates our Chief Executive Officer’s performance in light of those goals and objectives and recommends to the Board the approval of the Chief Executive Officer’s annual compensation. | | | | | | | · | Together with our Chief Executive Officer, reviews and approves the corporate performance goals and objectives of our other NEOs and recommends to the Board the approval of the annual compensation package for the other NEOs. | | | | | | | · | Holds executive sessions with no management present. | | | | | | | | | Board | | · | Reviews Chief Executive Officer’s performance. | | | | | | | · | Approves Chief Executive Officer and NEO compensation. | | | | | | | | | Independent Compensation Consultants | | · | Provides the Compensation Committee with independent advice concerning the types and levels of compensation to be paid to our Chief Executive Officer and the other NEOs. | | | | | | | · | Provides market compensation data (e.g., industry compensation surveys and benchmarking data) on base salary, annual incentives and long-term incentives and industry trends. | | | | | | | | | Chief Executive Officer | | · | Reviews performance of other NEOs with the Compensation Committee. | | | | | | | · | Makes recommendations on base salary, annual bonus and long-term incentives awards for the other NEOs. |
The Board and the Compensation Committee hold regular executive sessions at the end of each meeting with no representatives of the management team present. Our Chief Executive Officer does not attend any portion of the Compensation Committee or Board meeting at which his compensation is deliberated or approved. Except as described in the table above, our Chief Executive Officer does not play any role with respect to any matter affecting his own compensation.
The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with the Chief Executive Officer. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities and personnel of Gran Tierra. In addition, under the charter, the Compensation Committee has the authority to obtain, at the expense of Gran Tierra, advice and assistance from compensation consultants, internal and external legal, accounting or other advisors and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. The Compensation Committee has direct responsibility for the oversight of the work of any advisers engaged for the purpose of advising the Compensation Committee and may amend the engagement with or terminate any such advisor as it deems necessary or appropriate. Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees, as appropriate. In 2017, the Compensation Committee did not form any subcommittees.
The Compensation Committee and the Board make their compensation decisions for the upcoming year, and review performance for the prior year, generally in the first quarter of the year. For example, annual bonuses in respect of 2017 performance, as well as the consideration of salary increases for 2018, were recommended by the Compensation Committee and approved by the Board in January of 2018.
Philosophy and Objectives of our Executive Compensation Program Our compensation philosophy is to provide an attractive, flexible, and market-based total compensation program that is tied to performance and aligns the interests of our NEOs with those of our stockholders. The Company’s objective is to recruit and retain the caliber of executive officers and other key employees necessary to deliver sustained high performance to our stockholders as well as economic growth and respect for the communities in which we have a strong presence. Our compensation philosophy also serves as a means of communicating our goals and standards of conduct and performance, and for motivating and rewarding our NEOs in relation to their achievements. Our compensation philosophy includes the principles described below: | • | | Hire and retain top caliber and highly capable executives: Executive officers should have a total compensation package that is market competitive and permits us to hire and retain high-caliber individuals at all levels. |
| • | | Pay for performance: A significant portion of the annual compensation opportunity for our executive officers should be directly tied to the achievement of key operational and financial measures aligned with our strategy, relative TSR and our share price performance. Directly linking pay with our performance is essential to delivering long-term value to our stockholders. |
| • | | Create Stockholder Alignment: A significant portion of compensation should be variable (at risk) and equity-based. Executives are also required to meet significant share-ownership guidelines. |
| | | | | Gran Tierra Energy 2023 Proxy Statement | | 39 |
COMPENSATION DISCUSSION AND ANALYSIS Responsibilities for Executive Compensation Compensation decisions for our executive officers are made by the Compensation Committee, with input from our independent compensation consultants as well as from our Chief Executive Officer. The specific roles are summarized below: | | | | | Compensation Committee | | • Oversees compensation policies, plans and programs, reviews and determines the compensation to be paid to our executive officers and directors annually. Assessment• Oversees our annual and long-term incentive plans and programs and periodically assesses our non-employee director compensation program.
• Approves the goals of Company Performanceour Chief Executive Officer, evaluates our Chief Executive Officer’s performance in light of those goals and objectives and recommends to the Board the approval of the Chief Executive Officer’s annual compensation. • Together with our Chief Executive Officer, reviews and approves the corporate performance goals and objectives of our other NEOs and recommends to the Board the approval of the annual compensation package for the other NEOs. • Holds executive sessions with no management present. | | | Board | | • Reviews Chief Executive Officer’s performance. • Approves Chief Executive Officer and NEO compensation. | | | Independent Compensation Consultants | | • Provides the Compensation Committee with independent advice concerning the types and levels of compensation to be paid to our Chief Executive Officer and the other NEOs. • Provides market compensation data (e.g., industry compensation surveys and benchmarking data) on base salary, annual incentives and long-term incentives and industry trends. | | | Chief Executive Officer | | • Reviews performance of other NEOs with the Compensation Committee. • Makes recommendations on base salary, annual bonus and long-term incentives awards for the other NEOs. |
The Board and the Compensation Committee hold regular executive sessions at the end of each meeting with no representatives of the management team present. Our Chief Executive Officer does not attend any portion of the Compensation Committee or Board meeting at which his compensation is deliberated or approved. Except as described in the table above, our Chief Executive Officer does not play any role with respect to any matter affecting his own compensation. The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with the Chief Executive Officer. From time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. Under the charter, the Compensation Committee has the authority to obtain, at the expense of Gran Tierra, advice and assistance from compensation consultants, internal and external legal, accounting or other advisors and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. The Compensation Committee has direct responsibility for the oversight of the work of any advisers engaged for the purpose of advising the Compensation Committee and may amend the engagement with or terminate any such advisor as it deems necessary or appropriate. The Compensation Committee and the Board make their compensation decisions for the upcoming year, and review performance for the prior year, generally in the first quarter of the year. For example, annual bonuses in respect of 2022 performance were recommended by the Compensation Committee and approved by the Board in January of 2023. Assessment of Company Performance The Compensation Committee uses Company performance measures to establish total compensation ranges relative to our performance and the performance of our comparator groups as outlined on the following page. In addition, the Compensation Committee establishes specific performance measures that determine payouts under cash and equity-based incentive programs. Role of the Independent Compensation Consultant
| | | | | 40 | | Gran Tierra Energy 2023 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS Role of the Independent Compensation Consultant When making determinations regarding executive compensation, the Compensation Committee considers advice from external advisors and third-party compensation surveys as well as the advice of Compensation Committee members and other members of the Board based on their knowledge and experience to set competitive, results driven levels of salary and other compensation. The Compensation Committee may, in its sole discretion, retain or obtain the advice of independent compensation consultants or other external advisors and is directly responsible for the appointment, compensation arrangements and oversight of the work of any such person. The retention of independent compensation consultants and scope of services provided by them are assessed on an annual basis. The Compensation Committee may select a compensation consultant only after taking into consideration all factors relevant to that person’s independence from management. We will provide appropriate funding, as determined by the Compensation Committee, for payment of reasonable compensation to any independent compensation consultants or other external advisors retained by the Compensation Committee. Risk Considerations The Compensation Committee and the Board periodically review the risks associated with our compensation policies and practices. These assessments include an examination of the changes in our risk profile over the past year for our compensation policies and practices. Based on this assessment, the Compensation Committee and the Board each determined that these risks were not reasonably likely to have a material adverse effect on us. Among other things, the Compensation Committee and the Board took into consideration the fact that: | • | | the current significant weighting towards long-term incentive compensation, the value of which depends on the value of our shares, discourages short-term risk taking; |
| • | | our annual incentive compensation program includes several different metrics, preventing NEOs from focusing on one metric at the exclusion of other important performance goals; |
| • | | our compensation program is appropriately balanced such that if annual bonus targets are not achieved, base pay and long-term incentive compensation will still provide the executives with a reasonable amount of compensation; |
| • | | stock options and PSUs for executives vest over three years, which discourages short-term risk taking; |
| • | | our current clawback policy permits us to recover executive compensation in the case of fraud or intentional misconduct requiring a material restatement of financial results, and we intend to amend this clawback policy or adopt a new clawback policy consistent with the requirements of Exchange Act Rule 10D-1 prior to the effectiveness of final NYSE listing standards implementing such rule; |
| • | | stock ownership guidelines encourage a long-term perspective by our executives; and |
| • | | incentive awards are decided by the Compensation Committee and recommended to the Board for payment of reasonable compensation to any independent compensation consultants or other external advisors retained by the Compensation Committee. During 2017, the Compensation Committee engaged the independent compensation consultant for limited services such as LTIP measurement. In 2017, the Compensation Committee evaluated whether any work provided by its Compensation Committee consultant raised any conflict of interest and determined that it did not.approval. |
Compensation Peer Group – 2022 The following is our peer group for executive compensation purposes. The companies in the executive compensation peer group were selected with the assistance of our independent compensation consultants and consists of companies that are of similar size as Gran Tierra, are in the same line of business, and are listed on a major exchange in Canada or the United States. We included companies with and enterprise value of at least $0.7 billion and Working Interest production before royalties of 20,000+ BOEPD. Risk Considerations
The Compensation Committee and the Board periodically review the risks associated with our compensation policies and practices. These assessments include an examination of the changes in our risk profile over the past year for our compensation policies and practices. Based on this assessment, the Compensation Committee and the Board each determined that these risks were not reasonably likely to have a material adverse effect on us. Among other things, the Compensation Committee and the Board took into consideration the fact that:
| | | · | the current significant weighting towards long-term incentive compensation, the value of which depends on the value of our shares, discourages short-term risk taking; |
| · | our annual incentive compensation program includes several different metrics, preventing NEOs from focusing on one metric at the exclusion of other important performance goals; |
| · | our compensation program is appropriately balanced such that if annual bonus targets are not achieved, base pay and long-term incentive compensation will still provide the executives with a reasonable minimum amount of compensation; |
| · | stock options and PSUs for executives vest over three years, which discourages short-term risk taking; |
| · | our clawback policy permits us to recover executive compensation in the case of fraud or intentional misconduct requiring a material restatement of financial results; |
| · | stock ownership guidelines encourage a long-term perspective by our executives; and |
| · | incentive awards are decided by the Compensation Committee and recommended to the Board for approval. |
Athabasca Oil Corporation | | Baytex Energy Corp. | | | Bonavista Energy Corporation | | Frontera Energy Corporation | | | Compensation Peer Group - 2017Denbury Resources Inc.
| | Kosmos Energy Ltd. | | | Civitas Resources Inc. (Formerly Extraction Oil & Gas, Inc.) | | Matador Resources Company | | | Geopark Limited | | Parex Resources Inc. | | | Laredo Petroleum, Inc. | | Whitecap Resources Inc. | | | Paramount Resources Ltd. | | | | | VAALCO Energy Inc. (Formerly TransGlobe Energy Corp.) | | | | |
The Company has a separate peer group for evaluating performance which is further explained on page 45. The following is our peer group for executive compensation purposes. The companies in the executive compensation peer group were selected as they are of similar size as Gran Tierra, are in the same line of business, and are listed on a major exchange in Canada or the United States. During 2017, Oando Energy Resources Inc., Bankers Petroleum Ltd. and Mart Resources Inc. were removed from our peer group as they were either sold or delisted. As the Company’s executive office is located in Canada, most of the companies in the peer group above were chosen as they are also located in Canada and would have similar pay structures. Although the Company monitors the salaries of the executives in its compensation peer group, there were no salary increases for the Company’s NEOs in 2017.
Pengrowth Energy Corporation | Bonavista Energy Corporation | Raging River Exploration Inc. | Birchcliff Energy Ltd. | Parex Resources Inc. | TORC Oil & Gas Ltd. | Crew Energy Inc. | NuVista Energy Ltd. | Canacol Energy Ltd. | Surge Energy Inc. | TransGlobe Energy CorporationThe Company has a separate peer group for evaluating performance which is further explained on page 50.
| Gran Tierra Energy 2023 Proxy Statement | | 41 |
COMPENSATION DISCUSSION AND ANALYSIS Elements of Our Compensation Program Our executive compensation program includes a mix of fixed and variable pay with performance periods ranging from one to five years. The primary elements are summarized in the table below: | | | | | | | | | | | | | | ElementsCompensation
| | Fixed/Variable | | Cash/Equity | | Time Period | | Goal | | | | | | Base Salary | | Fixed | | Cash | | 1 year | | Provide fixed level of Our Compensation Programincome | | | | | | Short-term Incentive | | Variable | | Annual cash bonus | | 1 year | | Reward contribution to annual corporate and individual performance | | | | | | Long-term Incentive | | Variable | | PSUs Stock options | | 3 years Our executive compensation program includes a mix5 years
| | Reward medium and long-term performance and align interests of fixedmanagement and variable pay with performance periods ranging from one to five years. The primary elements are summarized in the table below:stockholders |
Base Salary We pay base salaries in order to attract and retain talented executives and to provide our NEOs with a fixed base of cash compensation. The salaries typically reflect each NEO’s experience, skills, knowledge and responsibilities. Competitive market conditions also have an impact on setting salary levels. The salaries of our NEOs are reviewed on an annual basis by our Chief Executive Officer (other than with respect to his own salary, which is reviewed and determined by the Compensation Committee). There were no changes to our NEOs’ salaries from 2021 to 2022. Compensation | Fixed/Variable | Cash/Equity | Time Period | Goal | Base Salary | Fixed | Cash | 1 year | Provide fixed level of income | Short-term Incentive | Variable | Annual cash bonus | 1 year | Reward contribution to annual corporate and individual performance | Long-term Incentive | Variable | PSUs
Stock options | 3 years
5 years | Reward medium and long-term performance |
| | | | | | | | | | | Name | | 2022 Base Salary (1) ($) | | 2021 Base Salary (1) ($) | | % Change 2021-2022 | | | | | Gary S. Guidry | | $441,176 | | $441,176 | | 0% | | | | | Ryan Ellson | | $312,500 | | $312,500 | | 0% | | | | | Jim Evans | | $275,735 | | $275,735 | | 0% | | | | | Rodger Trimble | | $220,588 | | $220,588 | | 0% | | | | | Lawrence West | | $275,735 | | $275,735 | | 0% |
(1) | Base Salary
We pay base salariesFor ease of comparison, amounts reported in orderthis column are converted from Canadian dollars to attract and retain talented executives and to provide our NEOs with a fixed baseU.S. dollars at the exchange rate of cash compensation. The salaries typically reflect each NEOs experience, skills, knowledge and responsibilities. Competitive market conditions also have an impact on setting salary levels. The salaries of our NEOs are reviewed on an annual basis by our Chief Executive Officer (other than with respect to his own salary, which is reviewed and determined by the Compensation Committee). The table below sets forth the annual base salaries for our NEOs for fiscal 2017 which were unchanged from 2016.1.3600 at December 31, 2022.
Name | | 2017 Base Salary ($) | | | 2016 Base Salary(1) ($) | | | % Increase 2016-2017 | | Gary S. Guidry | | $ | 318,852 | | | $ | 318,852 | | | | — | | Ryan Ellson | | $ | 259,067 | | | $ | 259,067 | | | | — | | Adrian Coral | | $ | 230,000 | | | $ | 230,000 | | | | — | | Jim Evans | | $ | 239,139 | | | $ | 239,139 | | | | — | | Lawrence West | | $ | 239,139 | | | $ | 239,139 | | | | — | | David Hardy | | $ | 255,879 | | | $ | 255,879 | | | | — | |
|
Short Term Incentives – Cash Bonus | (1) | For ease of comparison, amounts reported in this column are converted from Canadian dollars and Colombia pesos to U.S. dollars at the exchange rate at December 29, 2017. |
Short Term Incentives - Cash Bonus
One of our key compensation objectives is for a significant portion of each NEO’s compensation to be tied to Company performance. Our annual cash bonus plan provides opportunities for our executives, including the NEOs, to earn annual cash bonuses tied to the successful achievement of key operational, financial and market objectives that that drive our business and stockholder value.
In February 2017,
One of our key compensation objectives is for a significant portion of each NEO’s compensation to be tied to Company performance. Our annual cash bonus plan provides opportunities for our executives, including the NEOs, to earn annual cash bonuses tied to the successful achievement of key operational, financial and market objectives that drive our business and stockholder value. In January 2023, the Compensation Committee approved the annual bonus target for each of our NEOs which were calculated as a percentage of their respective base salaries. The value of the bonus is calculated as below: | | | | | | | | | | | | | | | | | | | | | Bonus Payment Amount
| | = | | Salary | | x | | Bonus Target % | | x | | ( | | Individual Weightingx Individual Rating | | + | | Corporate Weightingx Corporate Rating | | ) |
| | | | | 42 | | Gran Tierra Energy 2023 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS The following bonus structure was approved by the Compensation Committee for the following executives in connection with 2022 performance, which bonus structure was unchanged from the previous year: | | | | | | | | | | | | | | | | | | | | Name | | Target Payout as a % of Base Salary | | Corporate Performance Weighting | | Individual Performance Weighting | | | | | Gary S. Guidry | | | | 100 | % | | | | 100 | % | | | | — | % | | | | | Ryan Ellson | | | | 80 | % | | | | 80 | % | | | | 20 | % | | | | | Jim Evans | | | | 50 | % | | | | 60 | % | | | | 40 | % | | | | | Rodger Trimble | | | | 50 | % | | | | 60 | % | | | | 40 | % | | | | | Lawrence West | | | | 50 | % | | | | 60 | % | | | | 40 | % |
Assessment of Individual Performance Individual performance has a significant impact on the annual cash bonus for NEOs other than the Chief Executive Officer and is weighted between 20% and 40% of the award with the remaining amount being driven by our performance relative to our corporate performance measures. The individual performance rating for each NEO, other than the Chief Executive Officer, is determined through a formal performance evaluation conducted with the Chief Executive Officer. The performance evaluation measures how each NEO performs against criteria directly related to their position. 2022 Corporate Performance Goals and Scores Results between the Company’s Corporate Target can be interpolated on a linear basis. The lower number results in a multiplier of 0, middle results in a multiplier of 1 and the upper threshold is a multiplier of 2. | | | | | | | | | | | | | | Target | | Unit | | Corporate Target | | Weighting | | Score | | | | | | Operational | | | | | | | | | | | | | | WI Production | | kboepd | | 30.5 – 31.5 – 32.5 | | 10% | | 3% | | | | | | 1P FD&A Costs (1) | | $/boe | | 18 – 15 – 12 | | 10% | | 0% | | | | | | 1P Reserve Replacement Ratio (2) | | % | | 85 – 100 – 115 | | 10% | | 20% | | | | | | Financial | | | | | | | | | | | | | | G&A (gross, excluding bonus) | | $MM | | 56 – 48 – 40 | | 10% | | 9% | | | | | | Lifting Costs /boe (3) | | $/boe | | 12 – 10 – 8 | | 10% | | 3% | | | | | | Total Workover Costs | | $MM | | 51 – 43 – 35 | | 10% | | 0% | | | | | | RBL repayment | | $MM | | Pay off in first 6 months | | 15% | | 30% | | | | | | Market | | | | | | | | | | | | | | Generate Free Cash Flow (4) | | $MM | | 40 – 45 – 50 | | 10% | | 20% | | | | | | Strategic | | | | | | | | | | | | | | Exploration success – recognized reserves by Reserve Auditor | | # | | 0 – 1 – 2 | | 15% | | 30% |
(1) | Finding, development and acquisition costs (“FD&A”) costs are calculated as estimated exploration and development capital expenditures in Colombia, divided by the Compensation Committee for the following executivesapplicable reserves additions both before and after changes in connection with 2017 performance:future development costs (“FDC”). Name | | Target Payout as a % of Base Salary | | | Corporate Performance Weighting | | | Individual Performance Weighting | | Gary S. Guidry | | | 100% | | | | 100% | | | | —% | | Ryan Ellson | | | 80% | | | | 80% | | | | 20% | | Adrian Coral | | | 60% | | | | 60% | | | | 40% | | Jim Evans | | | 50% | | | | 60% | | | | 40% | | Lawrence West | | | 50% | | | | 60% | | | | 40% | | David Hardy | | | 50% | | | | 60% | | | | 40% | |
Assessment of Individual Performance
Individual performance has a significant impact on the annual cash bonus for NEOs other than the Chief Executive Officer and is weighted between 20% and 40% of the award with the remaining amount being driven by our performance relative to our performance measures. The individual performance rating for each NEO, other than the Chief Executive Officer, is determined through a formal performance evaluation conducted with the Chief Executive Officer. The performance evaluation measures how each NEO performs against criteria directly related to their position.
(2) | 2017 Corporate Performance Goals1P reserves have been calculated in compliance with NI 51-101 and Scores
At the beginning of each fiscal year, the Board of Directors approves the measures (and associated performance targets) that will be used to measure corporate performance for the fiscal year. For 2017, the Board of Directors approved eight goalsCOGEH and are based on the Company’s budgetGTE McDaniel Reserves Report. See “Disclosure of Oil and operating plan that were considered to be the key drivers to the success of the Company’s business planGas Information” for the year, which were used as corporate performance metrics to determine the 2017 annual bonus structure (40% operational, 30% financial, 10% market and 20% strategic). Each of the measures had a threshold level of performance which had to be reached for the measure to contribute to a payout. There is a target level of performance for each element and a stretch level of performance above threshold. Between threshold and target performance, and between target and the stretch maximum, performance factors are graduated according to the performance level actually reached. The Board of Directors met in January 2018 to assess the Company’s 2017 performance relative to the pre-established targets. The following table summarizes the results of the assessment:important information.
Metric | | Relative Weighting Factor | | | 2017 Corporate Targets | | | 2017 Performance Result | | | 2017 Performance Factor Level | | | Performance Factor | | | | | | | | | | | | | | | | | | Operational Goals | | | | | | | | | | | | | | | | Gross Field Reserve 2P Additions (MMBOE)(1) | | 15% | | | 10 - 15 - 20 | | | 27.9 | | | Maximum | | | 30% | | 2P Finding & Development Costs (“F&D”), Including Future Development Costs ($/BOE)(2) | | 10% | | | 15 - 12 - 10 | | | 11.3 | | | Above Target | | | 14% | | WI Production before royalties (BOEPD) | | 15% | | | 35 - 36 - 38 | | | 32.1 | | | Below Threshold | | | 0% | | | | | | | | | | | | | | | | | | Financial Goals | | | | | | | | | | | | | | | | General & Administration Expenses ($/BOE) | | 10% | | | 4.5 - 3.0 - 2.5 | | | 2.6 | | | Maximum | | | 20% | | Cash Costs ($/BOE)(3) | | 10% | | | 25 - 20 - 18 | | | 16.4 | | | Maximum | | | 20% | | Funds Flow from Operations ($ millions)(4) | | 10% | | | 200 - 225 - 250 | | | 220.2 | | | Below Target | | | 8% | | | | | | | | | | | | | | | | | | Market Goals | | | | | | | | | | | | | | | | Increase in NAV/share(5) | | 10% | | | 17.58 - 12% | | | 30% | | | Maximum | | | 20% | | | | | | | | | | | | | | | | | | Strategic Goals(6) | | 20% | | | | | | - | | | Partially Met Target | | | 15% | | | | 100% | | | | | | | | | | | | 127% | |
| (1) | 2P reserves have been calculated in compliance with NI 51-101 and COGEH and are based on the GTE McDaniel Reserves Report. See “Disclosure of Oil and Gas Information” for important information. |
| (2) | F&D costs are calculated as estimated exploration and development capital expenditures in Colombia, excluding acquisitions and dispositions, divided by the applicable reserves additions both before and after changes in future development costs (“FDC”) costs. The calculation of F&D costs incorporates the change in FDC required to bring proved undeveloped and developed reserves into production. The aggregate of the exploration and development costs incurred in the financial year and the changes during that year in estimated FDC may not reflect the total F&D costs related to reserves additions for that year. Management uses F&D costs per BOE as a measure of its ability to execute its capital program and of its asset quality. |
| (3) | Cash costs includes operating, transportation and commercialization expenses. |
| (4) | Funds flow from operations is a non-GAAP measure and does not have a standardized meaning under generally accepted accounting principles in the United States of America (“GAAP”). Funds flow from operations, as presented, is net income or loss adjusted for DD&A expenses, asset impairment, deferred tax expense or recovery, stock-based compensation expense, amortization of debt issuance costs, cash settlement of RSUs, unrealized foreign exchange and financial instruments gains and losses and loss on sale of business units or gain on acquisition. Management uses this financial measure to analyze performance and income or loss generated by our principal business activities prior to the consideration of how non-cash items affect that income or loss, and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. |
| (5) | See page 50 for further details of NAV. |
| (6) | The 2017 Strategic Goals include metrics set by the Compensation Committee relating to joint ventures, exploration discoveries, financing and exploration commitments included in the Company’s annual budget and approved by the Board. |
(3) | Lifting Costs include production and transportation expenses. Actual Annual Cash Bonuses Earned for 2017
The following table shows the 2017 annual cash bonus awards earned by each NEO:
| | Base Salary for 2017 ($) | | | Target Payout as a % of Base Salary | | | 2017 Cash Bonus Awarded ($)(1) | | | 2017 Cash Bonus (% of Base Salary) | | Gary S. Guidry | | 318,852 | | | 100% | | | 404,145 | | | 127 | | Ryan Ellson | | 259,067 | | | 80% | | | 262,256 | | | 101 | | Adrian Coral | | 230,000 | | | 60% | | | 166,600 | | | 72 | | Jim Evans | | 239,139 | | | 50% | | | 150,658 | | | 63 | | Lawrence West | | 239,139 | | | 50% | | | 136,309 | | | 57 | | David Hardy(2) | | 255,879 | | | 50% | | | n/a | | | n/a | |
| (1) | 2017 Cash Bonuses were paid on February 15, 2018. |
| (2) | Mr. Hardy’s employment with us terminated on August 30, 2017 and, as such, he did not receive a cash bonus for 2017. |
(4) | Long-Term Equity Incentive ProgramFree Cash Flow equals funds from operations less capital expenditures before exploration expense and before STIP payment.
|
Our equity compensation program was redesigned in 2016 to incorporate equity awards that vest based on the achievement of key operational goals established by the Board of Directors as described below. Approximately 80% of the value of equity awards granted in 2017 consisted of PSUs and 20% of the value of equity awards consisted of stock options, based on the fair value at grant date.
2017 PSUs Granted
As part of our long-term incentive plan, PSUs are designed to create a link between executive compensation and increased stockholder value by rewarding NEOs for achievement against key performance metrics over a three-year period. Our goal is to further incentivize our executives to achieve the operational goals established by the Board and to increase share and net asset value for our stockholders.
Each PSU entitles the holder to be issued the number of common shares designated in the performance award multiplied by a payout multiplier, with such common shares (or cash equal in value to such shares) to be issued on dates determined by the Compensation Committee, but no later than March 15 of the year following the year in which the last performance period applicable to the award ends. The payout multiplier is dependent on the performance of the Company relative to pre-defined corporate performance measures for the period. The number of PSUs that vest may range from zero to 200% of the target number granted based on the performance multiplier earned under the terms of the award agreement. Each recipient must also remain in the continuous service of
| | | | | Gran Tierra from the date of grant through the date of settlement in order for the award to vest. PSUsEnergy 2023 Proxy Statement | | 43 |
COMPENSATION DISCUSSION AND ANALYSIS Actual Annual Cash Bonuses Earned for 2022 The following table shows the 2022 annual cash bonus awards earned by each NEO: | | | | | | | | | | | | | | | | | | | | | | | | 2022 Base Salary ($) | | | Target Payout as a % of Base Salary | | | 2022 Cash Bonus Awarded ($) (1) | | | 2022 Cash Bonus (% of Base Salary) | | | | | | | Gary S. Guidry | | | 441,176 | | | | 100% | | | | 507,353 | | | | 115% | | | | | | | Ryan Ellson | | | 312,500 | | | | 80% | | | | 305,147 | | | | 98% | | | | | | | Jim Evans | | | 275,735 | | | | 50% | | | | 177,941 | | | | 65% | | | | | | | Rodger Trimble | | | 220,588 | | | | 50% | | | | 120,588 | | | | 55% �� | | | | | | | Lawrence West | | | 275,735 | | | | 50% | | | | 177,941 | | | | 65% | |
(1) | 2022 Cash Bonuses are granted annually.payable on February 15, 2023 The PSUs granted to our NEOs in 2017
|
Long-Term Equity Incentive Program Our equity compensation program has been designed to incorporate equity awards that vest based on the achievement of key operational goals established by the Board of Directors as described below. Approximately 80% of the value of equity awards granted in 2022 consisted of PSUs and 20% of the value of equity awards consisted of stock options, based on the fair value at grant date. 2022 PSUs Granted As part of our long-term incentive plan, PSUs are designed to create a link between executive compensation and increased stockholder value by rewarding NEOs for achievement against key performance metrics over a three-year period. Our goal is to further incentivize our executives to achieve the operational goals established by the Board and to increase share and net asset value for our stockholders. Each PSU entitles the holder to be issued the number of common shares designated in the performance award multiplied by a payout multiplier, with such common shares (or cash equal in value to such shares) to be issued on dates determined by the Compensation Committee, but no later than March 10 of the year following the year in which the last performance period applicable to the award ends. The payout multiplier is dependent on the performance of the Company relative to pre-defined corporate performance measures for the period. The number of PSUs that vest may range from zero to 200% of the target number granted based on the performance multiplier earned under the terms of the award agreement. Each recipient must also remain in the continuous service of Gran Tierra from the date of grant through the date of settlement in order for the award to vest. PSUs are granted annually. The PSUs granted to our NEOs in 2022 may become fully vested at the end of the three-year performance period, based upon our performance with respect to four separate performance periods as follows: | | | | | | | | Performance Period Performance Period | | Percentage of Target Award Subject to Performance Period | | January 1, 2017 - December 31, 2017 | | 20% | | January 1, 2018 - December 31, 2018 | | 20% | | January 1, 2019 - December 31, 2019 | | 20% | | January 1, 2017 - December 31, 2019 | | 40% | | | | 100% | | Percentage of Target Award Subject to Performance Period | | | January 1, 2022—December 31, 2022 | | | | 20 | % | | | January 1, 2023—December 31, 2023 | | | | 20 | % | | | January 1, 2024—December 31, 2024 | | | | 20 | % | | | January 1, 2022—December 31, 2024 | | | | 40 | % | | | | | | | 100 | % |
The calculation of the performance multiplier is as follows: | • | | 50% weighting: Gran Tierra’s Total Shareholder Return (“TSR”) relative to that of peer companies; |
| • | | The calculation of the performance multiplier is as follows:25% weighting: Gran Tierra’s Financial Covenant Compliance and Free Cash Flow; and
| · | 50% weighting: Gran Tierra’s Relative Total Shareholder Return (“TSR”); |
| · | 25% weighting: Gran Tierra’s Net Asset Value (“NAV”) per shares; and |
| · | 25% weighting: execution of strategy (as determined by the Board). |
| • | | Total Shareholder Return.The Compensation Committee believes that25% weighting: execution of strategy (as determined by the Board).
|
Total Shareholder Return. The Compensation Committee believes that the comparison of Gran Tierra’s TSR over a specified period of time to the returns of peer companies over the same period is an objective external measure of the Company’s effectiveness in translating its results into stockholder returns. TSR is calculated by comparing Gran Tierra’s change in share price relative to the performance of a pre-selected peer group of companies with respect to the same measures. The framework included in the table below is used in translating its results into stockholder returns. TSR is calculated by comparing Gran Tierra’s change in share price plus reinvestment of dividends relative to the performance of a pre-selected peer group of companies with respect to the same measures. The framework included in the table below is used to determining our relative TSR. Results between the performance levels are interpolated on a linear basis. | | Annualized TSR Above/Below | | Payout Multiplier | | Performance Level | | Median of Peers | | (% of the Target Award) | | Threshold | | -15% | | 0 | | Target | | At median | | 100 | | Maximum | | 20% | | 200 | |
The Compensation Committee approved the following total shareholder return performance peer group (the “Performance Peer Group”) for the 2017 PSUs:
| | | | | 44 | | Gran Tierra Energy 2023 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS Callon Petroleum Company | Oasis Petroleum Inc. | Canacol Energy Ltd. | Obsidian Energy Ltd. (formerly Penn West Petroleum Ltd.) | Carrizo Oil & Gas Inc. | Parex Resources Inc. | Contango Oil & Gas Company | Spartan Energy Corp. | Jones Energy Inc. | Synergy Resources Corp. | Kosmos Energy Ltd. | Tamarack Valley Energy Ltd. | Matador Resources Company | TransGlobe Energy Corp. | Frontera Energy Corporation
(formerly Pacific Exploration & Production Corp.) | W&TOffshore Inc. |
| | | | | | | | Performance Level | | Annualized TSR Above/Below Median of Peers | | Payout Multiplier (% of the Tarcget Award) | | | | Threshold | | -15% | | 0 | | | | Target | | At median | | 100 | | | | Maximum | | 20% | | 200 |
The Compensation Committee approved the following total shareholder return performance peer group (the “Performance Peer Group”) for the 2022 PSUs: | | | | | If any of the peer companies undergoes a change in corporate capitalization or a corporate transaction (including, but not limited to, a going-private transaction, bankruptcy, liquidation, merger or consolidation) during the performance period, the Committee shall undertake an evaluation to determine whether such peer company will be replaced. The Committee has pre-approved Denbury Resources Inc., Baytex Energy Corp. and EP Energy Corporation as replacement companies. During 2017 Cobalt International Energy
| | Parex Resources Inc., Stone Energy Corp. and TransAtlantic | | | Callon Petroleum Ltd. were removed from the Performance Peer Group and Company | | Tamarack Valley Energy Ltd., Carrizo | | | Canacol Energy Ltd. | | W&T Offshore Inc. | | | Crescent (Formerly Contango Oil & Gas Company) | | Tullow Oil plc | | | Kosmos Energy Ltd. | | Surge Energy Inc., and Oasis | | | Matador Resources Company | | Panoro Energy ASA | | | Frontera Energy Corporation (formerly Pacific Exploration & Production Corp.) | | VAALCO Energy Inc. (Formerly TransGlobe Energy Corp.) | | | Obsidian Energy Ltd. (formerly Penn West Petroleum Inc. were added as replacements.Ltd.) The Performance Peer Group was developed with the assistance of our Compensation Consultants to meet at least one of the following specifications: an enterprise value of at least $1 billion; Proved Reserves of 30 million BOE; WI production before royalties of 20,000+ BOEPD; production to be at least 50% oil and natural gas liquids. Enterprise value was calculated as the market value of our common stock plus the market value of debt minus cash and investments.
Net Asset Value.NAV per share is based on before tax NPV discounted at 10% of Colombia only proved plus probable (2P) reserves, year-end 2017 net debt of $272 million, comprised of working capital deficit of $16 million, senior convertible notes of $111 million (net of unamortized fees; $115 million gross) and reserves-based credit facility of $145 million (net of unamortized fees; $148 million gross), excluding risk management assets and liabilities and investment in Sterling Resources Ltd. shares, and number of shares of Gran Tierra’s common stock and Exchangeable Shares issued and outstanding at December 31, 2017 and 2016, of 391 million and 399 million, respectively. Net working capital and debt at December 31, 2017 and 2016, prepared in accordance with generally accepted accounting principles in the United States of America. NAV per share was chosen as a performance metric for our PSUs because it provides an indication of the value of the Company’s reserves on a per share basis. Growth in NAV per share demonstrates the Company’s ability to increase the underlying value of the Company without diluting stockholders. The framework included in the table below is used to assess NAV per share
| | |
If any of the peer companies undergoes a change in corporate capitalization or a corporate transaction (including, but not limited to, a going-private transaction, bankruptcy, liquidation, merger or consolidation) during the performance period, the Compensation Committee will undertake an evaluation to determine whether such peer company will be replaced. The Performance Peer Group was developed with the assistance of our independent compensation consultants to meet at least one of the following specifications: an enterprise value of at least $1 billion; Proved Reserves of 30 million BOE; WI production before royalties of 20,000+ BOEPD; production to be at least 50% oil and natural gas liquids. Enterprise value was calculated as the market value of our common stock plus the market value of debt minus cash and investments. Financial Covenant Compliance and Free Cash Flow. The Company has a number of financial covenants that it must stay in compliance with in order to maintain good standing with its lenders. The Company must also generate Free Cash Flow calculated as funds from operations less capital expenditures before exploration expense and before STIP payment. Free Cash Flow was chosen as a performance metric for our PSUs because it provides an indication of the ability of the Company to execute its exploration program and paydown its debt. Financial covenant compliance and free cash flow demonstrates the Company’s ability to increase the underlying value of the Company without risking stockholder value and diluting stockholders. The framework included in the table below is used to assess Financial Covenant Compliance and Free Cash Flow performance. Results between the performance levels are interpolated on a linear basis. | | | | | | | | Financial Covenant Compliance | | | | 50 | |
| | | Performance Level | | Financial Covenant Compliance | | Payout Multiplier (% of the Target Award) | | | | Threshold Performance Level | | Compound Annual Growth in NAV/share | | | Payout Multiplier (% of the Target Award) | | Threshold | | less than 8% | | | 0 | | Target | | 8% | | | 100 | | Maximum | | 12% | | | 200 | |
| | non-compliance | | 0 | | | | Target | | compliance | | 200 | | Free Cash Flow | | | | | | | | | Performance Level | | Free cash flow Strategy.Execution measured at end of strategy was chosen as a performance metric for our PSUs because it provides a link toyear
| | Payout Multiplier (% of the Company’s success in meeting key milestones and achieving its strategic goals. The Strategic Goals included metrics set by the Compensation Committee relating to acquisitions, exploration discoveries, financing and exploration commitments included in the Company’s annual budget and approved by the Board.Target Award) | | | | Threshold | | less than $10mm | | 0 | | | | Target | | $20mm | | 100 | | | | The following table lists the number of PSUs awarded in 2017 at minimum, target, and maximum levels :Maximum
| | Minimum # of units | | | Target # of units | | | Maximum # of units | | Gary S. Guidry | | 0 | | | 325,600 | | | 651,200 | | Ryan Ellson | | 0 | | | 235,800 | | | 471,600 | | Adrian Coral | | 0 | | | 131,200 | | | 262,400 | | Jim Evans | | 0 | | | 139,500 | | | 279,000 | | Lawrence West | | 0 | | | 139,500 | | | 279,000 | | David Hardy(1) | | 0 | | | 149,300 | | | 298,600 | |
| (1) | All PSUs held by David Hardy were forfeited upon his retirement on August 30, 2017. | | Greater than $30mm | | 200 |
2017 Performance Results.In February 2018, the Compensation Committee confirmed and approved the performance results for the portion of the 2017 annual PSU awards that vest based on performance during the one-year performance period ended December 31, 2017 and continued employment through the end of 2019.
For the performance period ended December 31, 2017, the performance results were as follows:
| | 2017 result | | | Performance Level | | | Weighting | | | Payout Multiplier | | TSR - Relative TSR above or below median of peers | | +0.5% | | | Above Target | | | 50% | | | 0.67 | | NAV - Compound annual growth in NAV per share | | +30% | | | Maximum | | | 25% | | | 0.50 | | Strategy | | | | | Above Target | | | 25% | | | 0.46 | | Total Multiplier | | | | | | | | | | | 1.62 | |
Stock Options
Stock options provide NEOs with an option to buy
| | | | | Gran Tierra common shares at a future date at the exercise price determined at the time of grant.Our Compensation Committee and Board continues to believe that time-vested stock options are an important element of our equity compensation program because they serve as a strong retention tool while ensuring that the recipient only receives value upon an increase in the value of our common stock. Stock options within the LTIP mix account for 20% of the value of equity awards granted.Energy 2023 Proxy Statement | | 45 |
COMPENSATION DISCUSSION AND ANALYSIS Strategy.Execution of strategy was chosen as a performance metric for our PSUs because it provides a link to the Company’s success in meeting key milestones and achieving its strategic goals. The Strategic Goals included metrics set by the Compensation Committee relating to acquisitions, exploration discoveries, financing and exploration commitments which have been included in the Company’s annual budget and subsequently approved by the Board. The following table lists the number of PSUs awarded in 2022 at minimum, target, and maximum levels: | | | | | | | | | | | | | | | | | | | Minimum # of units | | | Target # of units | | | Maximum # of units | | | | | | Gary S. Guidry | | | 0 | | | | 923,077 | | | | 1,846,154 | | | | | | Ryan Ellson | | | 0 | | | | 630,769 | | | | 1,261,538 | | | | | | Jim Evans | | | 0 | | | | 368,132 | | | | 736,264 | | | | | | Rodger Trimble | | | 0 | | | | 263,736 | | | | 527,472 | | | | | | Lawrence West | | | 0 | | | | 368,132 | | | | 736,264 | |
2022 Performance Results. In January 2023, the Compensation Committee confirmed and approved the performance results for the portion of the 2022 annual PSU awards that vest based on performance during the one-year performance period ended December 31, 2022 and continued employment through the end of 2022. For the performance period ended December 31, 2022, the performance results were as follows: | | | | | | | | | | | | | 2022 Performance Factor Level | | Weighting | | Payout Multiplier | | | | | TSR – Relative TSR above or below median of peers | | Above Target | | 50% | | 0.99 | | | | | Financial Covenant Compliance and Free Cash Flow | | Above Target | | 25% | | 0.50 | | | | | Strategy Achievement | | Above Target | | 25% | | 0.50 | | | | | Total Multiplier | | | | | | 1.99 |
The PSUs granted in 2020 vested on December 31, 2022 and the calculation of the performance multiplier for the three-year period is as follows: | | | | | | | | Year | | Performance Multiplier | | Weighted Contribution | | | | 2020 | | 0.50 | | 0.10 | | | | 2021 | | 2.00 | | 0.40 | | | | 2022 | | 1.99 | | 0.40 | | | | Three-Year | | 0.83 | | 0.33 | | | | TOTAL MULTIPLIER | | | | 1.23 |
Stock Options Stock options provide NEOs with an option to purchase Gran Tierra common shares at a future date at the exercise price determined at the time of grant. Our Compensation Committee and Board continues to believe that time-vested stock options are an important element of our equity compensation program because they serve as a strong retention tool while ensuring that the recipient only receives value upon an increase in the value of our common stock. Stock options within the LTIP mix account for 20% of the value of equity awards granted, based on the grant date fair value. Stock options vest pro-rata annually over three years, beginning with the first anniversary of the date of grant, and have a term of five years, subject to the officer’s continuous provision of services to Gran Tierra through the vesting date (except as otherwise provided in an officer’s award agreement or any employment agreement with Gran Tierra). The exercise price for our stock options is equal to the market price per share at the time of grant. The Compensation Committee meets in the first quarter each year to evaluate, review and approve the annual stock option award design and level of awards for the NEOs. RSUs
46 | | Gran Tierra Energy 2023 Proxy Statement | | |
COMPENSATION DISCUSSION AND ANALYSIS Actual Total Compensation Paid to NEOs | | | | | | | | | | | | | | | | | | | | | | Year | | Total Target Compensation for PEO (USD) | | | Total Compensation Actually Paid to PEO (USD) | | | Average of Total Target Compensation for non-PEO NEOs (USD) | | | Average of Total Compensation Actually Paid to Non-PEO NEOs (USD) | | | | (a) | | | (b) | | | (c) | | | (d) | | | | | | | 2022 | | $ | 2,426,000 | | | $ | 1,163,000 | | | $ | 1,113,000 | | | $ | 565,000 | | | | | | | 2021 | | $ | 2,426,000 | | | $ | 880,000 | | | $ | 1,113,000 | | | $ | 454,000 | | | | | | | 2020 | | $ | 2,426,000 | | | $ | 1,020,000 | | | $ | 1,113,000 | | | $ | 588,000 | |
Principal Executive Officer (PEO) – Gary Guidry – President and Chief Executive Officer Non-PEO NEOs – Ryan Ellson, Executive Vice President and Chief Financial Officer and ; Jim Evans, VP Corporate Services; Lawrence West, VP Exploration; Rodger Trimble, VP Investor Relations a) | No RSUs were granted to NEOs in 2017 asThis column represents the program has been replaced with grants of PSUs for our executives. RSUs granted prior to 2017 entitle the holder to receive, either the underlying number of shares of our Common Stock upon vesting of such units or, at the optiontotal target compensation of the Company, a cash payment equal to the value of the underlying shares. RSUs vest over three years,PEO which includes: base salary, short term incentive plan and once an RSU is vested, it is immediately settled.long-term incentive.
Equity Awards Granted During 2017
In 2017, the Compensation Committee approved the following awards under our 2007 Equity Incentive Plan for the NEOs:
| | | | | PSUs | | | Stock Options | | | | Total LTI Grant Date Fair Value ($) | | | Target # of units | | | Grant Date Fair Value ($)(1) | | | # of units | | | Grant Date Fair Value ($)(1) | | Gary S. Guidry | | 1,046,505 | | | 325,600 | | | 836,792 | | | 184,200 | | | 209,713 | | Ryan Ellson | | 757,883 | | | 235,800 | | | 606,006 | | | 133,400 | | | 151,877 | | Adrian Coral | | 421,661 | | | 131,200 | | | 337,184 | | | 74,200 | | | 84,477 | | Jim Evans | | 448,343 | | | 139,500 | | | 358,515 | | | 78,900 | | | 89,828 | | Lawrence West | | 448,343 | | | 139,500 | | | 358,515 | | | 78,900 | | | 89,828 | | David Hardy(2) | | 479,905 | | | 149,300 | | | 383,701 | | | 84,500 | | | 96,204 | |
| (1) | The grant date fair value reported in this column is calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 Compensation - Stock Compensation (“ASC 718”). |
| (2) | All PSUs held by David Hardy were forfeited upon his retirement on August 30, 2017. |
b) | Benefits
The NEOs are eligible for full participationThis column represents the total compensation paid to the PEO in all rights and benefits under any life insurance, disability, medical, dental, health and accident plans maintained by Gran Tierra for its employees and executive officers. Our executive officers generally do not receive any supplemental retirement benefits or perquisites, except for limited perquisites provided on a case-by-case basis. In addition, our employees including our executive officers will be paid 100% of theirthat year which includes: base salary, in the event they become disabled while still employed by us, until such time as the executive officer begins to receiveshort term incentive plan and long-term disability insurance benefits which is intended to pay two-thirds of base salary to a maximum of $15,000/month to age 70. These are standard basic benefits in our industry and help to retain and recruit key talent.incentive.
Share Ownership Guidelines
We have implemented share ownership guidelines for all of our executives, which are designed to align their long-term financial interests with those of our stockholders. The NEO share ownership guidelines are as follows:
Position | Guideline | | | Ownership Relative to Base Salary
as of December 31, 2017(1) | | Chief Executive Officer | 3 X base salary | | | Exceeds | | Chief Financial Officer | 2 X base salary | | | Exceeds | | Other NEOs | 1 X base salary | | | Exceeds or In-Progress | |
c) | If at any time an executive officer does not meet their ownership requirement, they must retain (a) any of our Common Stock owned by them (whether owned directly or indirectly) and (b) any net shares received asThis column represents the resulttotal target compensation of the exercise, vesting or payment of any equity award untilNon-PEO NEOs which includes: base salary, short term incentive plan and long-term incentive.
|
d) | This column represents the ownership requirement is met,total compensation paid to the Non-PEO NEOs in each case unless otherwise approved by the Compensation Committee. For this purpose, “net shares” means the shares of stock that remain after shares are sold or withheld to (i) pay the exercise price for a stock option award or (ii) satisfy any tax obligations, including withholding taxes, arising in connection with the exercise, vesting or payment of an equity award.year which includes: base salary, short term incentive plan and long-term incentive. |
Benefits The NEOs are eligible for full participation in all rights and benefits under any life insurance, disability, medical, dental, health and accident plans maintained by Gran Tierra for its employees and executive officers. Our executive officers generally do not receive any supplemental retirement benefits or perquisites, except for corporate health services and other limited perquisites provided on a case-by-case basis. In addition, our employees including our executive officers will be paid 100% of their base salary in the event they become disabled while still employed by us, until such time as the executive officer begins to receive long-term disability insurance benefits which are intended to pay two-thirds of base salary to a maximum of $15,000/month to age 70. These are standard basic benefits in our industry and help to retain and recruit key talent. In addition, the NEOs are eligible to participate in the Company’s Employee Share Purchase Plan which allows employees to contribute up to 10% of their gross salary which is then matched by the Company and used to purchase undiscounted shares. Share Ownership Guidelines We have implemented share ownership guidelines for all of our executives, which are designed to align their long-term financial interests with those of our stockholders. The NEO share ownership guidelines are as follows: | | | | | | | | Position | | Guideline | | Ownership Relative to Base Salary as of December 31, 2022 | | | | Chief Executive Officer | | 3 X base salary | | Exceeds | | | | Chief Financial Officer | | 2 X base salary | | Exceeds | | | | Other NEOs | | 1 X base salary | | Exceeds |
If at any time an executive officer does not meet their ownership requirement, they must retain (a) any of our Common Stock owned by them (whether owned directly or indirectly) and (b) any net shares received as the result of the exercise, vesting or payment of any equity award until the ownership requirement is met, in each case unless otherwise approved by the Compensation Committee. For this purpose, “net shares” means the shares of stock that remain after shares are sold or withheld to (i) pay the exercise price for a stock option award or (ii) satisfy any tax obligations, including withholding taxes, arising in connection with the exercise, vesting or payment of an equity award. | | | | 52 | | Gran Tierra Energy 2023 Proxy Statement | | 47 |
COMPENSATION DISCUSSION AND ANALYSIS Compliance with these requirements is evaluated as of December 31 of each year. The value of an individual’s share ownership as of such date is determined by multiplying the number of shares of our stock or other eligible equity interests held by the individual by the greater of the purchase price of the stock or the closing price on December 31 of each year. In determining stock ownership levels, we include shares of common stock held directly or indirectly by the officer (including shares beneficially owned in a trust, by a limited liability company or partnership, and by a spouse and/or minor children). Outstanding RSUs, PSUs and unexercised stock options are not included. If an executive officer does not satisfy the stock ownership requirements, they must retain all shares acquired on the vesting of equity awards or the exercise of stock options (net of exercise costs and taxes) until compliance is achieved. All of the NEO’s are in compliance. Clawback Provisions The Company has adopted a policy specifying that if an executive engages in fraud or intentional misconduct that requires a material restatement of financial results, and the fraud or intentional misconduct results in an incorrect determination that an incentive compensation performance goal had been achieved, the Board may take action to recover any incentive compensation resulting from the incorrect determination that had been paid to the executive during the three-year period preceding the filing of the accounting restatement. We intend to amend the Company’s clawback policy or adopt a new clawback policy consistent with the requirements of Exchange Act Rule 10D-1 prior to the effectiveness of final NYSE listing standards implementing such rule. Prohibition on Speculative Trading of Company Stock We maintain a policy for securities transactions applicable to all employees including officers, directors, and other members of management of the Company which prohibits engaging in short sales, transactions in put or call options, hedging transactions or other inherently speculative transactions with respect to our stock at any time. The policy also prohibits margining or pledging Company securities. In addition, our Insider Trading Policy, among other things, prohibits our officers, including our NEOs, directors and employees from trading during quarterly and special blackout periods. Employment Agreements The Compensation Committee approves the terms of all NEO employment agreements. The terms of those agreements were structured to attract and retain persons key to our success, as well as to be competitive with compensation practices for executives in similar positions at companies of similar size and complexity. In assessing whether the terms of the employment agreements were competitive, the Compensation Committee received advice from our independent compensation consultant and reviewed appropriate surveys and industry benchmarking data. The employment agreements do not have a fixed term. No changes were made to any of the NEO employment agreements already in place during 2022. The terms of the NEO employment agreements provide for certain payments and benefits in connection with a termination of employment and corporate transaction. The Compensation Committee believes these payments allow management to focus their attention and energy on making objective business decisions that are in the best interests of stockholders without allowing personal considerations to affect the decision-making process. Additionally, executive officers at other companies in our industry and the general market in which we compete for executive talent commonly provide post-termination payments, and we have consistently provided this benefit to certain executives in order to remain competitive in attracting and retaining skilled professionals in our industry. In 2017, the Company’s pay practices were amended so that no new employment agreements entered into between Gran Tierra and executive officers will include any provisions that provide for excise tax gross-ups or change in control “Single” or “Modified Single” triggers of severance payments or equity vesting accelerations. Say on Pay Advisory Vote on Executive Compensation The Company asked stockholders to vote on a “say-on-pay” advisory vote on our executive compensation in 2022 at the 2022 annual meeting of stockholders. Stockholders expressed support for the compensation of our named executive officers, with approximately 88.95% of the votes cast in favor of the “say-on-pay” advisory vote. Given the stockholders support, the Company did not make any changes to our compensation programs in 2022 as a result of the “say-on-pay” advisory vote. The Compensation Committee also considers many other factors in evaluating our executive compensation programs as discussed in this Compensation Discussion and Analysis, including the Compensation Committee’s assessment of the interaction of our compensation programs with our corporate business objectives and review of peer group data, each of which is evaluated in the context of the Compensation Committee’s duty to act in the best interests of our stockholders. | | | | | 48 | | Gran Tierra Energy 2023 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS Tax Considerations Following the enactment of the Tax Cuts and Jobs Act, compensation in excess of $1 million earned by our executive officers who are subject to Section 162(m) of the Internal Revenue Code is not deductible. The Compensation Committee has the discretion to approve, and we will continue to pay, compensation that will not be deductible for federal income tax purposes. Consistent with our compensation philosophy, we currently expect that we will continue to structure our executive compensation program so that a significant portion of total executive compensation is linked to the performance of our company REPORT OF THE COMPENSATION COMMITTEE The Compensation Committee has reviewed and discussed with management the Company’s disclosure under “Compensation Discussion and Analysis” contained in this proxy statement. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement. Members of the Compensation Committee: Brooke Wade, Chair Peter J. Dey Robert B. Hodgins David Smith | | | | | Gran Tierra Energy 2023 Proxy Statement | | 49 |
Executive Compensation Summary Compensation Table The following table summarizes the compensation of our NEOs for their performance during the years ended December 31, 2022, 2021 and 2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Position | | Year | | | Salary(1) ($) | | | Stock Awards (2) ($) | | | Option Awards (3) ($) | | | Non-Equity Incentive Plan Compensation (4) ($) | | | All Other Compensation (5) ($) | | | Total ($) | | | | | | | | | | Gary S. Guidry President and Chief Executive Officer | | | 2022 | | | | 441,176 | | | | 1,310,769 | | | | 334,995 | | | | 507,353 | | | | 50,679 | | | | 2,644,972 | | | | 2021 | | | | 473,261 | | | | 1,337,476 | | | | 332,821 | | | | 473,261 | | | | 57,410 | | | | 2,674,229 | | | | 2020 | | | | 431,982 | | | | 1,255,922 | | | | 312,288 | | | | 391,140 | | | | 42,345 | | | | 2,433,677 | | | | | | | | | | Ryan Ellson Executive Vice President & Chief Financial Officer | | | 2022 | | | | 312,500 | | | | 895,692 | | | | 228,913 | | | | 305,147 | | | | 39,495 | | | | 1,781,747 | | | | 2021 | | | | 335,226 | | | | 913,942 | | | | 227,427 | | | | 294,999 | | | | 44,702 | | | | 1,816,296 | | | | 2020 | | | | 305,988 | | | | 858,214 | | | | 213,397 | | | | 257,619 | | | | 30,576 | | | | 1,665,794 | | | | | | | | | | Jim Evans Vice President, Corporate Services | | | 2022 | | | | 275,735 | | | | 522,747 | | | | 133,599 | | | | 177,941 | | | | 21,225 | | | | 1,131,247 | | | | 2021 | | | | 295,788 | | | | 533,398 | | | | 132,732 | | | | 163,275 | | | | 23,345 | | | | 1,148,538 | | | | 2020 | | | | 306,788 | | | | 500,873 | | | | 124,544 | | | | 129,595 | | | | 121,307 | | | | 1,183,107 | | | | | | | | | | Rodger Trimble Vice President, Investor Relations | | | 2022 | | | | 220,588 | | | | 374,505 | | | | 95,713 | | | | 120,588 | | | | 29,152 | | | | 840,546 | | | | 2021 | | | | 236,630 | | | | 382,136 | | | | 95,091 | | | | 118,315 | | | | 32,219 | | | | 864,391 | | | | 2020 | | | | 215,991 | | | | 358,835 | | | | 89,225 | | | | 103,676 | | | | 20,331 | | | | 788,058 | | | | | | | | | | Lawrence West Vice President, Exploration | | | 2022 | | | | 275,735 | | | | 522,747 | | | | 133,599 | | | | 177,941 | | | | 7,534 | | | | 1,117,556 | | | | 2021 | | | | 295,788 | | | | 533,398 | | | | 132,732 | | | | 148,288 | | | | 8,556 | | | | 1,118,762 | | | | 2020 | | | | 269,989 | | | | 500,873 | | | | 124,544 | | | | 129,595 | | | | 8,393 | | | | 1,033,394 | |
(1) | All compensation is paid in Canadian dollars and converted into U.S. dollars for the purposes of the above table. For 2022 compensation amounts, the exchange rate at December 31, 2022 of one U.S. dollar to Canadian $1.3600 is used. |
(2) | Amounts reported in the “Stock Awards” column represent the aggregate grant date fair value of RSU and PSU awards, computed in accordance with ASC 718, disregarding estimated forfeitures. The PSU awards are subject to market conditions and have been valued based on the probable outcome of the market conditions as of the grant date. For a discussion of valuation assumptions, see Note 9—Share Capital of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2022. Assuming maximum performance is achieved, the value of PSUs granted in 2022 based on the price of the Company’s shares at the date of grant would be as follows: Gary S. Guidry—$ 2,621,538; Ryan Ellson—$ 1,791,384; Jim Evans—$ 1,045,494; Rodger Trimble—$ 749,010 and Lawrence West—$ 1,045,49. |
(3) | Amounts reported in the “Option Awards” column represent the aggregate grant date fair value of stock options, computed in accordance with ASC 718. The value ultimately realized by the NEOs upon the actual vesting of the award(s) or the exercise of the stock option(s) may or may not be equal to this determined value. For a discussion of valuation assumptions, see Note 7—Share Capital of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2022. |
(4) | Amounts reported in the “Non-equity Incentive Plan Compensation” column for each year represent the amount earned in that year, irrespective of when the amount was paid. |
(5) | Amounts reported in the “All Other Compensation” column include matching contributions to the Employee Share Purchase Plan, parking and transportation allowances, corporate health and group term life insurance, and other perquisites, as shown in the table below. |
| | | | | 50 | | Gran Tierra Energy 2023 Proxy Statement |
EXECUTIVE COMPENSATION | | | | | | | | | | | | | | | | | | | | | | Name | | Employee Share Purchase Plan Contribution (1) ($) | | | Corporate Health and Group Term Life Insurance (S) | | | Parking and Transportation Allowance ($) | | | Total ($) | | | | | | | Gary S. Guidry | | | 42,279 | | | | 3,909 | | | | 4,491 | | | | 50,679 | | | | | | | Ryan Ellson | | | 29,948 | | | | 5,056 | | | | 4,491 | | | | 39,495 | | | | | | | Jim Evans | | | 13,213 | | | | 4,483 | | | | 3,529 | | | | 21,225 | | | | | | | Rodger Trimble | | | 21,140 | | | | 4,483 | | | | 3,529 | | | | 29,152 | | | | | | | Lawrence West | | | — | | | | 4,005 | | | | 3,529 | | | | 7,534 | |
(1) | These amounts reflect the Company’s matching contributions to the NEOs’ Employee Share Purchase Plan accounts. |
2022 GRANTS OF PLAN-BASED AWARDS The following table shows certain information regarding grants of plan-based awards granted to the NEOs for the fiscal year ended December 31, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Option Awards: Number of Securities Underlying | | | Exercise or Base Price of Option | | | Grant Date Fair Value of Stock and Option | | Name | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | Options (#) | | | Awards ($/Sh) | | | Awards ($) (1) | | | | | | | | | | | | | Gary S. Guidry | | | | | | $ | 0 | | | | 441,176 | | | | 882,353 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | 0 | | | | 923,077 | | | | 1,846,154 | | | | | | | | | | | | 1,310,769 | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 375,000 | | | | 1.42 | | | | 334,995 | | | | | | | | | | | | | Ryan Ellson | | | | | | $ | 0 | | | | 250,000 | | | | 500,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | 0 | | | | 630,769 | | | | 1,261,538 | | | | | | | | | | | | 895,692 | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 256,250 | | | | 1.42 | | | | 228,913 | | | | | | | | | | | | | Jim Evans | | | | | | $ | 0 | | | | 137,868 | | | | 275,735 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | 0 | | | | 368,132 | | | | 736,264 | | | | | | | | | | | | 522,747 | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 149,554 | | | | 1.42 | | | | 133,599 | | | | | | | | | | | | | Rodger Trimble | | | | | | $ | 0 | | | | 110,294 | | | | 220,588 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | 0 | | | | 263,736 | | | | 527,472 | | | | | | | | | | | | 374,505 | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 107,143 | | | | 1.42 | | | | 95,713 | | | | | | | | | | | | | Lawrence West | | | | | | $ | 0 | | | | 137,868 | | | | 275,735 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | 0 | | | | 368,132 | | | | 736,264 | | | | | | | | | | | | 522,747 | | | | | | | | | | | | | | | | 2/24/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 149,554 | | | | 1.42 | | | | 133,599 | |
(1) | The amounts in this column reflect the aggregate grant date fair value of awards granted to NEOs in 2022 computed in accordance with ASC 718, disregarding estimated forfeitures. The value ultimately realized by each NEO upon the actual vesting of the award(s) or exercise of the stock option(s) may or may not be equal to this determined value. For a discussion of the valuation assumptions, see Note 9 — Share Capital of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2022. |
| | | | | Gran Tierra Energy 2023 Proxy Statement | | 51 |
EXECUTIVE COMPENSATION OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2022 The following table shows for the fiscal year ended December 31, 2022, certain information regarding outstanding equity awards held by each of the NEOs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | | | | | | | | | | | | | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units That Have Not Vested (#) | | | Market Value of Unearned Units That Have Not Vested ($) (1)
| | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (1)
| | | | | | | | | | | | | | Gary S. Guidry | | | 193,103 | | | | 0 | | | | 2.47 | | | | March 1, 2023 | | | | 2,006,214 | (2) | | | 1,986,152 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | 291,667 | | | | 0 | | | | 2.32 | | | | March 1, 2024 | | | | 1,301,592 | (3) | | | 1,288,576 | | | | 329,476 | (4) | | | 326,181 | | | | | | | | | | | | | | | | | 651,162 | | | | 325,582 | (5) | | | 0.77 | | | | Feb. 28, 2025 | | | | 307,692 | (6) | | | 304,615 | | | | 615,385 | (7) | | | 609,231 | | | | | | | | | | | | | | | | | 229,508 | | | | 688,525 | (8) | | | 0.82 | | | | March 1, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 375,000 | (9) | | | 1.42 | | | | Feb. 24, 2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ryan Ellson | | | 139,862 | | | | 0 | | | | 2.47 | | | | March 1, 2023 | | | | 1,370,912 | (2) | | | 1,357,203 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | 199,306 | | | | 0 | | | | 2.32 | | | | March 1, 2024 | | | | 743,042 | (3) | | | 735,611 | | | | 371,521 | (4) | | | 367,806 | (3) | | | | | | | | | | | | | | | | 444,961 | | | | 222,481 | (5) | | | 0.77 | | | | Feb. 28, 2025 | | | | 210,256 | (6) | | | 208,153 | | | | 420,513 | (7) | | | 416,308 | (6) | | | | | | | | | | | | | | | | 156,830 | | | | 313,662 | (8) | | | 0.82 | | | | March 1, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 256,250 | (9) | | | 1.42 | | | | Feb. 24, 2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jim Evans | | | 82,759 | | | | 0 | | | | 2.47 | | | | March 1, 2023 | | | | 800,097 | (2) | | | 792,096 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | 116,319 | | | | 0 | | | | 2.32 | | | | March 1, 2024 | | | | 433,657 | (3) | | | 429,320 | | | | 216,828 | (4) | | | 214,660 | (3) | | | | | | | | | | | | | | | | 256,690 | | | | 129,845 | (5) | | | 0.77 | | | | Feb. 28, 2025 | | | | 122,711 | (6) | | | 121,484 | | | | 245,421 | (7) | | | 242,967 | (6) | | | | | | | | | | | | | | | | 91,530 | | | | 183,060 | (8) | | | 0.82 | | | | March 1, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 149,554 | (9) | | | 1.42 | | | | Feb. 24, 2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rodger Trimble | | | 82,759 | | | | 0 | | | | 2.47 | | | | March 1, 2023 | | | | 573,203 | (2) | | | 567,471 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | 83,333 | | | | 0 | | | | 2.32 | | | | March 1, 2024 | | | | 310,679 | (3) | | | 307,572 | | | | 155,340 | (4) | | | 153,787 | (3) | | | | | | | | | | | | | | | | 186,046 | | | | 93,024 | (5) | | | 0.77 | | | | Feb. 28, 2025 | | | | 87,912 | (6) | | | 87,033 | | | | 175,824 | (7) | | | 174,066 | (6) | | | | | | | | | | | | | | | | 65,573 | | | | 131,148 | (8) | | | 0.82 | | | | March 1, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 107,143 | (9) | | | 1.42 | | | | Feb. 24, 2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lawrence West | | | 82,759 | | | | 0 | | | | 2.47 | | | | March 1, 2023 | | | | 800,097 | (2) | | | 792,096 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | 116,319 | | | | 0 | | | | 2.32 | | | | March 1, 2024 | | | | 433,657 | (3) | | | 429,320 | | | | 216,828 | (4) | | | 214,660 | (3) | | | | | | | | | | | | | | | | 256,690 | | | | 129,845 | (5) | | | 0.77 | | | | Feb. 28, 2025 | | | | 122,711 | (6) | | | 121,484 | | | | 245,421 | (7) | | | 242,967 | (6) | | | | | | | | | | | | | | | | 91,530 | | | | 183,060 | (8) | | | 0.82 | | | | March 1, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 149,554 | (9) | | | 1.42 | | | | Feb. 24, 2027 | | | | | | | | | | | | | | | | | | | |
(1) | Calculated using $0.99 which is the closing price of Gran Tierra’s shares on December 31, 2022. |
(2) | These amounts include the tranches of the PSU awards granted in February of 2020 which were vested December 31, 2022 and were settled in February 2023. |
(3) | Provided that our NEOs remain employed through the settlement date, these amounts represent the number of common shares, or their cash equivalent, deliverable to each NEO with respect to the first and second tranches (representing 40% of the target amount) of the PSU award granted on March 1, 2021. These amounts represent the actual number of common shares, or their cash equivalent, earned pursuant to the |
| | | | | 52 | | Gran Tierra Energy 2023 Proxy Statement |
EXECUTIVE COMPENSATION | terms of the PSUs for the performance period from January 1, 2021 through December 31, 2021, and the period January 1, 2022 through December 31, 2022. The first tranche became earned at 50% of target and the second tranche became earned at 200% of target. The awards are enumerated in this column because while the performance element of vesting for the awards has been fulfilled, the continued service requirement for vesting has not. If the NEOs do not remain employed through the settlement date, they will forfeit the awards. As such, the awards were not fully vested as of December 31, 2022. |
(4) | These amounts include the tranches (representing 40% of the target amount) of the PSU award granted on March 1, 2021 the vesting of which is still subject to company performance. The applicable performance period for the third tranche (representing 20% of the target amount) is January 1, 2023 through December, 2023. The fourth tranche (representing 40% of the target amount) has a performance period which began on January 1, 2020 and will end on December 31, 2023. |
(5) | The right to exercise the options vest one-third on February 28, 2021, one-third on February 28, 2022, and one-third on February 28, 2023, in each case if the option holder is still employed by Gran Tierra on such date. |
(6) | Provided that our NEOs remain employed through the settlement date, these amounts represent the number of common shares, or their cash equivalent, deliverable to each NEO with respect to the first tranche (representing 20% of the target amount) of the PSU award granted on February 24, 2022. These amounts represent the actual number of common shares, or their cash equivalent, earned pursuant to the terms of the PSUs for the performance period from January 1, 2022 through December 31, 2022. The awards are enumerated in this column because while the performance element of vesting for the awards has been fulfilled, the continued service requirement for vesting has not. If the NEOs do not remain employed through the settlement date, they will forfeit the awards. As such, the awards were not fully vested as of December 31, 2022. |
(7) | These amounts include the tranches (representing 80% of the target amount) of the PSU award granted on February 24, 2022 the vesting of which is still subject to company performance. The applicable performance period for the second tranche (representing 20% of the target amount) is January 1, 2023 through December 31, 2023, and the applicable performance period for the third tranche (representing 20% of the target amount) is January 1, 2024 through December, 2024. The fourth tranche (representing 40% of the target amount) has a performance period which began on January 1, 2022 and will end on December 31, 2024. The amounts above represent the maximum number of the PSUs that may vest. The actual number of PSUs that vest pursuant to the PSU award granted on February 24, 2022 will depend on our performance over the applicable performance periods and the NEOs continued employment through the date of settlement. |
(8) | The right to exercise the options vest one-third on March 1, 2022, one-third on March 1, 2023 and one-third on March 1, 2024, in each case if the option holder is still employed by Gran Tierra on such date. |
(9) | The right to exercise the options vest one-third on February 24, 2023 one-third on February 24, 2024 and one-third on February 24, 2025, in each case if the option holder is still employed by Gran Tierra on such date. |
2022 OPTION EXERCISES AND STOCK VESTED The following table presents information concerning the aggregate number of options that were exercised and the PSUs that vested during the fiscal year ended December 31, 2022, for the NEOs. | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | | | | | | Name | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | | Number of Shares Acquired on Vesting (#) (1) | | | Value Realized on Vesting ($) (2) | | | | | | | Gary S. Guidry | | | — | | | | — | | | | 2,006,214 (PSU) | | | | 1,986,152 | | | | | | | Ryan Ellson | | | — | | | | — | | | | 1,370,912 (PSU) | | | | 1,357,203 | | | | | | | Jim Evans | | | — | | | | — | | | | 800,097 (PSU) | | | | 792,096 | | | | | | | Rodger Trimble | | | | | | | | | | | 573,203 (PSU) | | | | 567.471 | | | | | | | Lawrence West | | | — | | | | — | | | | 800,097 (PSU) | | | | 792,096 | |
(1) | All PSUs that vested during 2022 were settled in cash, and no shares of common stock were issued. |
(2) | The amounts in this column were calculated by multiplying the number of shares of ourcommon stock or other eligible equity interests heldsubject to the PSU that vested by the individual by the greater of the purchaseclosing market price of the stock or the closing price on December 31 of each year. In determining stock ownership levels, we include shares of common stock held directly or indirectly by the officer (including shares beneficially owned in a trust, by a limited liability company or partnership, and by a spouse and/or minor children). Outstanding RSUs, PSUs and unexercised stock options are not included. If an executive officer does not satisfy the stock ownership requirements, they must retain all shares acquired on the vesting date of equity awards or the exercise of stock options (net of exercise costs and taxes) until compliance is achieved.
The following table shows the number and value of shares owned at December 31, 2017 compared with the minimum share ownership guideline:
| | Number of Shares Owned as of December 31, 2017 | | | Value of Shares owned as of December 31, 2017(1) | | | Minimum Ownership Per Guideline | | Gary S. Guidry | | 2,527,000 | | | $ 6,822,900 | | | $ 956,557 | | Ryan Ellson | | 266,030 | | | $ 718,281 | | | $ 518,135 | | Adrian Coral | | 0 | | | 0 | | | 230,000 | | Jim Evans | | 251,405 | | | $ 678,794 | | | $ 239,139 | | Lawrence West | | 245,030 | | | $ 661,581 | | | $ 239,139 | | David Hardy | | n/a | | | n/a | | | n/a | |
| (1) | Value is calculated based on the closing price of the Company’s shares on the NYSE American on December 29, 2017, which was $2.70. |
Clawback Provisions
The Company has adopted a policy specifying that if an executive engages in fraud or intentional misconduct that requires a material restatement of financial results, and the fraud or intentional misconduct results in an incorrect determination that an incentive compensation performance goal had been achieved, the Board may take action to recover any incentive compensation resulting from the incorrect determination that had been paid to the executive during the three-year period preceding the filing of the accounting restatement.
Prohibition on Speculative Trading of Company Stock
We maintain a policy for securities transactions applicable to all officers, directors, and other members of management of the Company2022 which prohibits engaging in short sales, transactions in put or call options, hedging transactions or other inherently speculative transactions with respect to our stock at any time. In addition, our Insider Trading Policy, among other things, prohibits our officers, including our NEOs, directors and employees from trading during quarterly and special blackout periods.was $0.99.
Employment Agreements
The Compensation Committee approves the terms of all NEO employment agreements. The terms of those agreements were structured to attract and retain persons key to our success, as well as to be competitive with compensation practices for executives in similar positions at companies of similar size and complexity. In assessing whether the terms of the employment agreements were competitive, the Compensation Committees received advice from our Compensation Consultant and reviewed appropriate surveys and industry benchmarking data. The employment agreements do not have a fixed term. No changes were made to any of the NEO employment agreements during 2017. The terms of the NEO employment agreements provide for certain payments and benefits in connection with a termination of employment and corporate transaction. The Compensation Committee believes these payments allow management to focus their attention and energy on making objective business decisions that are in the best interests of stockholders without allowing personal considerations to affect the decision-making process. Additionally, executive officers at other companies in our industry and the general market in which we compete for executive talent commonly provide post-termination payments, and we have consistently provided this benefit to certain executives in order to remain competitive in attracting and retaining skilled professionals in
our industry. In 2017, the Company’s pay practices were amended so that no new employment agreements entered into between Gran Tierra and executive officers will include any provisions that provide for excise tax gross-ups or change in control “Single” or “Modified Single” triggers of severance payments or equity vesting accelerations.
Say on Pay Advisory Vote on Executive Compensation
The Company asked stockholders to vote on a “say-on-pay” advisory vote on our executive compensation in 2017 at the 2017 annual meeting of stockholders. Stockholders expressed substantial support for the compensation of our named executive officers, with approximately 95% of the votes cast in favor of the “say-on-pay” advisory vote. The Compensation Committee carefully evaluated the results of the 2017 advisory vote. The Compensation Committee also considers many other factors in evaluating our executive compensation programs as discussed in this Compensation Discussion and Analysis, including the Compensation Committee’s assessment of the interaction of our compensation programs with our corporate business objectives and review of peer group data, each of which is evaluated in the context of the Compensation Committee’s fiduciary duty to act as the directors determine to be in stockholders’ best interests. While each of these factors bore on the Compensation Committee’s decisions regarding our named executive officers’ compensation, the Compensation Committee did not make any changes to our executive compensation program and policies as a result of the 2017 “say-on-pay” advisory vote.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed with management the Company’s disclosure under “Compensation Discussion and Analysis” contained in this proxy statement. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Members of the Compensation Committee:
Brooke Wade, Chair
Peter J. Dey
Robert B. Hodgins
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation of our NEOs for their performance during the years ended December 31, 2017, 2016 and 2015.
Name and Position | | Year | | | Salary(1) ($) | | | Stock Awards(3) ($) | | | Option Awards(4) ($) | | | Non-Equity Incentive Plan Compensation(2) ($) | | | All Other Compensation(5) ($) | | | Total ($) | | Gary S. Guidry(6) | | 2017 | | | 318,852 | | | 836,792 | | | 209,713 | | | 404,145 | | | 6,804 | | | 1,776,306 | | President and Chief | | 2016 | | | 297,907 | | | 832,048 | | | 219,984 | | | 359,723 | | | 4,555 | | | 1,714,217 | | Executive Officer | | 2015 | | | 187,204 | | | 350,550 | | | 896,072 | | | 140,173 | | | 2,238 | | | 1,576,237 | | | | | | | | | | | | | | | | | | | | | | | | Ryan Ellson(7) | | 2017 | | | 259,067 | | | 606,006 | | | 151,877 | | | 262,256 | | | 6,804 | | | 1,286,010 | | Chief Financial Officer | | 2016 | | | 242,050 | | | 602,756 | | | 159,358 | | | 235,347 | | | 4,555 | | | 1,244,066 | | | | 2015 | | | 151,214 | | | 221,400 | | | 522,709 | | | 102,601 | | | 2,228 | | | 1,000,152 | | | | | | | | | | | | | | | | | | | | | | | | Jim Evans(8) | | 2017 | | | 239,139 | | | 358,515 | | | 89,828 | | | 150,658 | | | 89,697 | | | 927,837 | | Vice President, Corporate | | 2016 | | | 223,430 | | | 356,440 | | | 94,229 | | | 128,845 | | | 3,997 | | | 806,941 | | Services | | 2015 | | | 134,921 | | | 73,800 | | | 298,691 | | | 51,301 | | | 2,228 | | | 560,941 | | | | | | | | | | | | | | | | | | | | | | | | Adrian Coral, | | 2017 | | | 210,461 | | | 337,184 | | | 84,477 | | | 166,600 | | | 116,694 | | | 915,416 | | President, Colombia | | 2016 | | | 185,303 | | | 78,204 | | | 20,670 | | | 156,551 | | | 122,557 | | | 563,285 | | | | 2015 | | | 206,230 | | | 68,750 | | | 94,024 | | | 136,070 | | | 120,217 | | | 625,291 | | | | | | | | | | | | | | | | | | | | | | | | Lawrence West(9) | | 2017 | | | 239,139 | | | 358,515 | | | 89,828 | | | 136,309 | | | 264,963 | | | 1,088,754 | | Vice President, | | 2016 | | | 223,430 | | | 356,440 | | | 94,229 | | | 125,866 | | | 247,069 | | | 1,047,034 | | Exploration | | 2015 | | | 98,522 | | | 73,800 | | | 298,691 | | | 51,301 | | | 154,681 | | | 676,995 | | | | | | | | | | | | | | | | | | | | | | | | David Hardy(10) | | 2017 | | | 170,586 | | | 383,701 | | | 96,204 | | | 0 | | | 731,288 | | | 1,381,779 | | Former Vice President, Legal | | 2016 | | | 239,071 | | | 381,710 | | | 100,812 | | | 184,702 | | | 25,515 | | | 931,810 | | and General Counsel | | 2015 | | | 231,936 | | | 88,550 | | | 160,393 | | | 108,382 | | | 37,503 | | | 626,764 | |
|
Potential Payment Upon Termination or Change of Control | (1) | All compensation is paid in Canadian dollars and converted into U.S. dollars for the purposes of the above table. For 2017 compensation amounts, the exchange rate at December 29, 2017 of one U.S. dollar to Canadian $1.2545 is used. |
Messrs. Guidry, Ellson, Evans, Trimble and West | (2) | Amounts reported in the “Non-equity Incentive Plan Compensation” column for each year represent the amount earned in that year, irrespective of when the amount was paid. |
| (3) | Amounts reported in the “Stock Awards” column represent the aggregate grant date fair value of RSU and PSU awards, computed in accordance with ASC 718, disregarding estimated forfeitures. The PSU awards are subject to market conditions and have been valued based on the probable outcome of the market conditions as of the grant date. For a discussion of valuation assumptions, see Note 7 - Share-Based Compensation of the Notes to Consolidated Financial Statements included under Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2017. Assuming maximum performance is achieved, the value of PSUs based on the price of the Company’s shares at the date of grant would be as follows: Gary S. Guidry - $1,673,584; Ryan Ellson - $1,212,012; Jim Evans - $717,030; Adrian Coral - $674,368; Lawrence West - $717,030; David Hardy - $767,402. |
| (4) | Amounts reported in the “Option Awards” column represent the aggregate grant date fair value of stock options, computed in accordance with ASC 718. The value ultimately realized by the NEOs upon the actual vesting of the award(s) or the exercise of the stock option(s) may or may not be equal to this determined value. For a discussion of valuation assumptions, see Note 7 - Share-Based Compensation of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2017. |
| (5) | Amounts reported in the “All Other Compensation” column include severance payments, vacation pay, parking and transportation allowances, group term life insurance, and other perquisites, as shown in the table below. |
| (6) | Mr. Guidry became President and Chief Executive Officer on May 7, 2015. |
| (7) | Mr. Ellson became Chief Financial Officer on May 11, 2015. |
| (8) | Mr. Evans became Vice President, Corporate Services on May 11, 2015. |
| (9) | Mr. West became Vice President, Exploration on May 11, 2015. |
| (10) | Mr. Hardy ceased to be our Vice President, Legal and General Counsel on August 30, 2017. |
Name | | Group Term Life Insurance (S) | | Parking and Transportation Allowance ($) | | Vacation Pay ($) | | Severance Payment ($) | | Other ($) | | Total ($) | | Gary S. Guidry | | 928 | | 5,876 | | — | | — | | — | | 6,804 | | Ryan Ellson | | 928 | | 5,876 | | — | | — | | — | | 6,804 | | Adrian Coral | | 3,722 | | — | | 7,747 | | — | | 105,225 | (1) | 116,694 | | Jim Evans | | 928 | | 3,029 | | — | | — | | 85,740 | (2) | 89,697 | | David Hardy | | 655 | | 2,551 | | 47,731 | | 680,351 | | | | 731,288 | | Lawrence West | | — | | — | | — | | — | | 264,963 | (3) | 264,963 | |
| (1) | Consists of $89,190 for driver, vehicle and vehicle expenses, $6,136 for club membership and $9,899 for savings fund contributions. Mr. Coral resides in Bogota, Colombia. |
| (2) | Consists of $15,945 allowance for housing and utilities; $37,713 for driver, vehicle and vehicle expenses; $27,401 for foreign service and hardship allowance; $4,384 for goods and services costs; and $297 for language training. Mr. Evans has been residing in Bogota, Colombia since September 2017. |
| (3) | Consists of $84,987 allowance for housing and utilities; $86,872 for driver, vehicle and vehicle expenses; $63,573 for foreign service and hardship allowance; $14,922 for goods and services costs; $12,365 for club membership; and $2,244 for language training. Mr. West currently resides in Bogota, Colombia. |
2017 GRANTS OF PLAN-BASED AWARDS
The following table shows certain information regarding grants of plan-based awards granted to the NEOs for the fiscal year ended December 31, 2017:
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Option Awards: Number of Securities Underlying | | Exercise or Base Price of Option | | Grant Date Fair Value of Stock and Option | | Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | | Threshold (#) | | Target (#) | | Maximum (#) | | | Options (#) | | Awards ($/Sh) | | Awards ($)(1) | | Gary S. Guidry | | | | $0 | | 318,852 | | 637,704 | | | | | | | | | | | | | | | | | | 2017/03/02 | | | | | | | | | 0 | | 325,600 | | 651,200 | | | | | | | | | | | 2017/03/02 | | | | | | | | | | | | | | | | 184,200 | | 2.57 | | 209,713 | | | | | | | | | | | | | | | | | | | | | | | | | | Ryan Ellson | | | | $0 | | 207,254 | | 383,420 | | | | | | | | | | | | | | | | | | 2017/03/02 | | | | | | | | | 0 | | 235,800 | | 471,600 | | | | | | | | | | | 2017/03/02 | | | | | | | | | | | | | | | | 133,400 | | 2.57 | | 151,877 | | | | | | | | | | | | | | | | | | | | | | | | | | Adrian Coral | | | | $0 | | 138,000 | | 234,600 | | | | | | | | | | | | | | | | | | 2017/03/02 | | | | | | | | | 0 | | 131,200 | | 262,400 | | | | | | | | | | | 2017/03/02 | | | | | | | | | | | | | | | | 74,200 | | 2.57 | | 84,477 | | | | | | | | | | | | | | | | | | | | | | | | | | Jim Evans | | | | $0 | | 119,570 | | 203,268 | | | | | | | | | | | | | | | | | | 2017/03/02 | | | | | | | | | 0 | | 139,500 | | 279,000 | | | | | | | | | | | 2017/03/02 | | | | | | | | | | | | | | | | 78,900 | | 2.57 | | 89,828 | | | | | | | | | | | | | | | | | | | | | | | | | | Lawrence West | | | | $0 | | 119,570 | | 203,268 | | | | | | | | | | | | | | | | | | 2017/03/02 | | | | | | | | | 0 | | 139,500 | | 279,000 | | | | | | | | | | | 2017/03/02 | | | | | | | | | | | | | | | | 78,900 | | 2.57 | | 89,828 | | | | | | | | | | | | | | | | | | | | | | | | | | David Hardy | | | | $0 | | 127,939 | | 217,497 | | | | | | | | | | | | | | | | | | 2017/03/02 | | | | | | | | | 0 | | 149,300 | | 298,600 | | | | | | | | | | | 2017/03/02 | | | | | | | | | | | | | | | | 84,500 | | 2.57 | | 96,204 | |
| (1) | The amounts in this column reflect the aggregate grant date fair value of awards granted to NEOs in 2017 computed in accordance with ASC 718, disregarding estimated forfeitures. The value ultimately realized by each NEO upon the actual vesting of the award(s) or exercise of the stock option(s) may or may not be equal to this determined value. For a discussion of the valuation assumptions, see Note 7—Share-Based Compensation of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2017. |
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2017
The following table shows for the fiscal year ended December 31, 2017, certain information regarding outstanding equity awards held by each of the NEOs.
| | Option Awards | | | Stock Awards | | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | | Number of Shares or Units That Have Not Vested (#) | | Market Value of Unearned Units That Have Not Vested ($)(2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Gary S. Guidry | | 400,000 | | 200,000 | (1) | 3.69 | | May 11, 2020 | | | 31,667 | (7) | 85,501 | | | | | | | | 63,500 | | 127,000 | (5) | 2.66 | | March 1, 2021 | | | 212,704 | (8) | 574,301 | | 375,360 | (3) | 1,013,472 | | | | 0 | | 184,200 | (6) | 2.57 | | March 2, 2022 | | | 105,300 | (9) | 284,310 | | 520,000 | (4) | 1,404,000 | | | | | | | | | | | | | | | | | | | | | Ryan Ellson | | 233,333 | | 116,667 | (1) | 3.69 | | May 11, 2020 | | | 20,000 | (7) | 54,000 | | | | | | | | 46,000 | | 92,000 | (5) | 2.66 | | March 1, 2021 | | | 154,088 | (8) | 416,038 | | 271,920 | (3) | 734,184 | | | | 0 | | 133,400 | (6) | 2.57 | | March 2, 2022 | | | 76,399 | (9) | 206,278 | | 377,280 | (4) | 1,018,656 | | | | | | | | | | | | | | | | | | | | | Adrian Coral | | 10,000 | | — | | 2.51 | | December 15, 2018 | | | 8,334 | (10) | 22,502 | | | | | | | | 23,000 | | — | | 5.90 | | March 3, 2020 | | | 19,992 | (8) | 53,978 | | 35,280 | (3) | 95,256 | | | | 16,312 | | — | | 8.40 | | March 9, 2021 | | | 42,509 | (9) | 114,774 | | 209,920 | (4) | 566,784 | | | | 7,500 | | — | | 5.83 | | Feb. 28, 2022 | | | | | | | | | | | | | 8,865 | | — | | 7.09 | | Feb. 28, 2019 | | | | | | | | | | | | | 20,500 | | — | | 6.45 | | Aug. 10, 2019 | | | | | | | | | | | | | 56,666 | | 28,334 | | 2.75 | | Mar. 3, 2020 | | | | | | | | | | | | | 5,966 | | 11,934 | | 2.66 | | Mar. 1, 2021 | | | | | | | | | | | | | 0 | | 74,200 | | 2.57 | | Mar. 2, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jim Evans | | 133,333 | | 66,667 | (1) | 3.69 | | May 11, 2020 | | | 6,667 | (7) | 18,001 | | | | | | | | 27,200 | | 54,400 | (5) | 2.66 | | March 1, 2021 | | | 91,120 | (8) | 246,024 | | 160,800 | (3) | 434,160 | | | | 0 | | 78,900 | (6) | 2.57 | | March 2, 2022 | | | 45,198 | (9) | 122,035 | | 233,200 | (4) | 602,640 | | | | | | | | | | | | | | | | | | | | | Lawrence | | | | | | | | | | | | | | | | | | | West | | 133,333 | | 66,667 | (1) | 3.69 | | May 11, 2020 | | | 6,667 | (7) | 18,001 | | | | | | | | 27,200 | | 54,400 | (5) | 2.66 | | March 1, 2021 | | | 91,120 | (8) | 246,024 | | 160,800 | (3) | 434,160 | | | | 0 | | 78,900 | (6) | 2.57 | | March 2, 2022 | | | 45,198 | (9) | 122,035 | | 233,200 | (4) | 602,640 | | | | | | | | | | | | | | | | | | | | | David Hardy | | 150,000 | | — | | 5.90 | | August 30, 2018 | | | — | | — | | — | | — | | | | 100,000 | | — | | 8.40 | | August 30, 2018 | | | | | | | | | | | | | 100,000 | | — | | 5.83 | | August 30, 2018 | | | | | | | | | | | | | 75,000 | | — | | 6.28 | | August 30, 2018 | | | | | | | | | | | | | 100,000 | | — | | 7.09 | | August 30, 2018 | | | | | | | | | | | | | 145,000 | | — | | 2.75 | | August 30, 2018 | | | | | | | | | | | | | 29,100 | | — | | 2.66 | | August 30, 2018 | | | | | | | | | | |
| (1) | The right to exercise the option will vest on May 12, 2018, as long as the option holder is still employed by Gran Tierra on that date. |
| (2) | Calculated using $2.70 which is the closing price of Gran Tierra’s shares on December 29, 2017. |
| (3) | These amounts include the tranches (representing 60% of the target amount) of the PSU award granted in March of 2016 the vesting of which is still subject to company performance. The applicable performance period for the third tranche (representing 20% of the target amount) is January 1, 2018 through December, 2018. The fourth tranche (representing 40% of the target amount) has a performance period which began on January 1, 2016 and will end on December 31, 2018. Because our performance during 2016 exceeded target, the amounts above represent the maximum number of the PSUs that may vest. The actual number of PSUs that vest pursuant to the PSU award granted in March of 2016 will depend on our performance over the applicable performance periods and the NEOs continued employment through the date of settlement. |
| (4) | These amounts include the tranches (representing 80% of the target amount) of the PSU award granted in March of 2017 the vesting of which is still subject to company performance. The applicable performance period for the second tranche (representing 20% of the target amount) is January 1, 2018 through December 31, 2018, and the applicable performance period for the third tranche (representing 20% of the target amount) is January 1, 2019 through December, 2019. The fourth tranche (representing 40% of the target amount) has a performance period which began on January 1, 2017 and will end on December 31, 2019. Because our performance during 2017 exceeded target, the amounts above represent the maximum number of the PSUs that may vest. The actual number of PSUs that vest pursuant to the PSU award granted in March of 2017 will depend on our performance over the applicable performance periods and the NEOs continued employment through the date of settlement. |
| (5) | The right to exercise the option will vest one-half on March 2, 2018 and one-half on March 2, 2019, in each case if the option holder is still employed by Gran Tierra on such date. |
| (6) | The right to exercise the option will vest one-third on March 2, 2018, one-third on March 2, 2019, and one-third on March 2, 2020, in each case if the option holder is still employed by Gran Tierra on such date. |
| (7) | The RSUs will all vest on May 12, 2018. |
| (8) | Provided that our NEOs remain employed through the settlement date, these amounts represent the number of common shares, or their cash equivalent, deliverable to each NEO with respect to the first tranche (representing 20% of the target amount) of the PSU award granted in March of 2016. These amounts represent the actual number of common shares, or their cash equivalent, earned pursuant to the terms of the PSUs for the performance period from January 1, 2016 through December 31, 2016. This tranche became earned at 178% of target. The awards are enumerated in this column because while the performance element of vesting for the awards has been fulfilled, the continued service requirement for vesting has not. If the NEOs do not remain employed through the settlement date, they will forfeit the awards. As such, the awards were not fully vested as of December 31, 2016. |
| (9) | Provided that our NEOs remain employed through the settlement date, these amounts represent the number of common shares, or their cash equivalent, deliverable to each NEO with respect to the first tranche (representing 20% of the target amount) of the PSU award granted in March of 2017. These amounts represent the actual number of common shares, or their cash equivalent, earned pursuant to the terms of the PSUs for the performance period from January 1, 2017 through December 31, 2017. This tranche became earned at 162% of target. The awards are enumerated in this column because while the performance element of vesting for the awards has been fulfilled, the continued service requirement for vesting has not. If the NEOs do not remain employed through the settlement date, they will forfeit the awards. As such, the awards were not fully vested as of December 31, 2017. |
| (10) | The RSUs vested on March 1, 2018 |
2017 OPTION EXERCISES AND STOCK VESTED
The following table presents information concerning the aggregate number of RSUs that vested during the fiscal year ended December 31, 2017, for the NEOs. There were no option exercises for the NEOs during the fiscal year ended December 31, 2017, and no PSUs vested during the fiscal year ended December 31, 2017.
| | Stock Awards | | Name | | Number of Shares Acquired on Vesting (#)(1) | | Value Realized on Vesting ($)(2) | | Gary S. Guidry | | 31,667 | | 79,168 | | Ryan Ellson | | 20,000 | | 50,000 | | Adrian Coral | | 11,639 | | 29,381 | | Jim Evans | | 6,667 | | 16,668 | | Lawrence West | | 6,667 | | 16,668 | | David Hardy | | -- | | - | |
| (1) | All RSUs that vested during 2017 were settled in cash, and no shares of common stock were issued. |
| (2) | The amounts in this column were calculated by multiplying the number of shares of common stock subject to the RSU that vested by the closing market price of common stock on the vesting date. |
POTENTIAL PAYMENT UPON TERMINATION OR CHANGE OF CONTROL
Mr. Hardy
In connection with Mr. Hardy’s retirement from employment on August 30, 2017, we entered into a Severance Agreement providing for the following:
| · | Lump sum cash payment of $680,351, excluding vacation pay; and |
| · | All outstanding and vested stock options will remain exercisable through August 30, 2018. |
Messrs. Guidry, Ellson, Coral, Evans and West
In the event that Messrs. Guidry, Ellson, Coral, Evans, Trimble or West die, voluntarily resign (without good reason, as defined below), or their employment is terminated by Gran Tierra for cause (as defined below), the executive will not be entitled to receive any further compensation or benefits whatsoever other than those which have accrued up to the executive’s last day of active service. The NEOs
| | | | | Gran Tierra Energy 2023 Proxy Statement | | 53 |
EXECUTIVE COMPENSATION Messrs. Guidry, Ellson, Evans, Trimble and West are entitled to severance payments in the event of an involuntary termination of employment by Gran Tierra other than for cause or a termination of employment by the NEO for good reason, as follows: | | | | | | | Base Salary + Bonus Earned during 12 months preceding Termination multiplied by: | | | Gary S. Guidry | | 2 | | | Ryan Ellson | | 1.5 | | | Jim Evans | | 1 | | | Rodger Trimble | | 1 | | | Lawrence West | | 1 |
Under the terms of Mr. Guidry’s employment agreement, as he is required to file a U.S. income tax return with the Internal Revenue Service, and as certain payments or benefits received or to be received by him constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company shall pay to Mr. Guidry, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by Mr. Guidry, plus the amount necessary to put him in the same after-tax position as if no Excise Tax had been imposed. In 2022, this amount would have been $3,257,013, calculated as follows: | Base Salary + Bonus Earned during 12 months preceding
Termination multiplied by: | | | | | | | Total termination payment | | $ | 6,263,486 | | | | Gross-Up of taxable income | | | 2,654,230 | | | | Total taxable income | | | 8,917,717 | | | | Canadian tax payable | | | (4,280,504 | ) | | | Net cash | | | 4,637,213 | | | | US Excise tax payable | | | (1,380,200 | ) | | | Net after tax | | $ | 3,257,013 | |
Pursuant to the employment agreements for each of Messrs. Guidry, Ellson, Evans, Trimble and West, “cause” means any act or omission of the executive which would, at common law, permit an employer to terminate the employment of an employee without notice or payment in lieu of notice. As defined in the employment agreements for each of Messrs. Guidry, Ellson, Evans, Trimble and West, “good reason” generally means any of the following without the executive’s express written consent: (a) an adverse change in position, titles, duties or responsibilities, except in connection with the termination of employment for cause; (b) a reduction by the company of the executive’s base salary except to the extent that the annual base salaries of all other executive officers are similarly reduced or any change in the basis upon which the Executive’s annual compensation is determined or paid if the change is adverse to the executive (excluding changes to the annual bonus); (c) a change in control (as defined below) of Gran Tierra Energy Inc. or Gran Tierra Energy Canada ULC occurs; or (d) any breach by the Company of any material provision of the employment agreement. The following events will generally constitute a “change in control” pursuant to the employment agreements with each of Messrs. Guidry, Ellson, Evans, Trimble and West: (1) a disposition of all or substantially all of the assets of Gran Tierra or GTE ULC; (2) a majority of the voting securities of Gran Tierra Energy Canada ULC cease to be controlled, directly or indirectly, by Gran Tierra; or | | | | | 54 | | Gran Tierra Energy 2023 Proxy Statement | Gary S. Guidry | 2 | Ryan Ellson | 1.5 | Adrian Coral | 1 | Jim Evans | 1 | Lawrence West | 1 |
EXECUTIVE COMPENSATION (3) a merger or other transaction of Gran Tierra with or into another company pursuant to which any person or combination of persons thereafter holds a greater number of voting securities of the continuing company than the number of voting securities of the continuing company held by former shareholders of Gran Tierra Energy, Inc. Upon a termination of employment, each of Messrs. Guidry, Ellson, Evans, Trimble and West forfeit any unvested RSUs and stock options. Estimated Potential Payments The table below estimates the amounts payable if an involuntary termination of employment without cause, a termination for good reason or a specified corporate transaction had occurred on December 31, 2022, for the NEOs using $0.99, the closing price of the stock on that date. | | | | | | | | | | | | | | | | | | | | | | | | | Acceleration of Vesting | | | | | | | Name | | Cash Severance ($) | | | Stock Options ($) (1) | | | PSUs ($) (1) | | | Total ($) | | Gary S. Guidry (2) | | | | | | | | | | | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | | 1,897,058 | | | | — | | | | — | | | | 1,897,058 | | | | | | | Corporate Transaction | | | — | | | | 0 | | | | 4,143,361 | | | | 4,143,361 | | | | | | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | | 1,897,058 | | | | 0 | | | | 4,143,361 | | | | 6,040,419 | | Ryan Ellson | | | | | | | | | | | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | | 926,471 | | | | — | | | | — | | | | 926,471 | | | | | | | Corporate Transaction | | | — | | | | 0 | | | | 2,831,296 | | | | 2,831,296 | | | | | | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | | 926,471 | | | | 0 | | | | 2,831,296 | | | | 3,757,767 | | Jim Evans | | | | | | | | | | | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | | 453,676 | | | | — | | | | — | | | | 453,676 | | | | | | | Corporate Transaction | | | — | | | | 0 | | | | 1,652,411 | | | | 1,652,411 | | | | | | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | | 453,676 | | | | 0 | | | | 1,652,411 | | | | 2,106,087 | | Rodger Trimble | | | | | | | | | | | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | | 354,946 | | | | — | | | | — | | | | 354,946 | | | | | | | Corporate Transaction | | | — | | | | 0 | | | | 1,183,816 | | | | 1,183,816 | | | | | | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | | 354,946 | | | | 0 | | | | 1,183,816 | | | | 1,538,762 | | Lawrence West | | | | | | | | | | | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | | 453,676 | | | | — | | | | — | | | | 453,676 | | | | | | | Corporate Transaction | | | — | | | | 0 | | | | 1,652,411 | | | | 1,652,411 | | | | | | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | | 453,676 | | | | 0 | | | | 1,652,411 | | | | 2,106,087 | |
(1) | Unvested equity awards will accelerate and become fully vested immediately prior to a Corporate Transaction. With respect to stock options, the value is calculated as (a) the difference between $0.99, the closing price of our common stock on December 31, 2022, and the exercise price of the applicable option, multiplied by (b) the number of unvested options subject to accelerated vesting held by the applicable NEO. With respect to PSUs, the value is calculated as (a) $0.99, the closing price of our common stock on December 31, 2022, multiplied by (b) the number of unvested PSUs subject to accelerated vesting held by the applicable NEO, assuming a performance factor of 1. |
(2) | In addition, if Mr. Guidry is required to file a U.S. income tax return with the Internal Revenue Service, and if any of the payments or benefits received or to be received by him constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company shall pay to Mr. Guidry, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by Mr. Guidry, plus the amount necessary to put him in the same after-tax position as if no Excise Tax had been imposed. The Company believes that to ensure Gran Tierra’s executive compensation remains competitive, the Chief Executive Officer should be tax |
| | | | | Gran Tierra Energy 2023 Proxy Statement | | 55 |
EXECUTIVE COMPENSATION | equalized to his Canadian citizen colleagues on payments that are subject to U.S. Excise Tax.Tax In 2017,2022, this amount would have been $1,669,682,$3,257,013, calculated as follows:Total Termination payment | | $ | 3,284,201 | | Gross-Up of taxable income | | | 1,669,682 | | Total taxable income | | | 4,953,883 | | | | | | | Canadian tax payable | | | (2,377,864) | | Net cash | | | 2,576,019 | | U.S. Excise tax payable | | | (868,235) | | Net after tax | | $ | 1,707,785 | |
Pursuant to the employment agreements for each of Messrs. Guidry, Ellson, Coral, Evans and West, “cause” means any act or omission of the executive which would, at common law, permit an employer to terminate the employment of an employee without notice or payment in lieu of notice.
As defined in the employment agreements for each of Messrs. Guidry, Ellson, Coral, Evans and West, “good reason” generally means any of the following without the executive’s express written consent:
| (a) | an adverse change in position, titles, duties or responsibilities, except in connection with the termination of employment for cause; |
| (b) | a reduction by the company of the executive’s base salary except to the extent that the annual base salaries of all other executive officers are similarly reduced or any change in the basis upon which the Executive’s annual compensation is determined or paid if the change is adverse to the executive (excluding changes to the annual bonus); |
| (c) | a change in control (as defined below) of Gran Tierra Energy Inc. or Gran Tierra Energy Canada ULC occurs; or |
| (d) | any breach by the Company of any material provision of the employment agreement. |
As defined in the amendment to the employment agreement with Mr. Hardy, “change in control” generally means any of the following (note, “Company” includes either Gran Tierra Energy Inc. or Gran Tierra Energy Canada ULC):
| (1) | a sale of all or substantially all of the assets of the Company; |
| (2) | a merger or consolidation in which the Company is not the surviving corporation; |
| (3) | a reverse merger in which the Company is the surviving corporation but the shares of the Company’s common stock outstanding immediately preceding the merger are converted into other property; or |
| (4) | the acquisition by any person, entity or group of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors. |
The following events will generally constitute a “change in control” pursuant to the employment agreements with each of Messrs. Guidry, Ellson, Coral, Evans and West:
| (1) | a disposition of all or substantially all of the assets of Gran Tierra or GTE ULC; |
| (2) | a majority of the voting securities of Gran Tierra Energy Canada ULC cease to be controlled, directly or indirectly, by Gran Tierra; or |
| (3) | a merger or other transaction of Gran Tierra with or into another company pursuant to which any person or combination of persons thereafter holds a greater number of voting securities of the continuing company than the number of voting securities of the continuing company held by former shareholders of Gran Tierra Energy, Inc. |
Upon a termination of employment, each of Messrs. Guidry, Ellson, Coral, Evans and West forfeit any unvested RSUs and stock options.
| | | | | | | Total termination payment | | $ | 6,263,486 | | | | Gross-Up of taxable income | | | 2,654,230 | | | | Total taxable income | | | 8,917,717 | | | | Canadian tax payable | | | (4,280,504 | ) | | | Net cash | | | 4,637,213 | | | | US Excise tax payable | | | (1,380,200 | ) | | | Net after tax | | $ | 3,257,013 | |
Pay Ratio Disclosure Estimated Potential Payments
The table below estimates the amounts payable if an involuntary termination of employment without cause, a termination for good reason or a specified corporate transaction had occurred on December 31, 2017, for the NEOs using $2.70, the closing price of the stock on that date.
| | Acceleration of Vesting | | Name | | Cash Severance ($) | | Stock Options ($)(1) | | RSUs ($)(1) | | PSUs ($)(1) | | Total ($) | | Gary S. Guidry(2) | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | 1,445,994 | | — | | — | | — | | 1,445,994 | | Corporate Transaction | | — | | 29,026 | | 85,501 | | 1,723,680 | | 1,838,207 | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | 1,445,994 | | 29,026 | | 85,501 | | 1,723,680 | | 3,284,201 | | | | | | | | | | | | | | Ryan Ellson | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | 781,985 | | — | | — | | — | | 781,985 | | Corporate Transaction | | — | | 21,022 | | 54,000 | | 1,248,480 | | 1,323,502 | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | 781,985 | | 21,022 | | 54,000 | | 1,248,480 | | 2,105,487 | | | | | | | | | | | | | | Adrian Coral | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | 396,600 | | — | | — | | — | | 396,600 | | Corporate Transaction | | — | | 10,123 | | 22,502 | | 433,620 | | 466,245 | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | 396,600 | | 10,123 | | 22,502 | | 433,620 | | 862,845 | | | | | | | | | | | | | | Jim Evans | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | 389,797 | | — | | — | | — | | 389,797 | | Corporate Transaction | | — | | 12,433 | | 18,001 | | 738,450 | | 768,884 | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | 389,797 | | 12,433 | | 18,001 | | 738,450 | | 1,158,681 | | | | | | | | | | | | | | Lawrence West | | | | | | | | | | | | Termination without Cause or Resignation for Good Reason | | 375,448 | | — | | — | | — | | 375,448 | | Corporate Transaction | | — | | 12,433 | | 18,001 | | 738,450 | | 768,884 | | Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | 375,448 | | 12,433 | | 18,001 | | 738,450 | | 1,144,332 | |
| (1) | Unvested equity awards will accelerate and become fully vested immediately prior to a Corporate Transaction. With respect to stock options, the value is calculated as (a) the difference between $2.70, the closing price of our common stock on December 29, 2017, and the exercise price of the applicable option, multiplied by (b) the number of unvested options subject to accelerated vesting held by the applicable NEO. With respect to RSUs, the value is calculated as (a) $2.70, the closing price of our common stock on December 29, 2017, multiplied by (b) the number of unvested RSUs subject to accelerated vesting held by the applicable NEO. With respect to PSUs, the value is calculated as (a) $2.70, the closing price of our common stock on December 29, 2017, multiplied by (b) the number of unvested PSUs subject to accelerated vesting held by the applicable NEO, assuming a performance factor of 1. |
| (2) | Under the terms of Mr. Guidry’s employment agreement, as he is required to file a U.S. income tax return with the Internal Revenue Service, and as certain payments or benefits received or to be received by him constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company shall pay to Mr. Guidry, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by Mr. Guidry, plus the amount necessary to put him in the same after-tax position as if no Excise Tax had been imposed. In 2017, this amount would have been $1,669,682, calculated as follows: |
Total termination payment | | $ | 3,284,201 | | Gross-Up of taxable income | | | 1,669,682 | | Total taxable income | | | 4,953,883 | | | | | | | Canadian tax payable | | | (2,377,864) | | Net cash | | | 2,576,019 | | US Excise tax payable | | | (868,235) | | Net after tax | | $ | 1,707,785 | |
PAY RATIO DISCLOSURE
In determining the median employee, we prepared a list of all employees as of December 31, 2017.
In determining the median employee, we prepared a list of all employees as of December 31, 2022. Consistent with applicable rules, we used reasonable estimates both in the methodology used to identify the median employee and in calculating the annual total compensation for employees other than the chief executive officer. In measuring our employees’ total compensation, for employees other than the Chief Executive Officer, we used their base salary paid in 2022, their annual cash bonus paid in 2022 and the value of the equity awards they received in 2022. Total compensation for Gary S. Guidry, the Company’s Chief Executive Officer was determined to be $2,644,972 and was approximately 45 times the median annual compensation of all Company employees excluding the Chief Executive Officer, which as of December 31, 2022, was $53,335. For purposes of this calculation, the Company had 336 employees in Canada, Colombia, and Ecuador excluding the Chief Executive Officer. | | | | | 56 | | Gran Tierra Energy 2023 Proxy Statement |
Pay Versus Performance Disclosure As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of RegulationS-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s pay for performance philosophy and how the Company’s aligns execu tive compensation with the Company’s performance, refer to “Executive Compensation—Compensation Discussion and Analysis.” | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Summary Compensation Table Total for PEO (USD) | | | Compensation Actually Paid to PEO (USD) | | | Average Summary Compensation Table Total for Non-PEO NEOs (USD) | | | Average Compensation Actually Paid to Non-PEO NEOs (USD) | | | Value of Initial Fixed $100 Investment Based On: | | | | | | | | | Total Shareholder Return (TSR) | | | Per Group Total Shareholder Return | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2022 | | $ | 2,644,976 | | | $ | 3,282,698 | | | $ | 1,217,777 | | | $ | 1,575,275 | | | $ | 130 | | | $ | 146 | | | $ | 139,029,000 | | | $ | 489,555,000 | | | | | | | | | | | 2021 | | $ | 2,674,229 | | | $ | 3,744,595 | | | $ | 1,236,997 | | | $ | 1,781,183 | | | $ | 272 | | | $ | 244 | | | $ | 42,482,000 | | | $ | 241,536,000 | | | | | | | | | | | 2020 | | $ | 2,433,677 | | | $ | 642,322 | | | $ | 1,167,588 | | | $ | 295,008 | | | $ | 77 | | | $ | 155 | | | ($ | 778,967,000 | ) | | $ | 96,482,000 | |
1 | The dollar amounts reported are the amounts of total compensation reported in our Summary Compensation Table. |
2 | The dollar amounts reported represent the amount of “compensation actually paid”, as computed in accordance with SEC rules. The dollar amounts do not reflect theactual amount of compensation earned by or paid during the applicable year . In accordance with SEC rules, the following adjustments were made to total compensation to determine the compensation actually paid: |
| | | | | | | | | | | | | | | | | | | | | | | | Summary Compensation Table Total for PEO (USD) | | | Reported Value of Equity Awards | | | | | | Compensation Actually Paid to PEO | | | | | | | | | | | | | | | | | | | | 2022 | | $ | 2,644,976 | | | ($ | 1,645,764 | ) | | $ | 2,283,486 | | | $ | 3,282,698 | | | | | | | 2021 | | $ | 2,674,229 | | | ($ | 1,670,297 | ) | | $ | 2,740,663 | | | $ | 3,744,595 | | | | | | | 2020 | | $ | 2,433,677 | | | ($ | 1,568,210 | ) | | ($ | 223,145 | ) | | $ | 642,322 | |
| (a) | The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. |
| (b) | The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) theyear-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for employees other than the chief executive officer. In measuring our employees’ total compensation, for employees other than the Chief Executive Officer, we used their base salary paid in 2017, their annual cash bonus paid in 2017 and the value of the equity awards they received in 2017. Total compensation for Gary S. Guidry, the Company’s Chief Executive Officer was determined to be $1,776,306 and was approximately 24 times the median annual compensation of all Company employees excluding the Chief Executive Officer of $73,602. For purposes of this calculation, the Company had 323 employees in Canada and Colombia, excluding the Chief Executive Officer.SUMMARY OF INCENTIVE PLANS
Plan category | | (a) Number of securities to be issued upon exercise of outstanding options(1) | | (b) Weighted average exercise price of outstanding options | | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)(2) | | Equity compensation plans approved by security holders | | 8,960,692 | | 3.65 | | 17,280,233 | | Equity compensation plans not approved by security holders | | — | | — | | — | | | | 8,960,692 | | 3.65 | | 17,280,233 | |
| (1) | Includes shares reserved to be issued pursuant to stock options granted, representing 2.3% of the Company’s issued and outstanding shares, pursuant to the 2007 Equity Incentive Plan (“the Plan”), which is an amendment and restatement of our 2005 Equity Incentive Plan. This does not include any shares reserved to be issued relating to PSUs, DSUs and RSUs, which may be settled in cash or in shares of our common stock at our election, and for which management’s intent to cash settle is reflected in the financial statement classification of these awards as financial liabilities. |
| (2) | In accordance with Item 201(d) of Regulation S-K, the figure in this column represents the total number of shares of our common stock remaining available for issuance under the Plan as of December 31, 2017, representing 4.5% of the Company’s issued and outstanding shares, minus the awards reported in column (a), above. Note, pursuant to the terms of the Plan, the pool of shares available for grant thereunder is not actually reduced until an award is settled in shares of our common stock (as opposed to reducing the pool at the time of grant) At December 31, 2017, PSUs, DSUs and RSUs with respect to 6,709,809 shares were issued and outstanding and, after application of the fungible factor of 1.55, these outstanding awards would represent a 10,400,204 reduction to the securities remaining available for future issuance under the Plan if such awards were to be equity settled. Consistent with accounting treatment that reflects management’s intent to cash settle, these amounts are not included in the above table as a reduction in the securities remaining available for future issuance. Pursuant to the provisions of the Plan, the number of securities remaining available for issuance is reduced by the aggregate balance of (i) stock options exercised and outstanding at a fungible factor of 1.0 shares and (ii) unit based awards at a fungible factor of 1.55 shares for each share of our common stock issued pursuant to any equity settled awards granted under the Plan. Accordingly, the number of shares available for future awards under the Plan may be different than the amount shown in this column. |
2007 Equity Incentive Plan- The only equity compensation plan approved by our stockholders is our 2007 Equity Incentive Plan (the “Plan”), which is an amendment and restatement of our 2005 Equity Plan (the “Prior Plan”).
The Plan, provides for the grant of stock options, restricted stock awards, stock appreciation rights, RSUs and other stock awards, collectively referred to as“Awards.” To date, Gran Tierra has granted stock options, RSUs including DSUs and PSUs under the Plan.
Purpose
The Board adopted the Plan to provide a means by which employees, directors and consultants of Gran Tierra and its affiliates may be given an opportunity to acquire stock in Gran Tierra, to assist in retaining the services of such persons, to secure and retain the services of persons capable of filling such positions and to provide incentives for such persons to exert maximum efforts for the success of Gran Tierra and its affiliates. As of December 31, 2017, all of the approximately 332 employees, directors and consultants of Gran Tierra and its affiliates are eligible to participate in the Incentive Plan and may receive all types of awards.
Stock Subject to the Plan
The maximum aggregate number of shares reserved for issuance under the Plan is 39,806,100 shares, or the “Share Reserve.”
Under the terms of the Plan, the Share Reserve will be reduced by (i) one share for each share of common stock issued pursuant to an option or stock appreciation right, and (ii) 1.55 shares for each share of common stock issued pursuant to any other type of stock award, referred to as a “Full Value Award.” If a stock award is settled in cash, such settlement will not reduce the Share Reserve.
The following shares of common stock granted pursuant to a stock award under the Plan will become available for subsequent issuance under the Plan as such shares become available from time to time, as follows:
| · | one share for each share subject to an outstanding option or stock appreciation right that expires, terminates for any reason prior to exercise or settlement or that is forfeited or otherwise returns because of the failure to meet a contingency or condition required to vest such shares; |
| · | 1.55 shares for each share subject to a Full Value Award that is forfeited or otherwise returns because of the failure to meet a contingency or condition required to vest such shares or the Full Value Award otherwise terminates without all of the shares covered by the Full Value Award having been issued; and |
| · | 1.55 shares for each share subject to a Full Value Award that is reacquired or withheld or not issued to satisfy a tax withholding obligation. |
However, any shares of common stock granted pursuant to a stock award under the Plan or the Prior Plan that are not delivered to a participant because of any of the following reasons will not become available for subsequent issuance under the Plan:
| · | shares are not delivered to a participant because an option or stock appreciation right is exercised through a reduction in the number of shares subject to the stock award (a “net exercise”); |
| · | shares are reacquired or withheld or not issued to satisfy a tax withholding obligation in connection with an option or stock appreciation right; |
| · | shares are used as consideration for the exercise of an option or stock appreciation right; or |
| · | shares are repurchased by Gran Tierra on the open market with the proceeds of an option or stock appreciation right exercise price. |
Eligibility
Employees (including officers), directors, and consultants of both Gran Tierra and its affiliates are eligible to receive all types of awards under the Plan. Under the Plan, no employee may be granted options or stock appreciation rights whose value is determined by reference to an increase over an exercise or strike price of at least 100% of the fair market value on the date of grant covering more than 1,000,000 (0.3%) shares of common stock during any calendarapplicable year. The maximum number of shares which may be reserved for issuancevaluation assumptions used to insiders, at any time, under the Plan, and any other share compensation arrangement of Gran Tierra shall be 10% of the shares of common stock issued and outstanding. Additionally, the maximum number of shares of common stock which may be issued under the Plan, at any time, and any other share compensation arrangements within any 12-month period shall be 10% of the common stock outstanding for insiders as a group and 5% of the common stock outstanding for any one insider and such insider’s associates. The maximum number of options that may be granted to any one consultant in any 12-month period shallcalculate fair values did not exceed 2% of the issued and outstanding common stockmaterially differ from those disclosed at the time of grant.
Repricing; Cancellation and Re-Grant of Stock Awards
Under The amounts deducted or added in calculating the Plan, the Board does not have the authority to reduce the exercise, purchase or strike price of an option or stock appreciation right or to cancel any outstanding option or stock appreciation right that has an exercise price greater than the current fair market value of our common stock in exchange for cash or other stock awards without obtaining the approval of our stockholders within 12 months equity award adjustments are as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year End Fair Value of Equity Awards of Equity Awards granted in the Year and Unvested at Year End | | | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | | | Total Equity Award Adjustments | | | | | | | | | | 2022 | | $ | 1,164,234 | | | $ | 616,253 | | | $ | 0 | | | $ | 502,999 | | | $ | 0 | | | $ | 0 | | | $ | 2,283,486 | | | | | | | | | | 2021 | | $ | 1,564,183 | | | $ | 827,394 | | | $ | 0 | | | $ | 349,086 | | | $ | 0 | | | $ | 0 | | | $ | 2,740,663 | | | | | | | | | | 2020 | | $ | 785,170 | | | ($ | 587,520 | ) | | $ | 0 | | | ($ | 420,795 | ) | | $ | 0 | | | $ | 0 | | | ($ | 223,145 | ) |
PAY VERSUS PERFORMANCE DISCLOSURE 3 | The dollar amounts reported represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding our CEO) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding our CEO) included for purposes of calculating the average amounts in the three years are as follows: Ryan Ellson, Executive Vice President and Chief Financial Officer; Jim Evans, VP Corporate Services; Rodger Trimble, VP Investor Relations; Lawrence West, VP Exploration. |
4 | The dollar amounts reported represent the average amount of “compensation actually paid” to the NEOs as a group (excluding our CEO), as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding our CEO) during the applicable year. In accordance with the SEC rules, the following adjustments were made to average total compensation for the NEOs as a group (excluding our CEO) for each year to determine the compensation actually paid, using the same methodology described above in Note 2: |
| | | | | | | | | | | | | | | | | | | | | | | | Average Summary Compensation Table Total for non-PEO NEOs (USD) | | | Average Reported Value of Equity Awards | | | Average Equity Award Adjustments | | | Compensation Actually Paid to PEO | | | | | | | | | | | | | | | | | | | | 2022 | | $ | 1,217,777 | | | ($ | 726,879 | ) | | $ | 1,084,377 | | | $ | 1,575,275 | | | | | | | 2021 | | $ | 1,236,997 | | | ($ | 737,715 | ) | | $ | 1,281,901 | | | $ | 1,781,183 | | | | | | | 2020 | | $ | 1,167,588 | | | ($ | 692,627 | ) | | ($ | 179,953 | ) | | $ | 295,008 | |
| (a) | The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average Year End Fair Value of Equity Awards of Equity Awards granted in the Year and Unvested at Year End | | | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | | | Averagae Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | | | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | | | Total Average Equity Award Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2022 | | $ | 514,203 | | | $ | 276,632 | | | $ | 0 | | | $ | 293,542 | | | $ | 0 | | | $ | 0 | | | $ | 1,084,377 | | | | | | | | | | 2021 | | $ | 690,847 | | | $ | 363,786 | | | $ | 0 | | | $ | 227,268 | | | $ | 0 | | | $ | 0 | | | $ | 1,281,901 | | | | | | | | | | 2020 | | $ | 352,382 | | | ($ | 275,194 | ) | | $ | 0 | | | ($ | 257,141 | ) | | $ | 0 | | | $ | 0 | | | ($ | 179,953 | ) |
5 | Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
6 | Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: S&P O&G E&P Select Index Total Return. |
7 | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
8 | EBITDAis a key indicator of a business’s performance, profitability, value and ability to add debt. It’s a picture of the core profit of a company and provides a picture of its available cash flow. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for asset impairment, goodwill impairment, non-cash lease expense, lease payments, unrealized foreign exchange gains or losses, unrealized derivative instruments gains or losses, other financial instruments gains or losses, other non-cash gains or losses, and stock-based compensation expense. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the repricingconsideration of how non-cash items affect that income and believes that this financial measure is a useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net income or cancellationloss to EBITDA and re-grant event. Additionally,adjusted EBITDA is available in the Board mayCompany’s Annual Report. |
As described in greater detail in “Executive Compensation—Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variablephilosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our shareholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows: 1P Reserve Replacement Lifting Costs Funds Flow
PAY VERSUS PERFORMANCE DISCLOSURE Analysis of the Information Presented in the Pay versus Performance Table described in more detail in the section “Executive Compensation—Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and TSR Compensation Actually Paid and Net Income
PAY VERSUS PERFORMANCE DISCLOSURE Compensation Actually Paid and Adjusted EBITDA (non-GAAP)
Proposal 4: Approve an Amendment to the Company’s Certificate of Incorporation to Effect a Reverse Stock Split We are seeking shareholder approval to approve a proposed amendment to the Company’s Certificate of Incorporation to effect (a) a reverse stock split (the “Reverse Stock Split”) to reduce the number of shares of our issued Common Stock into a lesser number of shares of issued Common Stock by a ratio of 1-for-10 shares, subject to certain adjustments for fractional shares, and (b) a reduction in the number of authorized shares of Common Stock by the corresponding proportion (the “Authorized Share Reduction” and together with the Reverse Stock Split, the “Reverse Split Proposal”). The form of amendment to our Certificate of Incorporation (the “Reverse Split Amendment”) is set forth in Appendix A. If our shareholders approve the Reverse Split Proposal, then we will promptly cause an amendment to the Certificate of Incorporation to be filed with the Delaware Secretary of State and effect the Reverse Stock Split. If this Reverse Split Proposal is approved by our shareholders and effected, every 10 shares of issued Common Stock would be combined and reclassified into one share of Common Stock, subject to certain adjustments for fractional shares as described below. In addition, the number of authorized shares of stock would be proportionally reduced by the Reverse Stock Split ratio, resulting in a decrease (a) from 570,000,000 authorized shares of Common Stock to 57,000,000 shares of Common Stock. Even if our stockholders approve the Reverse Split Proposal, we reserve the right not to effect the Reverse Stock Split and Authorized Share Reduction if our Board of Directors does not deem them to be in the best interests of the Company and our stockholders. Our Board of Directors believes that granting this discretion provides it with maximum flexibility to act in the best interests of our stockholders. Our Board of Directors’ decision as to whether to effect the Reverse Stock Split and Authorized Share Reduction will be based on a number of factors, including, but not limited to, prevailing market conditions, existing and expected trading prices for our Common Stock, actual or forecasted results of operations, and the likely effect of the Reverse Stock Split and the Authorized Share Reduction on the market price of our Common Stock. See “Reasons for the Reverse Stock Split” below. The Reverse Stock Split Proposal is not being proposed in response to any effort of which we are aware to accumulate shares of our Issued Common Stock or obtain control of the Company, nor is it a plan by management to recommend such actions to our Board of Directors or our stockholders. Furthermore, the Reverse Split Proposal is not being proposed in order to meet the requirements of any national securities exchange. There are certain risks associated with a reverse stock split, and we cannot accurately predict or ensure that the Reverse Stock Split and the Authorized Share Reduction will produce or maintain the desired results, which are described in more detail below. For more information on the risks associated with the Reverse Stock Split and the Authorized Share Reduction, see the section below entitled “Other Considerations”. However, our Board of Directors believes that the benefits to the Company and our stockholders outweigh the risks and recommends that you vote “For” the Reverse Split Proposal. Reasons for the Reverse Stock Split The primary objectives for effecting the Reverse Stock Split, should our Board of Directors choose to effect one, would be to increase the per share price of our Common Stock. Our Board of Directors believes that, should the appropriate circumstances arise, effecting the Reverse Stock Split would, among other things, help us to appeal to a broader range of investors to generate greater investor interest in the Company and improve the perception of our Common Stock as an investment security. In connection with the Reverse Stock Split, our Board of Directors also believes it is in the best interests of our stockholders to decrease the authorized number of shares of Common Stock by the corresponding proportion, which would reduce the total number of our authorized shares of Common Stock. Appeal to a Broader Range of Investors to Generate Greater Investor Interest in the Company. An increase in our stock price may make our Common Stock more attractive to investors. Brokerage firms may be reluctant to recommend lower-priced securities to their clients and trading volatility is often associated with low-priced stocks. Many institutional investors have internal practices or policies prohibiting them from holding lower-priced stocks in their portfolios, which reduces the number of potential purchasers of our Common Stock. Investment funds may also be reluctant to invest in lower-priced stocks. Investors may also be dissuaded from purchasing lower-priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms typically do not monitor the trading activity or otherwise provide | | | | | Gran Tierra Energy 2023 Proxy Statement | | 61 |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO GIVE THE BOARD OF DIRECTORS DISCRETIONARY AUTHORITY TO EFFECT A REVERSE STOCK SPLIT coverage of lower-priced stocks. Our Board of Directors believes that the anticipated higher market price resulting from the Reverse Stock Split may enable investors and brokerage firms with policies and practices such as those described above to invest in our Common Stock. Improve the Perception of Our Common Stock as an Investment Security. We believe that the overall economic environment in which we and other energy companies are currently operating has been a significant contributing factor to the decline in the trading price of our Common Stock. The Reverse Split Proposal is one potential means of increasing the per share price of our Common Stock, which could improve the perception of our Common Stock as a viable investment security. Lower-priced stocks have a perception in the investment community as being risky and speculative, which may negatively impact, not only the price of our Common Stock, but also our market liquidity. As an oil and gas exploration and production company, we believe that we may be particularly sensitive to this type of negative public perception and the Reverse Stock Split may result in a higher per share price for our Common Stock. However, we cannot guarantee that such higher price per share of Common Stock will be realized or maintained. Other Considerations The Reverse Stock Split May Not Increase the Price of our Common Stock over the Long-Term. Even if a Reverse Stock Split is effected, some or all of the expected benefits discussed above may not be realized or maintained. While we expect that the Reverse Stock Split will result in an increase in the per share price of our Common Stock, any such increase to the per share price of our Common Stock may not be in proportion to the reduction in the number of shares of our issued Common Stock or result in a permanent increase in the per share price. The per share price of our Common Stock depends on multiple factors, including our performance, exploration success, market conditions, and other factors that may be unrelated to the number of shares outstanding, any of which could have a counteracting effect to the Reverse Stock Split on the per share price. The Reverse Stock Split May Lead to a Decrease in our Overall Market Capitalization and the Liquidity of our Common Stock. Furthermore, if the per share price of our Common Stock declines after the Reverse Stock Split is effected, the decline in the price and the decline in our overall market capitalization may be greater than would have occurred in the absence of a Reverse Stock Split. As a result of a lower number of shares issued and outstanding, the market for our Common Stock may also become more volatile. In addition, the liquidity of our Common Stock may be harmed by the Reverse Stock Split, given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the per share trading price does not increase proportionately as a result of the Reverse Stock Split. The Reverse Stock Split may Result in Some Stockholders Owning “Odd Lots” That May be More Difficult to Sell or Require Greater Transaction Costs per Share to Sell. In addition, the Reverse Stock Split will likely increase the number of stockholders who hold odd lots (less than 100 shares). Stockholders who hold odd lots typically will experience an increase in the cost of selling their shares, as well as possible greater difficulty in effecting such sales. Accordingly, a Reverse Stock Split may not achieve all of the desired results that have been outlined above. Our Board of Directors considered all of the foregoing factors and unanimously approved, and recommended seeking stockholder approval of this Reverse Split Proposal, including the Reverse Split Amendment, on February 21, 2023. As noted above, even if stockholders approve the Reverse Split Proposal, our Board of Directors reserves the right not to effect the Reverse Split Amendment if our Board of Directors does not deem it to be in the best interests of the Company or its stockholders at the time. Implementation of a Reverse Stock Split Shares Issued and Outstanding If our shareholders approve the Reverse Split Proposal, then we will promptly cause an amendment to the Certificate of Incorporation to be filed with the Delaware Secretary of State and effect the Reverse Stock Split. The principal effect of the Reverse Split Amendment, which is set forth in Appendix A and also contemplates the Authorized Share Reduction, would be that every 10 shares of issued Common Stock would be combined and reclassified into one share of Common Stock, with any fractional shares being treated as discussed below. The Reverse Stock Split would be effected simultaneously for all of our issued Common Stock. The Reverse Stock Split will not affect any stockholder’s percentage ownership interests in the Company, voting rights or other rights that accompany the shares of our issued Common Stock, except certain adjustments for fractional shares. All Common Stock issued following the completion of the Reverse Stock Split would remain fully paid and non-assessable. | | | | | 62 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO GIVE THE BOARD OF DIRECTORS DISCRETIONARY AUTHORITY TO EFFECT A REVERSE STOCK SPLIT At the close of business on March 7, 2023, 368,898,619 shares of Common Stock were issued (including 24,284,878 shares held in treasury). For purposes of illustration, after giving effect to such Reverse Stock Split, subject to certain adjustments fractional shares, there would be approximately 36,889,862 shares of Common Stock issued (including 2,428,488 shares that would be held in treasury). Ownership Percentages Our stockholders should recognize that, if the Reverse Stock Split is effected, they will own a lower number of shares than they currently own. However, except for certain adjustments for fractional shares as described below, each stockholder will hold the same percentage of our issued and outstanding Common Stock immediately following the Reverse Stock Split as such stockholder held immediately prior to the Reverse Stock Split. Shares Authorized for Issuance If this Reverse Split Proposal is approved by our stockholders and the Reverse Stock Split is effected, the number of authorized shares of stock would be proportionally reduced by the Reverse Stock Split ratio, resulting in a decrease from 570,000,000 authorized shares of Common Stock to 57,000,000 shares of Common Stock. Effect on Equity Compensation Arrangements If the Reverse Split Proposal is approved by our stockholders and effectuated, the per share exercise price of any outstanding stock options and any applicable repurchase price of any restricted shares would be increased proportionately, and the number of shares issuable under outstanding stock options, restricted stock units, performance share units and all other outstanding equity-based awards would be reduced proportionately. The number of shares of Common Stock authorized for future issuance under our equity plans would be proportionately reduced and other similar adjustments would be made under the equity plans to reflect the Reverse Stock Split. In addition, the performance targets to which our PSUs are subject, including certain stock price targets, would be proportionally adjusted. Fractional Shares If, as a result of the Reverse Stock Split, a stockholder would otherwise be entitled to a fraction of a share of Common Stock in respect of the total aggregate number of pre-Reverse Stock Split shares held by such stockholder, no such fractional shares will be awarded. The aggregate number of post-Reverse Stock Split shares of Common Stock that such stockholder is entitled to will, if the fraction is less than half a share, be rounded down to the next nearest whole number of shares, and if the fraction is at least half of a share, be rounded up to the nearest whole number of shares, with all shares of Common Stock held by a beneficial holder being aggregated. Effect on Beneficial Holders (i.e., Stockholders Who Hold in “Street Name”) Upon the Reverse Stock Split, we intend to treat issued and outstanding shares of Common Stock held by stockholders in “street name,” through a bank, broker or other nominee, in the same manner as stockholders whose shares are registered in their own names. Banks, brokers or other nominees will be instructed to effect the Reverse Stock Split for their customers holding issued and outstanding shares in “street name.” However, these banks, brokers or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split, particularly with respect to the treatment of fractional shares. If you hold shares of Common Stock with a bank, broker or other nominee and have any questions in this regard, you are encouraged to contact your bank, broker or other nominee. Effect on Registered “Book-Entry” Holders (i.e., Stockholders That are Registered on the Transfer Agent’s Books and Records but do not Hold Certificates) Stockholders that hold their shares electronically in book-entry form with our transfer agent, Odyssey Trust Company, do not have stock certificates evidencing their ownership of shares of Common Stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts. If a stockholder holds registered shares in book-entry form with our transfer agent, they will receive a letter of transmittal sent by our transfer agent after the effective time of the Reverse Stock Split. The letter of transmittal will contain instructions on how a stockholder should surrender his or her book-entry shares representing shares of Common Stock (“Old Book Entry Shares”) to the transfer agent in exchange for book-entry shares representing the appropriate number of whole post-Reverse Stock Split shares, as applicable (“New Book Entry Shares”). Until surrendered, we will deem outstanding Old Book Entry Shares held by stockholders to be canceled and only to represent the number of whole shares to which these stockholders are entitled. Any Old Book Entry Shares submitted for exchange, whether because of a sale, transfer or other disposition of shares, will automatically be exchanged for New Book Entry Shares. | | | | | Gran Tierra Energy 2023 Proxy Statement | | 63 |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO GIVE THE BOARD OF DIRECTORS DISCRETIONARY AUTHORITY TO EFFECT A REVERSE STOCK SPLIT Effect on Certificated Shares For shares of Common Stock held in certificate form, stockholders will receive a letter of transmittal sent by our transfer agent after the effective time of the Reverse Stock Split. The letter of transmittal will contain instructions on how a stockholder should surrender his or her certificates representing shares of Common Stock (“Old Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole post-Reverse Stock Split shares, as applicable (“New Certificates”). Until surrendered, we will deem outstanding Old Certificates held by stockholders to be canceled and only to represent the number of whole shares to which these stockholders are entitled. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of shares, will automatically be exchanged for New Certificates. Stockholders should not destroy any stock certificates and should not submit any certificates until requested to do so by the transfer agent. Shortly after the Reverse Stock Split, the transfer agent will provide registered stockholders with instructions and a letter of transmittal for converting Old Certificates into New Certificates. Stockholders are encouraged to promptly surrender Old Certificates to the transfer agent (acting as exchange agent in connection with the Reverse Stock Split) in order to avoid having shares become subject to escheat laws. Continued SEC Reporting Requirements and Stock Listing After the effective time of the Reverse Split Amendment, we would continue to be subject to periodic reporting and other requirements of the Exchange Act, and our Common Stock would continue to be listed on NYSE American, the London Stock Exchange and Toronto Stock Exchange. New CUSIP After the effective time of the Reverse Split Amendment, the post-Reverse Stock Split shares of our Common Stock would have new CUSIP numbers. A CUSIP number is used to identify the company’s equity securities. Procedure for Effecting the Reverse Stock Split If our shareholders approve the Reverse Split Proposal, then we will promptly cause an amendment to the Certificate of Incorporation to be filed with the Delaware Secretary of State and effect the Reverse Stock Split. The Form of Reverse Split Amendment is attached to this Proxy Statement as Appendix A and is considered a part of this Proxy Statement. Upon the filing of the Reverse Split Amendment, and without any further action on the part of the Company or our stockholders, every 10 shares of Common Stock as of the effective time of the Reverse Stock Split would be converted into one share of Common Stock, subject to certain adjustments for fractional shares. For example, if a stockholder currently holds 100 shares of our Common Stock, he or she would hold 10 shares of our Common Stock following the Reverse Stock Split. As soon as practicable after the effective time of the Reverse Stock Split, stockholders will be notified that the Reverse Stock Split has been effected and will receive a letter of transmittal containing instructions on how to surrender Old Certificate and Old Book Entry Shares. Our transfer agent will act as exchange agent for purposes of implementing the exchange. Stockholders whose shares are held by a brokerage firm, bank or other similar organization do not need to take any action with respect to the exchange. These shares will automatically reflect the new quantity of shares based on the Reverse Stock Split. However, these brokerage firms, banks or other similar organizations may have different procedures for processing the Reverse Stock Split and stockholders whose shares are held by a brokerage firm, bank or other similar organization are encouraged to contact their brokerage firm, bank or other similar organization. We will not file the Reverse Stock Split Amendment if our Board Directors decide prior to filing that effecting the Reverse Stock Split is not in the best interests of the Company and its stockholders. Accounting Matters The par value of our Common Stock and Preferred Stock would remain unchanged if a Reverse Stock Split is effected. Our shareholders’ equity in our consolidated balance sheet would not change in total. However, our stated capital par value times the number of shares issued and outstanding, would be proportionately reduced. Additional paid-in capital would be increased by an equal amount, which would result in no overall change to the balance of shareholders’ equity. Additionally, net income or loss per share for all periods would increase proportionately as a result of a Reverse Stock Split since there would be a lower number of shares outstanding. In addition, the Reverse Stock Split will be retrospectively reflected in our disclosures for all periods presented in our consolidated financial statements. We do not anticipate that any other material accounting consequences would arise as a result of a Reverse Stock Split. | | | | | 64 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO GIVE THE BOARD OF DIRECTORS DISCRETIONARY AUTHORITY TO EFFECT A REVERSE STOCK SPLIT Under Delaware law, a reduction in stated capital will create a corresponding increase in paid-in surplus (i.e., the excess of net assets over stated capital), and the Company may make distributions, such as the payment of dividends, up to the amount of its surplus, provided that the distribution does not cause it to become insolvent, and subject to the limitations of its debt financing agreements. No Appraisal Rights Under Delaware law, our stockholders will not be entitled to appraisal rights with respect to the Reverse Split Amendment. Certain Material U.S. Federal Income Tax Considerations of a Reverse Stock Split The following is a general summary of certain material U.S. federal income tax considerations relating to the Reverse Stock Split that may be relevant to holders of our Common Stock. This summary only addresses a U.S. Holder (as defined below) who holds Common Stock as a capital asset for U.S. federal income tax purposes. For purposes of this summary, a “U.S. Holder” means a beneficial owner of Common Stock who is any of the following for U.S. federal income tax purposes: (i) a citizen or resident of the United States, (ii) a corporation created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if (1) its administration is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all of its substantial decisions, or (2) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person. This summary is based upon provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, rulings and judicial decisions as of the date hereof, all of which may be change, perhaps retroactively, so as to result in U.S. federal income tax considerations different from those summarized below. This summary is general in nature and does not represent a detailed description of the U.S. federal income tax considerations to a stockholder in light of their particular circumstances. In addition, it does not represent a description of the U.S. federal income tax Considerations to a stockholder who is subject to special treatment under the U.S. federal income tax laws and does not address the tax considerations applicable to U.S. Holders who may be subject to special tax rules, such as: | • | | Partnerships (or entities or arrangements treated as partnerships for U.S. federal income tax purposes) and any beneficial owners thereof; |
| • | | financial institutions or financial services entities; |
| • | | real estate investment trusts; |
| • | | regulated investment companies; |
| • | | tax-exempt organizations; |
| • | | governments or agencies or instrumentalities thereof; |
| • | | brokers, dealers or traders in securities or currencies; |
| • | | stockholders who hold Common Stock as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S. federal income tax purposes; |
| • | | U.S. Holders that have a functional currency other than the exercise price of an optionU.S. dollar; |
| • | | stockholders who actually or extend the term of an option held by an insider without obtaining the approvalconstructively own five percent or more of the Company’s voting stock; |
| • | | stockholders who acquire shares of our Common Stock in connection with employment or other than insiders who are eligible to receive stock awards and such insiders’ associates, at a meetingperformance of the stockholders.services. |
Moreover, this description does not address any aspect of U.S. state or local tax, non-U.S. tax, the Medicare tax on net investment income, U.S. federal estate and gift tax, alternative minimum tax, or other U.S. federal income tax consideration or other tax consequences of the Reverse Stock Split. If an entity classified as a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) for U.S. federal income tax purposes holds common stock, the tax treatment of an equity holders in such entity will generally depend on the status of such equity holder and the activities of such entity. Terms of Options
The following is a description of the permissible terms of options under the Plan. Individual option grants may be more restrictive as to any or all of the permissible terms described below.
Exercise Price; Payment
The exercise price of options may not be less than 100% of the fair market value of the stock on the date of grant. The “fair market value” of Gran Tierra’s common stock on a particular day is generally the closing sales price for the common stock (or the closing bid, if no sales were reported) as quoted on the primary exchange or market upon which Gran Tierra’s common stock trades. If that day is not a market trading day, then the last market trading day prior to the day of determination is used.
The exercise price of options granted under the Plan must be paid either in cash at the time the option is exercised or at the discretion of the Board, (i) by delivery of other common stock of Gran Tierra, (ii) by a “net exercise” arrangement, (iii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of common stock, results in either the receipt of cash (or check) by Gran Tierra or the receipt of irrevocable instructions to pay the aggregate exercise price to Gran Tierra from the sale proceeds, or (iv) in any other form of legal consideration acceptable to the Board.
Option Exercise
Options granted under the Plan may become exercisable in cumulative increments, or vest, as determined by the Board. Shares covered by currently outstanding options under the Plan typically vest over a three year period in three equal annual installments during the participant’s employment by, or service as a director or consultant to, Gran Tierra or an affiliate.
Term
The maximum term of options under the Plan is 10 years. Options under the Plan generally terminate three months after termination of the participant’s Service unless (i) such termination is due to the participant’s permanent and total disability, in which case the option may, but need not, provide that it may be exercised (to the extent the option was exercisable at the time of the termination of Service) at any time within 12 months of such termination; (ii) the participant dies before the participant’s Service has terminated, or within three months after termination of such Service, in which case the option may, but need not, provide that it may be exercised (to the extent the option was exercisable at the time of the participant’s death) within 18 months of the participant’s death by the person or persons to whom the rights to such option pass by will or by the laws of descent and distribution; or (iii) the option by its terms specifically provides otherwise. A participant may designate a beneficiary who may exercise the option following the participant’s death. Individual option grants by their terms may provide for exercise within a longer period of time following termination of Service.
The option term generally may be extended in the event that exercise of the option within these periods is prohibited. A participant’s option agreement may provide that if the exercise of the option following the termination of the participant’s Service would be prohibited because the issuance of stock would violate the registration requirements under the Securities Act, then the option will terminate on the earlier of (i) the expiration of the term of the option or (ii) three months after the termination of the participant’s service during which the exercise of the option would not be in violation of such registration requirements.
Restrictions On Transfer
The Board may grant stock options that are transferable to the extent provided in the stock option agreement. If an option does not provide for transferability then the option shall not be transferable except by will or by the laws of descent and distribution or pursuant to a domestic relations order and shall be exercisable during the lifetime of the option holder and only by the option holder. Shares subject to repurchase by Gran Tierra under an early exercise stock purchase agreement may be subject to restrictions on transfer that the Board deems appropriate.
Terms of Restricted Stock Awards and Purchases of Restricted Stock
Gran Tierra Energy 2023 Proxy Statement | | 65 | |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO GIVE THE BOARD OF DIRECTORS DISCRETIONARY AUTHORITY TO EFFECT A REVERSE STOCK SPLIT We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service (“IRS”) regarding the U.S. federal income tax consequences of the Reverse Stock Split and there can be no assurance that the IRS will not challenge the statements and conclusions set forth below or a court would not sustain any such challenge. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE PARTICULAR U.S. FEDERAL TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT, AS WELL AS THE CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION, INCLUDING ANY U.S. STATE OR LOCAL OR NON-U.S. TAX CONSEQUENCES. Tax Consequences to U.S. Holders of the Reverse Stock Split The Reverse Stock Split is intended to be treated as a recapitalization for U.S. federal income tax purposes. Assuming the Reverse Stock Split qualifies as a recapitalization, then a U.S. Holder generally will not recognize gain or loss on the Reverse Stock Split. In general, the aggregate tax basis of the post-split shares received will be equal to the aggregate tax basis of the pre-split shares exchanged therefor and the holding period of the post-split shares received will include the holding period of the pre-split shares exchanged. Treasury regulations promulgated under the Code provide rules for allocating the tax basis and holding period of the shares of our Common Stock surrendered to the shares of our Common Stock received pursuant to the Reverse Stock Split. U.S. Holders of shares of our Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares. A U.S. Holder whose fractional shares resulting from the Reverse Stock Split are rounded up to the nearest whole share may recognize gain for U.S. federal income tax purposes equal to the value of the additional fractional share. The treatment of the exchange of a fractional share for a whole share in the Reverse Stock Split is not clear under current law and a U.S. Holder may recognize gain for U.S. federal income tax purposes equal to the value of the additional fraction of a share of Common Stock received by such U.S. Holder. Certain Canadian Federal Income Tax Considerations of the Reverse Stock Split The Reverse Stock Split may result in capital gains or capital losses under the Income Tax Act (Canada) to a holder of Common Stock whose shares are subject to the Reverse Stock Split and who, for purposes of the Tax Act and any applicable income tax treaty or convention, and at all relevant times, is a resident of Canada, holds their Common Stock as capital property, deals at arm’s length with the Company and is not affiliated with the Company (a “Canadian Holder”). EACH CANADIAN HOLDER SHOULD CONSULT THEIR TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT, INCLUDING THE EFFECTS OF ANY CANADIAN OR U.S. FEDERAL, STATE AND LOCAL, FOREIGN AND OTHER TAX LAWS. Interests of Directors and Executive Officers Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this Reverse Split Proposal except to the extent of their ownership of shares of our Common Stock. Reservation of Right to Abandon Reverse Stock Split We reserve the right to abandon a Reverse Stock Split and Authorized Share Reduction without further action by our stockholders at any time before the effectiveness of the Reverse Split Amendment filing with the Secretary of the State of Delaware, even if the authority to effect a Reverse Stock Split has been approved by our stockholders. By voting in favor of the Reverse Split Proposal, you are also expressly authorizing the Board of Directors to delay, not to proceed with, and potentially abandon, a Reverse Stock Split and Authorized Share Reduction if it should so decide, in its sole discretion, that such action or lack thereof is in the best interests of the Company and its stockholders. Required Vote The approval of this Reverse Split Proposal, including the Reverse Split Amendment, requires the affirmative vote of a majority of the outstanding stock entitled to vote. Abstentions and broker non-votes, if any, will have the same effect as a vote “Against.” If you do not instruct your broker, bank or other nominee how to vote your shares, they will have discretion to vote on this proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE REVERSE SPLIT PROPOSAL. Payment
The Board determines the purchase price under a restricted stock purchase agreement but the purchase price may not be less than the par value of Gran Tierra’s common stock on the date of purchase. The Board may award stock bonuses in consideration of past services without a purchase payment.
The purchase price of stock acquired pursuant to a restricted stock purchase agreement under the Plan must be paid either in cash at the time of purchase or at the discretion of the Board, (i) by cash at the time of purchase, (ii) by services rendered, or to be rendered to Gran Tierra or (iii) in any other form of legal consideration acceptable to the Board.
Vesting
Shares of stock sold or awarded under the Plan may, but need not be, subject to a repurchase option in favor of Gran Tierra in accordance with a vesting schedule as determined by the Board. The Board has the power to accelerate the vesting of stock acquired pursuant to a restricted stock purchase agreement under the Plan in the event of death, disability, or in the event of a Change in Control.
Restrictions on Transfer
Rights under a stock bonus or restricted stock bonus agreement may be transferred only upon the terms and conditions of the award agreement as the Board shall determine in its discretion, except where such assignment is required by law or expressly authorized by the terms of the applicable stock bonus or restricted stock purchase agreement.
Other Stock Awards
Other forms of stock awards valued in whole or in part with reference to or otherwise based on our common stock may be granted either alone or in addition to other stock awards under the Plan. The Board will have sole and complete authority to determine the persons to whom and the time or times at which such other stock awards will be granted, the number of shares of common stock (or the cash equivalent thereof) to be granted and all other conditions of such other stock awards. Other forms of stock awards may be subject to vesting in accordance with a vesting schedule to be determined by the Board. RSUs, including PSUs, are subject to a three year vesting period. Although DSUs vest immediately, directors are not eligible to receive payment until such time as they are no longer a director of the Company.
Adjustment Provisions
Transactions not involving receipt of consideration by Gran Tierra, such as a merger, consolidation, reorganization, stock dividend, or stock split, may change the type(s), class(es) and number of shares of common stock subject to the Plan and outstanding awards. In that event, the Plan will be appropriately adjusted as to the type(s), class(es) and the maximum number of shares of common stock subject to the Plan, and outstanding Awards will be adjusted as to the type(s), class(es), number of shares and price per share of common stock subject to such Awards.
Effect Of Certain Corporate Transactions
66 | | Gran Tierra Energy 2023 Proxy Statement | |
Certain Relationships and Related Transactions RELATED PERSON TRANSACTIONS POLICY AND PROCEDURES Gran Tierra discourages transactions with related persons. The charter of the Audit Committee provides that the Audit Committee is charged with reviewing and recommending to the Board the approval or disapproval of any related person transactions, as defined under Regulation S-K, Item 404. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which Gran Tierra was or is to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest. In addition, potential related persons transactions are to be referred to the Chief Executive Officer and brought to the attention of the full Board if material. There have been no related party transactions since January 1, 2022 where the procedures described above did not require review, approval or ratification or where these procedures were not followed. CERTAIN RELATED-PERSON TRANSACTIONS Gran Tierra has entered into indemnity agreements with certain officers and directors which provide, among other things, that Gran Tierra will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of Gran Tierra, and otherwise to the fullest extent permitted under Delaware law and Gran Tierra’s Bylaws. Stockholder Proposals Stockholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at the 2023 annual meeting of stockholders may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act and must submit their proposals to us at our principal executive offices (to the Corporate Secretary at 500 Centre Street S.E., Calgary, Alberta, Canada T2G 1A6), not later than the close of business on November 25, 2023. If the date of the 2024 annual meeting is changed by more than 30 days from the date of the 2023 annual meeting, the deadline for submitting proposals is a reasonable time before we begin to print and mail the proxy materials for our 2024 annual meeting. Our Bylaws provide that stockholders may nominate persons for election to the Board of Directors or bring any other business before the stockholders (other than matters properly brought under Rule 14a-8) at the 2024 annual meeting of stockholders only by sending to our Corporate Secretary a notice containing the information required by our Bylaws. Notice to us must be made not less than 30 or more than 65 days prior to the date of the annual meeting; provided, however, that if the annual meeting is to be held on a date that is less than 50 days after the date on which the public announcement of the date of the annual meeting was made by Gran Tierra, notice may be made not later than the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by Gran Tierra. Detailed information about how to make stockholder proposals or nominations for our annual meetings of stockholders can be found in our Bylaws. In addition, for next year’s annual meeting of stockholders, we will be required under new SEC Rule 14a-19 to include on our proxy card all nominees for director for whom we have received notice under the rule, which must be received no later than 60 calendar days prior to the anniversary of the previous year’s annual meeting. For any such director nominee to be included on our proxy card for next year’s annual meeting, our Corporate Secretary must receive notice under SEC Rule 14a-19 no later than February 27, 2024. Please note that the notice requirement under SEC Rule 14a-19 is in addition to the applicable notice requirements under the advance notice provisions of our Bylaws described above. The Plan provides that in the event of the consummation of (i) the sale or other disposition of all or substantially all of the assets of Gran Tierra, (ii) the sale or other disposition of at least fifty percent of the outstanding securities of Gran Tierra, or (iii) certain specified types of merger, consolidation or similar transactions, or collectively, a corporate transaction, any surviving or acquiring corporation may continue or assume Awards outstanding under the Plan or may substitute similar Awards. Regardless of whether any surviving or acquiring corporation assumes such Awards or substitutes similar Awards, with respect to Awards held by participants whose Service with Gran Tierra or an affiliate has not terminated as of the effective time of the corporate transaction, the vesting of such awards (and, if applicable, the time during which such awards may be exercised) will be accelerated in full.
Duration, Amendment And Termination
The Board may suspend or terminate the Plan without stockholder approval or ratification at any time or from time to time.
The Board may at any time, or from time to time, amend or revise the Plan as follows: (a) to make amendments to the Plan or a Stock Award of a housekeeping or administrative nature; (b) if the common stock is listed on the Toronto Stock Exchange subject to any required approval of the TSX, to change the vesting or termination provisions of a Stock Award or the Plan; (c) amendments necessary to comply with provisions of applicable law or stock exchange requirements or for grants to qualify for favorable treatment under applicable laws; and (d) any other amendment, fundamental or otherwise, not requiring stockholder approval under the Code. However, no amendment will be effective unless approved by the stockholders of Gran Tierra within 12 months before or after its adoption by the Board to the extent such approval is necessary to satisfy the requirements of Section 422 of the Code. The Board may submit any other amendment to the Plan for stockholder approval.
For so long as Gran Tierra’s stock is listed on the TSX, under the rules and policies of the TSX any amendment to the Plan is subject to pre-clearance of such amendment by the TSX, and no amendment, suspension or discontinuance of the Plan may contravene the requirements of the TSX.
Burn Rate
In 2017 there were 2,029,035 stock options granted under the Plan which resulted in a burn rate of 0.52%. In 2016 there were 1,744,165 stock options granted under the Plan which resulted in a burn rate of 0.56%, and in 2015 there were 5,346,260 stock options granted under the Plan which resulted in a burn rate of 1.93%.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Person Transactions Policy And Procedures
Gran Tierra discourages transactions with related persons. The charter of the Audit Committee provides that the Audit Committee is charged with reviewing and recommending to the Board the approval or disapproval of any related person transactions, as defined under Regulation S-K, Item 404. In addition, potential related persons transactions are to be referred to the Chief Executive Officer, and brought to the attention of the full Board if material.
There have been no related party transactions since January 1, 2017 where the procedures described above did not require review, approval or ratification or where these procedures were not followed.
Certain Related-Person Transactions
Gran Tierra has entered into indemnity agreements with certain officers and directors which provide, among other things, that Gran Tierra will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of Gran Tierra, and otherwise to the fullest extent permitted under Delaware law and Gran Tierra’s Bylaws.
STOCKHOLDER PROPOSALS
Stockholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at the 2019 annual meeting of stockholders may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act and must submit their proposals to us at our principal executive offices (to the Corporate Secretary at 900, 520 - 3rd Avenue S.W., Calgary, Alberta, Canada T2P 0R3), not later than the close of business on November 21, 2018. If the date of the 2019 annual meeting is changed by more than 30 days from the date of the 2018 annual meeting, the deadline for submitting proposals is a reasonable time before we begin to print and mail the proxy materials for our 2019 annual meeting. There is no minimum number of shares required to be held by a stockholder interested in submitting a proposal for inclusion in our proxy materials.
Our Bylaws provide that stockholders may nominate persons for election to the Board of Directors or bring any other business before the stockholders (other than matters properly brought under Rule 14a-8) at the 2019 annual meeting of stockholders only by sending to our Corporate Secretary a notice containing the information required by our Bylaws. Notice to us must be made not less than 30 or more than 65 days prior to the date of the annual meeting; provided, however, that if the annual meeting is to be held on a date that is less than 50 days after the date on which the public announcement of the date of the annual meeting was made by Gran Tierra, notice may be made not later than the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by Gran Tierra. Detailed information about how to make stockholder proposals or nominations for our annual meetings of stockholders can be found in our Bylaws.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other annual meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other annual meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are stockholders of Gran Tierra will be “householding” Gran Tierra’s proxy materials. A single Notice of Internet Availability of Proxy Materials or a single set of annual meeting materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials or a separate set of annual meeting materials, please notify your broker. You can also request prompt delivery of a copy of the proxy statement and annual report by contacting
Gran Tierra Energy Inc., Diane Phillips, Corporate Secretary, 900, 520 - 3 Avenue S.W., Calgary, Alberta, Canada T2P 0R3 or by telephone at (403) 265-3221. Stockholders who currently receive multiple copies of the Notices of Internet Availability of 2023 Proxy Materials or multiple sets of annual meeting materials at their addresses and would like to request “householding” of their communications should contact their brokers.OTHER MATTERS
Statement | | 67 | |
Householding of Proxy Materials The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other annual meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other annual meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. This year, a number of brokers with account holders who are stockholders of Gran Tierra will be “householding” Gran Tierra’s proxy materials. A single Notice of Internet Availability of Proxy Materials or a single set of annual meeting materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials or a separate set of annual meeting materials, please notify your broker. You can also request prompt delivery of a copy of the proxy statement and annual report by contacting Gran Tierra Energy Inc., Corporate Secretary, 500 Centre Street S.E., Calgary, Alberta, Canada T2G 1A6or by telephone at (403) 265-3221. Stockholders who currently receive multiple copies of the Notices of Internet Availability of Proxy Materials or multiple sets of annual meeting materials at their addresses and would like to request “householding” of their communications should contact their brokers Other Matters The Board knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment. | By Order of the Board of Directors | /s/ Gary Guidry | Gary S. Guidry | President and Chief Executive Officer |
March 24, 2023 A copy of Gran Tierra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, including the financial statements and the financial statement schedules required to be filed with the SEC for the Company’s most recent fiscal year, is available without charge upon written request to: Gran Tierra Energy Inc., 500 Centre Street S.E., Calgary, Alberta, Canada T2G 1A6, Attention: Corporate Secretary. | | | By Order of the Board of Directors | | | | /s/ Gary Guidry | | Gary S. Guidry | | President and Chief Executive Officer |
March 21, 2018
A copy of Gran Tierra’s Annual Report to the SEC on Form 10-K for the fiscal year ended December 31, 2017, including the financial statements and the financial statement schedules required to be filed with the SEC for the Company’s most recent fiscal year, is available without charge upon written request to: Gran Tierra Energy Inc., 900, 520 - 3 Avenue S.W., Calgary, Alberta, Canada T2P 0R3, Attention: Corporate Secretary. |
FORWARD LOOKING STATEMENTS ADVISORY
This document contains opinions, forecasts, projections, guidance, plans and other statements about future events or results that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and financial outlook and forward looking information within the meaning of applicable Canadian securities laws (collectively, “forward-looking statements”). Such forward-looking statements include, but are not limited to, the Company’s expectation to fully fund its operations from cash from operating activities, expectations regarding the annual meeting and the related procedures, the filing of voting results, the Company’s future operations including planned operations and the exploration and development of the Company’s blocks, areas and fields.
The forward-looking statements contained in this document reflect several material factors and expectations and assumptions of
68 | | Gran Tierra including, without limitation, that Gran Tierra will continue to conduct its operations in a manner consistent with its current expectations, the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates), rig availability, the effects of drilling down-dip, the effects of waterflood and high pressure stimulation operations, the extent and effect of delivery disruptions, and the general continuance of current or, where applicable, assumed operational, regulatory and industry conditions including in areas of potential expansion, and the ability of Gran Tierra to access capital and other resources and to execute its current business and operational plans in the manner currently planned. Gran Tierra believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct.Among the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements in this document are: Gran Tierra’s operations are located in Colombia, and unexpected problems can arise due to guerrilla activity; technical difficulties and operational difficulties may arise which impact the production, transport or sale of the Company’s products, including instability of electricity supply at our production facilities; geographic, political and weather conditions can impact the production, transport or sale of the Company’s products; the risk that current global economic and credit conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts; the ability of Gran Tierra to execute its business plan and its drilling and development plan; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the timely receipt of regulatory or other required approvals for the Company’s operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; the risk that oil prices could remain weak or further decline, or global economic and credit market conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts, which could cause Gran Tierra to further modify its strategy and capital spending program; and the risk factors detailed from time to time in Gran Tierra’s periodic reports filed with the Securities and Exchange Commission, including, without limitation, under the caption “Risk Factors” in Gran Tierra’s Annual Report on Form 10-K filed February 27, 2018. These filings are available on the Securities and Exchange Commission website at http://www.sec.gov and on SEDAR at www.sedar.com. Although the current guidance, capital spending program and long term strategy of Gran Tierra is based upon the current expectations of the management of Gran Tierra, should any one of a number of issues arise, Gran Tierra may find it necessary to alter its business strategy and/ or capital spending program and there can be no assurance as at the date of this document as to how those funds may be reallocated or strategy changed and how that would impact Gran Tierra’s results of operations and financing position.
Statements relating to “reserves” and “resources” are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, including that the reserves and resources described can be profitably produced in the future.
All forward-looking statements are made as of the date of this document and the fact that this document remains available does not constitute a representation by Gran Tierra that Gran Tierra believes these forward-looking statements continue to be true as of any subsequent date. Actual results may vary materially from the expected results expressed in forward-looking statements. Gran Tierra disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities laws. Gran Tierra’s forward-looking statements are expressly qualified in their entirety by this cautionary statement.
Energy 2023 Proxy Statement | |
Forward Looking Statements Advisory This proxy statement contains forward-looking statements regarding the Company within the meaning of applicable securities laws and regulations. These statements include those relating to the Company’s plans, goals and expectations. They are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, the risks detailed in the Company’s filings with the Securities and Exchange Commission, including the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The forward-looking statements speak only as of the date of this proxy statement, and we assume no obligation to update any of these forward-looking statements, except as required by law. Disclosure of Oil and Gas Information DISCLOSURE OF OIL AND GAS INFORMATION
Gran Tierra’s Statement of Reserves Data and Other Oil and Gas Information on Form 51-101F1 dated effective as at December 31, 2017 (the “GTE 51-101F1”), which includes disclosure of its oil and gas reserves and other oil and gas information in accordance with Canadian National Instrument 51-101 -Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGEH”) forming the basis of this document, is available on SEDAR at www.sedar.com.
Estimates of net present value contained herein do not necessarily represent fair market value of reserves or resources. Estimates of reserves or resources and future net revenue for individual properties may not reflect the same level of confidence as estimates of reserves and future net revenue for all properties, due to the effect of aggregation.
Gas volumes are converted to BOE at the rate of 6 Mcf of gas per bbl of oil, based upon the approximate relative energy content of gas and oil. The rate is not necessarily indicative of the relationship between oil and gas prices. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value.
Definitions
All dollar ($) amounts referred to in this proxy statement are United States (U.S.) dollars, unless otherwise indicated.
BOE means barrels of oil equivalent.
BOEPD means barrels of oil equivalent per day.
MMBOE means million barrels of oil equivalent
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
Possible reserves are those additional reserves that are less certain to be recovered than Probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of Proved plus Probable plus Possible reserves. The estimate of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.
See the GTE 51-101F1 for additional definitions regarding terms used in this document.
Oil and Gas Metrics
This document contains certain oil and gas metrics, including reserves per share, net asset value per share and FDC, which are calculated as described in this document and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies.
Gran Tierra’s Statement of Reserves Data and Other Oil and Gas Information on Form 51-101F1 dated effective as at December 31, 2022 (the “GTE 51-101F1”), which includes disclosure of its oil and gas reserves and other oil and gas information in accordance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGEH”) forming the basis of this document, is available on SEDAR at www.sedar.com. All reserves values, future net revenue and ancillary information contained herein are as of December 31, 2022, are derived from a report with an effective date of December 31, 2022 (the “GTE McDaniel Reserves Report”) prepared by Gran Tierra’s independent qualified reserves evaluator McDaniel & Associates Consultants Ltd. (“McDaniel”) and calculated in compliance with NI 51-101 and COGEH. Estimates of net present value contained herein do not necessarily represent fair market value of reserves or resources. Estimates of reserves or resources and future net revenue for individual properties may not reflect the same level of confidence as estimates of reserves and future net revenue for all properties, due to the effect of aggregation. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Gran Tierra’s reserves will be attained and variances could be material. All reserves assigned in the GTE McDaniel Reserves Report are located in Colombia and Ecuador and presented on a consolidated basis by foreign geographic area. There are numerous uncertainties inherent in estimating quantities of crude oil reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth in the GTE McDaniel Reserves Report are estimates only. References to a formation where evidence of hydrocarbons has been encountered is not necessarily an indicator that hydrocarbons will be recoverable in commercial quantities or in any estimated volume. Gran Tierra’s reported production is a mix of light crude oil and medium and heavy crude oil for which there is no precise breakdown since the Company’s oil sales volumes typically represent blends of more than one type of crude oil. Drilling locations disclosed herein are derived from the GTE McDaniel Reserves Report and account for drilling locations that have associated Undeveloped and Proved plus Probable Undeveloped reserves, as applicable. Gas volumes are converted to BOE at the rate of 6 Mcf of gas per bbl of oil, based upon the approximate relative energy content of gas and oil. The rate is not necessarily indicative of the relationship between oil and gas prices. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value. This document contains a number of oil and gas metrics, including reserves replacement, net asset value (“NAV”) per share and FD&A costs, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Company’s performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods. | • | | Reserves replacement is calculated as reserves in the referenced category per the GTE McDaniel Reserves Report divided by estimated referenced production. Management uses this measure to determine the relative change of its reserve base over a period of time. |
| | | | 70 | | Gran Tierra Energy 2023 Proxy Statement | | 69 |
| • | | NAV per share is calculated as net asset value at 10% discount (before or after tax, as applicable) of the applicable reserves category per the GTE McDaniel Reserves Report minus estimated debt, divided by the number of shares of Gran Tierra’s common stock issued and outstanding. Management uses NAV per share as a measure of the relative change of Gran Tierra’s net asset value over its outstanding common stock over a period of time. |
| • | | FD&A costs are calculated as estimated exploration and development capital expenditures in Colombia, divided by the applicable reserves additions per the GTE McDaniel Reserves Report both before and after changes in FDC. The calculation of FD&A costs incorporates the change in FDC required to bring proved undeveloped and developed reserves into production. The aggregate of the exploration and development costs incurred in the financial year and the changes during that year in estimated FDC may not reflect the total FD&A costs related to reserves additions for that year. Management uses FD&A costs as a measure of its ability to execute its capital program and of its asset quality. |
Definitions All dollar ($) amounts referred to in this proxy statement are United States (U.S) dollars, unless otherwise indicated. BOE means barrels of oil equivalent. BOEPD means barrels of oil equivalent per day. MMBOE means million barrels of oil equivalent Proved (1P) reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Possible reserves are those additional reserves that are less certain to be recovered than Probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of Proved plus Probable plus Possible reserves. The estimate of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation. Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned. See the GTE 51-101F1 for additional definitions regarding terms used in this document. | | | | | 70 | | Gran Tierra Energy 2023 Proxy Statement |
Appendix A CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF GRAN TIERRA ENERGY INC. Gran Tierra Energy Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”), does hereby certify as follows: | 1. | The current name of the Corporation is Gran Tierra Energy Inc., and the Corporation was incorporated pursuant to the General Corporation Law on October 31, 2016 (the “Certificate of Incorporation”). |
| 2. | The amendments to the existing Certificate of Incorporation set forth in this Certificate of Amendment were duly authorized and adopted in accordance with Section 242 of the General Corporation Law. |
| 3. | The amendments to the existing Certificate of Incorporation being effected hereby are to amend and restate Article IV of the Certificate of Incorporation in its entirety to read as follows: |
“ARTICLE IV The Corporation is authorized to issue two classes of stock to be designated respectively Common Stock, par value $0.001 per share (the “Common Stock”), and Preferred Stock, par value $0.001 per share (the “Preferred Stock”). The total number of shares of stock which the Corporation is authorized to issue is 82,000,000, consisting of 57,000,000 shares of Common Stock and 25,000,000 shares of Preferred Stock. Effective as of 12:01 a.m. Eastern Time on [•], 2023 (the “Effective Time”), every ten shares of the Corporation’s Common Stock issued immediately prior to the Effective Time shall, automatically and without any action on the part of the Corporation or the respective holders thereof, be combined and converted into one share of Common Stock without increasing or decreasing the par value of each share of Common Stock (the “Reverse Stock Split”). No fractional shares of Common Stock shall be issued as a result of the Reverse Stock Split and, in lieu thereof, upon surrender after the Effective Time of a certificate or book-entry position which formerly represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time, any person who would otherwise be entitled to a fractional share of Common Stock as a result of the Reverse Stock Split, following the Effective Time, shall be entitled to receive (i) if the fraction is less than half a share of Common Stock, the aggregate number of post-Reverse Stock Split shares to be issued to such stockholder rounded down to the nearest whole number of shares, and (ii) if the fraction is at least half a share of Common Stock, the aggregate number of post-Reverse Stock Split shares to be issued to such stockholder rounded up to the nearest whole number of shares, with all shares of Common Stock held by a beneficial holder being aggregated. For shares held in certificated form, the Reverse Stock Split shall occur whether or not the certificates representing such shares of Common Stock are surrendered to the Corporation or its transfer agent. Each certificate or book entry position that immediately prior to the Effective Time represented shares of Common Stock shall thereafter represent the number of shares of Common Stock into which the shares of Common Stock represented by such certificate or book entry position has been combined, subject to the treatment of fractional interests set forth above.” A. Common Stock Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote. All Common Stock of the Corporation shall have the same rights and preferences. All Common Stock when issued shall be fully paid and non-assessable. The Board of Directors (the “Board”) of the Corporation may, at its discretion and by resolution of the Board, issue any authorized but unissued Common Stock of the Corporation which has not been reserved for issuance upon the exercise of any outstanding warrants, options, or other documents evidencing the right to acquire the Common Stock of the Corporation. Cumulative voting shall not be permitted for the election of individuals to the Corporation’s Board or for any other matters brought before any meeting of the Corporation’s stockholders, regardless of the nature thereof. Stockholders of the Corporation’s Common Stock shall not be entitled to any pre-emptive or preferential rights to acquire additional Common Stock of the Corporation. | | | | | Gran Tierra Energy 2023 Proxy Statement | | A-1 |
APPENDIX A-1 B. Preferred Stock The aggregate number of shares of Preferred Stock which the Corporation shall have the authority to issue is twenty-five million (25,000,000) shares, $0.001 par value, which may be issued in such series, with such powers, designations, preferences, stated values, rights, qualifications, restrictions or limitations as determined solely by the Board in the resolution or resolutions providing for the issue of such class or series of Preferred Stock. | 1. | Provisions Relating to the Preferred Stock. |
| (a) | The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations and powers, preferences, and rights, and qualifications, limitations, and restrictions thereof, as are stated and expressed herein and in the resolution or resolutions providing for the issue of such class or series adopted by the Board as hereafter prescribed. |
| (b) | Authority is hereby expressly granted to and vested in the Board to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, and with respect to each class or series of the Preferred Stock, to fix and state by the resolution or resolutions from time to time adopted providing for the issuance thereof the designation and the powers, preferences, rights, qualifications, limitations and restrictions relating to each class or series of the Preferred Stock, including, but not limited to, the following: |
(i) whether or not the class or series is to have voting rights, full, special or limited, or is to be without voting rights, and whether or not such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock; (ii) the number of shares to constitute the class or series and the designations thereof; (iii) the preferences, and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series; (iv) whether or not the shares of any class or series shall be redeemable at the option of the Corporation or the holders thereof or upon the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property), and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption; (v) whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount thereof, and the terms and provisions relative to the operation thereof; (vi) the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividends shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends shall accumulate; (vii) the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation; (viii) whether or not the shares of any class or series, at the option of the Corporation or the holder thereof or upon the happening of any specified event, shall be convertible into or exchangeable for, the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities or other property of the Corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and (ix) such other special rights and protective provisions with respect to any class or series as may to the Board seem advisable. | | | | | A-2 | | Gran Tierra Energy 2023 Proxy Statement |
APPENDIX A-1 | (c) | The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. The Board may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any other class or series. The Board may decrease the number of shares of the Preferred Stock designated for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares of the Preferred Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued, and undesignated shares of the Preferred Stock. |
| 4. | This Certificate of Amendment to the Certificate of Incorporation shall be effective as of 12:01 a.m. Eastern Time on [●], 2023. |
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to the Certificate of Incorporation to be signed by its Chief Executive Officer this day of . | | | By: | | | | | Gary S. Guidry | | | President and Chief Executive Officer |
| | | | | Gran Tierra Energy 2023 Proxy Statement | | A-3 |
QUESTIONS? NEED HELP VOTING? CONTACT US North American Toll Free Phone 1.855.476.7987 | | | | | | | E-mail: contactus@kingsdaleadvisors.com | | | Prospective Resources
| | Fax: 416.867.2271 | | | | | Toll Free Facsimile: 1.866.545.5580 | | | | | Outside North America, Banks and Brokers | | Call Collect: 416.867.2272 |
| | | | | | | GRAN TIERRA ENERGY INC. | | |
| | | | | Prospective Resources are those quantitiesForm of petroleum estimated, as of a given date,Proxy – Annual Meeting to be potentially recoverable from undiscovered accumulations by applicationheld on May 3, 2023
| | Trader’s Bank Building 702, 67 Yonge Street Toronto, On M5E 1J8 |
| | | | | Appointment of future development projects. Prospective Resources have both an associated chanceProxyholder I/We being the undersigned holder(s) of discoveryGran Tierra Energy Inc. hereby appoint Gary S. Guidry and a chanceRyan Ellson, or either of development. Not all exploration projects will result in discoveries. The chance that an exploration project will result inthem, | | OR | | Print the discovery of petroleum is referred to as the “chance of discovery.” Thus, for an undiscovered accumulation the chance of commerciality is the product of two risk components-the chance of discovery and the chance of development. There is no certainty that any portionname of the Prospective Resources will be discovered. If discovered, thereperson you are appointing if this person is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.Estimates of the Company’s Prospective Resources are based upon the GTE McDaniel Prospective Resources Report. The estimates of Prospective Resources provided in this document are estimates only and there is no guarantee that the estimated Prospective Resources will be recovered. Actual resources may be greater than or lesssomeone other than the estimates provided in this in this document and the differences may be material. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Gran Tierra’s Prospective Resources will be attained and variances could be material. There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.
Estimates of Prospective Resources are by their nature more speculative than estimates of proved reserves and would require substantial capital spending over a significant number of years to implement recovery. Actual locations drilled and quantities that may be ultimately recovered from our properties will differ substantially. In addition, we have made no commitment to drill, and likely will not drill, all of the drilling locations that have been attributable to these quantities.
The prospective resources in this document are classified as “mean” representing the arithmetic average of the expected recoverable volume. It is the most accurate single point representation of the volume distribution.
For a discussion of Gran Tierra’s interest in the Prospective Resources, the location of the Prospective Resources, the product typereasonably expected, the risks and level of uncertainty associated with recovery of the resources, the significant positive and negative factors relevant to the estimate of the Prospective Resources, a description of the applicable projects maturity sub-categories and other relevant information regarding the Prospective Resources estimates, please see the GTE NI 51-101F1 available on SEDAR at www.sedar.com.
| 71 | Proxyholders listed herein: | | |
as my/our proxyholder with full power of substitution and to attend, act, and to vote for and on behalf of the holder in accordance with the following direction (or if no directions have been given, as indicated in the Notes to Proxy below) and all other matters that may properly come before the Annual Meeting of Stockholders (the “Meeting”) of Gran Tierra Energy Inc. (the “Corporation”) to be held virtually at https://web.lumiagm.com/251955864 on WEDNESDAY, MAY 3, 2023, AT 10:00 A.M. (MOUNTAIN TIME) or at any adjournment thereof. The Board of Directors recommend a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2, 3 and 4. | | | | | | | | | | | | | | | | | | | | | | |
IMPORTANT ANNUAL MEETING INFORMATION Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:00 a.m., Mountain Time, on April 30, 2018. Vote by Internet Go to www.investorvote.com/GTE Or scan the QR code with your smartphone Follow the steps outlined on the secure website Vote by telephone Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors recommends a vote FOR each of the nominees listed and FOR Proposals 2 and 3. 1. Election of Directors. Nominees: 01 -
| | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | a. Peter J. Dey | | ☐ | | ☐ | | ☐ | | b. Gary S. Guidry For Against Abstain 04 - | | ☐ | | ☐ | | ☐ | | c. Evan Hazell | | ☐ | | ☐ | | ☐ | d. Robert B. Hodgins For Against Abstain 02 - Peter J. Dey 05 - | | ☐ | | ☐ | | ☐ | | e. Alison Redford | | ☐ | | ☐ | | ☐ | | f. Ronald W. Royal For Against Abstain 03 - Evan Hazell 06 - | | ☐ | | ☐ | | ☐ | g. Sondra Scott For Against Abstain 07 - | | ☐ | | ☐ | | ☐ | | h. David P. Smith 08 - | | ☐ | | ☐ | | ☐ | | i. Brooke Wade | | ☐ | | ☐ | | ☐ | 2. Proposal to ratify the appointment of KPMG LLP as theGran Tierra Energy Inc.’s independent registered public accounting firm for 2018. 2023. | | For ☐ | | Against ☐ | | Abstain ☐ | 3. Proposal to approve, on an advisory basis, the compensation of Gran Tierra Energy Inc.'s named executive officers, as disclosed in the proxy statement. For Against Abstain B Non-Voting Items Change of Address — Please print new address below. Note: To conduct any other business properly brought before the meeting. C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 02SA0D 1 U P X +
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice, Proxy Statement and Annual Report are available at http://www.edocumentview.com/GTE. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Annual Meeting Proxy — Gran Tierra Energy Inc. ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON May 2, 2018 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholders hereby appoint Gary S. Guidry and Ryan Ellson, or any of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes each of them to represent and to vote all of the shares of Common Stock, Special A Voting Stock, and Special B Voting Stock of Gran Tierra Energy Inc. that the stockholders are entitled to vote at the Annual Meeting of Stockholders to be held at 11:00 a.m. (Mountain time) on May 2, 2018, at Centennial Place, 3rd Floor, West Tower, 250-5 Street SW, Calgary, Alberta, Canada T2P 0R4, and any adjournments or postponements thereof, hereby revoking all previous proxies, with all powers the stockholders would possess if present, on all matters listed on the reverse side and in accordance with the instructions designated on the reverse side and with discretionary authority as to any and all such other matters as may properly come before the meeting. For directions to the meeting, please visit www.grantierra.com. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR EACH OF PROPOSALS 2 AND 3. THE PROXIES NAMED ABOVE ARE HEREBY AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE OR VOTE ONLINE AS INSTRUCTED IN THIS PROXY CARD.
IMPORTANT ANNUAL MEETING INFORMATION Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors recommends a vote FOR each of the nominees listed and FOR Proposals 2 and 3. 1. Election of Directors. Nominees: 01 - Gary S. Guidry 04 - Robert B. Hodgins For Against Abstain 02 - Peter J. Dey 05 - Ronald W. Royal For Against Abstain 03 - Evan Hazell 06 - Sondra Scott For Against Abstain 07 - David P. Smith For Against Abstain 08 - Brooke Wade For Against Abstain 2. Proposal to ratify the appointment of KPMG LLP as the independent registered public accounting firm for 2018. 3. Proposal to approve, on an advisory basis, the compensation of Gran Tierra Energy Inc.'s named executive officers, as disclosed in the proxy statement. Note: To conduct any other business properly brought before the meeting. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 02SA1D 1 U P X +
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice, Proxy Statement and Annual Report are available at http://www.edocumentview.com/GTE. PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Annual Meeting Proxy — Gran Tierra Energy Inc. ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON May 2, 2018 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholders hereby appoint Gary S. Guidry and Ryan Ellson, or any of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes each of them to represent and to vote all of the shares of Common Stock, Special A Voting Stock, and Special B Voting Stock of Gran Tierra Energy Inc. that the stockholders are entitled to vote at the Annual Meeting of Stockholders to be held at 11:00 a.m. (Mountain time) on May 2, 2018, at Centennial Place, 3rd Floor, West Tower, 250-5 Street SW, Calgary, Alberta, Canada T2P 0R4, and any adjournments or postponements thereof, hereby revoking all previous proxies, with all powers the stockholders would possess if present, on all matters listed on the reverse side and in accordance with the instructions designated on the reverse side and with discretionary authority as to any and all such other matters as may properly come before the meeting. For directions to the meeting, please visit www.grantierra.com. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR EACH OF PROPOSALS 2 AND 3. THE PROXIES NAMED ABOVE ARE HEREBY AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE AS INSTRUCTED IN THIS PROXY CARD.
GRAN TIERRA EXCHANGECO INC. 8th Floor, 100 University Avenue Toronto, Ontario M5J 2Y1 www.computershare.com Security Class Holder Account Number Fold Voting Instruction Form (“VIF”) - Annual Meeting to be held on Wednesday, May 2, 2018 Notes to VIF 1. This voting direction will not be valid and not be acted upon unless it is completed as outlined herein and delivered to Computershare Trust Company of Canada, Attention: Manager, Corporate Trust, 600, 530 – 8th Avenue S.W., Calgary, Alberta T2P 3S8, Canada by 11:00 am (Mountain Time) on Monday, April 30, 2018, or not less than 48 hours before the time set for the holding of any adjournment(s) thereof. The voting direction is valid only for the Meeting or any adjournment(s) of the Meeting. 2. If this voting direction is not signed by the Holder (as defined below) of Gran Tierra Exchangeco Inc. Exchangeable Shares, the votes to which the Holder of the Gran Tierra Exchangeco Inc. Exchangeable Shares is entitled will not be exercised. 3. If the Holder is a corporation, its corporate seal must be affixed or it must be signed by an officer or attorney thereof duly authorized. 4. This voting direction must be dated and the signature hereon should be exactly the same as the name in which the Gran Tierra Exchangeco Inc. Exchangeable Shares are registered. 5. Persons signing as executors, administrators, trustees, etc., should so indicate and give their full title as such. 6. A Holder who has submitted a voting direction may revoke it at any time prior to the Meeting. In addition to revocation in any other manner permitted by law, a voting direction may be revoked by instrument in writing executed by the Holder or his attorney authorized in writing or, if the Holder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized and deposited at the office of the Trustee (as defined below) at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof at which the voting direction is to be acted upon or with a representative of the Trustee in attendance at the Meeting, on the day of the Meeting or any adjournment thereof, and upon either of such deposits, the voting direction is revoked. VIF’s submitted must be received by 11:00 am (Mountain Time) on Monday, April 30, 2018. VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK! To Vote Using the Telephone To Vote Using the Internet Fold Call the number listed BELOW from a touch tone telephone. 1-866-732-VOTE (8683) Toll Free Go to the following web site: www.investorvote.com/GTE Smartphone? Scan the QR code to vote now. If you vote by telephone or the Internet, DO NOT mail back this VIF. Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual. Voting by mail or by Internet are the only methods by which a holder may appoint a person as proxyholder other than the Management nominees named on the reverse of this VIF. Instead of mailing this VIF, you may choose one of the two voting methods outlined above to vote this VIF. To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER listed below. CONTROL NUMBER 01DUMD
PLEASE SELECT ONE OF THE FOLLOWING: Direct the Trustee to Vote Gran Tierra Exchangeco Inc. Exchangeable Shares The Holder hereby directs the Trustee to vote as indicated. Appointment of Company Management as Proxy The Holder hereby appoints Gary S. Guidry and Ryan Ellson, or either of them, as proxyholder of the Holder, with power of substitution, and authorizes them to represent and vote, as indicated above, all of the Gran Tierra Exchangeco Inc. Exchangeable Shares which the Holder may be entitled to vote at the Meeting, and at any adjournment or adjournments thereof and on every ballot that may take place in consequence thereof, and with discretionary authority as to any other matters that may properly come before the Meeting. Appointment of the Holder, or the Holder’s Designee as Proxy The Holder hereby appoints as proxyholder of the Holder and authorizes them to represent and vote, as indicated above, all of the Gran Tierra Exchangeco Inc. Exchangeable Shares which the Holder may be entitled to vote at the Meeting, and at any adjournment or adjournments thereof and on every ballot that may take place in consequence thereof, and with discretionary authority as to any other matters that may properly come before the Meeting. IF THE HOLDER DOES NOT COMPLETE ONE OF THE FOREGOING, COMPLETES MORE THAN ONE OF THE FOREGOING OR COMPLETES THE THIRD SELECTION BUT DOES NOT SPECIFY A DESIGNEE, THE HOLDER WILL BE DEEMED TO HAVE DIRECTED THE TRUSTEE TO VOTE THEIR GRAN TIERRA EXCHANGECO INC. EXCHANGEABLE SHARES AS INDICATED. The undersigned holder (the “Holder”) of exchangeable shares of Gran Tierra Exchangeco Inc. that were issued in connection with the transaction between the former stockholders of Solana Resources Limited and Gran Tierra Energy Inc. (the “Company”) has the right to instruct Computershare Trust Company of Canada (the “Trustee”) in respect of the exercise of the Holder’s votes at the annual meeting of stockholders of the Company to be held at Centennial Place, 3rd Floor, West Tower, 250 - 5 Street S.W., Calgary, Alberta, Canada T2P 0R4 on May 2, 2018 (the “Meeting”), as follows: To instruct the Trustee to exercise the votes to which the Holder is entitled as indicated below; OR To instruct the Trustee to appoint a representative of the Company’s management as proxy to exercise the votes to which the Holder is entitled as indicated below; OR To instruct the Trustee to appoint the Holder, or the Holder’s designee, as a proxy to exercise personally the votes to which the Holder is entitled as indicated below. IMPORTANT NOTE: IF NO DIRECTION IS MADE, FOR OR AGAINST, THE HOLDER’S GRAN TIERRA EXCHANGECO INC. EXCHANGEABLE SHARES WILL NOT BE VOTED Fold 1. Election of Directors For Against Abstain For Against Abstain For Against Abstain 01. Gary S. Guidry 04. Robert B. Hodgins 02. Peter J. Dey 05. Ronald W. Royal 03. Evan Hazell 06. David P. Smith 07. Brooke Wade 08. Sondra Scott 2. Ratification of Selection of Independent Auditors For Against Abstain To ratify the appointment of KPMG LLP as the independent registered public accounting firm for 2018. 3. Advisory Vote to Approve Named Executive Compensation Approval of, on an advisory basis, the compensation of Gran Tierra Energy Inc.’s named executive officers, as disclosed in the proxy statement.
| | For ☐ | | Against ☐ | | Abstain Fold ☐ | 4. Proposal to approve an amendment to Gran Tierra Energy Inc.’s Certificate of Incorporation to effect a reverse stock split of the Corporation’s issued common stock, par value $0.001 per share at a reverse stock split ratio of 1 for 10. | | For ☐ | | Against ☐ | | Abstain ☐ |
| Authorized Signature(s) – This section must be completed for your instructions to be executed. | | I/Wewe authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting instructions are indicated above, this VIFProxy will be voted as recommended by Management. the Board of Directors. |
| | | | | Signature(s): | | | | Date | | | | | | | | | | / / | | | | | MM / DD / YY G R Q Q 246036 A R 0 01DUNC | Annual Financial Statements –Check the box to the right if you would like to DECLINE to receive the Annual Financial Statements and accompanying Management’s Discussion and Analysis by mail. | | | | ☐ |
This form of proxy is solicited by and on behalf of the Board of Directors. Proxies must be received by 10:00 am, Mountain Time, on May 1, 2023. Notes to Proxy | 1. |
GRAN TIERRA GOLDSTRIKE INC. 8th Floor, 100 University Avenue Toronto, Ontario M5J 2Y1 www.computershare.com Security Class Holder Account Number Fold Voting Instruction Form (“VIF”) - Annual MeetingEach holder has the right to be held on Wednesday, May 2, 2018 Notes to VIF 1. This voting direction willappoint a person, who need not be valida holder, to attend and not be acted upon unless it is completed as outlinedrepresent him or her at the Meeting. If you wish to appoint a person other than the persons whose names are printed herein, and delivered to Computershare Trust Companyplease insert the name of Canada, Attention: Manager, Corporate Trust, 600, 530 – 8th Avenue S.W., Calgary, Alberta T2P 3S8, Canada by 11:00 am (Mountain Time)your chosen proxyholder in the space provided on Monday, April 30, 2018, or not lessthe reverse.
|
| 2. | If the securities are registered in the name of more than 48 hours before the time set for the holding of any adjournment(s) thereof. The voting direction is valid only for the Meeting or any adjournment(s)one holder (for example, joint ownership, trustees, executors, etc.) then all of the Meeting. 2.registered owners must sign this proxy in the space provided on the reverse. If thisyou are voting direction is not signed by the Holder (as defined below)on behalf of Gran Tierra Goldstrike Inc. Exchangeable Shares, the votes to which the Holder of the Gran Tierra Goldstrike Inc. Exchangeable Shares is entitled will not be exercised. 3. If the Holder is a corporation its corporate seal mustor another individual, you may be affixed or it mustrequired to provide documentation evidencing your power to sign this proxy with signing capacity stated. |
| 3. | This proxy should be signed by an officer or attorney thereof duly authorized. 4. This voting direction must be dated andin the signature hereon should be exactly the sameexact manner as the name inappears on the proxy. |
| 4. | If this proxy is not dated, it will be deemed to bear the date on which the Gran Tierra Goldstrike Inc. Exchangeable Shares are registered. 5. Persons signing as executors, administrators, trustees, etc., should so indicate and give their full title as such. 6. A Holder who has submitted a voting direction may revoke it at any time prior to the Meeting. In addition to revocation in any other manner permitted by law, a voting direction may be revoked by instrument in writing executedis mailed by the Holder or his attorneyholder. |
| 5. | The securities represented by this proxy will be voted as directed by the holder. If no such directions are made, this proxy will be voted FORall the nominees listed in Proposal 1 andFORProposals 2, 3 and 4. The proxyholders named above are hereby authorized to vote in writing or, if the Holder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized and deposited at the office of the Trustee (as defined below) at any time up to and including the lasttheir discretion upon such other business day preceding the day ofas may properly come before the Meeting or any adjournment thereof at whichor postponement thereof. |
| 6. | The securities represented by this proxy will be voted or withheld from voting, in accordance with the voting direction isinstructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted upon or with a representative of the Trustee in attendance at the Meeting, on, the daysecurities will be voted accordingly. |
| 7. | This proxy confers discretionary authority in respect of amendments to matters identified in the Notice of Meeting or any adjournment thereof, and upon either of such deposits,other matters that may properly come before the voting direction is revoked. VIF’s submitted mustMeeting. |
| 8. | This proxy should be receivedread in conjunction with the accompanying documentation provided by 11:00 am (Mountain Time) on Monday, April 30, 2018. Fold VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK! Gran Tierra Energy Inc. . |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on May 3, 2023. The Notice, Proxy Statement and Annual Report are available at: https://www.grantierra.com/investor-relations/2023-annual-meeting INSTEAD OF MAILING THIS PROXY, YOU MAY SUBMIT YOUR PROXY USING SECURE ONLINE VOTING: | | | | | | | To Vote UsingYour Proxy Online please visit: | | | | https://login.odysseytrust.com/pxloginand click on | | | | .. You will require the Telephone To Vote Using the Internet • Call the number listed BELOW from a touch tone telephone. 1-866-732-VOTE (8683) Toll Free • GoCONTROL NUMBER printed with your address to the following web site: www.investorvote.com/GTE • Smartphone? Scan the QR code to vote now.right. If you vote by telephone Internet, do not mail this proxy. | | Shareholder Address and Control Number Here | | | To request the receipt of future documents via email and/or the Internet, DO NOT mail back this VIF. to sign up for Securityholder Online services, you may contact Odyssey Trust Company at www.odysseycontact.com | | | | | Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual. A return envelope has been enclosed for voting by mail. | | |
| | | | | | | GRAN TIERRA ENERGY INC. | | |
| | | | | Voting by mail or by Internet areInstruction Form (“VIF”) – ANNUAL MEETING OF STOCKHOLDERS to be held on MAY 3, 2023 | | Trader’s Bank Building 702, 67 Yonge Street Toronto, On M5E 1J8 |
| | | | | Appointee(s) I/We being the only methods by which a holder may appoint a person as proxyholder other than the Management nominees named on the reverseundersigned holder(s) of this VIF. Instead of mailing this VIF, you may choose one of the two voting methods outlined above to vote this VIF. To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER listed below. CONTROL NUMBER 01DUOC
PLEASE SELECT ONE OF THE FOLLOWING: Direct the Trustee to Vote Gran Tierra GoldstrikeEnergy Inc. Exchangeable Shares The Holder hereby directs the Trustee to vote as indicated. Appointment of Company Management as Proxy The Holder hereby appoints Gary S. Guidry and Ryan Ellson, or either of them, as proxyholder
| | OR | | Print the name of the Holder, with power of substitution, and authorizes them to represent and vote, as indicated above, all ofperson you are appointing if this person is someone other than the Gran Tierra Goldstrike Inc. Exchangeable Shares which the Holder may be entitled to vote at the Meeting, and at any adjournment or adjournments thereof and on every ballot that may take place in consequence thereof, and with discretionary authority as to any other matters that may properly come before the Meeting. Appointment of the Holder, or the Holder’s Designee as Proxy The Holder hereby appoints as proxyholder of the Holder and authorizes them to represent and vote, as indicated above, all of the Gran Tierra Goldstrike Inc. Exchangeable Shares which the Holder may be entitled to vote at the Meeting, and at any adjournment or adjournments thereof and on every ballot that may take place in consequence thereof, and with discretionary authority as to any other matters that may properly come before the Meeting. IF THE HOLDER DOES NOT COMPLETE ONE OF THE FOREGOING, COMPLETES MORE THAN ONE OF THE FOREGOING OR COMPLETES THE THIRD SELECTION BUT DOES NOT SPECIFY A DESIGNEE, THE HOLDER WILL BE DEEMED TO HAVE DIRECTED THE TRUSTEE TO VOTE THEIR GRAN TIERRA GOLDSTRIKE INC. EXCHANGEABLE SHARES AS INDICATED. The undersigned holder (the “Holder”) of exchangeable shares of Gran Tierra Goldstrike Inc. that were issued in connection with the transaction between the former stockholders of Goldstrike, Inc. and Gran Tierra Energy Inc. (the “Company”) has the right to instruct Computershare Trust Company of Canada (the “Trustee”) in respect of the exercise of the Holder’s votes at the annual meeting of stockholders of the Company to be held at Centennial Place, 3rd Floor, West Tower, 250 - 5 Street S.W., Calgary, Alberta, Canada T2P 0R4 on May 2, 2018 (the “Meeting”), as follows: • To instruct the Trustee to exercise the votes to which the Holder is entitled as indicated below; OR • To instruct the Trustee to appoint a representative of the Company’s management as proxy to exercise the votes to which the Holder is entitled as indicated below; OR • To instruct the Trustee to appoint the Holder, or the Holder’s designee, as a proxy to exercise personally the votes to which the Holder is entitled as indicated below. IMPORTANT NOTE: IF NO DIRECTION IS MADE, FOR OR AGAINST, THE HOLDER’S GRAN TIERRA GOLDSTRIKE INC. EXCHANGEABLE SHARES WILL NOT BE VOTED Fold Appointees listed herein: | | |
as my/our appointee with full power of substitution and to attend, act, and to vote for and on behalf of the holder in accordance with the following direction (or if no directions have been given, as indicated in the Notes to VIF below) and all other matters that may properly come before the ANNUAL MEETING OF STOCKHOLDERS (the “Meeting”) of GRAN TIERRA ENERGY INC. (the “Corporation”) to be held virtually at https://web.lumiagm.com/251955864 on WEDNESDAY, MAY 3, 2023, AT 10:00 A.M. (MOUNTAIN TIME) or at any adjournment thereof. The Board of Directors recommend a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2, 3 and 4. | | | | | | | | | | | | | | | | | | | | | | | 1. Election of Directors Directors. | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For Against | | Against�� | | Abstain 01. | a. Peter J. Dey | | ☐ | | ☐ | | ☐ | | b. Gary S. Guidry 04. | | ☐ | | ☐ | | ☐ | | c. Evan Hazell | | ☐ | | ☐ | | ☐ | d. Robert B. Hodgins 02. Peter J. Dey 05. | | ☐ | | ☐ | | ☐ | | e. Alison Redford | | ☐ | | ☐ | | ☐ | | f. Ronald W. Royal 03. Evan Hazell 06. | | ☐ | | ☐ | | ☐ | g. Sondra Scott | | ☐ | | ☐ | | ☐ | | h. David P. Smith 07. | | ☐ | | ☐ | | ☐ | | i. Brooke Wade 08. Sondra Scott | | ☐ | | ☐ | | ☐ | 2. Ratification of Selection of Independent Auditors For Against Abstain ToProposal to ratify the appointment of KPMG LLP as theGran Tierra Energy Inc.’s independent registered public accounting firm for 2018. 2023. | | For ☐ | | Against ☐ | | Abstain ☐ | 3. Advisory VoteProposal to Approve Named Executive Compensation Approval of,approve, on an advisory basis, the compensation of Gran Tierra Energy Inc.’s named executive officers, as disclosed in the proxy statement. | | For ☐ | | Against ☐ | | Abstain Fold ☐ | 4. Proposal to approve an amendment to Gran Tierra Energy Inc.’s Certificate of Incorporation to effect a reverse stock split of the Corporation’s issued common stock, par value $0.001 per share at a reverse stock split ratio of 1 for 10. | | For ☐ | | Against ☐ | | Abstain ☐ |
| Authorized Signature(s) – This section must be completed for your instructions to be executed. | | I/Wewe authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxyVIF previously given with respect to the Meeting. If no voting instructions are indicated above, this VIF will be voted as recommended by Management. the Board of Directors. |
| | | | | Signature(s): | | | | Date | | | | | | | | | | / / | | | | | MM / DD / YY G R Q Q 246036 A R 0 01DUPE |
This form of VIF is solicited by and on behalf of the Board of Directors. VIFs must be received by MAY 1, 2023 AT 10:00 AM (MOUNTAIN TIME) Notes to VIF | 1. | Each holder has the right to appoint a person, who need not be a holder, to attend and represent him or her at the Meeting. If you wish to appoint a person other than the persons whose names are printed herein, please insert the name of your chosen appointee in the space provided on the reverse. |
| 2. | If the securities are registered in the name of more than one holder (for example, joint ownership, trustees, executors, etc.) then all of the holders must sign this VIF in the space provided on the reverse. If you are voting on behalf of a corporation or another individual, you may be required to provide documentation evidencing your power to sign this VIF with signing capacity stated. |
| 3. | This VIF should be signed in the exact manner as the name appears on the VIF. |
| 4. | If this VIF is not dated, it will be deemed to bear the date on which it is mailed by the holder. |
| 5. | The securities represented by this VIF will be voted as directed by the holder. If no such directions are made, this VIF will be voted FOR all the nominees listed in Proposal 1 and FOR Proposals 2, 3 and 4. The appointees named above are hereby authorized to vote in their discretion upon such other business as may properly come before the Meeting or any adjournment or postponement thereof. |
| 6. | The securities represented by this VIF will be voted or withheld from voting, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities will be voted accordingly. |
| 7. | This VIF confers discretionary authority in respect of amendments to matters identified in the Notice of Meeting or other matters that may properly come before the Meeting. |
| 8. | This VIF should be read in conjunction with the accompanying documentation provided by the Corporation. |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on May 3, 2023. The Notice, Proxy Statement and Annual Report are available at: https://www.grantierra.com/investor-relations/2023-annual-meeting INSTEAD OF MAILING THIS VIF, YOU MAY SUBMIT YOUR VIF USING SECURE ONLINE VOTING AVAILABLE ANYTIME: | | | | | | | To Vote Your VIF Online please visit: https://login.odysseytrust.com/pxloginand click on .. You will require the CONTROL NUMBER printed with your address to the right. If you vote by Internet, do not mail this VIF. | | Shareholder Address and Control Number Here | | To request the receipt of future documents via email and/or to sign up for Securityholder Online services, you may contact Odyssey Trust Company at www.odysseycontact.com. | | | | | Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual. A return envelope has been enclosed for voting by mail. | | |
|
|
|
|
|
|
|
|
|