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| | Chaparral Energy, Inc. 701 Cedar Lake Boulevard
Oklahoma City, OK 73114
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NOTICE OF
20192020 ANNUAL MEETING OF STOCKHOLDERS
Place: Held exclusively as a virtual meeting via live webcast at: www.virtualshareholdermeeting.com/CHAP2020 | | | | | | | | |
| | Place:
701 Cedar Lake Boulevard
Oklahoma City, OK 73114
| | Time and Date: 10: 9:00 a.m. local time
Central Time June 28, 2019 26, 2020 | | | | | 11, 2020 |
To the stockholders of Chaparral Energy, Inc., a Delaware corporation (the “Company”):
NOTICE IS HEREBY GIVEN that the annual meeting (the “Annual Meeting”) of stockholders will be held
exclusively as a virtual meeting via live webcast at www.virtualshareholdermeeting.com/CHAP2020 on June
28, 2019,26, 2020, at
10:9:00 a.m.
local time at the principal executive offices of the Company, 701 Cedar Lake Boulevard, Oklahoma City, OK 73114.Central Time. The Annual Meeting is being held for the following purposes:
1.
| to elect eight directors named in the accompanying proxy statement, each to serve until the next Annual Meeting of Stockholders and until his or her respective successor is duly elected and qualified; |
2.
| to approve the Chaparral Energy, Inc. 2019 Long-Term Incentive Plan;
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3. | to consider an advisory vote on the compensation of the Company’s named executive officers as disclosed in the accompanying proxy statement; |
4.3.
| to consider an advisory vote on the frequency of the advisory vote on the compensation of the Company’s named executive officers;
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5. | to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019;2020; and |
6.4.
| to transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. |
Enclosed with this notice is a proxy statement and proxy card. The accompanying proxy statement contains information regarding the matters that you will be asked to consider and vote on at the Annual Meeting.
The Board of Directors of the Company has fixed the close of business on May
6, 201911, 2020 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting or any reconvened meeting after any adjournment or postponement of the meeting. Only holders of record of issued and outstanding shares of Class A common stock, par value $0.01 per share, of the Company (the “Common Stock”) at the close of business on May
6, 201911, 2020 will be entitled to vote.
In light of the current COVID-19 outbreak, and for the health and well-being of our stockholders, employees and directors, this year’s Annual Meeting will be conducted exclusively as a virtual meeting of stockholders, which will be held virtually via live webcast. You will be able to attend and participate in the Annual Meeting only by visiting www.virtualshareholdermeeting.com/CHAP2020, where you will be able to listen to the meeting live, submit questions, and vote. There will not be a physical meeting location, and you will not be able to attend the Annual Meeting in person.
Representation of your shares at the meeting is very important. All stockholders are cordially invited to attend the Annual Meeting in person.virtually. However, regardless of whether or not you plan to attend the Annual Meeting virtually, PLEASE VOTE BY TELEPHONE, THE INTERNET OR BY COMPLETING, SIGNING, DATING AND MAILING THE ENCLOSED PROXY CARD OR VOTING INSTRUCTION CARDINSTRUCTIONS FORM AS PROMPTLY AS POSSIBLE TO ENSURE THAT YOUR VOTE IS COUNTED.
PROPOSAL NO. 2: APPROVAL
TABLE OF 2019 LONG-TERM INCENTIVE PLAN
CONTENTSProposal
We are asking you to approve the Chaparral Energy, Inc. 2019 Long-Term Incentive Plan (the “LTIP”), which the Board adopted on May 2, 2019 upon the recommendation of the Compensation Committee. The LTIP will only become effective if approved by stockholders at the Annual Meeting. If approved, the effective date of the LTIP will be June 28, 2019, the date of the Annual Meeting.
The Company believes that long term equity-based compensation is a critical part of its compensation program. Stockholder approval of the LTIP would allow us to continue to attract and retain talented directors, officers, employees and consultants with equity incentives.
The LTIP will replace the Chaparral Energy, Inc. Management Incentive Plan, adopted effective August 16, 2017 (the “MIP”), which will be frozen as of the effective date of the LTIP so that no further awards will be granted under the MIP. Outstanding awards under the MIP will continue to be governed by the terms of the MIP until vested, exercised, expired or otherwise terminated or canceled.
The LTIP authorizes us to issue up to 3,500,000 shares of the Common Stock. This represents an increase of 1,627,435 shares over the shares remaining available under the MIP as of the date the Board approved the LTIP. The number of authorized shares available for issuance under the LTIP will be increased by any shares of the Common Stock subject to awards under the MIP that, following the approval of the LTIP, would have become available under the terms of the MIP as a result of cancellation, forfeiture, termination or payment of an exercise price or withholding taxes.
As of the record date of May 6, 2019, there were a total of 46,341,222 shares of our Common Stock issued and outstanding. There were 1,872,565 shares remaining available for issuance under the MIP. The Company had a total of 706,824 shares of restricted stock outstanding as of the record date.
If the LTIP is not approved by stockholders, the MIP will continue in effect and we will continue to make grants under the MIP subject to the limits on shares available thereunder.
Background
On March 21, 2017 (the “Emergence Date”), we and our subsidiaries emerged from bankruptcy and shares of our common stock were distributed to our and our subsidiaries’ creditors pursuant to the First Amended Joint Chapter 11 Plan of Reorganization (as amended, modified, or supplemented from time to time, the “Plan of Reorganization”).
As part of the Plan of Reorganization, on the Emergence Date, the Company adopted the MIP. The total number of shares of our Common Stock reserved and available for delivery with respect to awards under the MIP was 3,388,832 shares, which represented 7% of the total new equity at the Emergence Date and was based on an assumed price of $27.63 per share price. At that time, the Company’s management and new equity holders expected this number of shares would be adequate to attract, retain, motivate and reward talented employees, officers, directors and consultants (“Service Providers”), and enhance the alignment of Service Providers with those of our shareholders for approximately three years.
Since the Emergence Date, however, a confluence of factors have impacted the utility of the MIP in its current form. These factors have resulted in the number of available shares under the MIP being insufficient to meet the Company’s near-term needs:
Share Allocation.As noted above, the total number of shares of our Common Stock reserved and available for delivery with respect to awards under the MIP represented only 7% of the total new equity at the Emergence Date. Based on data made available to the Company since the Emergence Date, it is our understanding that the 7% allocation to an equity-based award plan was on the lower end of the range of what was typical for oil and gas exploration and production companies emerging from bankruptcy at the time.
Trading Market for our Common Stock. A price of $27.63 per share was used in determining the number of shares reserved and initially granted under the MIP; however, there was no active trading market for our shares at that time and, accordingly, the value of shares reserved and granted at the Emergence Date was theoretical. Our shares of Common Stock did not begin trading on the NYSE until 16 months later, on July 24, 2018. From that date through May 10, 2019, the closing stock price for our Common Stock has ranged from $20.80 per share to $4.13 per share.
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14 2019 Proxy Statement | | Chaparral Energy, Inc. | | |