What is the difference between a stockholder of record and a beneficial owner of shares held in “street name”?
Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, Continental Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares, and the proxy materials were sent directly to you by the Company.
Beneficial Owner of Shares Held in “Street Name.” If your shares are held in an account at a broker, bank, broker-dealer, custodian, or other similar organization, then you are the beneficial owner of shares held in "street“street name,"” and the proxy materials were forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting during the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account, but you must follow the instructions that organization has provided to you in order to do so or to vote at or attend the Annual Meeting. Those instructions are contained in a "voter“voter instruction form"form” provided to you. If you hold shares through a broker, bank, or other nominee and wish to be able to vote in personyour shares electronically at the Annual Meeting, you must first obtain a “legal proxy” from your broker, bank, or other nominee and present it to the inspector of election with your ballot at the Annual Meeting.nominee.
What is a broker non-vote?
Under the rules that govern brokers who are voting with respect to shares that are held in “street name,” brokers have the discretion to vote such shares without voting instructions from the beneficial owner of the shares only on routine matters, such as the ratification of the appointment of our independent registered public accounting firm, butand not on non-routine matters, such as the election of directors or the advisory proposal on executive compensation. If you are a beneficial owner of Common Stock and do not provide voting instructions to your broker, bank, or other nominee, your shares will not be voted on any Proposal on whichnon-routine proposal since the broker, bank, or other nominee does not have discretionary authority to vote. This is calledresults in a “broker non-vote.”non-vote” on that proposal.
Why would the Annual Meeting be adjourned or postponed?
The Board intends to adjourn and postpone the Annual Meeting if, as of May 4, 2020,3, 2023, the number of shares of Common Stock present at the Annual Meeting, in person or represented by proxy, is insufficient to either constitute a quorum or approve any of the Proposals described in this proxy statement to be submitted to stockholders for consideration.
May I revoke my proxy or change my vote after I have voted?
Yes. If you are a stockholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by:
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● | | Providing written notice of revocation to the Corporate Secretary at Magnolia Oil& Gas Corporation, Nine Greenway Plaza, Suite1300, Houston, Texas 77046; 77046 that is received no later than 5:00 p.m. Central Time on May 2, 2023, the day before the Annual Meeting; |
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● | | Delivering a valid, later-dated proxy or a later-dated vote over the Internet or by telephone, in each case, no later than 11:10:59p.m., Eastern Central Time on May 3, 2020,2, 2023, the day before the Annual Meeting;Meeting; or |
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● | | Attending the virtual Annual Meeting and voting in personyour shares electronically during the meeting, which will automatically cancel any proxy previously given. |
Please note that your attendance at the virtual Annual Meeting alone will not cause your previously granted proxy to be revoked unless you actually vote by ballotyour shares electronically during the Annual Meeting. If you wish to revoke your proxy, you must do so in sufficient time to permit the necessary examination and tabulation of the subsequent proxy before the vote is taken. Please also note that if your shares of Common Stock are held of record by a broker, bank, or other nominee, you must instruct your broker,
bank, or other nominee that you wish to change your vote by following the procedures on the materials provided to you by the broker, bank, or other nominee.
Will my shares be voted if I do not provide my proxy or if I do not indicate how to vote my proxy?
Your shares of Common Stock may be voted on routine matters if they are held in “street name” even if you do not provide the broker, bank, or other nominee with voting instructions. See “What is a broker non-vote?” above.
If you are a stockholder of record, you may return a signed proxy card without indicating your vote on any matter, in which case the designated proxies will vote FOR each director nominee, FOR approval on an advisory basis of our named executive officer compensation, and FOR ratification of the appointment of KPMG as our independent registered public accounting firm. If you are a stockholder of record and you do not provide a signed proxy card, vote electronically over the Internet or vote by telephone, your shares will not be voted.
Who will count the votes?
Representatives of Broadridge Financial Solutions, Inc. will count the votes and will serve as the independent inspector of election.
Who bears the costs of soliciting proxies?
We do. The Company has engaged Innisfree M&A Incorporated (“Innisfree”) to assist in the solicitation of proxies for the Annual Meeting and has agreed to pay Innisfree a fee of $20,000.$12,500. In addition, the Company will reimburse, or advance funds to, Innisfree for reasonable out-of-pocket expenses incurred in connection with Innisfree’s services and will indemnify Innisfree and its affiliates against certain claims, liabilities, losses, damages, and expenses. The Company also reimburses brokers, banks, and other nominees and fiduciaries representing beneficial owners of shares of Common Stock for their expenses in forwarding soliciting materials to such beneficial owners of shares of Common Stock and in obtaining voting instructions from those owners. In addition, some of our employees or agents may contact you by telephone, by mail, or in person regarding the Annual Meeting proposals. None of our employees will receive any extra compensation for providing those services. Other proxy solicitation expenses that we will pay include those for preparation, mailing, returning, and tabulating the proxies.
How can I obtain additional information about the Company?
A copy of the Company’s 20192022 Form 10‑K,10-K, which contains audited consolidated financial statements for the 20192022 fiscal year, has been posted on the Internet along with this proxy statement, and these materials are available at http://www.proxyvote.com. Stockholders may also obtain a copy of our 20192022 Form 10‑K10-K (without exhibits), withoutat no charge, by writing to our Investor Relations department at Nine Greenway Plaza, Suite 1300, Houston, Texas 77046, or bcorales@mgyoil.com,jjohnson@mgyoil.com, or by calling (713) 842‑9036.842-9033.
We also furnish or file reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). The SEC maintains a website that contains reports, proxy and information statements, and other information regarding registrants, including the Company, that file with the SEC. The SEC’s website address is http://www.sec.gov. In addition, we make our Annual Reports on Form 10‑K,10-K, Quarterly Reports on Form 10‑Q,10-Q, and Current Reports on Form 8‑K8-K available free of charge on our website, at www.magnoliaoilgas.com, under the “Investors”Investors tab as soon as reasonably practicable after they are filed or furnished with the SEC. Information on our website is not incorporated into this proxy statement or any of the Company’s other filings with the SEC. Our Class A Common Stock is listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “MGY.”
If you have any questions or need assistance voting your shares, you may contact Innisfree at 501 Madison Avenue, 20th Floor, New York, NYNew York 10022.
PROPOSAL 1: ELECTION OF DIRECTORS
Our Board of Directors (the “Board”) currently consists of seven directors. The biographies of our Board members reflect a diversity of experience and a wide variety of attributes, skills, and qualifications that we believe allow our Board to effectively fulfill its oversight function in the best interests of our stockholders. Based on recommendations from the Nominating and Corporate Governance Committee of the Board (the “Governance Committee”) have, the Board has nominated the seven individuals named below for election as directors at the Annual Meeting:
| | | | |
Name of Director |
| Age
(As of March 20, 2020)17, 2023) |
| Director Since |
Stephen I. ChazenChristopher G. Stavros
| | 7359
| | May 2017September 2022
|
Arcilia C. Acosta | | 5457
| | May 2017 |
Angela M. Busch | | 5356
| | July 2018 |
Edward P. Djerejian | | 8184
| | May 2017 |
James R. Larson | | 7073
| | July 2018 |
Dan F. Smith | | 7376
| | May 2017 |
John B. Walker | | 7477
| | July 2018 |
Holders of our Class A Common Stock and Class B Common Stock are being asked to elect the seven directors listed above to serve a one year term, commencing on the date of the Annual Meeting, and until their respective successors are duly elected and qualified, subject to each such director’s earlier death, resignation, retirement, disqualification, or removal. Under the terms of our Stockholder Agreement, dated as of July 31, 2018 (the “Stockholder Agreement”), certain affiliates of EnerVest, Ltd. (“EnerVest”) (who collectively own more than 47% of the shares of our Common Stock entitled to vote at the Annual Meeting) are entitled to nominate two directors and agreed to vote all of their shares of Common Stock in favor of the directors nominated by the Governance Committee. Please see “Certain Relationships and Related Party Transactions—Stockholder Agreement” for additional information.
Information about Director Nominees
The following sets forth information regarding each nominee:
Stephen “Steve” I. Chazen Christopher G. Stavros has served as our President and Chief Executive Officer since February 2017 and as Chairman of the Board following the completion of our initial public offering in May 2017.a director since September 2022. Prior to his appointment to those roles, Mr. Chazen retiredStavros was Magnolia’s Executive Vice President and Chief Financial Officer since July 2018. Prior to joining Magnolia, Mr. Stavros served as Senior Vice President and Chief ExecutiveFinancial Officer of Occidental Petroleum Corporation, whose principal businesses consist of oil and gas, chemical, and midstream and marketing segments (“Occidental”), in April 2016. He began his career at. Mr. Stavros joined Occidental in 1994 as Executive Vice President—Corporate Development. He2005 and was named Chief Financial Officer in 19992014, having previously served as Vice President, Investor Relations and served in that position until 2010.Treasurer. Mr. Chazen was appointed President ofStavros retired from Occidental in 2007. HeMay 2017. Prior to joining Occidental, Mr. Stavros was then named Chief Operating Officera Senior Analyst at UBS with coverage of the Oil and Gas sector. Mr. Stavros received his BSBA from Boston University and received his MBA from the University of Rochester.
Mr. Stavros is well-qualified to serve as a director due to his 30 years of experience in 2010 before being appointedthe energy and financial industries. As an executive officer of the Company since our Business Combination (as defined below under “Certain Relationships and Related Party Transactions”), Mr. Stavros is committed to the principles of the business model established when Magnolia was founded, and his in-depth understanding of Magnolia’s day-to-day operations provides an important perspective on the Board.
Arcilia C. Acosta is the Chief Executive Officer of CARCON Industries & Construction, a full-service construction firm, and she is also the founder and Chief Executive Officer of Southwestern Testing Laboratories (STL Engineers), a geotechnical engineering and construction materials testing firm, both of which are based in May 2011. Mr. Chazen served onDallas, Texas. In February 2020, Ms. Acosta was elected to the Boardboard of Directorsdirectors of Occidental from 2010 to 2017. Before joining Occidental, Mr. Chazen was Managing DirectorVistra Corporation, a retail electricity and power generation company located in Corporate Finance and Mergers and Acquisitions at Merrill Lynch. He worked as Director of Project Evaluation and Reservoir Engineering at Columbia Gas Development Corporation from 1977 to 1982. Mr. Chazen began his career at Northrop Corporation in 1973 as Laboratory Manager at18 states across the Johnson Space Center, where he worked until 1977.
Mr. Chazen is a former Chairman of the Board of the American Petroleum InstituteUnited States and the Catalina Island Conservancy. He was appointed to the UniversityDistrict of Houston System Board of Regents in 2018 and serves on the Advisory Board at Rice University’s Baker Institute for Public Policy. He is a director of Houston Methodist Institute for Academic Medicine, The Williams Companies, Inc., and the National Park Foundation. HeColumbia. She has also served on the board of directors of Ecolab,Veritex Holdings, Inc. since January 2021. Ms. Acosta’s prior corporate board service includes ten years on the board of directors of Energy Future Holdings Corporation, six years on the board of directors of Legacy Texas Financial Group, N.A., a global leader in water, hygiene, and energy technologies and services (“Ecolab”), from 2012 to 2019. Mr. Chazen holds a Ph.D. in Geology from Michigan State University, a Master’s degree in Finance from the University of Houston and a Bachelor’s degree in Geology from Rutgers College.
Mr. Chazen is well-qualified to serve as a director because of his significant directorship experience, as well as his substantial and broad experience in the energy sector, as an executive, advisor and director.
Arcilia C. Acosta is the President and Chief Executive Officer of CARCON Industries & Construction, specializing in commercial, institutional, and transportation construction, and is also the Chief Executive Officer and controlling principal of STL Engineers. Ms. Acosta servestwo years on the board of directors of ONE Gas, Incorporated,Inc.
In November 2022, Governor Greg Abbott appointed Ms. Acosta as one of three co-chairs of the 2023 Texas Inaugural Committee. In April 2021, Governor Abbott appointed Ms. Acosta to the Texas HigherTech University Board of Regents for a
six-year term. Additionally, in March 2016, Governor Abbott appointed Ms. Acosta to the Texas Higher Education Coordinating Board, where she served a three-year term, and, in March 2020, Governor Abbott appointed her to the Strike Force to Open Texas for COVID-19. Ms. Acosta is one of 40 members from across the state appointed to this Special Advisory Council to Governor Abbott. Ms. Acosta’s civic board service also includes the Communities Foundation of Texas and the Dallas Citizens Council.Council, where she was recently named chairman for a three-year term from 2023 until 2026, making her only the second woman to hold that position in the 84-year history of the organization. She wasis also elected toa member of the board of directors of VistraNational Women Energy Corp. on February 24, 2020. Ms. Acosta previously served on the national advisory board for BBVA Compass Bank and the Texas Tech National Alumni Association. Ms. Acosta’s prior board service also includes six years on the board of Legacy Texas Financial Group, Inc. and ten years on the board of Energy Future Holdings Corporation.Directors Network. Ms. Acosta received a Bachelor of Arts from Texas Tech University and Board Director Certification from Southern Methodist University Southwest School of Banking and is a graduate ofcompleted the Harvard University Business School Corporate Governance Program. In September 2021, she was awarded the Excellence in Business Award from Texas Tech University Rawls School of Business honoring distinguished alumni.
Ms. Acosta is well-qualified to serve as a director because of her broad range of experience and directorships.
Angela M. Busch currently serves as the Executive Vice President of Corporate and Business Development for Ecolab, Inc., a global leader in water, hygiene, and energy technologies and services (“Ecolab”), where she is responsible for acquisitions, divestitures, and alliances in support of Ecolab’s strategic objectives related to its global portfolio of businessbusinesses and activities. Ms. Busch has held this position since 2006. Prior to joining Ecolab, Ms. Busch held several positions related to strategy development and acquisition work including most recently Managing Director, Merger and Acquisitions Group at RBC Capital Markets. She previously held positions in Mergers and Acquisitions and Planning and Business Development at Honeywell and Land O’Lakes. Ms. Busch was also previously a management consultant at McKinsey & Company, where she focused on strategic initiatives for clients in the healthcare industry. Ms. Busch holds a Bachelor’s degree in Mechanical Engineering from the University of Minnesota Institute of Technology, a Master’s in Management from the Kellogg School of Management, and a Juris Doctorate from Northwestern University School of Law.
Ms. Busch is well-qualified to serve as a director because of her broad range of experience in the energy services sector, strategy development and acquisitions, and finance. She has demonstrated application of her expertise in a variety of institutional and industrial markets including the energy services market. Ms. Busch has managed energy services sector acquisitions for Ecolab, positioning her to possess a supplier perspective in the oil & gas industry. In addition, Ms. Busch’s background in mechanical engineering is an asset in Magnolia’s production operations. Lastly, having served on the Ecolab Executive Council for 1316 years, Ms. Busch has direct knowledge of the decisions and challenges involved in the successful execution of a sustainable, high growth plan of a public company.
Edward P. Djerejian served in the U.S. Foreign Service for eight presidents, from John F. Kennedy in 1962 to William J. Clinton in 1994. Prior to his nomination by President Clinton as U.S. ambassador to Israel, in which position he served from 1993 to 1994, he was assistant secretary of state for Near Eastern affairs in both the George H.W. Bush and the Clinton administrations from 1991 to 1993. He was the U.S. ambassador to the Syrian Arab Republic from 1988 to 1991. He also served as special assistant to President Ronald Reagan and deputy press secretary for foreign affairs in the White House from 1985 to 1986.
After his retirement from government service in 1994, he became and currently serves as, thefounding director of the James A.Rice University’s Baker III Institute for Public Policy, at Rice University, a premier nonpartisan public policy think tank.tank, which he led for 28 years until June 2022. He was appointed a senior fellow at the Middle East Initiative at Harvard Kennedy School’s Belfer Center for Science and International Affairs in June 2022. He has been awarded the Presidential Distinguished Service Award, the Department of State’s Distinguished Honor Award, and numerous other honors, including the Ellis Island Medal of Honor and the Anti-Defamation League’s Moral Statesman Award. He is also a recipient of the Association of Rice Alumni’s Gold Medal.Medal and is a life member of the Baker Institute’s Board of Advisors. In 2011, Ambassador Djerejian was elected a fellow of the American Academy of Arts and Sciences. He washas been a member of the Board of Trustees of the Carnegie Corporation of New York fromsince 2011, to 2019 andwhere he has served as Vice Chairman and Chairman of the Audit Committee. Ambassador Djerejian previously served as a director of Occidental from 1996 to 2015, serving as Chairman of the Board and a director of Occidental,from 2013 to 2015, and as a director of Baker Hughes Incorporated and Global Industries, Ltd., where he was Chairman of the Governance Committee. He currently serveshas served on the board of directors of The Mexico Fund, Inc. since 2013. He holds a Bachelor of Science and a Doctor of Humane Letters, honoris causa, from Georgetown University, as well as a Doctor of Laws, honoris causa, from Middlebury College.
Ambassador Djerejian is well-qualified to serve as a director because of his significant directorship experience.
James R. Larson has served as an independent director of CSI Compressco GP LLC, and its predecessor CSI Compressco GP Inc., general partner of CSI Compressco L.P., a provider of compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage, and as Chairman of its Audit Committee since July 2011 and served as a member of its
its Conflicts Committee since April 2012. Since January 1, 2006, Mr. Larson has been retired.August 2021. From September 2005 until his retirement on January 1, 2006, Mr. Larson served as senior vice president of Anadarko Petroleum Corporation, (“Anadarko”), an independent exploration and production company.company (“Anadarko”). From December 2003 to September 2005, Mr. Larson served as Senior Vice President, Finance and Chief Financial Officer of Anadarko. From 2002 to 2003, Mr. Larson served as Senior Vice President, Finance of Anadarko, where he oversaw treasury, investor relations, internal audits, and acquisitions and divestitures. From 1995 to 2002, Mr. Larson served as Vice President and Controller of Anadarko, where he was responsible for accounting, financial reporting, budgeting, forecasting, and tax. Prior to that, he held various tax and financial positions within Anadarko after joining the company in 1981.
Mr. Larson is a current member of the American Institute of Certified Public Accountants, Financial Executives International, and the Tax Executives Institute. Mr. Larson also served on the Boardboard of Directorsdirectors of EV Management, LLC, the general partner of EV Energy GP, L.P., which is the former general partner of EV Energy Partners, L.P., from September 2006 until June 2018. He received his Bachelor of Business Administration from the University of Iowa.
Mr. Larson has over 30 years of experience in the oil and natural gas business and has served as Chief Financial Officer of a large independent oil and natural gas company. We believe that his knowledge of the industry, finance, and accounting makes him well-qualified to serve as a director.
Dan F. Smithis a retired Chief Executive Officer of Lyondell Chemical Company, (“Lyondell”), which operated in the chemicals, polymers, and fuels business segments (“Lyondell”), and its wholly owned subsidiaries Millennium Chemicals Inc. and Equistar Chemicals, LP., a position he held from December 1996 until his retirement in December 2007. From June 2007 to December 2007, Mr. Smith was also Chairman of Lyondell. Mr. Smith began his career as an engineer with Atlantic Richfield Company in 1968. He was elected President of Lyondell in August 1994 and Chief Executive Officer in December 1996.
Mr. Smith ishas served as a director and Chairman of the Board of Orion Engineered Carbons, S.A., since 2014. During the past five years, Mr. Smith served on the boards of directors of Kraton Corp., where he was Chairman of the Board from 2008 until the company was sold in 2022, Nexeo Solutions, Inc., Northern Tier Energy GP LLC, and the general partner of Valerus Compression Services, L.P. (doing business as Axip Energy Services, L.P.). During the past five years, Mr. Smith served on the board of directors of Nexeo Solutions, Inc., Northern Tier Energy GP LLC and Cooper Industries plc. He also serves as a member of the College of Engineering Advisory Council at Lamar University. Mr. Smith is a graduate of Lamar University with a Bachelor of Science in chemical engineering.
Mr. Smith is well-qualified to serve as a director because of his significant directorship experience and broad experience in energy and energy-related sectors.
John B. Walker is Executive Chairman of EnerVest, Ltd., an oil and natural gas company (“EnerVest”), a position he has held since December 2020. He previously served as theEnerVest’s Chief Executive Officer of EnerVest, Ltd. since 1992. EnerVest has more than $5.0 billionits formation in assets with an interest in more than 30,000 wells across 14 states.1992. During his time on Wall Street, Mr. Walker was selected by Institutional Investor as an “All-American” energy analyst for six years in a row. In November 2007, Mr. Walker received the oil and gas industry’s highest honor, the Chief Roughneck Award. Mr. Walker served the Independent Petroleum Association of America (“IPAA”) as Chairman from 2003 to 2005. Mr. Walker previously served as Chairman of the Board of Stewards of Chapelwood United Methodist Church and Chairman of the Boardboard of Directorsdirectors of the Sam Houston Area Council of the Boy Scouts of America. During his time with the Boy Scouts of America, Mr. Walker received the Distinguished Eagle Award in May 2007 and the Silver Beaver Award in 2001. Mr. Walker is a member of the National Petroleum Council and All-American Wildcatters. Mr. Walker previously served on the Board of Regents of the Texas Tech University System from January 2012 to January 2015 and was re-appointed to a six year term in January 2017. In November 2015, Mr. Walker was named as a National Finalist for the EY Entrepreneur of the Year and, prior to that, he was named Distinguished Alumni at Texas Tech University in 2004. Mr. Walker served on the board of directors of PetroLogistics LP from 2012 until 2014. Mr. Walker also held multiple roles at EV Management, LLC,2014 and currently serves on the general partnerBoard of EV Energy GP, L.P., which isRegents of the former general partnerTexas Tech
University System. Mr. Walker holds a Bachelor of Business Administration, with honors, from Texas Tech University and a Master of Business Administration, with distinction, from New York University.
Mr. Walker is well-qualified to serve as a director because of his broad range of experience in the energy industry and with EnerVest.
Vote Required;Required and Board Recommendation
Approval of this Proposal requires the affirmative vote ofThe director nominees will be elected by a plurality of the votes cast by holders of outstanding shares of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote thereon at the Annual Meeting, voting as a single class. Stockholders may not cumulate their votes with respect to the election of directors. At the Annual Meeting,directors, and proxies cannot be voted for a greater number of individuals than the seven nominees named in this proxy statement. An abstention from votingA properly-executed proxy marked “Withhold” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether a quorum is present. Broker non-votes also have no effect on the outcome of the vote on this Proposal. Broker non-votes also have no effect on the outcome.
THE BOARD RECOMMENDS THAT THE CLASS A AND CLASS B STOCKHOLDERS, VOTING AS A SINGLE CLASS, VOTE “FOR” EACH OF THE SEVEN DIRECTOR NOMINEES TO THE BOARD.
CORPORATE GOVERNANCE
Role of the Board of Directors
We maintain a diverse Board made up of individuals with different professional experiences and backgrounds, including gender, race, ethnicity, age, and other factors. These individuals bring expertise in exploration and production, finance and accounting, public company leadership, government, academia, strategic planning, and operations to their roles on our Board.
The role of the Board is to provide oversight of management’s policies and strategies, with a commitment to enhancing stockholder value over the long term. The non-employee directors meet regularly without members of management present in executive session, which may include regular executive sessions of independent directors only. TheWhen the position of Chairman of the Board is not held by an independent director, the Lead Independent Director presides at executive sessions of the independent directors.
Members of the Board are expected to make every effort to attend the meetings of the Board and the committees upon which they serve. During the 20192022 fiscal year, the Board held sixseven meetings. All of our incumbent directors attended 75% or moreat least 90% of the aggregate of allthe total meetings of the Board and of the committees on which they served during the 20192022 fiscal year. Our Corporate Governance Guidelines provide that all directors are encouraged to attend our annual stockholder meetings, and all of our directors attended our 20192022 Annual Meeting of Stockholders.
Board Leadership Structure
The Board does not have a fixed policy regarding the separation of the offices of Chairman of the Board and Chief Executive Officer and believes that ait should maintain the flexibility to select the Chairman who understands Magnolia’s day-to-day business and the important issues to be addressed byof the Board is currentlyand its leadership structure, from time to time, based on the criteria that it deems in the best interests of the Company and its stockholders. Mr. Chazen has held the roles of Chairman of the Board and Chief Executive Officer since May 2017.
When the position of Chairman is not held by an independent director, a Lead Independent Director may be designated by the Board. Ambassador Djerejian has served as Lead Independent Director since July 31, 2018. Provided he is reelected, Ambassador Djerejian is expected to continue in the role as Lead Independent Director. The Board believes that utilizing a Lead Independent Director ensures an appropriate level of independent oversight and that such individual serves as an effective liaison between the Chairman of the Board and the independent directors.
The Board periodically reviews the leadership structure to determine whether it continues to best serve the Company and its stockholders.
From Magnolia’s inception in 2017 until shortly before his passing in September 2022, Mr. Chazen held the dual roles of Chairman of the Board and Chief Executive Officer. During this period in the early life of the Company, the Board determined that it was in the best interests of the Company and its stockholders to have a Chairman with direct insight into both Magnolia’s day-to-day business and the important issues to be addressed by the Board. Ambassador Djerejian served as Lead Independent Director of the Company from the July 31, 2018 closing date of the Business Combination that formed Magnolia (as described further below under “Certain Relationships and Related Party Transactions”) until May 2, 2022 (the day preceding our 2022 Annual Meeting of Stockholders). Effective as of the date of our 2022 Annual Meeting, Mr. Smith was appointed Lead Independent Director of the Company. Both Ambassador Djerejian and Mr. Smith have significant experience serving as a corporate board chairman, making them well-suited for this position.
Beginning September 21, 2022, Mr. Smith was appointed to serve as Chairman of the Board and Mr. Stavros was appointed as President and Chief Executive Officer and as a director. Given Mr. Smith’s extensive experience in board leadership and the Company’s significant growth over the past five years, the Board has determined that separation of the offices of Chairman of the Board and Chief Executive Officer is currently in the best interests of the Company and its stockholders.
Independence of Directors
Under the NYSE listing rules, the Company is required to have a majority of independent directors serving on the Board. In making independence determinations, the Board observes all applicable requirements, including the corporate governance listing standards established by NYSE, and carefully considers all relevant facts and circumstances. To be considered independent, the Board must determine under applicable NYSE listing standards that a director does not have
any direct or indirect “material” relationship with the Company. The Board has also adopted standards for determining whether a director is independent, which examine a variety of potential relationships between the director or the director’s immediate family members and the Company, its auditors, and certain other entities. These standards are located in the Company’s Corporate Governance Guidelines, which are available in the Investors—Sustainability—Corporate Governance section of our website at www.magnoliaoilgas.com.
The Board has determined that Mmes. Acosta and Busch, Ambassador Djerejian, and Messrs. Larson and Smith are independent within the meaning of Section 303A.02 of the NYSE Listing Manual. Mr. Larson ishas historically been one of EnerVest’s nominees pursuant to the terms of the Stockholder Agreement.Agreement, dated as of July 31, 2018 (the “Stockholder Agreement”), which was considered by the Board in its determination of Mr. Larson’s independence. EnerVest’s nomination rights under the Stockholder Agreement ceased effective December 31, 2022, when the Stockholder Agreement terminated in accordance with its terms. Certain of our directors have from time to time been directors or executive officers at companies on whose board of directors other of our directors have served. There are no family relationships between any of the nominees for director or between any nominee and any executive officer of Magnolia.
Board Role in Risk Oversight
In its risk oversight role, the Board has the responsibility to oversee the Company’s risk management process to ensure its adequacy and that it is implemented properly by management. The Board meets regularly with senior management, including the
executive officers, to discuss strategy and risks facing the Company. Senior management also attends the quarterlyBoard meetings, of the Board, as well as certain committee meetings, in order to review impacts to our operations, assess our progress on internal priorities, and address any questions or concerns raised by directors on risk management and any other matters.matters, including but not limited to the regulation of emissions, our environmental commitments, climate related risk, and the health and safety aspects of our business. The Board monitors these risks, including stakeholder concerns, to ensure that the Company responds accordingly.
The committees of the Board also assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee of the Board (the “Audit Committee”) assists in fulfilling the oversight responsibilities with respect to management of major risk exposures, including in the areas of financial reporting and internal controls, and has general oversight over cybersecurity risks. Risk assessment reports are regularly provided by management to the Audit Committee. The Compensation Committee of the Board (the “Compensation Committee”) assists in fulfilling oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The Governance Committee assists in fulfilling oversight responsibilities with respect to the management of risks associated with the Board’s organization, membership and structure, and corporate governance. as follows:
Audit Committee | Compensation Committee | Governance Committee |
● Assists the Board in fulfilling its oversight responsibilities with respect to management of major risk exposures, including in the areas of financial reporting and internal controls. ● Has general oversight over cybersecurity risks and management’s cybersecurity policies and practices. ● Monitors and reviews the Company’s compliance with its Risk Management Policy relating to commodity hedging transactions. ● Regularly reviews risk assessment reports provided by management. | ● Develops compensation arrangements designed to attract and retain employees, while appropriately reflecting Company performance and aligning with stockholder interests. ● Annually assesses whether the Company’s compensation policies and practices could lead to excessive risk-taking behavior by executives and employees. ● Develops, in consultation with our Chief Executive Officer, the Company’s management succession plan. | ● Assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with the Board’s organization, membership and structure, and corporate governance. ● Assesses the effect on the Board’s leadership structure of the Board’s role in the risk oversight of the Company. ● Provides general oversight and recommendations to the Board regarding the Company’s ESG policies and practices. |
All of the committees report back to the full Board as to the committees’ activities and matters discussed and reviewed at the committees’ meetings.
