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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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TO OUR STOCKHOLDERS,
We invite you to attend the Annual Meeting of Gran Tierra Energy Inc., (“Gran Tierra” or the “Company”) which will be on May 3, 2023, at 10 a.m. Mountain Time. This year’s Annual Meeting will be a virtual meeting of stockholders, which will be conducted via live webcast. You will be able to attend the Annual Meeting of Stockholders online, vote your shares electronically and submit your questions during the meeting by visiting https://web.lumiagm.com/251955864.
The attached Notice of Annual Meeting of Stockholders and Proxy Statement describes the business to be conducted at the Annual Meeting. Whether or not you plan to attend the Annual Meeting of Stockholders, we urge you to submit your vote via the internet or mail.
I encourage you to read our 2022 Annual Report for additional information about Gran Tierra’s objectives and results. Last year was an exciting one for the Company since we made key exploration discoveries in Ecuador and Colombia. The teams drilled four independent prospects, two in Ecuador and two in Colombia. All four have produced oil from different reservoir zones. It is exciting that all four of these prospects may offer future development opportunities in 2023 and beyond.
During 2022, Gran Tierra achieved strong 126% (Proved – “1P”), 148% (Proved plus Probable – “2P”) and 280% (Proved plus Probable and Possible – “3P”) reserves replacement through our successful results from our development and exploration drilling, waterflooding programs and field performance. We completed our 2022 development plan on-budget, including waterflooding efforts and development drilling in the Acordionero, Costayaco and Moqueta oil fields. The success the Company achieved in 2022 also reflects our ongoing conversion of reserves from the Probable to the Proved category. With 115 booked Proved plus Probable Undeveloped future drilling locations, Gran Tierra is well positioned to continue to grow the Company’s production in 2023.
In 2022, we also had success from a financial perspective and, thanks to 16% annual growth in our oil production and a good oil price environment, we generated free cash flow which allowed us to reduce our debt and start another share buyback program. Pursuant to Gran Tierra’s current normal course issuer bid, Gran Tierra purchased approximately 23 million shares during 2022, representing about 6.2% of shares outstanding as of June 30, 2022. With our focus on significant debt reduction, Gran Tierra also reduced its total debt by $87.6 million in 2022, and by a further $122.5 million in 2021, for a reduction total debt of $210.1 million over the past two fiscal years. A combination of our ongoing reductions in debt and per well drilling, completion, and workover costs, focus on maintaining low operating costs, strong rebound in oil prices and share buybacks allowed Gran Tierra to achieve net asset values per share before tax of $4.62 (1P), up 77% from 2021, and $7.36 (2P), up 56% from 2021. With this significant growth in our net asset values per share in 2022, we believe Gran Tierra is well-positioned to offer exceptional long-term stakeholder value.
Our forecasted 2023 capital budget is a balanced, returns-focused program which is expected to provide free cash flow generation, ongoing strengthening of our balance sheet, shareholder returns via share buybacks, optimization of ultimate oil reserves value and exposure to exploration upside. We see material potential in our exploration portfolio located in highly prospective geological trends in Ecuador and Colombia. We believe Gran Tierra is well-positioned to navigate the current volatile environment with our low base decline, conventional oil asset base and the operational control for capital allocation and timing, while maintaining a low-cost structure and the safety of our people.
Finally, we continue to have a strong focus on our Environmental, Social and Governance (“ESG”) commitments, which is implemented through our companywide Beyond Compliance philosophy. Our Beyond Compliance Policy means that, wherever there are significant opportunities and benefits to the environment or communities, Gran Tierra works to go beyond what is legally required to protect the environment and provide social benefits because it is the right thing to do. A few examples of this important work include a reduction in our overall Scope 1 and 2 greenhouse gas emissions of 55% since 2019. In 2022, 69% of the total energy used in all of our operations was generated by our own produced gas, reducing flaring, the use of diesel power and our reliance on the municipal grid. Our flagship conservation program, NaturAmazonas, which we conduct in partnership with Conservation International, has committed to reforesting 1,000 hectares of land and securing and maintaining 18,000 hectares of forest in the Andes-Amazon rainforest corridor. This program’s success has set a new Colombian standard for industry-led conservation. Furthermore, Gran Tierra has planted a total of approximately 1,400,000 trees and has conserved, preserved, or reforested over 3,800 hectares of land through all of the Company’s environmental efforts since 2018. Gran Tierra will continue to implement projects that focus on environmental protection, conservation, and reforestation efforts.
Our success during 2022 demonstrates Gran Tierra’s ability to be a full-cycle oil and gas exploration, development and production company focused on the development of our existing assets, appraisal of new discoveries that we made last year and new exploration drilling, while generating free cash flow to strengthen our balance sheet and return capital to shareholders through share buybacks. We are very excited for what 2023 holds for the Company and expect to build off the momentum from our strong finish to 2022.
Shareholders who have any questions should contact the Company’s strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors, at 1-855-476-7987 (toll-free within North America) or 1-416-867-2272 (collect call outside North America) or by e-mail at contactus@kingsdaleadvisors.com.
On behalf of our Board of Directors and the team at Gran Tierra, I want to thank all our stakeholders for their continued support.
Sincerely,
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 | | /s/ Gary S. Guidry Gary S. Guidry President and Chief Executive Officer |
March 24, 2022
Notice of Meeting
Annual Meeting of the Stockholders of Gran Tierra Energy Inc.
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Date: Wednesday, May 3, 2023 | | | | |
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¨ | | Fee paid previously with preliminary materials. |
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¨ | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Location: Virtual-only meeting via live webcast online at https://web.lumiagm.com/251955864 |
GRAN TIERRA ENERGY INC.
200, 150-13th Avenue S.W.
Calgary, Alberta T2R 0V2 Canada
(403) 265-3221
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 23, 2016
Dear Stockholder:
You are cordially invited to attendThe business of the annual meeting of stockholders of
GRAN TIERRA ENERGY INC., a Nevada corporation (“Gran Tierra”). The meeting will be held on Thursday, June 23, 2016, at 10:00 a.m. (Eastern time) at the Andaz Wall Street Hotel, 75 Wall Street, New York, NY, 10005 for the following purposes:
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| 1. | To elect sevenElect the nine nominees namedspecified in the accompanying proxy statement to serve on the Board of Directors until the next annual meeting and until their respective successors are duly elected and qualified.as directors. |
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| 2. | To approve,Ratify the appointment of KPMG LLP as Gran Tierra’s independent registered public accounting firm for 2023. |
| 3. | Approve, on an advisory basis, the compensation of Gran Tierra’s named executive officers as disclosed in thisthe accompanying proxy statement. |
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3. | To ratify the appointment of Deloitte LLP as the independent registered public accounting firm for 2016. |
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| 4. | To approveApprove an amendment to Gran Tierra’s Certificate of Incorporation to effect a change in the Company's statereverse stock split of incorporation from the Stateour issued common stock, par value $0.001 per share (“Common Stock”), at a reverse stock split ratio of Nevada to the State of Delaware, pursuant to a plan of conversion.1 for 10. |
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| 5. | To conductConduct any other business properly brought before the meeting.meeting and any adjournments and postponements thereof. |
These items of business are more fully described in the proxy statement accompanying this Notice.
Thenotice.This notice and the attached proxy statement are first being mailed to our shareholdersstockholders beginning on or about May 11, 2016. TheMarch 24, 2023. Holders of shares on March 7, 2023, the record date, for the annual meeting is April 27, 2016. Only stockholdersare entitled to notice of, record at the close of business on that date mayand to vote at, theour meeting or any adjournment or postponement thereof.
Gran Tierra will be holding its annual meeting in a virtual-only format by way of webcast accessed at https://web.lumiagm.com/251955864 and no physical or in-person meeting will be held. A virtual-only meeting will provide all stockholders an equal opportunity to participate at the annual meeting regardless of their geographic location or the particular constraints, circumstances or risks they may be facing. Stockholders will be able to attend the annual meeting online and vote their shares electronically and submit questions during the meeting.
If you are a registered stockholder, to attend the annual meeting and vote your shares electronically and submit questions during the meeting, you will need the control number included on the Notice of Internet Availability of Proxy Materials or proxy card that accompanied your proxy materials. If you are the beneficial owner of shares held in “street name”, and wish to attend the meeting insert your name in the blank space included in the proxy form provided by your broker or other agent and submit such proxy form to your broker or other agent prior to the voting deadline to vote your shares and submit questions during the meeting. In addition you must also register your appointment (of your broker or other agent) by emailing appointee@odysseytrust.com no later than the voting deadline and provide Odyssey with your name, email, number of shares appointed and name of broker or other agent where shares are held, so that Odyssey may email the appointee their control number.
We are using the “Notice and Access” method of providing proxy materials to our stockholders which provides our stockholders with a convenient way to access the proxy materials and vote, while allowing us to lower the costs of printing and distributing the proxy materials and reduce the environmental impact of our meeting. We will mail to most of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) in lieu of a paper copy of our proxy materials. Stockholders receiving the Notice may review the proxy materials online or request a paper copy by following the instructions set forth in the Notice.
Please submit your proxy or voting instructions on the Internet or by telephone promptly by following the instructions about how to view the proxy materials on your Notice of Internet Availability of Proxy Materials so that your shares can be voted, regardless of whether you expect to attend the annual meeting. If you received your proxy materials by mail, you may submit your proxy or voting
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IMPORTANT NOTICE
Regarding the Availability of Proxy Materials for the Stockholders’ Meeting
to be held on June 23, 2016, at 10:00 a.m. (Eastern time) at the
Andaz Wall Street Hotel, 75 Wall Street
New York, NY, 10005
The proxy statement and annual report to stockholders
are available to view at
http://www.edocumentview.com/GTE
See “Questions and Answers About These Proxy Materials and Voting” in this proxy statement for voting instructions.
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instructions on the Internet or you may submit your proxy by marking, dating, signing and returning the enclosed proxy/confidential voting instruction card. If you attend the annual meeting, you may withdraw your proxy and vote virtually at the annual meeting.
Shareholders who have any questions should contact the Company’s strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors, at 1-855-476-7987 (toll-free within North America) or 1-416-867-2272 (collect call outside North America) or by e-mail at contactus@kingsdaleadvisors.com.
By Orderorder of the Board of Directors
Gary S. Guidry
President and Chief Executive Officer
CALGARY, ALBERTA
April [ ], 2016
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/s/ Gary S. Guidry Gary S. Guidry President and Chief Executive Officer |
Calgary, Alberta, Canada
March 24, 2023
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You are cordially invited to attend | | |
Proxy Statement Table of Contents
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PROXY STATEMENT SUMMARY | | | 1 | |
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND 2023 ANNUAL MEETING | | | 4 | |
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PROPOSAL 1: ELECTION OF DIRECTORS | | | 10 | |
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Nominees for Director | | | 11 | |
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The Board’s Role and Responsibilities | | | 22 | |
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Board Structure and Processes | | | 23 | |
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Information Regarding Committees of the meeting in person. Whether or not you expect to attendBoard of Directors | | | 26 | |
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Director Compensation | | | 29 | |
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PROPOSAL 2: RATIFICATION OF APPOINTMENT OF SELECTION OF INDEPENDENT AUDITORS | | | 32 | |
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Report of the meeting, please complete, date, signAudit Committee | | | 32 | |
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Principal Accountant Fees and return the proxy mailed to you, or vote by telephone or on the internet as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting. If you are receiving proxy materials by mail, a return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are heldServices | | | 33 | |
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PROPOSAL 3: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION | | | 35 | |
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Security Ownership of record by a broker, bank or other nomineeCertain Beneficial Owners and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.Management | | | 35 | |
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Delinquent Section 16(a) Reports | | | 36 | |
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Executive Officers | | | 37 | |
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COMPENSATION DISCUSSION AND ANALYSIS | | | 39 | |
Proxy Statement Summary
This summary highlights information contained elsewhere within this proxy statement. You should read the entire proxy statement carefully and consider all information before voting. Page references are supplied to help you find further information in this proxy statement. This summary does not contain all of the information you should consider, and we encourage you to read the entire proxy statement before voting.
References to “we”, “us”, “our”, “Gran Tierra” or the “Company” are to Gran Tierra Energy Inc.
This proxy statement is first being mailed to our stockholders beginning on March 24, 2023. Holders of shares on March 7, 2023, the record date, are entitled to notice of, and to vote at, our meeting or any adjournment thereof.
Important Notice Regarding the Availability of Materials for the 2023 Annual Meeting of Shareholders to be Held on May 3, 2023: The proxy statement and our Annual Report for the fiscal year ended December 31, 2022 are available free of charge at https://www.grantierra.com/investor-relations/2023-annual-meeting.
2023 Annual Meeting of Stockholders
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TABLE OF CONTENTS
Date: May 3, 2023 | | |
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Time: 10:00 a.m.
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ABOUT THE PROXY MATERIALS AND VOTING | | 1 |
BUSINESS OF THE ANNUAL MEETING
Location: Virtual-only meeting via live webcast online at https://web.lumiagm.com/251955864 | | 8 | | 
Record Date: March 7, 2023 |
Voting Matters and Board Recommendations
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Voting Matter | | Board Vote Recommendation |
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Proposal 1: Election of Directors (page 10) The Board and the Nominating and Corporate Governance Committee believe that each of the director nominees possesses the necessary qualifications and skills to provide effective oversight of the business and quality advice and counsel to our management team. | | 8FOReach nominee |
Proposal 2: Advisory Vote on Executive Compensation | | 18 |
Proposal 3:2: Ratification of Selection of Independent Auditors (page 32) The Board and the Audit Committee believe that the retention of KPMG LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023 is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee’s selection of the independent registered public accounting firm. | | 19FOR |
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Proposal 3: Advisory Vote to Approve Named Executive Officer Compensation (page 35) The Company seeks a non-binding advisory vote from its stockholders to approve the compensation of its named executive officers as described in the Compensation Discussion and Analysis section beginning on page 39 and the Compensation Tables section beginning on page 50 and ending on page 56. Our executive compensation program reflects our philosophy of aligning executive compensation with the interests of our stockholders and a commitment to pay for performance. | | FOR |
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Proposal 4: Approval of Amendment of Certificate of Incorporation to Effect a Change inReverse Stock Split (page 61) The Board seeks approval from the Company’s State of Incorporation from the State of Nevadastockholders for an amendment to the StateCompany’s Certificate of Delaware
Incorporation to effect a reverse stock split of the issued Common Stock at a reverse stock split of 1-for-10. | | 21FOR |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | |
| Gran Tierra Energy 2023 Proxy Statement | | 421 |
PROXY STATEMENT SUMMARY
Director Nominees
The following table provides summary information about each director nominee. See pages 11 to 19 for more information.
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Director Nominee | | Director Since | | Age | | Committees |
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Robert B. Hodgins Chairman | | | | 2015 | | | | | 72 | | | • Audit Committee • Compensation Committee • Nominating and Corporate Governance Committee |
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Gary S. Guidry President and Chief Executive Officer | | | | 2015 | | | | | 67 | | | |
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Peter J. Dey | | | | 2015 | | | | | 82 | | | • Nominating and Corporate Governance Committee • Compensation Committee • Health, Safety & Environment Committee |
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Evan Hazell | | | | 2015 | | | | | 64 | | | • Audit Committee • Health, Safety & Environment Committee • Reserves Committee |
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Alison Redford | | | | 2021 | | | | | 58 | | | • Audit Committee • Nominating and Corporate Governance Committee • Health, Safety and Environment Committee |
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Ronald W. Royal | | | | 2015 | | | | | 73 | | | • Audit Committee • Health, Safety & Environment Committee • Reserves Committee |
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Sondra Scott | | | | 2017 | | | | | 56 | | | • Nominating and Corporate Governance Committee • Health, Safety & Environment Committee • Reserves Committee |
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David P. Smith | | | | 2015 | | | | | 64 | | | • Audit Committee • Compensation Committee |
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Brooke Wade | | | | 2015 | | | | | 69 | | | • Compensation Committee • Nominating and Corporate Governance Committee • Reserves Committee |
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EQUITY COMPENSATION PLAN INFORMATION | |
| 2 | | 44Gran Tierra Energy 2023 Proxy Statement |
PROXY STATEMENT SUMMARY
Corporate Governance
We are committed to good corporate governance practices, which promote the long-term interests of our stockholders and strengthens our Board and management accountability.
Highlights of our corporate governance practices include the following:
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | ✓ | | 45Independent Board Chair |
EXECUTIVE OFFICERS | ✓ | | 458 of 9 director nominees are independent |
EXECUTIVE COMPENSATION AND RELATED INFORMATION | ✓ | | 47Annual elections of all directors |
COMPENSATION DISCUSSION AND ANALYSIS | ✓ | | 47Majority voting for directors with resignation policy |
COMPENSATION COMMITTEE REPORT | ✓ | | 58100% independent Committee members |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | ✓ | | 58Annual self-evaluation of the Board and Committees |
SUMMARY COMPENSATION TABLE | ✓ | | 58Stock ownership guidelines for directors and officers |
2015 GRANTS OF PLAN-BASED AWARDS | ✓ | | 60No Tax Gross-Up provisions in any new executive agreements (currently only applies to Chief Executive Officer in order to be equalized to Canadian colleagues) |
NARRATIVE TO THE SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS | ✓ | | 61Policy prohibiting speculative trading of the Company’s stock |
2015 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ✓ | | 61Limited trading windows |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | ✓ | | 63Clawback policy |
2015 DIRECTOR COMPENSATION | ✓ | | 68Stockholders may call special meetings of stockholders |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | ✓ | | 70No stockholder rights (“poison pill”) or similar plan |
STOCKHOLDER PROPOSALS | ✓ | | 70Regular executive sessions of independent directors |
HOUSEHOLDING OF PROXY MATERIALS | ✓ | | 70Stockholders have the right to fill director vacancies caused by director removal |
Executive Compensation Highlights
Our compensation philosophy and programs are based on the following core principles:
OTHER MATTERS | • | | 71attract and retain highly capable individuals and offer competitive compensation opportunities, |
Appendix A: Plan of Conversion | • | | A-1pay for performance, and |
Appendix B: Articles of Conversion | • | | B-1align the interests of management with our stockholders. |
Our equity compensation program is designed to be aligned with the interests of our stockholders and focus on pay-for-performance:
Appendix C: State of Delaware Certificate of Conversion from a Non-Delaware Corporation to a Delaware Corporation | • | | C-1The majority of 2022 executive compensation is considered to be “at risk” because its value is based on specific performance criteria and/or stock price appreciation and payout is not guaranteed. |
Appendix D: Certificate of Incorporation | • | | D-1In 2022, 80% of the value of equity awards granted to the Named Executive Officers (“NEOs”) consisted of performance share units (“PSUs”) and 20% consisted of stock options. |
Appendix E: Delaware Bylaws | • | | E-1The target for total compensation is approximately the 50th percentile as compared to the Company’s compensation peer group. |
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Appendix F: Indemnity Agreement | |
| Gran Tierra Energy 2023 Proxy Statement | | F-13 |
GRAN TIERRA ENERGY INC.
200, 150-13th Avenue S.W.
Calgary, Alberta T2R 0V2 Canada
(403) 265-3221
PROXY STATEMENT
FOR THE 2016 ANNUAL MEETING OF STOCKHOLDERS
June 23, 2016
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Questions and Answers About the Proxy Materials and 2023 Annual Meeting
Why am I receiving these materials?
We are sending you these proxy materials because the Board of Directors (the “Board”) of Gran Tierra Energy Inc., a Nevada CorporationDelaware corporation (“Gran Tierra” or the “Company”), is soliciting your proxy to vote at the 20162023 annual meeting of stockholders, including at any adjournments or postponements of the annual meeting. You are invited to attend the annual meeting, which is being held in a virtual-only format by way of webcast accessed at https://web.lumiagm.com/251955864, to vote on the proposals described in this proxy statement. However, you do not need to attend the annual meeting to vote your shares. Instead, if you are a stockholder of record of our common stock, you may simply complete, sign and return the proxy card if you received a paper copy of our proxy materials, or follow the instructions below to submit your proxy over the telephone or through the internet. See “How do I vote” below for further information on how to vote, including if you hold our common stock through a broker in “street name” or hold exchangeable shares.
Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the internet. We are sending to our stockholders of record the proxy materials, including this proxy statement and an annual report, or a Notice Regarding the Availability of Proxy Materials (the “Notice”). We intend that our stockholders who hold their stock in “street name” will receive a Notice from their broker, bank or other agent in which they hold the stock in “street name,” unless they have specified otherwise. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice.
We intend to mail the proxy materials and Notice beginning on or about May 11, 2016,March 24, 2023 to all stockholders of record entitled to vote at the annual meeting. We expect that the Notice will be sent to stockholders who hold their stock in “street name” on or about this same date.
How do I attend the annual meeting?
The annual meeting will be held on Thursday, June 23, 2016,Wednesday, May 3, 2023, at 10:00 a.m. (Eastern(Mountain time) at the Andaz Wall Street Hotel, 75 Wall Street, New York, NY, 10005, USA. Directionsand will be held solely by remote communication, in a virtual-only format.
Instructions to the annual meeting may be found at http://www.grantierra.com. Information on how to vote in person at the annual meeting is discussed below.
Attend Online Meeting | • | | Log in online at https://web.lumiagm.com/251955864. The Meeting ID is 251-955-864. We recommend that you log in 15 minutes before the annual meeting starts. |
| • | | Enter the control number found on the form of proxy or Notice, as applicable, into the Shareholder login section. |
| • | | Enter the password: grantierra23 |
| • | | If you are a proxyholder, enter the credentials provided by Odyssey Trust Company |
| • | | If you are a guest, complete the Guest login information. |
Who can vote at the annual meeting?
Only stockholders of record at the close of business on April 27, 2016,March 7, 2023, will be entitled to vote at the annual meeting. On this record date, there were [____]346,151,157 shares of common stock outstanding and entitled to vote, one sharevote.
A list of Special A Voting Stock, and one share of Special B Voting Stock. On the record date, the one share of Special A Voting Stock was entitled to [____] votes, which equals the number of shares of common stock issuable upon exchange of exchangeable shares of Gran Tierra Goldstrike Inc. that were issued in connection with the transaction between the former stockholders of Gran Tierra Energy Inc., an Alberta corporation (“Gran Tierra Canada”),record will be made available for ten days before the annual meeting at the Company’s principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the annual meeting and Goldstrike, Inc. (the “Goldstrike Exchangeable Shares”). Onduring the record date, the one sharemeeting to stockholders upon request via email to: info@grantierra.com, subject to satisfactory verification of Special B Voting Stock was entitled to [____] votes, which equals the numberstatus as a stockholder of shares of common stock issuable upon exchange of exchangeable shares of Gran Tierra Exchangeco Inc. that were issued in connection with the transaction between the former stockholders of Solana Resources Limited, an Alberta corporation (“Solana”), and Gran Tierra (the “Solana Exchangeable Shares” and together with the Goldstrike Exchangeable Shares, the “Exchangeable Shares”).
record.Stockholders of Record: Shares Registered in Your Name
If at the close of business on April 27, 2016,March 7, 2023, your shares were registered directly in your name with Gran Tierra’s transfer agent, Computershare Investor Services,Odyssey Trust Company, then you are a stockholder of record. AsRegistered stockholders will receive a stockholderproxy form containing the relevant details concerning the business of record, you may vote in person at the meeting, including a control number required to access the virtual annual meeting or vote by proxy. meeting.
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| 4 | | Gran Tierra Energy 2023 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND 2023 ANNUAL MEETING
Whether or not you plan to attend the annual meeting, we urge you to fill out and return the proxy or vote by proxy by telephone or on the internet as instructed below to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If at the close of business on April 27, 2016,March 7, 2023, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice, and/or these proxy materials if you have received them, are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in personelectronically or submit questions at the annual meeting unless you request and obtain a valid proxy from your broker or other agent.
Stockholders Holding Exchangeable See “How Do I Vote? - Beneficial Owner: Shares
Holders Registered in the Name of Goldstrike Exchangeable Shares are receiving these proxy materials which relate solely toBroker or Bank” below for additional information about attending and participating in the annual meeting of Gran Tierra and are being delivered in accordance with the provisions of the Goldstrike Exchangeable Shares and the Voting Exchange and Support Agreement dated November 10, 2005, (the “Goldstrike Voting Exchange Agreement”) among Goldstrike Inc., 1203647 Alberta Inc., Gran Tierra Goldstrike Inc. and Olympia Trust Company (the “Goldstrike Trustee”). The Goldstrike Exchangeable Shares are the economic equivalent to the shares of common stock of Gran Tierra. In accordance with the Goldstrike Voting Exchange Agreement, holders of Goldstrike Exchangeable Shares are entitled to instruct the Goldstrike Trustee as to how to vote their Goldstrike Exchangeable Shares. The Goldstrike Trustee holds the one outstanding share of our Special A Voting Stock, which is entitled to as many votes as there are outstanding Goldstrike Exchangeable Shares on the record date, and may only vote the one share of Special A Voting Stock as directed by the holders of Goldstrike Exchangeable Shares. Holders of Goldstrike Exchangeable Shares who do not hold their Goldstrike Exchangeable Shares in their own name are not entitled to instruct the Goldstrike Trustee as to how to exercise voting rights at the annual meeting. Only holders of Goldstrike Exchangeable Shares whose names appear on the records of Gran Tierra Goldstrike Inc. as the registered holders of Goldstrike Exchangeable Shares are entitled to instruct the Goldstrike Trustee as to how to exercise voting rights in respect of their Goldstrike Exchangeable Shares at the annual meeting. Holders of Goldstrike Exchangeable Shares may also obtain a proxy from the Goldstrike Trustee to vote their Goldstrike Exchangeable Shares at the annual meeting. Holders of Goldstrike Exchangeable Shares should follow the instructions sent to them by the Goldstrike Trustee in order to exercise their voting rights.
Holders of Solana Exchangeable Shares are receiving these proxy materials which relate solely to the annual meeting of Gran Tierra and are being delivered in accordance with the provisions of the Solana Exchangeable Shares and the Voting and Exchange Trust Agreement dated November 14, 2008, (the “Solana Voting Exchange Agreement”) among Gran Tierra, Gran Tierra Exchangeco Inc. and Computershare Trust Company of Canada (the “Solana Trustee”). The Solana Exchangeable Shares are the economic equivalent to the shares of common stock of Gran Tierra. In accordance with the Solana Voting Exchange Agreement, holders of Solana Exchangeable Shares are entitled to instruct the Solana Trustee as to how to vote their Solana Exchangeable Shares. The Solana Trustee holds the one outstanding share of our Special B Voting Stock, which is entitled to as many votes as there are outstanding Solana Exchangeable Shares on the record date, and may only vote the one share of Special B Voting Stock as directed by the holders of Solana Exchangeable Shares. Holders of Solana Exchangeable Shares who do not hold their Solana Exchangeable Shares in their own name are not entitled to instruct the Solana Trustee as to how to exercise voting rights at the annual meeting. Only holders of Solana Exchangeable Shares whose names appear on the records of Gran Tierra Exchangeco Inc. as the registered holders of Solana Exchangeable Shares are entitled to instruct the Solana Trustee as to how to exercise voting rights in respect of their Solana Exchangeable Shares at the annual meeting. Holders of Solana Exchangeable Shares may also obtain a proxy from the Solana Trustee to vote their Solana Exchangeable Shares at the annual meeting. Holders of Solana Exchangeable Shares should follow the instructions sent to them by the Solana Trustee in order to exercise their voting rights.
If at the close of business on April 27, 2016, your Exchangeable Shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice, and these proxy materials if you have received them, are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of instructing your trustee as to how to vote your Exchangeable Shares. As a beneficial owner, you have the right to direct your broker or other agent regarding how to instruct your trustee as to how to vote your Exchangeable Shares.
There are four matters scheduled for a vote:
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| 1. | Election of sevennine nominees namenamed in the proxy statement to serve on the Board until the next annual meeting and until their respective successors are duly elected and qualified; |
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| 2. | Ratification of the appointment of KPMG LLP as the independent registered public accounting firm for 2023; |
| 3. | Approval, on an advisory basis, of the compensation of Gran Tierra’s named executive officers, as disclosed in this proxy statement in accordance with SEC rules;statement; and |
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3. | RatificationApproval of an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of the appointmentCommon Stock at a reverse stock split ratio of Deloitte LLP as the independent registered public accounting firm for 2016. |
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4. | Approval of a change in the Company's state of incorporation from the State of Nevada to the State of Delaware, pursuant to a plan of conversion. |
What if another matter is properly brought before the annual meeting?
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 annual meeting or any adjournment or postponement thereof, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
Will I be able to submit questions during the virtual annual meeting?
Stockholders will be able to submit questions through the virtual meeting website. Questions pertinent to meeting matters that comply with the meeting rules of conduct will be answered during the meeting, subject to time constraints. However, we reserve the right to exclude questions that are not pertinent to meeting matters, irrelevant to the business of the Company, derogatory or in bad taste, or relate to pending or threatened litigation, personal grievances or are otherwise inappropriate. Questions that are substantially similar may be grouped and answered once to avoid repetition.
How do I vote?
You may either vote “For” or “Against” or abstain from voting with respect to each nominee to the Board. ForBoard and each of the other matters to be voted on, you may vote “For” or “Against” or abstain from voting.
on.Stockholders of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in personelectronically at the annual meeting, vote by proxy on the internet or by telephone, or vote by proxy using a proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the annual meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the annual meeting and vote in personelectronically even if you have already voted by proxy.
| • | | To vote electronically during the meeting, once you have logged into the annual meeting, you will be able to vote your shares electronically by clicking on the “Cast Your Vote” link on the meeting center site. It is important that you remain connected to the internet at all times during the annual meeting in order to vote when balloting commences. It is your responsibility to ensure connectivity for the duration of the annual meeting. |
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¯ | To vote in person, come to the annual meeting and we will give you a ballot when you arrive |
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¯Gran Tierra Energy 2023 Proxy Statement | | 5 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND 2023 ANNUAL MEETING
| • | | To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered and return it promptly in the envelope provided. If you return your signed proxy card to us by 11:59 p.m. (Eastern Time)10:00 a.m. (Mountain time) on June 22, 2016,May 1, 2023, we will vote your shares as you direct. |
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¯ | To vote over the telephone, dial 1-800-652-VOTE (8683) using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice or proxy card. Your telephone vote must be received by 11:59 p.m. (Eastern Time) on June 22, 2016, to be counted. |
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¯ | To vote on the internet, go to http://www.investorvote.com/GTE to complete an electronic proxy card. You will be asked to provide the company number and control number from the Notice or proxy card. Your internet vote must be received by 11:59 p.m. (Eastern Time) on June 22, 2016, to be counted. |
To vote on the internet, go to https://login.odysseytrust.com/pxlogin and follow the on-screen instructions. You will need the control number located on the Notice or Form of Proxy to access the voting site. Your internet vote must be received by 10:00 a.m. (Mountain time) on May 1, 2023, to be counted. The Chair of the Meeting reserves the right to accept late proxies and may waive or extend the proxy cut-off, with or without notice, but is under no obligation to accept or reject any particular late proxy.
We provide the option for internet proxy voting to allow you to vote your shares, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting instructions, or these proxy materials and an annual report and form of proxy, from that organization rather than from Gran Tierra. Simply follow the voting instructions you receive from your broker, bank, or other agent to ensure that your vote is counted. If you have received these proxy materials and voting instructions therein, simply complete and mail the voting instructions to ensure that your vote is counted. Alternatively, if permitted by your broker or bank, you may vote by telephone or on the internet as instructed by your broker, bank or other agent. To vote in person atelectronically during the annual meeting, you must obtain a valid proxy from your broker, bank, or other agent.agent and appoint yourself as a proxyholder. Follow the instructions from your broker, bank, or other agent included with these proxy materials, or contact your broker, bank, or other agent to request a proxy form.
Beneficial Owner: Exchangeable Shares
If In addition you must also register your appointment (of your broker or other agent) by emailing appointee@odysseytrust.com no later than the voting deadline and provide Odyssey with your name, email, number of shares appointed and name of your broker or other agent where shares are a holder of Goldstrike Exchangeable Shares, you should have received a voting direction form with these proxy materials fromheld, so that Odyssey may email the Goldstrike Trustee,appointee their control number.The Corporation may utilize the Broadridge QuickVote™ system, which involves NOBOs being contacted by Kingsdale, which is soliciting proxies on behalf of Management, to obtain voting instructions over the holdertelephone and relaying them to Broadridge (on behalf of the one shareNOBO’s Intermediary). While representatives of Special A Voting Stock. FollowKingsdale are soliciting proxies on behalf of Management, Shareholders are not required to vote in the manner recommended by the Board of Directors. The QuickVoteTM system is intended to assist Shareholders in placing their votes, however, there is no obligation for any Shareholders to vote using the QuickVoteTM system, and Shareholders may vote (or change or revoke their votes) at any other time and in any other applicable manner described in this Circular. Any voting instructions provided by a Shareholder will be recorded and such Shareholder will receive a letter from Broadridge (on behalf of the Goldstrike Trustee, orShareholder’s Intermediary) as confirmation that their voting instructions have been accepted.
Shareholders who have any questions should contact the Goldstrike TrusteeCompany’s strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors, at 1-855-476-7987 (toll-free within North America) or 1-416-867-2272 (collect call outside North America) or by e-mail at contactus@kingsdaleadvisors.com.
A shareholder has the right to appoint a person or entity (who need not be a shareholder) to attend and act for further information. Instrumentshim/her on his/her behalf at the meeting other than the persons named in the enclosed instrument of Proxy. Shareholders who wish to appoint a third party proxyholder to represent them at the online meeting must submit their proxy or voting instruction form (if applicable) prior to registering your proxyholder. Registering your proxyholder is an additional step once you have submitted your proxy or voting instruction form. Failure to register the proxyholder will result in the proxyholder not receiving a Username to participate in the meeting. To register a proxyholder, shareholders MUST email appointee@odysseytrust.com and provide Odyssey Trust Company with their proxyholder’s contact information, including email address of appointee, amount of shares appointed and the name of broker or other agent where shares are held, so that Odyssey Trust Company may provide the proxyholder with a control number via email. Requests for registration must be received by ComputershareOdyssey Trust Company no later than 10:00 a.m. (Mountain Time), on Monday, May 1, 2023. You will receive a confirmation of Canada, Attention: Manager, Corporateyour registration by email after Odyssey Trust 600, 530 – 8th Avenue S.W., Calgary, Alberta T2P 3S8, Canada, by 11:59 p.m. (EDT) on June 20, 2016, or not less than 48 hours beforeCompany receives your registration materials. At the time of any adjournment(s) of the annual meeting. Followmeeting, go to https://web.lumiagm.com/251955864 and enter your control number and the directions on the voting direction form, which includes how voting instructions may be sent by facsimile transmission.
If you are a holder of record of Solana Exchangeable Shares, you should have received a voting direction form with these proxy materials from the Solana Trustee, which is the holder of the one share of Special B Voting Stock. Follow the instructions from the Solana Trustee, or contact the Solana Trustee for further information. Instruments of proxy must be received by Computershare Trust Company of Canada, Attention: Manager Corporate Trust, 600, 530 – 8th Avenue S.W., Calgary, Alberta T2P 3S8, Canada by 11:59 p.m. (EDT) on June 20, 2016, or not less than 48 hours before the time of any adjournment(s) of the annual meeting. Follow the directions on the voting direction form.
If you are a beneficial owner of Exchangeable Shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting instructions from that organization rather than from Gran Tierra. Simply follow the voting instructions in the Notice to ensure that your vote is counted.
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We provide telephone and internet proxy voting to allow you to vote your shares, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your telephone or internet access, such as usage charges from internet access providers and telephone companies. |
meeting password, grantierra23.How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common stock you own as of April 27, 2016. In addition, you have one vote for each Exchangeable Share held as of April 27, 2016, which are represented by the one share of Special A Voting Stock and one share of Special B Voting Stock of Gran Tierra, as applicable. Holders of Goldstrike Exchangeable Shares should follow the instructions sent to them by the Goldstrike Trustee and holders of Solana Exchangeable Shares should follow the instructions sent to them by the Solana Trustee in order to exercise their respectiveMarch 7, 2023. Cumulative voting rights.is not permitted.
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| 6 | | Gran Tierra Energy 2023 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND 2023 ANNUAL MEETING
What if I return a proxy card or otherwise vote but do not make specific choices?
Stockholder of Record; Shares Registered in Your Name
If you are a holder of record and return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” the election of all sevennine nominees for director, “For” the advisory approval of executive compensation, “For” the ratification of the selection of DeloitteKPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2016,2023, “For” the advisory vote to approve named executive officer compensation, and “For” the approval of the change inamendment to the Company's statecertificate of incorporation fromto effect the State of Nevada to the State of Delaware.reverse share split. If any other matter is properly presented at the annual meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
Beneficial Owner; Shares Registered in the Name of a Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank or other nominee, and you do not provide the broker or other nominee that holds your shares with voting instructions, your broker or other nominee is not permitted to vote on certain proposals and may elect not to vote your shares on any proposalof the other than Proposal 3 at the Annual Meeting.proposals unless you provide voting instructions. See “What are ‘broker non-votes’?” below. We encourage you to provide voting instructions to the organization that holds your shares to ensure that your vote is counted on all four proposals.
Holder of Exchangeable Shares
If you are a holder of Exchangeable Shares and you do not return a properly filled out voting election, or if you return a signed and dated voting election without marking voting selections, your shares will not be voted.
What happens if I do not vote?
Stockholder of Record; Shares Registered in Your Name
If you are a stockholder of record and do not vote by completing your proxy card, by telephone, over the internet or in personvirtually at the annual meeting, your shares will not be voted.
Beneficial Owner; Shares Registered in the Name of a Broker or Bank
If you hold your shares in “street name,” you will receive instructions from your broker, bank or other nominee describing how to vote your shares. If you do not instruct your broker, bank or other nominee how to vote your shares, they may vote your shares as they decide as to each matter for which they have discretionary authority under the rules of the NYSE MKT (“NYSE MKT”).
There are also non-discretionary matters for which brokers, banks and other nominees do not have discretionary authority to vote unless they receive timely instructions from you. When a broker, bank or other nominee does not have discretionpermitted to vote on a particular mattercertain proposals and you havemay elect not given timely instructions on how the broker, bank or other nominee should vote your shares, a “broker non-vote” results. Although any broker non-vote would be counted as present at the meeting for purposes of determining a quorum, it would be treated as not entitled to vote with respect to non-discretionary matters.
If your shareson any of the other proposals unless you provide voting instructions. See “What are held in “street name” and you do not give voting instructions, pursuant to NYSE MKT Company Guide Section 723, the record holder will not be permitted to vote your shares with respect to Proposals 1, 2 or 4. If your shares are held in “street name” and you do not give voting instructions, the record holder will nevertheless be entitled to vote your shares with respect to Proposal 3.
‘broker non-votes’?” below.Abstentions occur when stockholders are present at the Annual Meetingannual meeting but fail to vote or voluntarily withhold their vote forabstain on any of the matters upon which the stockholders are voting.
Holder of Exchangeable Shares
If you are a holder of Exchangeable Shares and you do not return a properly filled out voting election, or if you return a signed and dated voting election without marking voting selections, your shares will not be voted.
Who is paying for this proxy solicitation?
We will pay for the entirehave retained Kingsdale Advisors to help us with this process, at an estimated cost of $55,000. We pay the costs associated with soliciting proxies. In addition to these proxy materials, our directors and employees and Georgeson Shareholder Services may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies, but if Georgeson Shareholder Services solicits proxies it will be paid a fee of approximately [_______].proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
Shareholders who have any questions should contact the Company’s strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors, at 1-855-476-7987 (toll-free within North America) or 1-416-867-2272 (collect call outside North America) or by e-mail at contactus@kingsdaleadvisors.com.
What does it mean if I receive more than one Notice or more than one set of proxy materials?
If you receive more than one Notice or more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices or the instructions on the proxy cards in the proxy materials to ensure that all of your shares are voted.
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| Gran Tierra Energy 2023 Proxy Statement | | 7 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND 2023 ANNUAL MEETING
Can I change my vote after submitting my proxy?
Stockholder of Record; Shares Registered in Your Name
Yes. You can revoke your proxy at any time before the final vote at the annual meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
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¯• | | You may submit another properly completed proxy card with a later date, or vote again by telephone or on the internet; |
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¯• | | You may send a timely written notice that you are revoking your proxy to Gran Tierra’s Corporate Secretary at 200, 150 -13th Avenue S.W.500 Centre Street S.E., Calgary, Alberta, T2R 0V2, Canada;Canada T2G 1A6; or |
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¯• | | You may attend the annual meeting and vote in person.virtually. Simply attending the annual meeting will not, by itself, revoke your proxy. |
Your most current proxy card or telephone or internet proxy is the one that is counted and must be received by 10:00 a.m. (Mountain time) on May 1, 2023, to be counted.
The Chair of the Meeting reserves the right to accept late proxies and may waive or extend the proxy cut-off, with or without notice, but is under no obligation to accept or reject any particular late proxy.Beneficial Owner; Shares Registered in the Name of a Broker or Bank
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
Holder of Exchangeable Shares
If you are a holder of Goldstrike Exchangeable Shares, you should follow the instructions provided by the Goldstrike Trustee with respect to the Goldstrike Exchangeable Shares you hold, and if you are a holder of Solana Exchangeable Shares, you should follow the instructions provided by the Solana Trustee with respect to the Solana Exchangeable Shares you hold.
When are stockholder proposals due for next year’s annual meeting?
Stockholders who desire to present proposals at the 20172024 annual meeting of stockholders and to have proposals included in our proxy materials pursuant to Rule 14a-8 under the Exchange Act must submit their proposals to us at our principal executive offices (to the Corporate Secretary at 200, 150-13th Avenue S.W.500 Centre Street S.E., Calgary, Alberta, T2R 0V2, Canada)Canada T2G 1A6), not later than the close of business on January 11, 2017.November 24, 2023. If the date of the 20172024 annual meeting is changed by more than 30 days from the date of the 20162023 annual meeting, the deadline for submitting proposals is a reasonable time before we begin to print and mail the proxy materials for our 2017 Annual Meeting.
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 20172024 annual meeting of stockholders only by sending to our Corporate Secretary a notice containing the information required by our Bylaws no earlierBylaws. Notice to us must be made not less than 30 or more than 65 days prior to the closedate of businessthe annual meeting; provided, however, that if the annual meeting is to be held on March 25, 2017 and noa 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 April 24, 2017. If we schedule our 2017the 10th day following the day on which public announcement of the date of the annual meeting to a date that is more than 30 days before or 60 days after June 23, 2017, then such notice must be given no earlier than the close of business 90 days, and no later than the close of business 60 days, before the rescheduled meeting, or notice must be given within 10 days following the date public notice of the rescheduled meeting is givenfirst made by us.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 to satisfying the deadlines in the advance notice provisions of our Bylaws, a stockholder who intends to solicit proxies in support of nominees submitted under these advance notice provisions must provide the notice required under Rule 14a-19 to the Corporate Secretary no later than March 4, 2024.How are votes counted?
Votes will be counted by the inspector of election appointed for the annual meeting, who will separately count, for the proposal to elect directors votes “For,” “Against” and broker non-votes; and, with respect tothe other proposals, votes “For” and“For,” “Against,” abstentions and, if applicable, broker non-votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
What are “broker non-votes”?
As discussed above, whenWhen a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters, deemed bybrokers may in some cases vote the NYSE MKTshares in their discretion, but are not permitted to be “non-routine,”vote on certain proposals and may elect not to vote on any of the other proposals unless you provide voting instructions. If you do not provide voting instructions and the broker elects to vote your shares on some but not all matters, it will result in a “broker non-vote” for the matters on which the broker does not vote. Abstentions occur when you provide voting instructions but instruct the broker to abstain from voting on a particular matter instead of voting for or nominee cannot voteagainst the shares. These unvoted shares are counted as “broker non-votes.”matter.
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| 8 | | Gran Tierra Energy 2023 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND 2023 ANNUAL MEETING
How many votes are needed to approve each proposal?
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¯• | | Proposal No. 1, the election of directors: our bylaws provide for a majority voting standard for the election of directors in uncontested elections, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. Because this is an uncontested election, each director shall be elected by the vote of a majority of the votes cast at a meeting of stockholders at which a quorum is present. A "majority“majority of the votes cast"cast” means that the number of shares voted "For"“For” a director nominee must exceed the number of votes cast "Against"“Against” that director nominee. For these purposes, abstentions and broker non-votes will not count as a vote "For"“For” or "Against"“Against” a nominee'snominee’s election and will have no effect in determining whether a director nominee has received a majority of the votes cast. If you do not instruct your broker, bank or other nominee how to vote your shares, they are not permitted to vote on this proposal and may not vote unless you provide voting instructions. If an incumbent director is not elected by a majority of the votes cast, the incumbent director must promptly tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the director'sdirector’s resignation or whether other action should be taken. The Board will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision within 90 days from the date of the certification of the election results. |
Corporate Governance Committee's recommendation and publicly disclose its decision within 90 days from the date of the certification of the election results.
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¯• | | Proposal No. 2, the advisory approvalratification of the compensationappointment of KPMG LLP as Gran Tierra’s named executive officers, as disclosed in this proxy statement in accordance with SEC rules,independent registered public accounting firm for 2023, will be approved if it receives the affirmative vote of shares representing a majority of the votes present in personvirtually or represented by proxy at the meeting and entitled to vote on the matter. Abstentions will have the same effect as a vote "Against."“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. Broker non-votes, if any, will have no effect. |
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¯• | | Proposal No. 3, the ratification of the appointment of Deloitte LLPadvisory vote to approve named executive officer compensation, as Gran Tierra’s independent registered public accounting firm for 2016,disclosed in this proxy statement, will be approved if it receives the affirmative vote of shares representing a majority of the votes present in personvirtually or represented by proxy at the meeting and entitled to vote on the matter. Abstentions will have the same effect as a vote "Against." We“Against.” If you do not expect that thereinstruct your broker, bank or other nominee how to vote your shares, they are not permitted to vote on this proposal and may not vote unless you provide voting instructions. Broker non-votes will be any broker non-votes, as this is a routine matter.have no effect. |
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¯• | | Proposal No. 4, the approval of a change in the Company's state of incorporation from the State of Nevadaan amendment to the StateCompany’s Certificate of DelawareIncorporation to effect a reverse stock split of the Common Stock at a reverse stock split ratio of 1-for-10, will be approved if it receives the affirmative vote of a majority of the voting power of the stockholders.outstanding stock entitled to vote. Abstentions and broker non-votes, if any, will have the same effect as a vote "Against."“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. |
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding outstanding shares of Gran Tierra’s capital stock representing at least a majorityone-third of the total number of votes that may be cast at the annual meeting are present at the annual meeting in personvirtually or represented by proxy. On the record date, there were [_____]346,151,157 votes that could be cast. Those votes were represented by [_____] shares of common stock outstanding and entitled to vote and [_____] shares of common stock issuable upon exchange of the Exchangeable Shares and therefore entitled to vote through the one share of Special A Voting Stock and one share of Special B Voting Stock. Thus, holders of outstanding shares representing at least [_____]115,268,335 votes must be present in personvirtually or represented by proxy at the annual meeting to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in personvirtually at the annual meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the ChairmanChair of the annual meeting or the holders of a majority of shares present at the annual meeting in personvirtually or represented by proxy must adjourn the annual meeting to another date.
How can I find out the results of the voting at the annual meeting?
Preliminary voting results will be announced at the annual meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the annual meeting.
What proxy materials are available on the internet?
The notice of meeting, proxy statement and annual report to stockholders are available to view at:
http://www.edocumentview/com/GTE
or
on Gran Tierra’s website at: http:https://www.grantierra.com
www.grantierra.com/investor-relations/2023-annual-meetingSee “How do I vote?” above for voting instructions.
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| Gran Tierra Energy 2023 Proxy Statement | | 9 |
BUSINESS OF THE ANNUAL MEETING
Corporate Governance and Board Matters
PROPOSAL 1
1: ELECTION OF DIRECTORS
Gran Tierra’sThe Board currently consists of eightDirectors is nominating the nine individuals identified below for election as directors. There are seven nominees for director this year. Mr. Price will not stand for re-election at the 2016 Annual Meeting. Accordingly, Mr. Price's term as a member of the Board and any committee thereof will expire following the 2016 Annual meeting, and the size of our BoardUnless you specify differently, proxies received will be reduced to seven.voted FOR Robert B. Hodgins, Peter J. Dey, Gary S. Guidry, Evan Hazell, Alison Redford, Ronald W. Royal, Sondra Scott, David P. Smith and Brooke Wade. Each director to be elected and qualified will hold office until the next annual meeting of stockholders and until his or her successor is elected, or, if sooner, until the director’s death, resignation or removal. Each of the nominees listed below is currently a director of Gran Tierra. It is Gran Tierra’s policy to invite nominees for directors to attend the annual meeting. A majoritymeeting and all of the directors then in officeDirectors attended the 2015 Annual Meeting of Stockholders.
Directors are elected by a majority of the votes cast by the holders of voting shares at a2022 annual meeting of stockholders at which a quorum is present; provided, however, that if the number of nominees exceeds the number of directors to be elected, directors shall be elected by a plurality of the votes cast.stockholders.Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the sevennine nominees named below. If any nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute nominee proposed by Gran Tierra. Each person nominated for election has agreed to serve if elected. Gran Tierra’s management has no reason to believe that any nominee will be unable to serve.
MAJORITY VOTING STANDARD
Our Bylaws provide for a majority voting standard for the election of directors in uncontested elections, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. Because this is an uncontested election, each director shall be elected by the vote of a majority of the votes cast at a meeting of stockholders at which a quorum is present. A "majority of the votes cast" means that the number of shares voted "For" a director nominee must exceed the number of votes cast "Against" that director nominee. For these purposes, abstentions and broker non-votes will not count as a vote "For" or "Against" a nominee's election and will have no effect in determining whether a director nominee has received a majority of the votes cast. If an incumbent director is not elected by a majority of the votes cast, the incumbent director must promptly tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the director's resignation or whether other action should be taken. The Board will act on the Nominating and Corporate Governance Committee's recommendation and publicly disclose its decision within 90 days from the date of the certification of the election results. An incumbent director who tenders his or her resignation after failing to receive a majority of the votes cast will not participate in the Nominating and Corporate Governance Committee's or the Board's recommendation or decision or any deliberations related thereto.
NOMINEES
In May 2015, a major shareholder of the Company oversaw a transition in Board and Management that included the nomination and election of seven new directors.
The following is a brief biography of each nominee for director, his age on April 27, 2016, and a discussion of the specific experience, qualifications, attributes or skills of each nominee that led the Nominating and Corporate Governance Committeeto recommend that person for reelection as a director, as of the date of this proxy statement.
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NAME | AGE | POSITIONS HELD WITH GRAN TIERRA |
Gary10 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
THE BOARD RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES NAMED BELOW.
NOMINEES FOR DIRECTOR
| | |
 | | ROBERT B. HODGINS Age: 72 Calgary, Alberta, Canada Director since May 2015 Director and Independent Businessman Shareholder approval rating at the 2022 Gran Tierra annual meeting: 93.1% |
Mr. Hodgins has been a corporate director and independent businessman since November 2004. Prior thereto, Mr. Hodgins served as the Chief Financial Officer of Pengrowth Energy Trust (a Toronto Stock Exchange (TSX) and NYSE-listed energy trust) from 2002 to 2004. Prior to that, Mr. Hodgins held the position of Vice President and Treasurer of Canadian Pacific Limited (a TSX and NYSE-listed diversified energy, transportation and hotels company) from 1998 to 2002 and was Chief Financial Officer of TransCanada PipeLines Limited (a TSX and NYSE-listed energy transportation company) from 1993 to 1998. Mr. Hodgins also served as a non-executive, part-time position of Senior Advisor, Investment Banking at Canacord Genuity Corp. At present, Mr. Hodgins serves as a director of AltaGas Ltd., EnerPlus Corporation and MEG Energy Corp. Mr. Hodgins received an Honours Bachelor of Arts in Business from the Richard Ivey School of Business at the University of Western Ontario and received a Chartered Professional Accountant designation and was admitted as a member of the Institute of Chartered Accountants of Ontario in 1977 and Alberta in 1991. Mr. Hodgins is a member of the Institute of Corporate Directors.
Qualifications: With 30-plus years in the oil and gas industry as an executive and director and a strong reputation in the Canadian business community, Mr. Hodgins brings valuable industry and leadership experience to the Board. As a Chartered Professional Accountant and experienced executive in senior financial roles with several Canadian companies, Mr. Hodgins qualifies as one of Gran Tierra’s Audit Committee financial experts.
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| | | |
Board and Committee Participation | | Position | | Meetings | | Attendance |
| | | |
Board of Directors | | Chair | | 10/10 | | 100% |
| | | |
Audit Committee | | Member | | 4/4 | | 100% |
| | | |
Compensation Committee | | Member | | 2/2 | | 100% |
| | | |
Nominating and Corporate Governance Committee | | Member | | 3/3 | | 100% |
| | | | | | |
| | | |
Year | | Common Shares | | DSUs | | Stock Options |
| | | |
2022 | | 20,000 | | 982,651 | | 17,220 |
| | | |
2021 | | 20,000 | | 848,230 | | 17,220 |
| | | | | | |
| |
Other Public Board Directorships | | Committee Position(s) (1) |
| |
AltaGas Ltd. (TSX) | | • Audit Committee • Governance Committee |
| |
Enerplus Corporation (TSX) | | • Compensation and Human Resources Committee • Corporate Governance & Nominating Committee (Chair) |
| |
MEG Energy Corp. (TSX) | | • Audit Committee (Chair) • Corporate Governance and Nominating Committee |
| (1) | The Board of Directors has determined that Mr. Hodgins’ ability to effectively serve on the Company’s Audit Committee is not impaired by his membership on the Audit Committee of the other public boards listed above. |
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| Gran Tierra Energy 2023 Proxy Statement | | 11 |
PROPOSAL 1: ELECTION OF DIRECTORS
| | |
 | | GARY S. Guidry | 60 | GUIDRY Age: 67 Calgary, Alberta, Canada Director since May 2015 Non-Independent Director - President and Chief Executive Officer |
Peter Dey | 75 | Director |
Evan Hazell | 57 | Director |
Robert B. Hodgins | 64 | Chairman ofShareholder approval rating at the Board, Director |
Ronald Royal | 67 | Director |
David P. Smith | 57 | Director |
Brooke Wade | 62 | Director2022 Gran Tierra annual meeting: 97.2% |
____________________
is a professional engineer and has more than 40 years of experience developing and maximizing assets in the international oil and gas industry. Mr. Guidry has been our Chief Executive Officerdirect experience managing large, international projects, including assets in Latin America, Africa, the Middle-East and President since May 7, 2015.Asia. Prior to joining Gran Tierra, Mr. Guidry was the Chief Executive Officer of Onza Energy Inc. from January 2014, until May 2015. From July 2011 to July 2014, Mr. Guidry served as President and Chief Executive Officer of Caracal Energy Inc., a London Stock Exchange listed oil and gas company with operations in Chad, Africa. He held that position from mid-2011 until the company was acquired by Glencore plc for $1.8 billion in mid-2014. In 2014, Mr. Guidry also served aswas awarded the Oil Council Executive of the Year award for his leadership role with Caracal. Prior to Caracal, Mr. Guidry was the President and CEOChief Executive Officer of Orion Oil &and Gas Corp.(TSX listed), which operated in western Canada from October 2009 to July 2011,mid-2009 until mid-2011 when it was merged. From May 2005 until December 2008, he was the President and Chief Executive Officer of Tanganyika Oil Corp. from May 2005Company (TSX listed) which operated in Syria and Egypt. Prior to January 2009, andTanganyika, Mr. Guidry was Chief Executive Officer of Calpine Natural Gas Trust from October 2003 to February 2005. As chief executive officer of these companies, Mr. Guidry was responsible for overseeing all aspects of the respective company’s business. Mr. Guidry currently sits on the boards of Africa Oil Corp. (since April 2008) and Shamaran Petroleum Corp. (since February 2007), where he also serves as a member of each company’s Audit Committee. From September 2010 to October 2011, Mr. Guidry also served on the Board of Zodiac Exploration Corp., and from October 2009 to March 2014, he served on the board of TransGlobe Energy Corp. Prior to these positions, Mr. Guidry served as Senior Vice President and subsequently President of Alberta Energy Company International, and President and General Manager of Canadian Occidental Petroleum’s Nigerian operations. Mr. Guidry has directed exploration and production operations in Yemen, Syria and Egypt and has worked for oil and gas companies around the world in the U.S., Colombia, Ecuador, Venezuela, Argentina and Oman.Trust. Mr. Guidry is an Alberta-registered professional engineer (P. Eng.)Professional Engineer and holds a B.Sc.member of the Association of Professional Engineers and Geoscientists. He received a Bachelor of Science in petroleum engineeringPetroleum Engineering from Texas A&M University.
The NominatingUniversity in 1980.Qualifications: Mr. Guidry, as Chief Executive Officer, is responsible for the operations, financial management and Corporate Governance Committee believes thatimplementation of the Company’s strategy. Mr. Guidry’s extensive experience in the oil and gas industry brings valuable industry experience to the Board. The Nominating and Corporate Governance Committee also believes that the Board will benefit from Mr. Guidry’s expertise in international operations and internal controls and procedures for financial reporting with respect to both private and public companies, which he has developed through his experience as a senior executive at several publicly traded companies.
Peter Dey
companies brings valuable expertise and perspective to the Board. | | | | | | |
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Board and Committee Participation | | Position | | Meetings | | Attendance |
| | | |
Board of Directors | | Member | | 10/10 | | 100% |
| | | | | | |
| | | |
Year | | Common Shares | | PSUs | | Stock Options |
| | | |
2022 | | 3,871,756 | | 4,185,213 | | 2,525,039 |
| | | |
2021 | | 3,802,692 | | 3,807,591 | | 2,334,239 |
| | | | | | |
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Other Public Board Directorships | | Committee Position(s) |
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Africa Oil Corp. | | • Audit Committee • Compensation Committee (Chair) • Reserves Committee (Chair) |
During the past five years, Mr. Dey has beenGuidry previously served as a memberDirector of our Board since May 7, 2015. the following public companies: Shamaran Petroleum Corp. (until June 2018) and PetroTal Corp (1) (until August 2022).
| (1) | PetroTal Corp. was formerly a related company. In November 2021 the Company sold its entire stake in PetroTal Corp.’s common shares. Mr. Guidry and Mr. Ellson were both nominated to the board of PetroTal Corp in 2017. |
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| 12 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
| | |
 | | PETER J. DEY Age: 82 Toronto, Ontario, Canada Director since May 2015 Independent Director Shareholder approval rating at the 2022 Gran Tierra annual meeting: 82.4% |
Mr. Dey has been the Chairman of Paradigm Capital Inc., an investment dealer, since November 2005. He has been a director of Goldcorp Inc. (listed on the TSX and NYSE) since June 2006, a director of Granite REIT Inc. (listed on the NYSE) since 2011, and is currently a director of the Massachusetts Museum of Contemporary Art. He was a director of Caracal Energy Inc. from March 2013 until its sale in July 2014, a director of Enablence Technologies Inc. from October 2011 to October 2013 and a director of Coventree Inc. from April 2008 to February 2012. Mr. Dey was a Partner of the Toronto law firm Osler, Hoskin & Harcourt LLP, where he specialized in corporate board issues and mergers and acquisitions, from 2001 to 2005, and prior to that from 1985 to 1994 and from 1973 to 1983. From 1994 to 2001, Mr. Dey was Chairman of Morgan Stanley Canada Limited. From 1993 to 1995, Mr. Dey chaired The Toronto Stock Exchange Committee on Corporate Governance in Canada that released the December 1994 report entitled “Where Were the Directors?”, known as the Dey Report.Report and is the co-author of the report released in 2021: “360 Degree Governance: Where are the Directors in a World of Crisis”. Mr. Dey has also served as Chairman of the Ontario Securities Commission and was Canada’s representative to the OECDOrganisation for Economic Co-operation and Development (“OECD”) Task Force that developed the OECD Principles of Corporate
Governance released in May of 1999. Mr. Dey attended Queen’s University, where he earned his Bachelor of Science in 1963 and Dalhousie University, where he earned his Bachelor of Laws degree in 1966. He received his Master of Laws degree from Harvard University in 1967.
The Nominating and Corporate Governance Committee recommend Mr. Dey for relelection due to Mr. Dey’s manyQualifications: With more than 40 years of experience dealing with issues of corporate governance ranging from serving on public boards to private practice as a lawyer, which will provideMr. Dey provides significant value to the board of directors of Gran Tierra.
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| | | |
Board and Committee Participation | | Position | | Meetings | | Attendance |
| | | |
Board of Directors | | Member | | 10/10 | | 100% |
| | | |
Nominating and Corporate Governance Committee | | Chair | | 3/3 | | 100% |
| | | |
Compensation Committee | | Member | | 2/2 | | 100% |
| | | |
Health, Safety and Environment Committee | | Member | | 4/4 | | 100% |
| | | | | | |
| | | |
Year | | Common Shares | | DSUs | | Stock Options |
| | | |
2022 | | 20,000 | | 1,082,684 | | 271,684 |
| | | |
2021 | | 20,000 | | 932,079 | | 247,639 |
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Other Public Board Directorships | | Committee Position (s) |
| |
None | | |
During the past five years, Mr. Dey previously served as a Director of the following public company: Guayana Goldfields Inc. (until June 2019).
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| Gran Tierra Energy 2023 Proxy Statement | | 13 |
Evan Hazell
PROPOSAL 1: ELECTION OF DIRECTORS
| | |
 | | EVAN HAZELL Age: 64 Calgary, Alberta, Canada Director since June 2015 Independent Director Shareholder approval rating at the 2022 Gran Tierra annual meeting: 94.7% |
Mr. Hazell has been a member of our Boardan independent businessman since June 24, 2015. Mr. Hazell2011. He has been involved in the global oil and gas industry for over 30approximately 40 years, initially as a petroleum engineer and then as an investment banker. At present, he serves as a Director of Oryx Petroleum and Kaisen Energy Corp, as well as non-profit and community organizations YMCA Calgary, Calgary Municipal Land Corporation and Opera America. From 1998 to 2011, Mr. Hazell acted as a managing director at several financial institutions including HSBC Global Investment Bank and RBC Capital Markets. At present he serves as a director of Courser Energy Ltd (formerly Kaisen Energy Corp) and Pacific Opera Victoria. Mr. Hazell holds a Bachelor of Applied Science degree from Queen'sQueen’s University, a Master of Engineering degree from the University of Calgary, and a Master of Business Administration degree from the University of Michigan, and is licensed as a Professional Engineer in Alberta. He resides in Calgary.
The Nominating and Corporate Governance Committee recommendedQualifications: Mr. Hazell for reelection because of hisbrings to the Board extensive experience in the global energy industry as well as in the financial sector, both of which will be ofsector. Mr. Hazell also has significant benefit to Gran Tierra.
Robert B. Hodgins
Mr. Hodgins has been a member of our Board since May 7, 2015. Mr. Hodgins held the position of Chairman of the Board of Caracal Energy Inc. until it was purchasedexperience at nonprofit organizations. His education in July 2014 for CDN$1.8 billion. He is a Chartered Accountant, investorbusiness and director with over 30 years of oil and gas industry experience. From 2002 to 2004, Mr. Hodgins was the Chief Financial Officer of Pengrowth Energy Trust of Calgary. Previously, he held positions as Vice-President and Treasurer of Canadian Pacific Limited and Chief Financial Officer of TransCanada PipeLines Limited, both of Calgary. Mr. Hodgins is currently a director of, and serves as Chairman of the Audit Committee for, several public Calgary-based companies including AltaGas Ltd. (formerly Altagas General Partner Inc.), having joined in March 2005, MEG Energy Corp., from September 2010, Enerplus Corporation (listed on the TSX and NYSE, formerly Enerplus Resource Fund), from November 2007, Kicking Horse Energy Inc., from April 2012, and StonePoint Energy Inc., from October 2014. He has also served as a director and Chairman of the Audit Committee of the following companies: Orion Oil & Gas Corporation from January 2010 to July 2011; Cub Energy Inc. from July 2012 to March 2015; MGM Energy Corp. from January 2007 to June 2014; Santonia Energy Inc. from June 2005 to March 2014; Lateral Capital Corp. from October 2012 to August 2013; Skope Energy Inc. from October 2010 to February 2013; and Enerflex Ltd. from July 2004 to January 2010. Mr. Hodgins graduated with a Bachelor of Arts in Business from the Richard Ivey School of Business at the University of Western Ontario in 1975, received a Chartered Accountant designation and was admitted as a member of the Institute of Chartered Accountants of Ontario in 1977 and Alberta in 1991.
The Nominating and Corporate Governance Committee recommend Mr. Hodgins for reelection because Mr. Hodgins’ 30-plus years in the oil and gas industry as an executive and director allows him to bring valuable industry experience to the Board. Mr. Hodgins substantial executive experience in senior financial roles with several Canadian companies and strong reputation in the Canadian business communityengineering provides significant value to Gran Tierra.
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| | | |
Board and Committee Participation | | Position | | Meetings | | Attendance |
| | | |
Board of Directors | | Member | | 10/10 | | 100% |
| | | |
Health, Safety and Environment Committee | | Chair | | 4/4 | | 100% |
| | | |
Reserves Committee | | Member | | 2/2 | | 100% |
| | | |
Audit Committee | | Member | | 4/4 | | 100% |
| | | | | | |
| | | |
Year | | Common Shares | | DSUs | | Stock Options |
| | | |
2022 | | 55,000 | | 909,043 | | 226,505 |
| | | |
2021 | | 55,000 | | 774,268 | | 238,281 |
| | | | | | |
| |
Other Public Board Directorships | | Committee Position(s) |
| |
None | | |
| | |
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| 14 | | Gran Tierra Energy 2023 Proxy Statement |
Ronald RoyalPROPOSAL 1: ELECTION OF DIRECTORS
| | |
 | | ALISON M. REDFORD QC Age: 58 Calgary, Alberta, Canada Director since September 2021 Independent Director Shareholder approval rating at the 2022 Gran Tierra annual meeting: 95.8% |
Ms. Redford serves as an advisor to national governments and ministries in emerging economies on regulatory reform to promote transparency and investor confidence. She provides independent advice on the creation of regulatory regimes related to climate, social and governance sustainability most recently in Pakistan, Afghanistan, South Sudan and Guyana. Separately, Ms. Redford also serves as a strategic advisor to public companies operating in volatile political climates to assess risk and ensure regulatory compliance, particularly as it relates to Extractive Industries Transparency Initiatives and Community Benefits Agreements for affected Indigenous people. Previously, Ms. Redford served as Premier of Alberta from 2011 to 2014 and as Minister of Justice and Attorney General from 2008. She graduated from the College of Law at the University of Saskatchewan (1988) and also obtained a Master of Arts degree from the School of Oriental and African Studies at the University of London (2021). Ms. Redford was appointed Queens Counsel in 2008. Ms. Redford is a holder of the Institute of Corporate Directors Director designation.
Qualifications: Ms. Redford brings to the Board more than 25 years of experience from most recently serving as an advisor to national governments and ministries in emerging economies on regulatory reform to promote transparency and investor confidence. As well as serving as Premier of Alberta, Minister of Justice and Attorney General to private practice as a lawyer, Ms. Redford provides significant value to the board of directors of Gran Tierra.
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| | | |
Board and Committee Participation | | Position | | Meetings | | Attendance |
| | | |
Board of Directors | | Member | | 10/10 | | 100% |
| | | |
Audit Committee | | Member | | 4/4 | | 100% |
| | | |
Nominating and Corporate Governance Committee | | Member | | 3/3 | | 100% |
| | | |
Health, Safety & Environment Committee | | Member | | 4/4 | | 100% |
| | | | | | |
| | | |
Year | | Common Shares | | DSUs | | Stock Options |
| | | |
2022 | | 0 | | 146,457 | | 116,512 |
| | | |
2021 | | 0 | | 41,861 | | 85,000 |
| | | | | | |
| |
Other Public Board Directorships | | Committee Position(s) |
| |
None | | |
| | |
| |
| Gran Tierra Energy 2023 Proxy Statement | | 15 |
PROPOSAL 1: ELECTION OF DIRECTORS
| | |
 | | RONALD W. ROYAL Age: 73 Abbotsford, British Columbia, Canada Director since May 2015 Independent Director Shareholder approval rating at the 2022 Gran Tierra annual meeting: 95.8% |
Mr. Royal has been a member of our Boardan independent businessman since May 7, 2015.April 2007. Mr. Royal is a private businessman and currently serves on the Board of two public companies, Valeura Energy Inc. since March 2010 and Oando Energy Resources Inc. since April 2015. Mr. Royal is a professional engineer with overhas more than 35 years of experience with Imperial Oil Ltd. and ExxonMobil’s international upstream affiliates. From 2011 to 2014, he served on the Boardboard of directors of Caracal Energy Inc., and prior to 2010, several other boards of private oil companies. Prior to retiring in 2007, Mr. Royal was President and Production Manager of Esso Exploration and Production Chad Inc. and resided in N’Djamena, Chad from 2002 to 2007. In 2003, he was awarded the title “Chevalier de l’Ordre National du Chad” for his contribution to the economic development of Chad. Mr. Royal received his Bachelor of Applied Science from the University of British Columbia in 1972 and completed the Executive Development Program at Cornell University in 1986. He has been a member of the Association of the Professional Engineers Geologists and GeophysicistsGeoscientists of Alberta since 1972.
The Nominating and Corporate Governance Committee recommendQualifications: Mr. Royal for reelection because Mr. Royal’s extensive internationalbrings to the Board over 35 years of experience in senior executive roles in the oil and gas industry, having previously held a variety of management positions both domestically and internationally.
| | | | | | |
| | | |
Board and Committee Participation | | Position | | Meetings | | Attendance |
| | | |
Board of Directors | | Member | | 10/10 | | 100% |
| | | |
Audit Committee | | Member | | 4/4 | | 100% |
| | | |
Health, Safety & Environment Committee | | Member | | 4/4 | | 100% |
| | | |
Reserves Committee | | Chair | | 2/2 | | 100% |
| | | | | | |
| | | |
Year | | Common Shares | | DSUs | | Stock Options |
| | | |
2022 | | 254,667 | | 1,115,891 | | 271,684 |
| | | |
2021 | | 254,667 | | 965,286 | | 247,639 |
| | | | | | |
| |
Other Public Board Directorships | | Committee Position(s) |
| |
Valeura Energy Inc. | | • Audit Committee • Reserves & Health, Safety and Environment Committee |
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| 16 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
| | |
 | | SONDRA SCOTT Age: 56 Princeton, New Jersey Director since September 2017 Independent Director Shareholder approval rating at the 2022 Gran Tierra annual meeting: 93.4% |
Ms. Scott is an independent businesswoman with more than 25 years of experience as an energy and risk analytics business leader. Ms. Scott is currently CEO of Information Clearinghouse LLC, a valuable assetretail data and analytics information services company. She was formerly Chief Executive Officer for U.S. and Europe of ADEC Innovations, a leading ESG information and consulting firm where she led a team of professionals providing ESG, environmental and sustainability technical, software and strategy solutions. Prior to this, Ms. Scott was Chief Operating Officer of Verisk Financial where she was responsible for leading the company’s global operations team in support their range of portfolio, bankruptcy, fraud and spend solutions. Before joining Verisk Financial in 2020, Ms. Scott was President of Verisk Maplecroft, a leading risk analytics company. Prior to this, Ms. Scott filled a number of roles at Wood Mackenzie over a 13-year period. Her most recent position was head of Global Markets where she led a team focusing on macro energy economics and risk. Previously, Ms. Scott led Wood Mackenzie’s energy consultancy practice. Ms. Scott holds a Master of Science, Petroleum Engineering and Economics degree from a joint program with the University of Pennsylvania and the Institut Francais du Petrole (IFP) and received a Bachelor of Arts, Economics and Earth Sciences degree from Wesleyan University.
Qualifications: Ms. Scott brings to the Board.Board more than 25 years of experience as an energy and risk analytics business leader. She has significant leadership experience having led multi-sized global research and consultancy teams. Ms. Scott has worked in the United States, the United Kingdom, and Latin America, globalizing businesses and building local practices.
| | | | | | |
| | | |
Board and Committee Participation | | Position | | Meetings | | Attendance |
| | | |
Board of Directors | | Member | | 10/10 | | 100% |
| | | |
Health, Safety & Environment Committee | | Member | | 4/4 | | 100% |
| | | |
Nominating and Corporate Governance Committee | | Member | | 3/3 | | 100% |
| | | |
Reserves Committee | | Member | | 2/2 | | 100% |
| | | | | | |
| | | |
Year | | Common Shares | | DSUs | | Stock Options |
| | | |
2022 | | 0 | | 755,787 | | — |
| | | |
2021 | | 0 | | 755,787 | | 85,000 |
| | | | | | |
| |
Other Public Board Directorships | | Committee Position(s) |
| |
None | | |
| | |
| |
| Gran Tierra Energy 2023 Proxy Statement | | 17 |
David P. Smith
Mr. Smith has been a member of our Board since May 7, 2015. PROPOSAL 1: ELECTION OF DIRECTORS
| | |
 | | DAVID P. SMITH Age: 64 Parry Sound, Ontario, Canada Director since May 2015 Independent Director Shareholder approval rating at the 2021 Gran Tierra annual meeting: 95.7% |
Mr. Smith is a corporate director with extensive experience in the investment banking, investment research and management industry. He has been the Chairman of the Board of Directors of Superior Plus Corp., a diversified public company with interests in energy distribution, chemicals and construction products distribution. He previously served as a director of Xinergy Ltd. from December 2010 to February 2013, and of Jannock Properties Ltd. from 2000 to January 2011.North American propane distributor, since August 2014. From March 2004 to August 2015, Mr. Smith served as Chair of the Audit Committee of Superior Plus Corp. Previously, heMr. Smith was Managing Partner of Enterprise Capital Management Inc. from 1997 to 2011. Mr. Smith has extensive experience in the investment banking, investment researchis a Chartered Financial Analyst and management industry. His areas of expertise include investment research, mergers & acquisitions, project finance, privatization and corporate finance. Mr. Smith graduated with honors from the University of Western Ontario with a degree in Business Administration in 1981. He is a Chartered Financial Analyst.
The Nominating and Corporate Governance Committee recommendQualifications: Mr. Smith for reelection because Mr. Smith’s extensivebrings to the Board significant financial expertise, having spent his professional career in investment banking, investment research and management. His experience as the Chairman at Superior Plus Corp. and his previous experience as a director and deep investment knowledge background provides significant valuemember of the audit committee of other public companies provide valuable perspective to Gran Tierra.
Brooke Wade
Tierra’s Board. Mr.
Wade has been a memberSmith’s education and experience qualifies him as one of
our Board since June 24, 2015. Gran Tierra’s Audit Committee financial experts. | | | | | | |
| | | |
Board and Committee Participation | | Position | | Meetings | | Attendance |
| | | |
Board of Directors | | Member | | 10/10 | | 100% |
| | | |
Audit Committee | | Chair | | 4/4 | | 100% |
| | | |
Compensation Committee | | Member | | 2/2 | | 100% |
| | | | | | |
| | | |
Year | | Common Shares | | DSUs | | Stock Options |
| | | |
2022 | | 555,000 | | 453,455 | | 276,150 |
| | | |
2021 | | 555,000 | | 427,967 | | 252,105 |
| | | | | | |
| |
Other Public Board Directorships | | Committee Position(s) |
| |
Superior Plus Corp. | | • Chairman • Governance and Nominating Committee • Compensation Committee |
| | |
| |
| 18 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
| | |
 | | BROOKE WADE Age: 69 Vancouver, British Columbia, Canada Director since June 2015 Independent Director Shareholder approval rating at the 2022 Gran Tierra annual meeting: 93.6% |
Mr. Wade is the President of Wade Capital Corporation, a private investment company.company active in private equity, oil and gas, real estate and industrial businesses, and energy storage technology. From 1994 until the sale of the company in 2005, Mr. Wade was the co-founder and Chairman and Chief Executive Officer of Acetex Corporation, a publicly traded chemical company specializing in acetyls, specialty polymers, and films. In July 2005, Acetex was acquired by Blackstone. Prior to founding Acetex Corporation, Mr. Wade was founding President and Chief Executive Officer of Methanex Corporation, a company created byCorporation. In 1991, Ocelot Industries spun out its oil and gas assets and began a plan of growth through acquisitions to becomeacquisition into what is known today as Methanex Corporation—the world’s largest methanol producer. Prior to joining Ocelot, he was involved in a number of independent business ventures. Mr. Wade currently serves on the boardboards of Novinium,several private companies including Belkin Enterprises Ltd.. He is also Executive Chairman of Atlas Power Technologies Inc. He was also a director of the Caracal Energy Inc. board from September 2011 until it was purchased in July 2014. Mr. Wadeand is a member of the Advisory Board of NetworkNorthbridge Capital Management Inc.,Partners and is a participant of AEA Investors groups of funds. In addition, Mr. Wade is a member of the World Presidents’ Organization, the Chief Executives Organization, and the Dean'sDean’s Advisory Council of the Harvard Kennedy School. Mr. Wade earned a Bachelor of Commerce Degree from the University of Calgary in 1974 and received his Chartered Accountant designation in 1977. In 2012, Mr. Wade became a Fellow of the Institute of Chartered Accountants of British Columbia.
The Nominating and Corporate Governance Committee recommends Mr. Wade for reelection becauseQualifications: Mr. Wade’s extensive executive experience provides the Board with strong leadership and decision-making capabilities. His service on other public company boards provides Gran Tierra with public company senior executive and board member perspectives and judgment important to guiding our company.
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Board and Committee Participation | | Position | | Meetings | | | Attendance | |
| | | |
Board of Directors | | Member | | | 10/10 | | | | 100% | |
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Compensation Committee | | Chair | | | 2/2 | | | | 100% | |
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Nominating and Corporate Governance Committee | | Member | | | 3/3 | | | | 100% | |
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Reserves Committee | | Member | | | 2/2 | | | | 100% | |
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Year | | Common Shares | | DSUs | | | Stock Options | |
| | | |
2022 | | 2,133,600 | | | 1,115,891 | | | | 271,684 | |
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2021 | | 2,133,600 | | | 965,286 | | | | 247,639 | |
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Other Public Board Directorships | | Committee Position(s) | | | | | | |
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None | | | | | | | | | | |
During the past five years, Mr. Wade previously served as a Director of PKM Canada Limited, formerly, Kinder Morgan Canada Limited (until November 2019).
Majority Voting Standard
Our Bylaws provide for a majority voting standard for the election of directors in uncontested elections, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. Because this is an uncontested election, each director shall be elected by the vote of a majority of the votes cast at a meeting of stockholders at which a quorum is present. A “majority of the votes cast” means that the number of shares voted “For” a director nominee must exceed the number of votes cast “Against” that director nominee. For these purposes, abstentions and broker non-votes will not count as a vote “For” or “Against” a nominee’s election and will have no effect in determining whether a director nominee has received a majority of the votes cast. If an incumbent director is not elected by a majority of the votes cast, the incumbent director must promptly tender his or her or her resignation to the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the director’s resignation or whether other action should be taken. The
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| Gran Tierra Energy 2023 Proxy Statement | | 19 |
PROPOSAL 1: ELECTION OF DIRECTORS
Nominating and Corporate Governance Committee shall recommend, and the Board of Directors’ decision shall be, to accept the resignation absent exceptional circumstances. The Board Ofwill act on the Nominating and Corporate Governance Committee’s recommendation within 90 days from the date of the meeting of stockholders and publicly disclose its decision If the Board of Directors Recommends
determines not to accept a resignation, the public disclosure shall fully state the reasons for such decision. A Vote In Favor Of Each Named Nominee.
OTHER INFORMATION
director who tenders his or her or her resignation after failing to receive a majority of the votes cast will not participate in the Nominating and Corporate Governance Committee’s or the Board’s recommendation or decision or any deliberations related thereto.Other Information Regarding Our Directors
Our above-listed directors have neither been convicted in any criminal proceeding during the past ten years nor been parties to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree or final order enjoining them from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities law or commodities law. Similarly, no bankruptcy petitions have been filed by or against any business or property of any of our directors or officers, nor has any bankruptcy petition been filed against a partnership or business association in which these persons were general partners or executive officers.
INDEPENDENCE OF THE BOARD OF DIRECTORS
Skills Matrix
Below is a listing of each director’s key skills, together with a description of those key skills and experience desirable to support the strategic direction of Gran TierraTierra. Not every director is expected to be skilled in every area, however, we aim for the Board to have a balance of skills and experience. We believe the combination of the skills and qualifications shown below demonstrates how our board is well-positioned to provide effective oversight and strategic advice to our management.
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Skills and Experience | | Peter J.
Dey | | | Gary S. Guidry
(President &
Chief Executive
Officer) | | | Evan
Hazell | | | Robert B.
Hodgins
(Chair) | | | Alison
Redford | | | Ronald W.
Royal | | | Sondra
Scott | | | David P.
Smith | | | Brooke
Wade | |
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Relevant Industry Skills | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Energy Industry Executive Experience | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | | | | | ✓ | |
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Health, Safety and Environment Issues | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | |
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Engineering / Geology / Geophysics | | | | | | | ✓ | | | | ✓ | | | | | | | | | | | | ✓ | | | | ✓ | | | | | | | | | |
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Hydrocarbon Transportation and Marketing | | | | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | |
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General Business Skills | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Leadership | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | |
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Board Experience | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | |
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Finance / Capital Markets | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | | | | | | | | | ✓ | | | | ✓ | |
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Mergers and Acquisitions | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | |
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Legal and Governance | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | |
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Government and Public Affairs | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | | |
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International Experience | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | |
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Human Resources and Compensation | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | |
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Information Technology | | | | | | | ✓ | | | | | | | | ✓ | | | | | | | | | | | | ✓ | | | | | | | | | |
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Risk Management | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | |
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Strategic Planning | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | |
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Accounting /Audit | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | | | | | ✓ | | | | ✓ | |
Independence of the Board of Directors
The Company believes in the importance of directors’ independence and follows the listing standardsrules of the NYSE MKT.American. As required under the NYSE MKTAmerican listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the Board.
The Board conducts an annual review regarding the independence from the Company’s management of each of its members. After review of all relevant identified transactions or relationships between each director, or any of his or her family members, and Gran Tierra, its senior management and its independent auditors, the Board has affirmatively determined that, other than Mr. Guidry, each of our directors and nominees for director other than Mr. Guidry,(Peter J. Dey, Evan Hazell, Robert B. Hodgins, Alison Redford, Ronald W. Royal,
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| 20 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
Sondra Scott, David P. Smith and Brooke Wade), are independent directors within the meaning of the applicable NYSE MKTAmerican listing standards. In making this determination, the Board found that none of these directors or nominees for director had a material or other disqualifying relationship with Gran Tierra. Mr. Guidry, Gran Tierra’s President and Chief Executive Officer, is not an independent director by virtue of his employment with Gran Tierra.
BOARD LEADERSHIP STRUCTURE
For the period February 2, 2015 to June 24, 2015, Scott Price acted The Board considered and confirmed that Mr. Hodgins’ position as
LeadSenior Advisor, Investment Banking at Canaccord Genuity Corp. did not impede his independence as a Director of the
Board as the former Chairman, Jeffrey Scott, was not an independent director effective February 2, 2015. Robert Hodgins was appointed ChairmanCompany.In connection with its assessment of the Board on June 24, 2015 and the positionindependence of lead independenteach non-employee director, was discontinued. Mr. Hodgins is an independent director and brings leadership and experience to the Board separate from the Chief Executive Officer. We believe separationof Directors also determined that (i) Messrs. Smith, Hazell, Hodgins and Royal and Ms. Redford, are independent as defined in Section 10A of the roles of ChairmanExchange Act and Chief Executive Officer helps preserve our Board’s independence and objectivity and provides an appropriate division of labor between our Chairman and Chief Executive Officer.
ROLE OF THE BOARD IN RISK OVERSIGHT
Gran Tierra’s management is responsible for assessing the risks facing Gran Tierra and evaluating such risks, and the Board provides an oversight role with respect to risk management. At the direction of the Board, at each quarterly meeting of the Board, management makes a presentation to the Board regarding the higher level risks facing Gran Tierra, as well as the actions being taken to ameliorate these risks. The Board then gives direction and guidance to management as to the risks presented and the actions proposed, and reassesses at the next quarterly meeting of the Board.
MEETINGS OF THE BOARD OF DIRECTORS
The Board met twenty-five times during the last fiscal year as an entire board. Each Board member attended 75% or more of the aggregate number of meetings of the Board and of the committees on which he served, held during the last fiscal year for which he was a director or committee member. As required under the NYSE MKT listing standards in fiscal 2015, Gran Tierra’s independent directors met in regularly scheduled executive sessions at which only independent directors were present.
INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORS
The Board has five standing committees:an Audit Committee, a Compensation Committee, a Health, Safety and Environment Committee, a Nominating and Corporate Governance Committee, and a Reserves Committee. The following table provides membership and meeting information for the period January 1, 2015 to June 24, 2015 for each committee of the Board:
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| Name | | Audit | | Compensation | | Nominating and Corporate Governance | | Reserves |
Dana Coffield(1) | | | | | | | | X |
Jeffrey Scott(2)(3) | | X | | | | | | |
Scott Price(4) | | X | | X | | X | | X* |
Nicholas Kirton(3) | | X* | | | | X | | |
Gerald Macey(3) | | X | | X | | X* | | X |
Total Meetings Jan. 1 - June 24, 2015(4) | | 3 | | 3 | | 1 | | 1 |
(1) Mr. Coffield was a director and our chief executive officer and president until February 2, 2015.
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(2) | Mr. Scott resigned from the Audit Committee on February 2, 2015 as he was no longer an independent director. |
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(3) | Each of Messrs. Scott, Kirton and Macey ceased to be a member of Board effective June 24, 2015. |
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(4) | Mr. Price was a member of the Audit Committee for the period February 2, 2015 to June 24, 2015. |
(5) There were 14 board meetings held during the period January 1, 2015 to June 24, 2015.
The following table provides membership and meeting information for the period June 24, 2015 to December 31, 2015 for each committee of the Board:
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| Name | | Audit | | Compensation | | Nominating and Corporate Governance | | Reserves | | Health, Safety and Environment |
Peter Dey(1) | | X | | X | | X* | | | | |
Evan Hazell(2) | | | | | | | | X | | X* |
Robert Hodgins(1) | | X | | X | | X | | | | |
Scott Price(3) | | | | | | | | X | | X |
Ronald Royal(1) | | X | | | | | | X* | | X |
David Smith(1) | | X* | | | | | | | | X |
Brooke Wade(2) | | | | X* | | X | | X | | |
Total Meetings June 24 - Dec. 31, 2015(4) | | 2 | | 2 | | 0 | | 2 | | 1 |
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(1) | Each of Messrs Dey, Hodgins, Royal and Smith joined the Board effective May 7, 2015. |
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(2) | Each of Messrs. Hazell and Wade were elected to the Board effective June 24, 2015. |
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(3) | Mr. Price will not stand for re-election at the 2016 Annual Meeting. Accordingly, Mr. Price's term as a member of the Board and any committee thereof will expire following the 2016 Annual meeting |
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(4) | There were 11 board meetings held during the period June 24, 2015 through December 31, 2015. |
Below is a description of each committee of the Board. Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. The Board has determined that each member of each committee meets the applicable NYSE MKT rules and regulations regarding “independence” and that each member is free of any relationship that would impair his individual exercise of independent judgment with regard to Gran Tierra.
Audit Committee
The Audit Committee was establishedset forth by the BoardNYSE American applicable to oversee Gran Tierra’s corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, the Audit Committee performs several functions. The Audit Committee reviews our financial reports and other financial information disclosed to the public, the government and various regulatory bodies, our system of internal accounting, our financial controls, and the annual independent audit of our financial statements. The Audit Committee evaluates the performance of and assesses the qualifications of the independent auditors; determines and approves the engagement of the independent auditors; determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors; reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services; monitors the rotation of partners of the independent auditors on Gran Tierra’s audit engagement team as required by law; reviews and approves or rejects transactions between Gran Tierra and any related persons; confers with management and the independent auditors regarding the effectiveness of internal controls over financial reporting; establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by Gran Tierra regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and meets to review Gran Tierra’s annual audited financial statements and quarterly financial statements with management and the independent auditors, including a review of Gran Tierra’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Although the Audit Committee has the responsibilities set forth above and in the Audit Committee’s written charter, it is not the responsibilitymembers of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable laws, rules and regulations.
The Audit Committee is currently composed of four directors:(ii) Messrs. Smith (Chair),Wade, Dey, Hodgins and Royal. Jeffrey Scott was a member of the Audit Committee until February 2, 2015, and Scott Price was a member of the Audit Committee from February 2, 2015 to June 24, 2015. The Audit Committee met five times during the fiscal year. The Audit Committee has a written charter that is available to stockholders on Gran Tierra’s website at http://www.grantierra.com.
The Board reviews the SEC and NYSE MKT listing standards definition of independence for Audit Committee members and has determined that all members of Gran Tierra’s Audit CommitteeSmith, are independent (as independence is currently established in Rule 803(a)(2) ofunder the standards set forth by the NYSE MKT listing standards). Additionally, each Audit Committee member has met the criteria for audit committee independence set forth in Rule 10A-3 promulgated pursuantAmerican applicable to the Exchange Act. The Board has determined that Mr. Smith, an independent director, qualifies as an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K promulgated by the SEC, based on his past experience in the investment banking, investment research and management industry.
Report of the Audit Committee of the Board of Directors*
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2015, with management of Gran Tierra. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board that the audited financial statements be included in Gran Tierra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
David Smith, Chair
Peter Dey
Robert Hodgins
Ronald Royal
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* | The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Gran Tierra under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
Compensation Committee
The Compensation Committee is currently composed of three directors: Messrs. Wade (Chair), Dey and Hodgins. Messrs. Macey and Price were members of the Committee until June 24, 2015. All of the members of Gran Tierra’s Compensation Committee are independent (as independence is currently defined in Rule 803(a)(2) of the NYSE MKT listing standards). The Compensation Committee met five times during 2015. The Compensation Committee has a written charter that is available to stockholders on Gran Tierra’s website at http://www.grantierra.com.
The Compensation Committee of the Board acts on behalf of the Board to review, recommend for adoption and oversee Gran Tierra’s compensation strategy, policies, plans and programs, including:
establishment of corporate and individual performance objectives relevant to the compensation of Gran Tierra’s executive officers, directors, and other senior management, as appropriate, and evaluating performance in light of these stated objectives;
establishment of policies with respect to equity compensation arrangements;
review of the Company's compensation policies as they relate to risk management and risk-taking incentives to determine whether there is a material adverse effect on the Company.
review and approval of the compensation and other terms of employment or service, including severance and change-in-control arrangements, of Gran Tierra’s Chief Executive Officer and the other executive officers; and
administration of Gran Tierra’s equity compensation plans, pension and profit-sharing plans, deferred compensation plans and other similar plan and programs.
Each year, the Compensation Committee reviews with management Gran Tierra’s Compensation Discussion and Analysis and considers whether to recommend that it be included in proxy statements and other filings.
Compensation Committee Processes and Procedures
The Compensation Committee holds regular or special meetings as its members deem necessary or appropriate. The agenda for each meeting is usually developed by the Chair of the Compensation Committee in consultation withand (iii) Ms. Redford, Ms. Scott and Messrs. Dey, Hodgins and Wade, are independent under 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 invitedstandards set forth by the Compensation CommitteeNYSE American applicable to makepresentations, to provide financial or otherbackground information or advice or to otherwise participate in Compensation Committee meetings. The Compensation Committee has the authority to retain, amend the engagement with, and terminate any such adviser, as it deems necessary or appropriate to fulfill its responsibilities. 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. In particular, the Compensation Committee has the sole authority to retain compensation consultants to assist in the performance of its duties, including the authority to approve the consultant’s reasonable fees and other retention terms. Under its charter, the Compensation Committee may select, and receive advice from, a compensation consultant, legal counsel or other adviser to the Compensation Committee, other than in-house counsel and certain other types of advisers, only after taking into consideration six factors, prescribed by the SEC and NYSE MKT that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent.
After taking into consideration the six factors prescribed by the SEC and NYSE MKT described above, the Compensation Committee retained the services of Lane Caputo Compensation Inc. (the “Compensation Consultant”) as its executive compensation consultant pursuant to a written agreement. The Compensation Consultant reports directly to the Compensation Committee and the Compensation Committee may replace the Compensation Consultant or hire additional consultants at any time. A representative of the Compensation Consultant attends meetings of the Compensation Committee, if requested, and communicates with the Compensation Committee Chair between meetings; however, the Compensation Committee makes all decisions and recommendations to the Board. The Compensation Consultant maintains a group of benchmark peers that the Compensation Committee finds relevant for comparison purposes. Services performed by the Compensation Consultant are pre-approved by the Compensation Committee and any additional work to be performed, including at the request of management, must be pre-approved by the Chair of the Compensation Committee. The Compensation Committee retained the services of Hugessen Consulting effective August 3, 2015 as its executive compensation consultant to meet the Company's corporate governance objectives related to director, management and staff compensation.
Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees, as appropriate. In 2015, the Compensation Committee did not form any subcommittees.
New performance objectives are generally established at one or more meetings held during the first quarter of the year. Generally, the Compensation Committee’s process comprises two related elements: the recommendation of compensation levels; and the establishment of performance objectives for the current year. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines any adjustments to his compensationas well as awards to be granted. For all executives and directors, as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels, current company-wide compensation levels, and independent compensation surveys for the petroleum industry in Canada for peer groupings within the industry.
THE SPECIFIC DETERMINATIONS OF THE COMPENSATION COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION FOR FISCAL 2015 ARE DESCRIBED IN GREATER DETAIL IN THE COMPENSATION DISCUSSION AND ANALYSIS SECTION OF THIS PROXY STATEMENT.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee of the Board is responsible for identifying, reviewing and evaluating candidates to serve as directors of Gran Tierra (consistent with criteria approved by the Board), reviewing and evaluating incumbent directors, recommending to the Board for selection candidates for election to the Board, making recommendations to the Board regarding corporate governance issues, assessing the performance of the Board and management, and developing a set of corporate governance principles for Gran Tierra. In the event that a vacancy on the Board arises, the Nominating and Corporate Governance Committee will seek and identify a qualified director nominee to be recommended to the Board for either appointment by the Board to serve the remainder of the term of the director position that is vacant or election at the next annual meeting of stockholders.
The Nominating and Corporate Governance Committee is currently composed of three directors: Messrs. Dey (Chair), Hodgins and Wade. Messrs. Macey, Kirton and Price were members of the Nominating and Corporate Governance
Committee until June 24, 2015. All members of the NominatingCommittee.Stockholder Recommendations and Corporate Governance Committee are independent (as independence is currently defined in Rule 803(a)(2) of the NYSE MKT listing standards). The Nominating and Corporate Governance Committee met once during the fiscal year. The Nominating and Corporate Governance Committee has a written charter that is available to stockholders on Gran Tierra’s website at http://www.grantierra.com.
The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devoteNominations to the affairs of Gran Tierra, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of Gran Tierra’s stockholders. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the Board the operating requirements of Gran Tierra and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee considers diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board and Gran Tierra, to maintain a balance of knowledge, experience and capability. In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to Gran Tierra during their terms, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for NYSE MKT purposes, which determination is based upon applicable NYSE MKT listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote. In fiscal 2015, neither the Nominating and Corporate Governance Committee nor the Board paid any fees to any third party to assist in the process of identifying or evaluating director candidates.
The Nominating and Corporate Governance Committee does not have a formal policy regarding diversity in identifying nominees for a director. However, in assessing a potential nominee, the Nomination and Corporate Governance Committee considers the professional experience, education, skills and viewpoints of the nominee and how those factors will contribute to expanding the collective knowledge and experience of the Board. The Nominating and Corporate Governance Committee considers that, while nominees should present a good fit with the existing Board in terms of their ability to work together to create stockholder value in a constructive way, diversity in opinion and viewpoint contribute to the overall success of the Board and Gran Tierra as a whole.
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above,on page 23 in the section Considerations in Evaluating Director Nominees based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the following address: Gran Tierra Energy Inc., 200, 150-13th Avenue S.W.500 Centre Street S.E., Calgary, Alberta, T2R 0V2, Canada T2G 1A6, Attention: Director Nominations. This written recommendation must be delivered at least 120 days prior to the anniversary of the mailing of Gran Tierra’s proxy statement for the last annual meeting of stockholders. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record holder of Gran Tierra’s stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
Reserves Committee
The primary purposeCode of the Reserves Committee is to act on behalf of the Board in fulfilling the Board’s oversight responsibilities with respect to evaluating and reporting on Gran Tierra’s oil and gas reserves.
The Reserves Committee oversees Gran Tierra’s (1) annual review of its oil and gas reserves, (2) procedures for evaluating and reporting its oil and gas producing activities, and (3) compliance with applicable regulatory and securities laws relating to the preparation and disclosure of information with respect to its oil and gas reserves. The Reserves Committee also consults with the Audit Committee on matters relating to Gran Tierra’s oil and gas reserves which impact Gran Tierra’s financial statements. The Reserves Committee is composed of four directors: Messrs. Royal (Chair), Hazell, Price and Wade. Mr. Macey was a member of the Reserves Committee until June 24, 2015. Dana Coffield was a member of the Reserves Committee until he ceased to be a director of Gran Tierra effective February 2, 2015. All of the members of the Reserves Committee are independent (as independence is currently defined in Rule 803(a)(2) of the NYSE MKT listing standards). The Reserves Committee met three times during fiscal 2015. The Reserves Committee has a written charter that is available on Gran Tierra’s website at http://www.grantierra.com.
Health, Safety and Environment Committee
The Health, Safety and Environment Committee was formed June 24, 2015 to assist the Board in fulfilling its responsibilities in relation to environmental, health and safety matters, including monitoring and overseeing the Company's policies and procedures for ensuring compliance with environmental regulatory requirements and ensuring that employees are provided with a safe environment in which to perform their duties. The Health, Safety and Environment Committee is composed of four directors: Evan Hazell (Chair), Ronald Royal, Scott Price and David Smith. The Health, Safety and Environment Committee has a written charter that is available on Gran Tierra’s website at http://www.grantierra.com.
VOTING STANDARD FOR ELECTION OF DIRECTORS
The rules of the TSX, which became effective December 31, 2012, require a listed issuer to disclose in the materials sent to its stockholders for a meeting at which directors are to be elected, whether or not it has adopted a majority voting policy and, if not, to explain why it has not adopted such a policy in its meeting materials. A majority voting policy generally requires that a director tender his or her resignation if the director receives more “against” votes than “for” votes at any meeting where stockholders vote on the uncontested election of directors. On February 26, 2016, the Board amended the Company's bylaws to implement a majority voting standard and director resignation policy for uncontested election of directors, which is described under "Majority Voting Standard" at the beginning of Proposal 1, above.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board has adopted a formal process by which stockholders and other interested persons may communicate with the Board or any of its directors. This information is available on Gran Tierra’s website at http://www.grantierra.com.
CODE OF ETHICS
EthicsGran Tierra has adopted the Gran Tierraa Code of Business Conduct and Ethics thatwhich is available in English and Spanish and applies to allevery employee, officer and director. Employees, officers and directors are expected to understand the Code and employees.its application to the performance of his or her business responsibilities. The Code of Business Conduct and Ethics is available on Gran Tierra’sthe Company’s website at http://www.grantierra.com.
www.grantierra.com/governance. If Gran Tierra makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director, Gran Tierra will promptly disclose the nature of the amendment or waiver on its website.
PROPOSAL 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and Section 14Awebsite if required. The Board did not grant any waiver of the
Exchange Act,Code in favor of a director or executive officer in 2022.Diversity
Gran Tierra believes in the importance of diversity at all levels throughout the Company. In addition to the traditional concepts of diversity (i.e., gender, culture and geographic region), we believe it is important for the Board to achieve a diversity of knowledge, experience and capabilities that support the Company’s strategic direction. Currently, Gran Tierra does not have a formal policy concerning the diversity of director nominees. However, when considering director candidates, the Board seeks individuals with backgrounds and qualities that, when combined with those of incumbent directors, provide a blend of skills and experience to further enhance the Board’s effectiveness. As part of its annual self-evaluation, the Board assesses whether the directors, both individually and collectively, provide the integrity, experience, judgment, commitment, skills and expertise appropriate for the Company.
Gran Tierra recognizes the benefits of increasing the diversity of its board of directors. In February 2021, the Board updated its Corporate Governance Guidelines to state that as part of the search process for each new director, the Nominating and Corporate Governance Committee will actively seek out women and minority candidates to include in the pool from which Board nominees are chosen.
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| Gran Tierra Energy 2023 Proxy Statement | | 21 |
PROPOSAL 1: ELECTION OF DIRECTORS
THE BOARD’S ROLE AND RESPONSIBILITIES
Role of the Board of Directors
The Board is selected by the stockholders to provide oversight of and strategic guidance to senior management. The core responsibility of a Board member is to fulfill his or her or her fiduciary duties of care and loyalty and otherwise to exercise his or her business judgment in the best interests of the Company and its stockholders. The Board has responsibilities to review, approve and monitor fundamental financial and business strategies and major corporate actions, assess major risks facing the Company and consider ways to address those risks, select and oversee management and determine its composition and oversee the establishment and maintenance of processes and conditions to maintain the integrity of the Company. Directors must act with integrity and are expected to demonstrate a commitment to the company, its values and its business and to long-term stockholder value. The duties and responsibilities of the Board and significant issues of corporate governance are set out in the Company’s Corporate Governance Guidelines which are regularly reviewed by the Nominating and Corporate Governance Committee. The guidelines are available on the Company’s website at www.grantierra.com/governance.
Succession Planning
As part of its mandate and annual workplan, the Nominating and Corporate Governance Committee reviews the succession plan for each senior officer, including the President and Chief Executive Officer. The Nominating and Corporate Governance Committee is responsible for ensuring that there is an orderly succession plan for the position of the President and Chief Executive Officer and other members of senior management. To meet this obligation, the President and Chief Executive Officer meets with the Nominating and Corporate Governance Committee and reviews each position, the status of the incumbent, a review of our talent pool and the succession plan for each role.
Board Role in Risk Oversight
|
|
Full Board The full Board is entrusted with the responsibility for overseeing the significant risks to which our business is exposed and ensuring there are processes in place to effectively identify, monitor and manage them. A significant risk is one that, if it were to occur, could materially impact our ability to meet or support our business objectives. The Board delegates responsibility for the execution of certain elements of risk oversight to the committees to ensure appropriate expertise, attention and diligence. The committees oversee the relevant risk areas and report to the Board regularly. Each committee operates according to a Board-approved written mandate outlining its duties and responsibilities. They also oversee the procedures and programs put in place by management to mitigate the risks and the allocation of adequate resources to address the risks. Management is responsible for ensuring that the Board and its committees are kept well informed of changing risks. The risk oversight responsibilities of the committees include the following: |
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The Audit Committee is responsible for overseeing the integrity of the Company’s financial statements, the independent auditor’s qualifications and independence, the performance of the Company’s internal audit function and independent auditor, compliance with legal and regulatory requirements, major financial and information technology risk exposures and the Company’s accounting and financing reporting processes. | | | | The Compensation Committee is responsible for oversight of compensation-related risks, including reviewing management’s assessment of risks related to employee compensation programs. | | | | The Health, Safety and Environment Committee assists in overseeing the development, monitoring and effective implementation of systems, programs and initiatives to promote the management of health, safety and security at Gran Tierra and to address environmental, safety and operational risks. | | | | The Nominating and Corporate Governance Committee assists in overseeing governance related risks, including regulatory, reputation and other risks. | | | | The Reserves Committee assists in overseeing the risks related to the Company’s estimates of proved reserves of oil and natural gas. |
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| 22 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
Communications with the Board of Directors
Stockholders are encouraged to communicate by voting on the items in the proxy statement, by attending the annual meeting, by participating in the Company’s quarterly investor calls and by contacting us by mail or email. Security holders and other interested parties wishing to communicate with the Board or an individual director may send a written communication addressed to the Secretary of the Company at 500 Centre Street S.E., Calgary, Alberta T2G 1A6, Canada, Attention: Secretary. Communications also may be sent by e-mail to the following address info@grantierra.com. Further information about Gran Tierra’s Security Holder Communication Process is available on Gran Tierra’s website at www.grantierra.com/governance.
BOARD STRUCTURE AND PROCESSES
Board Leadership Structure
The positions of Board Chair and the Chief Executive Officer of the Company are held by two individuals. We believe separation of the roles of Board Chair and Chief Executive Officer helps preserve our Board’s independence and objectivity and provides an appropriate division of labor between our Board Chair and Chief Executive Officer. The Board believes that the current board leadership structure, coupled with a strong emphasis on board independence, effectively allocates authority, responsibility, and oversight between management and the independent members of our Board. Robert B. Hodgins currently serves as non-executive Board Chair and as a non-executive and independent director. The Board Chair presides over meetings of the Board, presides over meetings of stockholders, consults and advises the Board and its committees on the business and affairs of the Company, and performs additional duties as the Board may otherwise determine and delegate.
Board Effectiveness and Director Assessment
The Board performs an annual self-assessment, led by the Chair of the Nominations and Corporate Governance Committee, to evaluate its effectiveness in fulfilling its obligations. Directors complete a written questionnaire covering performance of the Board and its committees. The Chair of the Nominations and Corporate Governance Committee then interviews each director to obtain an assessment of the effectiveness of the Board and committees, as well as director performance and Board dynamics, summarizes these individual assessments for discussion with the Board and committees, and then leads a discussion with the Nominating and Corporate Governance Committee and the Board.
Considerations in Evaluating Director Nominees
The Nominating and Corporate Governance Committee is responsible for identifying and recruiting new candidates for nomination to the Board. The Nominating and Corporate Governance Committee considers recommendations for nominees for directorships submitted by stockholders. The Company will evaluate director nominees proposed by stockholders on the same basis as recommendations received from any other source. Please see “Stockholder Recommendations and Nominations to the Board” in this Proxy Statement for procedures to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board.
In developing recommendations for the Board, the Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating nominees for directors. Candidates for director nominees are entitled to vote to approve, on an advisory basis,reviewed in the compensationcontext of the current composition of the Board, the operating requirements of Gran Tierra’s named executiveTierra and the long-term interests of stockholders. Some of the qualifications that the Nominating and Corporate Governance Committee considers include:
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| | | | |
Independence (as per applicable NYSE American
listing standards and applicable
SEC rules and regulations) | | | | Relevant Industry Experience | | | | Excellence in His
or Her Field |
| | | | | | | | | | | | |
| | | | | | |
Potential Conflicts
of Interest and
Other Commitments | | | | Board Experience | | | | Ethics | | | | Diversity of
Experience |
In conducting this assessment, the Nominating and Corporate Governance Committee considers diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board and Gran Tierra, to maintain a balance of knowledge,
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| Gran Tierra Energy 2023 Proxy Statement | | 23 |
PROPOSAL 1: ELECTION OF DIRECTORS
experience and capability. In February 2021, the Board updated its Corporate Governance Guidelines to state that as part of the search process for each new director, the Nominating and Corporate Governance Committee will actively seek out women and minority candidates to include in the pool from which Board nominees are chosen.
The Nominating and Corporate Governance Committee believes that candidates should have certain minimum qualifications including:
| • | | the highest personal and professional ethics and integrity |
| • | | skills that are complementary to those of the existing Board |
| • | | being over 21 years of age |
| • | | commitment to represent the long-term interests of Gran Tierra’s stockholders |
To identify, recruit and evaluate qualified candidates for the Board, the Nominating and Corporate Governance Committee may use the services of professional search firms. In some cases, nominees have been individuals known to Board members or others through business or other relationships.
Director Tenure
Gran Tierra does not have a retirement policy or term limit for directors. We review our Board composition annually to ensure our board has the right skills to ensure the Company’s long-term success. None of the Company’s directors have served on the board for more than seven years.
Orientation and Education
The purpose of the Director Orientation and Education Program is to ensure there is an orientation program for new directors and an ongoing education program for existing directors. The program includes materials and resources that will inform and educate directors on the Company’s corporate governance framework, its business, operations and current issues and strategies. New directors attend an orientation session at which senior management review the Company’s business, strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its Code of Business Conduct and Ethics, its principal officers, and its internal and independent auditors. New directors are also provided with a copy of the Company’s director’s manual which includes the Board and Committee mandates, corporate governance guidelines and other company policies.
Each director is expected to maintain the necessary level of expertise to perform his or her responsibilities as discloseda director. Continuing education is provided through a number of methods, including an annual dedicated strategy session, periodic field trips, presentations from senior management, employees, and outside experts to the Board and its Committees on topics of interest and developing issues, as well as the ongoing distribution of relevant information. These presentations, meetings and discussions serve to increase the Board’s knowledge of the Company and its business, and assist the Board in this proxy statementthe execution of its duties. During 2022, the Board attended a number of sessions relevant to our business and the regulatory environment presented by senior executives of the Company and our legal counsel.
All of our directors are members of the Institute of Corporate Directors (ICD) and the National Association of Corporate Directors (NACD), which provide continuing education for directors through publications, seminars and conferences. During 2022, a number of our directors attended seminars provided through ICD and NACD.
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| 24 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Meetings and Attendance
Directors are expected to attend, in accordance with SEC rules. Atperson or by telephone, all meetings of the 2011Board and all meetings of each committee of which they are a member. During 2022, the Board held ten meetings, the Audit Committee held four meetings, the Compensation Committee held two meetings, the Health, Safety and Environment Committee held four meetings, the Nominating and Corporate Governance Committee held three meetings and the Reserves Committee held two meetings. No member of the Board attended fewer than 75% of the aggregate of the total number of meetings of the Board (held during the period for which he or she was a director) and the total number of meetings held by all committees of the Board on which such director served (held during the period that such director served). Directors are also expected to attend the Company’s annual meeting of stockholders and all of the stockholders indicatedCompany’s directors attended the 2022 annual meeting which was held by webcast.
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Name | | Meetings Attended / Meetings Held (2) | | | | | | Overall
Attendance | |
| Board | | | Audit
Committee | | | Compensation
Committee | | | Health,
Safety and
Environment
Committee | | | Nominating
and
Corporate
Governance
Committee | | | Reserves
Committee | |
| | | | | | | |
Peter J. Dey | | | 10/10 | | | | — | | | | 2/2 | | | | 4/4 | | | | 3/3 | | | | — | | | | 100 | % |
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Gary S. Guidry (1) | | | 10/10 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 100 | % |
| | | | | | | |
Evan Hazell | | | 10/10 | | | | 4/4 | | | | — | | | | 4/4 | | | | — | | | | 2/2 | | | | 100 | % |
| | | | | | | |
Robert B. Hodgins | | | 10/10 | | | | 4/4 | | | | 2/2 | | | | — | | | | 3/3 | | | | — | | | | 100 | % |
| | | | | | | |
Alison Redford | | | 10/10 | | | | 4/4 | | | | — | | | | 4/4 | | | | 3/3 | | | | — | | | | 100 | % |
| | | | | | | |
Ronald W. Royal | | | 10/10 | | | | 4/4 | | | | — | | | | 4/4 | | | | — | | | | 2/2 | | | | 100 | % |
| | | | | | | |
Sondra Scott | | | 10/10 | | | | — | | | | — | | | | 4/4 | | | | 3/3 | | | | 2/2 | | | | 100 | % |
| | | | | | | |
David P. Smith | | | 10/10 | | | | 4/4 | | | | 2/2 | | | | — | | | | — | | | | — | | | | 100 | % |
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Brooke Wade | | | 10/10 | | | | — | | | | 2/2 | | | | — | | | | 3/3 | | | | 2/2 | | | | 100 | % |
| 1. | Mr. Guidry is not a member of any committee of the Board as he is not considered to be an independent director. Mr. Guidry participates in various committee meetings; however, each committee holds executive sessions without Mr. Guidry present. |
| 2. | Directors who are not members of the committee attended certain meetings by invitation. |
Executive Sessions
As part of each regularly scheduled Board meeting, the independent directors meet without our management team. The Board Chair leads such discussions.
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| Gran Tierra Energy 2023 Proxy Statement | | 25 |
PROPOSAL 1: ELECTION OF DIRECTORS
INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORS
The Board has five standing committees: an Audit Committee, a Compensation Committee, a Health, Safety and Environment Committee, a Nominating and Corporate Governance Committee, and a Reserves Committee. The composition and responsibilities are described below. Members serve on these committees until their preference that Gran Tierra solicitresignation or until otherwise determined by the Board.
The committees regularly report their activities and actions to the full Board, generally at the next Board meeting following the committee meeting. Each of the committees operates under a non-binding advisory votecharter approved by the Board. Current copies of the charters of the committees are available on the Company’s website at www.grantierra.com/governance.
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| | | | Audit Committee |
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| | | | David P. Smith (Chair)
Evan Hazell
Robert B. Hodgins
Alison Redford
Ronald W. Royal | | | | | | The Audit Committee oversees the accounting and financial reporting process and the audit of the Company’s financial statements, and assists the Board in monitoring the financial systems and Gran Tierra’s legal and regulatory compliance. The Audit Committee met four times in 2022 and at each meeting met with our independent auditors and the internal auditor, both privately and in the presence of management. The Audit Committee is responsible for, among other things: • Evaluation and retention of Auditors • Approval of audit engagements • Approval of non-audit services • Review of audited financial statements and management’s discussion and analysis • Review of quarterly financial statements • Review of earnings press releases • Review of accounting principles and policies • Establish procedures for the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matters and violations of applicable laws, rules and regulations • Review of guidelines and policies with respect to risk assessment and risk management • Review of the scope, adequacy and effectiveness of internal control over financial reporting • Review and oversee the internal audit function • Approval of the Company’s hedging policies The Audit Committee operates under a written charter that was adopted by the Board and satisfies the applicable standards of the SEC and the NYSE American. A copy of the Audit Committee Charter is available on Gran Tierra’s website at www.grantierra.com/governance. |
| | | | The Board has determined that each of the members of the Audit Committee satisfies the requirements for audit committee independence and financial literacy under the rules and regulations of the NYSE American and the SEC. The Board has determined that Messrs. Hodgins and Smith are financial experts as per Item 407(d)(5) of Regulation S-K established by the SEC. The Audit Committee held four meetings during the fiscal year ended December 31, 2022. | | | | |
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| 26 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
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| | | | Compensation Committee |
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| | | | Brooke Wade (Chair)
Peter J. Dey
Robert B. Hodgins
David Smith | | | | | | The Compensation Committee acts on behalf of the Board to review, recommend for adoption and oversee Gran Tierra’s compensation strategy, policies, plans and programs. The Compensation Committee’s responsibilities include, among other things: • Review and approve the components of compensation for the Chief Executive Officer and other executive officers • Review and approve the corporate goals and objectives relevant to the compensation for the Chief Executive Officer and other executive officers • Evaluate the performance of the Chief Executive Officer and other executive officers in light of established goals and objectives • Establish policies with respect to equity compensation arrangements • Review the risks arising from our compensation policies and practices • Review and approve the compensation and other terms of employment or service, including severance and change-in-control arrangements, of Gran Tierra’s Chief Executive Officer and the other executive officers • Oversee Gran Tierra’s equity compensation plans for employees and directors • Evaluate and make recommendations regarding director compensation • Select compensation consultants and other advisors • Review the Compensation Discussion and Analysis The Compensation Committee operates under a written charter that was adopted by the Board and satisfies the applicable standards of the SEC and the NYSE American. A copy of the Compensation Committee Charter is available on Gran Tierra’s website at www.grantierra.com/governance. |
| | | | The Board has determined that each of the members of the Compensation Committee satisfies the requirements for compensation committee independence under the rules and regulations of the NYSE American and the SEC. The Compensation Committee held two meetings during the fiscal year ended December 31, 2022. | | | | |
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| | |
| | | | Health, Safety and Environment Committee |
| | | | | | | | | | |
| | | | Evan Hazell (Chair)
Peter Dey
Alison Redford
Ronald W. Royal
Sondra Scott | | | | | | The Health, Safety and Environment Committee acts on behalf of the Board and assists the Board in fulfilling its responsibilities in relation to environmental, health and safety matters, including monitoring and overseeing the Company’s policies and procedures for ensuring compliance by the Company with environmental regulatory requirements and ensuring that employees are provided with a safe environment in which to perform their duties. The Health, Safety and Environment Committee is responsible for, among other things: |
| | | | The Board has determined that each of the members of the Health, Safety and Environment Committee satisfies the requirements for independence under the rules and regulations of the NYSE American. The Health, Safety and Environment Committee is scheduled to meet each quarter, and held four meetings during the fiscal year ended December 31, 2022. | | | | | | • Develop and approve the environmental, health and safety goals and objectives of the Company • Review and monitor the environmental policies and activities of the Company and review and monitor the Company’s compliance programs with respect to environmental laws and legislation and that the Company conforms with industry standards • Review and monitor the health and safety policies and activities of the Company • Review and discuss with management environmental, health and safety compliance issues and incidents of non-compliance and discuss with management the Company’s response with respect to those matters • Review significant external or internal audit or consultants’ reports relating to environmental, health or safety matters; • Review significant legislative and regulatory changes including policy proposals and modifications that could impact the Company • Review and report to the Board on the sufficiency of resources available for carrying out the actions and activities recommended The Health, Safety and Environment Committee operates under a written charter that was adopted by the Board, a copy of which is available on Gran Tierra’s website at www.grantierra.com/governance. |
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| Gran Tierra Energy 2023 Proxy Statement | | 27 |
PROPOSAL 1: ELECTION OF DIRECTORS
| | | | | | | | | | |
| | |
| | | | Reserves Committee |
| | | | | | | | | | |
| | | | Ronald W. Royal (Chair)
Evan Hazell
Sondra Scott
Brooke Wade | | | | | | The Reserves Committee acts on behalf of the Board and assists the Board in fulfilling its oversight responsibilities with respect to evaluating and reporting on the Company’s oil and gas reserves. The Reserves Committee is responsible for, among other things: • Approve the engagement of the independent reserves evaluators and their compensation and evaluate any such reserve evaluator’s performance • Review disclosure procedures with respect to the oil and gas activities of the Company • Review the Company’s procedures for providing information to the independent reserves evaluator • Meet with the independent reserves evaluators • Make recommendations to the Board regarding the approval of the Company’s year-end reserves evaluations The Reserves Committee operates under a written charter that was adopted by the Board, a copy of which is available on Gran Tierra’s website at www.grantierra.com/governance. |
| | | | The Board has determined that each of the members of the Reserves Committee satisfies the requirements for independence under the rules and regulations of the NYSE American. The Reserves Committee held two meetings during the fiscal year ended December 31, 2022. | | | | |
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| | |
| | | | Nominating and Corporate Governance Committee |
| | | | | | | | | | |
| | | | Peter J. Dey (Chair)
Robert B. Hodgins
Alison Redford
Sondra Scott
Brooke Wade | | | | | | The Nominating and Corporate Governance Committee assists the Board in overseeing the Company’s corporate governance functions; identify, review and evaluate candidates to serve as directors of Gran Tierra, assessing the performance of the Board and management, and developing a set of corporate governance principles for Gran Tierra. The Nominating and Corporate Governance Committee is responsible for, among other things: • Identify and review director nominees • Consider recommendations for Board nominees and proposals submitted by the Company’s stockholders • Assess the performance of the Board • Recommend chair and membership of board committees • Review director independence • Review succession planning for the Board and key leadership roles on the Board and its committees • Review the Board’s leadership structure and recommend changes to the Board • Consider and review continuing education for directors • Review and assess our Corporate Governance Guidelines • Review succession planning for our Chief Executive Officer and other executive officers • Review insurance coverage for the directors and executive officers The Nominating and Corporate Governance Committee operates under a written charter that was adopted by the Board and satisfies the applicable standards of the SEC and the NYSE American. A copy of the Compensation Committee Charter is available on Gran Tierra’s website at www.grantierra.com/governance. |
| | | | The Board has determined that each of the members of the Nominating and Corporate Governance Committee satisfies the requirements for independence under the rules and regulations of the NYSE American. The Nominating and Corporate Governance Committee held three meetings during the fiscal year ended December 31, 2022. | | | | |
Compensation Committee Interlocks and Insider Participation
None of the namedmembers of the Compensation Committee has at any time been an officer or employee of Gran Tierra. No member of the Board or of the Compensation Committee served as an executive officer of another entity that had one or more of our executive officers every year. This vote is not intended to address any specific itemserving as a member of that entity’s board or compensation but rather the overall compensationcommittee.
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| 28 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
DIRECTOR COMPENSATION
The objective of Gran Tierra’s named executive officerscompensation program for non-executive directors is to attract and retain directors of a quality and nature that will enhance our long-term sustainable profitability and growth. Director compensation is intended to provide an appropriate level of remuneration considering the last completed fiscal yearexperience, responsibilities, time commitment and accountability of their roles. The Company intends for Director compensation to be competitive with our peer companies. Any director who is also an employee of the philosophy, policiesCompany does not receive additional compensation for serving as a director.
Non-executive director compensation is reviewed annually by the Nominating and practices describedCorporate Governance Committee to ensure that it is reasonable in this proxy statement.
The compensationlight of
Gran Tierra’s named executive officers subject to the
vote is disclosed in the Compensation Discussiontime required from directors and
Analysis, the compensation tables that follow, and the related narrative disclosure contained in this proxy statement. As discussed inaligns directors’ interests with those
disclosures, Gran Tierra believes that its compensation policies and decisions are consistent with current market practices and, especially following the implementation of our
new equity compensation program in 2016, are focused on pay-for-performance principles that stronglystockholders.In order to align the interests of our named executive officers with thosedirectors and the stockholders they represent, the Company divides the compensation of non-executive directors into cash and equity components.
We further align the interests of our stockholders.directors with our stockholders by requiring that Directors own a minimum number of shares or Deferred Stock Units (“DSUs” and each a “DSU”). Each non-executive director must hold shares or DSUs with a value equal to three times the annual cash retainer. The shareholdings of each non-executive director are valued using either the closing price of our shares on December 31 each year or the value at the time they were acquired, whichever is greater. Directors have five years to meet the share ownership requirement. As of December 31, 2022, all of the current Directors have met their share ownership.
Directors’ DSU Plan
The DSU plan allows directors to defer receipt of their fees and invest such deferred amounts in notional shares of Gran Tierra. Directors who have elected to be paid all or a portion of the annual retainer in DSUs receive their awards on a quarterly basis effective the first day of each quarter. The number of DSUs credited to each director is calculated by dividing the dollar value of the portion of the director’s retainer that he or she has elected to be paid in the form of DSUs by the fair market value of a common share of Gran Tierra on the day of determination. The DSUs vest immediately but are not paid out until the director ceases to be a director of Gran Tierra. The Board has discretion to settle the DSUs in common shares or in a cash amount equal to the market value of common shares at the time of settlement. DSUs are not shares and do not carry voting rights. DSUs received by directors in lieu of cash compensation and held by them represent an at-risk investment in Gran Tierra. The value of DSUs is based on the value of the common shares of Gran Tierra, and therefore is not guaranteed.
2022 Non-Executive Director Compensation
Annually, our Board of Directors reviews the competitiveness of our compensation program for non-executive directors. There were no changes to the Director compensation program in 2022.
The director compensation structure for non-executive directors as of January 1, 2022 is as follows:
| | | | | | | | |
| | |
| | | 2022 Annual Cash Retainer
and Travel Fees (1) | | | 2022 Annual Equity Retainer (DSUs, RSUs, Stock Options) (1) | |
| | |
Board Chair | | $ | 68,015 | | | $ | 139,706 | |
| | |
Board Member | | $ | 40,441 | | | $ | 95,956 | |
| | |
Audit Committee Chair | | $ | 33,088 | | | | | |
| | |
Other Committee Chairs | | $ | 22,059 | | | | | |
| | |
Committee Members | | $ | 11,029 | | | | | |
| | |
Travel Fee (over three hours) per meeting | | $ | 1,103 | | | | | |
| (1) | All compensation to non-employee directors is paid in Canadian dollars and converted into U.S. dollars for the purposes of the above table. The exchange rate at December 31, 2022 was one US dollar to Canadian $1.3600. |
The cash retainer portion of the director’s fees can be taken in the form of cash, restricted stock units (“RSUs”), DSUs or any combination thereof, as elected by each non-employee director. The equity portion must be taken in the form of equity until the stock ownership guideline is achieved. A maximum of 25% of the equity retainer can be taken as stock options which vest immediately and expire after five years. DSUs vest immediately but are not paid out until the director ceases to be a director of Gran Tierra and RSUs vest and are paid out after three years. The number of DSUs, RSUs or stock options credited to each director is calculated by dividing the dollar value of the portion of the director’s retainer to be paid in the form of DSUs, RSUs or stock options by the fair market value of Gran Tierra’s named executive officersstock on the day of determination. A travel fee is designedpaid to enable each director for travel over three hours to a Board meeting.
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| Gran Tierra Energy 2023 Proxy Statement | | 29 |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Compensation Table
The following table shows for the fiscal year ended December 31, 2022, the value of amounts paid or granted to all non-employee directors of Gran Tierra.
| | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | Fees Earned or Paid in Cash
($) (1) | | | Equity Retainer | | | All Other Compensation
($) (4) | | | Total ($) | |
| | Stock Awards (2) | | | Stock Options (3) | |
| | | | | |
Peter J. Dey | | | 84,559 | | | | 71,967 | | | | 23,989 | | | | 5,515 | | | | 186,030 | |
| | | | | |
Evan Hazell | | | 84,559 | | | | 95,956 | | | | - | | | | 1,103 | | | | 181,618 | |
| | | | | |
Robert B. Hodgins | | | 101,103 | | | | 139,706 | | | | - | | | | 8,824 | | | | 249,632 | |
| | | | | |
Alison Redford | | | 73,529 | | | | 47,978 | | | | 47,978 | | | | 3,309 | | | | 172,794 | |
| | | | | |
Ronald W. Royal | | | 84,559 | | | | 71,967 | | | | 23,989 | | | | 4,412 | | | | 184,926 | |
| | | | | |
Sondra Scott | | | 169,485 | | | | - | | | | - | | | | 5,515 | | | | 175,000 | |
| | | | | |
David P. Smith | | | 84,559 | | | | 71,967 | | | | 23,989 | | | | 7,721 | | | | 188,235 | |
| | | | | |
Brooke Wade | | | 84,559 | | | | 71,967 | | | | 23,989 | | | | 1,103 | | | | 181,618 | |
| (1) | Amounts reported in this column represent cash and committee retainers. Cash fees that were deferred by an election of a director and received in the form of DSUs (Stock Awards) are reported in the table below. All compensation to non-employee directors 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 $1.3600 is used. |
| | | | | | | | |
| |
| | | Cash Fees - Cash Retainer | |
| | |
| | | Cash
($) | | | Stock Awards (#DSUs) | |
| | |
Peter J. Dey | | | 0 | | | | 84,559 | |
| | |
Evan Hazell | | | 40,441 | | | | 44,118 | |
| | |
Robert B. Hodgins | | | 101,103 | | | | 0 | |
| | |
Alison Redford | | | 51,287 | | | | 22,242 | |
| | |
Ronald W. Royal | | | 0 | | | | 84,559 | |
| | |
Sondra Scott | | | 169,485 | | | | 0 | |
| | |
David P. Smith | | | 40,441 | | | | 44,118 | |
| | |
Brooke Wade | | | 0 | | | | 84,559 | |
| (2) | Amounts in the Stock Awards column reflect the aggregate grant date fair value of DSUs computed in accordance with GAAP. The Company currently intends to settle the DSUs outstanding as of December 31, 2022 in cash, and, therefore, DSUs are accounted for as liability instruments. The amounts in this column include DSUs which were issued as a result of an election by the directors to be paid a portion of their retainer in the form of DSUs. The value ultimately realized by each director may or may not be equal to this determined value. As of December 31, 2022, each of the non-employee directors had aggregate outstanding DSUs as follows, all of which were fully vested: Mr. Dey – 1,082,684; Mr. Hazell – 909,043; Mr. Hodgins – 982,651; Ms. Redford – 146,457; Mr. Royal – 1,115,891; Ms. Scott – 755,787; Mr. Smith – 453,455; and Mr. Wade – 1,115,891. None of the directors hold RSUs. |
| (3) | Amounts in the Options Awards column reflect the aggregate grant date fair value computed in accordance with ASC 718. Assumptions made in the valuation of stock options granted are discussed in Note 9 to Gran Tierra’s 2022 Consolidated Financial Statements, which can be found in Item 8 of the Form 10-K filed with the SEC on February 22, 2023. |
| (4) | Amounts reported in this column represent fees paid for travel to or from a meeting of the Board in excess of three hours per meeting. |
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| 30 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Share Ownership Requirements
Gran Tierra maintains a policy requiring directors to attract and retain talented and experienced executivesacquire common shares and/or DSUs equivalent in value to lead Gran Tierra successfully in a competitive environment.
Accordingly,three times their annual cash retainer within five years from the Board is askingdate of first election to the stockholders to indicate their supportBoard. The following table sets out the non-executive director share ownership requirements for the compensation of Gran Tierra’s named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the compensation paid to Gran Tierra’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this proxy statement, is hereby APPROVED.”
Because the vote is advisory, it is not binding on the Board or Gran Tierra. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and the Board and, accordingly, the Board and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.
Advisory approval of this proposal requires the affirmative vote of shares representing a majority2022. | | |
| |
| | Ownership Requirement 2022 |
| |
Board Chair | | 3x annual Board cash retainer fees in Common Shares and DSUs 3 X $68,015 = $204,045 |
| |
Non-Executive Directors | | 3x annual Board cash retainer fees in Common Shares and DSUs 3 x $40,441 = $95,956 |
All of the votes presentDirectors have met their share ownership requirements as of December 31, 2022.
Prohibition on Hedging and Pledging
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 personshort sales, transactions in put or represented by proxycall 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, directors and employees from trading during quarterly and special blackout periods.
Directors’ and Officers’ Insurance
We maintain an insurance policy for directors’ and officers’ liability which provides coverage for costs incurred to defend and settle claims against directors or officers up to an annual limit of $50 million. The cost of coverage for 2022-2023 is approximately $808,000. Directors and officers do not pay any portion of the meeting and entitled to vote on the matter. Abstentions will have the same effect as a vote "Against." Broker non-votes will have no effect.premiums. No claims were made or became payable in 2022.
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| Gran Tierra Energy 2023 Proxy Statement | | 31 |
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF Audit-Related Matters
PROPOSAL 2.
PROPOSAL 3
2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board has selected Deloittebelieves that the continued retention of KPMG LLP to serve as Gran Tierra’sthe Company’s independent registered public accounting firm foris in the fiscal year ending December 31, 2016,best interests of the Company and its stockholders and has further directed that management submit the selection of independent registered public accounting firmKPMG LLP for ratification by the stockholders at the annual meeting. Deloitte LLP has audited Gran Tierra’s financial statements since its inception in 2005. Representatives of Deloitte LLP are expected to be present at the annual meeting. They will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.
Neither Gran Tierra’s Bylaws nor other governing documents or law require stockholder
ratification of the selection of DeloitteKPMG LLP as Gran Tierra’s independent registered public accounting firm. However, the Audit Committee of the Board is submitting the selection of DeloitteKPMG LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of Gran Tierra and its stockholders.The ratificationstockholders.Representatives of KPMG LLP are expected to be present at the annual meeting and will have an opportunity to make a statement and respond to appropriate questions from stockholders raised at the meeting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
Audit Committee Report
The Audit Committee is a committee of the appointmentBoard comprised solely of Deloitte LLPindependent directors as required by the listing standards of the NYSE American and rules of the SEC. In accordance with the written Audit Committee Charter, the Audit Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company.
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2022, with management of Gran Tierra’sTierra and the independent registered public accounting firm. Management has the responsibility for the preparation of the Company’s financial statements, and the independent registered public accounting firm has the responsibility for 2016, willthe audit of those statements. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be approved if it receives the affirmative vote of shares representing a majoritydiscussed by applicable standards of the votes present in person or representedPublic Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by proxy atapplicable requirements of the meetingPCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and entitled to votehas discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the matter. Abstentions will haveforegoing, the same effect as a vote "Against." We do not expectAudit Committee has recommended to the Board that there willthe audited financial statements be any broker non-votes, as thisincluded in Gran Tierra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for filing with the Securities and Exchange Commission.
Respectfully submitted by the Audit Committee of the Board of Directors,
David P. Smith, Chair
Evan Hazell
Robert B. Hodgins
Alison Redford
Ronald W. Royal
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| 32 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Principal Accountant Fees and Services
The Audit Committee is a routine matter.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Set forth below is a summaryresponsible for the audit fee negotiations associated with the retention of fees paid to Deloitte LLP, our independent registered chartered accountants, for services inpublic accounting firm. For the fiscal years ended December 31, 20152022, and 2014.December 31, 2021, KPMG LLP served as our independent registered public accounting firm. The aggregate fees paid by the Company to KPMG LLP for professional services rendered in Gran Tierra’s last two fiscal years are as follows. In determining the independence of DeloitteKPMG LLP, the Audit Committee considered whether the provision of non-audit services is compatible with maintaining DeloitteKPMG LLP’s independence.
|
| | | | | | | | |
| | | Year Ended December 31, |
| (Thousands of U.S. Dollars) | | 2015 | | 2014 |
| Audit Fees | | $ | 532 |
| | $ | 1,439 |
|
| Audit-related Fees | | 79 |
| | — |
|
| Tax Fees | | — |
| | — |
|
| All Other Fees | | 33 |
| | 310 |
|
| Total Fees | | $ | 644 |
| | $ | 1,749 |
|
| | | | | | | | |
| |
| | | Year Ended December 31, | |
| | |
(Thousands of U.S. Dollars) | | 2022 | | | 2021 | |
| | |
Audit Fees | | $ | 933 | | | $ | 819 | |
| | |
Tax Fees (1) | | | 231 | | | | 350 | |
| | |
All Other Fees | | | 251 | | | | 0 | |
| | |
Total Fees | | $ | 1,415 | | | $ | 1,169 | |
| (1) | Included in Tax Fees are $83k fees related to tax compliance for 2022 (2021 - $92k) |
Audit Fees
The totalAudit Fees are primarily for the annual audit fees and reimbursement of expenses paid to Deloitte LLP were for audits,the Company’s consolidated financial statements included in the Form 10-K, including the audit of the effectiveness of the Company’s internal controls over financial reporting, the reviews of the quarterlyCompany’s financial statements included in the Forms 10-Qs, statutory audits, and other procedures required to be performed by the preparation of consents.
independent auditor to be able to form an opinion on the Company’s consolidated financial statements.Tax Fees
Tax fees were for tax compliance, tax advice and tax planning.
All Other Fees
OtherAll other fees in 2015 related to work performedproducts and services provided by DeloitteKPMG LLP in connection with: the Company's acquisition of Petroamerica; a working interest assignment in Colombia;other than those described as “Audit fees”, “Audit-related fees” and other transaction related projects. Other fees in 2014 included audit support for the sale of our Argentina business unit, IFRS support for Peru and Colombia and regulatory filing support for Colombia.
“Tax fees”.All feesservices described above were approved by the Audit Committee.
Pre-Approval Policies and Procedures
Our Audit Committee is responsible for the engagement of the independent auditors and for approving, in advance, all auditing services and permitted non-audit services to be provided by the independent auditors. The Audit Committee maintains a policy for the engagement of independent auditors that is intended to maintain the independence from Gran Tierra of the independent auditors. In adopting this
policy, our Audit Committee considered the various services that independent auditors have historically performed or may be needed to perform in the future for Gran Tierra. Under this policy:
the Audit Committee approves the performance by the independent auditors of auditing or permitted non-audit services, subject to restrictions in certain cases, based on the Audit Committee’s determination that this would not be likely to impair the independence of the independent auditors from Gran Tierra;
Gran Tierra’s management must obtain the specific prior approval of our Audit Committee for each engagement of the independent auditors to perform any auditing or permitted non-audit services; and
the performance by the independent auditors of certain types of services (bookkeeping or other services related to the accounting records or financial statements of Gran Tierra; financial information systems design and implementation; appraisal or valuation services, fairness opinions or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions or human resources; broker or dealer, or investment adviser or investment banking services; legal services and expert services unrelated to the audit; and any other service that the applicable federal oversight regulatory authority determines, by regulation, is impermissible) is prohibited due to the likelihood that their independence would be impaired.
| • | | the Audit Committee approves the performance by the independent auditors of audit or permitted non-audit services, subject to restrictions in certain cases, based on the Audit Committee’s determination that such services would not be likely to impair the independence of the independent auditors from Gran Tierra; |
| • | | Gran Tierra’s management must obtain the specific prior approval of our Audit Committee for each engagement of the independent auditors to perform any audit or permitted non-audit services; and |
| • | | the performance by the independent auditors of certain types of services (bookkeeping or other services related to the accounting records or financial statements of Gran Tierra; financial information systems design and implementation; appraisal or valuation services, fairness opinions or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions or human resources; broker or dealer, or investment adviser or investment banking services; legal services and expert services unrelated to the audit; and any other service that the applicable federal oversight regulatory authority determines, by regulation, is impermissible) is prohibited due to the likelihood that their independence would be impaired. |
In its review of all non-audit service fees, our Audit Committee considers, among other things, the possible effect of these services on the independence of our independent auditors. Relevant considerations include, but are not limited to, whether the services are prohibited pursuant to SEC rules, whether the auditors are best positioned to provide the services, and the percentage of total services the non-audit services will comprise.
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| Gran Tierra Energy 2023 Proxy Statement | | 33 |
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Any approval required under this policy must be given by our Audit Committee or by the chairperson of the Audit Committee in office at the time, provided that any pre-approval decisions made by the chairperson must be reported to the Audit Committee at its next scheduled meeting. Gran Tierra’s Audit Committee will not delegate its responsibilities to approve services performed by the independent auditors to any member of management.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
PROPOSAL 4
APPROVAL OF A CHANGE IN THE COMPANY'S STATE OF INCORPORATION FROM THE STATE OF NEVADA TO THE STATE OF DELAWARE
For the reasons discussed below, the Board has approved and declared it is advisable and All services rendered by KPMG LLP in the best interests of Gran Tierra and our stockholders to approve a change in Gran Tierra's state of incorporation from the State of Nevada to the State of Delaware (the “Reincorporation”), which includes the adoption of a new certificate of incorporation and bylaws governing our company,2022 were subject to approval by our stockholders.
Summary
The principal effects of the Reincorporation will be that:
The affairs of the Company will cease to be governed by Nevada corporation laws and will become subject to Delaware corporation laws;
The resulting Delaware corporation (“Gran Tierra-Delaware”) will be the same entity as the Company as currently incorporated in Nevada (“Gran Tierra-Nevada”) and will continue with all of the rights, privileges and powers of Gran Tierra-Nevada, will possess all of the properties of Gran Tierra-Nevada, will continue with all of the debts, liabilities and obligations of Gran Tierra-Nevada and will continue with the same officers and directors of Gran Tierra-Nevada immediately prior to the Reincorporation, as more fully described below.
When the Reincorporation becomes effective, all of our issued and outstanding shares of capital stock will be automatically converted into issued and outstanding shares of capital stock of Gran Tierra-Delaware, without any action on the part of our stockholders. The Reincorporation will have no effect on the trading of our shares of common stock on the TSX or NYSE MKT under the same symbol “GTE”. Gran Tierra-Delaware will continue to file periodic reports and other documents as and to the extent required by the rules and regulations of the SEC. Shares of our capital stock that are freely tradeable prior to the Reincorporation will continue to be freely tradeable as shares of Gran Tierra-Delaware capital stock, and shares of our capital stock that are subject to restrictions prior to the Reincorporation will continue to be subject to the same restrictions as shares of Gran Tierra-Delaware capital stock. The Reincorporation will not change the respective positions of Gran Tierra or our stockholders under federal securities laws. Pursuant to the Reincorporation, Gran Tierra-Delaware will assume all of Gran Tierra-Nevada’s obligations related to convertible or exchangeable securities and other rights to purchase or receive Gran Tierra-Nevada common stock, including pursuant to the Solana Exchangeable Shares, the Goldstrike Exchangeable Shares and the convertible notes, which shall become the right to purchase or receive the same number of shares of Gran Tierra-Delaware common stock.
Upon effectiveness of the Reincorporation, all of our employee benefit and incentive plans will become Gran Tierra-Delaware plans, and each option, equity award or other right issued under such plans will automatically be converted into an option, equity award or right to purchase or receive the same number of shares of Gran Tierra-Delaware common stock, at the same price per share, upon the same terms and subject to the same conditions as before the Reincorporation. In addition, our employment contracts and other employee benefit arrangements also will be continued by Gran Tierra-Delaware upon the terms and subject to the conditions in effect at the time of the Reincorporation.
The Reincorporation will have no effect on the number of shares of common stock, Special A Voting Stock, Special B Voting Stock and preferred stock the Company is authorized to issue. Under the Nevada Articles of Incorporation, the Company is authorized to issue up to 570,000,000 shares of common stock, one share of Special A Voting Stock, one share of Special B Voting Stock and up to 25,000,000 shares of preferred stock. Similarly, the Delaware Certificate of Incorporation authorizes the Company to issue up to 570,000,000 shares of common stock, one share of Special A Voting Stock, one share of Special B Voting Stock and up to 25,000,000 shares of preferred stock.
Plan of Conversion
To accomplish the Reincorporation, the Board has adopted a plan of conversion substantially in the form appended to this proxy statement as Appendix A (the “Plan of Conversion”). The Plan of Conversion provides that we will convert into a Delaware corporation and will thereafter be subject to all of the provisions of the General Corporation Law of the State of Delaware (the “DGCL”).
Assuming that our stockholders approve this proposal, we will cause the Reincorporation to be effected as soon as practicable thereafter by filing with the Secretary of State of the State of Nevada articles of conversion substantially in the form appended to this proxy statement as Appendix B (the “Nevada Articles of Conversion”) and will file with the Secretary of State of the State of Delaware
(i) a certificate of conversion substantially in the form appended to this proxy statement as Appendix C (the “Delaware Certificate of Conversion”) and (ii) a certificate of incorporation, which will govern Gran Tierra-Delaware as a Delaware corporation, substantially in the form appended to this proxy statement as Appendix D (the “Delaware Certificate of Incorporation”). In addition, assuming that our stockholders approve this proposal, the Board will adopt Bylaws for Gran Tierra-Delaware, substantially in the form appended to this proxy statement as Appendix E (the “Delaware Bylaws”), and we will enter into a new indemnification agreement with each director and executive officer of Gran Tierra-Delaware based upon provisions of the DGCL, substantially in the form appended to this proxy statement as Appendix F (the “Delaware Indemnification Agreement”). Approval of this proposal by our stockholders will constitute approval of the Plan of Conversion, the Nevada Articles of Conversion, the Delaware Certificate of Conversion, the Delaware Certificate of Incorporation, and thereby authorizing the Board to adopt the Delaware Bylaws and enter into the Delaware Indemnification Agreement with each director and executive officer of Gran Tierra-Delaware. Stockholders should also note that approval of the Reincorporation will also constitute approval of the Company’s equity and other employee benefit and incentive plans continuing as plans of Gran Tierra-Delaware.
Notwithstanding the foregoing, the Reincorporation may be delayed by the Board or the Plan of Conversion may be terminated and abandoned by action of the Board at any time prior to the effective time of the Reincorporation, whether before or after approval by our stockholders, if the Board determines for any reason that such delay or termination would be in the best interests of Gran Tierra and our stockholders. If the Reincorporation is approved by our stockholders, the Reincorporation would become effective upon the filing (and acceptance thereof by the Secretary of State of the State of Nevada and the Secretary of State of the State of Delaware, as applicable) of the Nevada Articles of Conversion, the Delaware Certificate of Conversion and the Delaware Certificate of Incorporation.
Reasons for the Reincorporation
The primary reason that the Board has approved the Reincorporation is because the corporate laws of the State of Delaware are more comprehensive, widely-used and extensively interpreted than the corporate laws of other states, including Nevada. As a result of the flexibility and responsiveness of the Delaware corporate laws to the legal and business needs of corporations, many major corporations have incorporated in Delaware or have changed their corporate domiciles to Delaware in a manner similar to the Reincorporation that we are proposing. The Delaware judiciary has become particularly familiar with corporate law matters and a substantial body of court decisions has developed construing the laws of Delaware, thus providing greater clarity and predictability with respect to our corporate legal and governance affairs. We believe any benefits provided to the Company by Delaware law directly benefit our stockholders.
In deciding to propose the Reincorporation, the Board considered, among others, the following benefits of Delaware law to Gran Tierra and our stockholders:
our corporation would be governed by the DGCL, which is generally acknowledged to be the most advanced and flexible corporate statute in the United States;
the responsiveness and efficiency of the Division of Corporations of the Secretary of State of the State of Delaware;
the Delaware General Assembly, which each year considers and adopts statutory amendments proposed by the Corporation Law Section of the Delaware State Bar Association in an effort to ensure that the corporate statute continues to be responsive to the changing needs of businesses;
the Delaware Court of Chancery, which has exclusive jurisdiction over matters relating to the DGCL and in which cases are heard by judges, without juries, who have many years of experience with corporate issues, which can lead to quick and effective resolution of corporate litigation; and the Delaware Supreme Court, which is highly regarded; and
the well-established body of case law construing Delaware law, which has developed over the last century and which provides businesses with a greater degree of predictability than most, if not all, other jurisdictions.
The Board is not proposing the Reincorporation to prevent a change in control of Gran Tierra and is not aware of any present attempt by any person to acquire control of Gran Tierra or to obtain representation on the Board.
Why You Should Vote for the Reincorporation
Delaware is a nationally recognized leader in adopting and implementing comprehensive modern and flexible corporate laws. The DGCL is frequently revised and updated to accommodate changing legal and business needs and is more comprehensive, widely used and interpreted than other state corporate laws, including the Nevada Revised Statutes (the “NRS”).
In addition, Delaware courts (such as the Court of Chancery and the Delaware Supreme Court) are highly regarded for their considerable expertise in dealing with corporate legal issues and for producing a substantial body of case law construing the DGCL, with multiple cases concerning areas that Nevada courts have not considered. Because the judicial system is based largely on legal precedents, the abundance of Delaware case law should serve to enhance the relative clarity and predictability of many areas of corporate law, which in turn may offer added advantages to us by allowing the Board and management to make corporate decisions and take corporate actions with greater assurance as to the validity and consequences of those decisions and actions.
The Reincorporation may also make it easier to attract future candidates willing to serve on the Board because many such candidates are already familiar with the DGCL, including provisions relating to director indemnification, from their past business experience.
In addition, in the opinion of the Board, underwriters and other members of the financial services industry may be more willing and better able to assist in capital-raising programs for corporations having the greater flexibility afforded by the DGCL. Certain investment funds, sophisticated investors and brokerage firms may be more comfortable and more willing to invest in a Delaware corporation than in a corporation incorporated in another U.S. jurisdiction whose corporate laws may be less understood and perceived to be unresponsive to stockholder rights.
Effects of the Reincorporation
Apart from being governed by the Delaware Certificate of Incorporation, the Delaware Bylaws and the DGCL, for all other purposes, Gran Tierra-Delaware will be the same entity as Gran Tierra-Nevada immediately prior to the Reincorporation. By virtue of the Reincorporation, all of the rights, privileges and powers of Gran Tierra-Nevada, all property owned by Gran Tierra-Nevada, all debts due to Gran Tierra-Nevada and all other causes of action belonging to Gran Tierra-Nevada immediately prior to the Reincorporation will remain vested in Gran Tierra-Delaware following the Reincorporation. In addition, by virtue of the Reincorporation, all debts, liabilities and duties of Gran Tierra immediately prior to the Reincorporation will remain attached to Gran Tierra-Delaware following the Reincorporation. Gran Tierra-Delaware will remain as the same entity following the Reincorporation, and the Reincorporation will not affect any change in our business, management or operations or the location of our principal executive offices.
Upon effectiveness of the Reincorporation, all of our issued and outstanding shares of capital stock will be automatically converted into issued and outstanding shares of capital stock of Gran Tierra-Delaware, without any action on the part of our stockholders. The Reincorporation will have no effect on the trading of our shares of common stock on the NYSE MKT under the same symbol “GTE”. Gran Tierra-Delaware will continue to file periodic reports and other documents as and to the extent required by the rules and regulations of the SEC. Shares of our capital stock that are freely tradeable prior to the Reincorporation will continue to be freely tradeable as shares of Gran Tierra-Delaware capital stock, and shares of our capital stock that are subject to restrictions prior to the Reincorporation will continue to be subject to the same restrictions as shares of Gran Tierra-Delaware capital stock. The Reincorporation will not change the respective positions of Gran Tierra or our stockholders under federal securities laws. Pursuant to the Reincorporation, Gran Tierra-Delaware will assume all of Gran Tierra-Nevada’s obligations related to convertible or exchangeable securities and other rights to purchase or receive Gran Tierra-Nevada common stock, including pursuant to the Solana Exchangeable Shares, the Goldstrike Exchangeable Shares and the convertible notes, which shall become the right to purchase or receive the same number of shares of Gran Tierra-Delaware common stock.
Upon effectiveness of the Reincorporation, our directors and officers will become all of the directors and officers of Gran Tierra-Delaware, all of our employee benefit and incentive plans will become Gran Tierra-Delaware plans, and each option, equity award or other right issued under such plans will automatically be converted into an option, equity award or right to purchase or receive the same number of shares of Gran Tierra-Delaware common stock, at the same price per share, upon the same terms and subject to the same conditions as before the Reincorporation. Our employment contracts and other employee benefit arrangements also will be continued by Gran Tierra-Delaware upon the terms and subject to the conditions in effect at the time of the Reincorporation.
We believe that the Reincorporation will not affect any of our material contracts with any third parties, and that our rights and obligations under such material contractual arrangements will continue as rights and obligations of Gran Tierra-Delaware.
Gran Tierra-Nevada stockholders will not be required to exchange their Gran Tierra-Nevada stock certificates for new Gran Tierra-Delaware stock certificates. Gran Tierra stockholders should not destroy any stock certificate(s) and should not submit any certificate(s) to us or our transfer agent unless and until requested to do so.
The Reincorporation will have no effect on the number of shares of common stock, Special A Voting Stock, Special B Voting Stock and preferred stock the Company is authorized to issue. Under the Nevada Articles of Incorporation, the Company is authorized to issue up to 570,000,000 shares of common stock, one share of Special A Voting Stock, one share of Special B Voting Stock and up to 25,000,000 shares of preferred stock. Similarly, the Delaware Certificate of Incorporation authorizes the Company to issue up to 570,000,000 shares
of common stock, one share of Special A Voting Stock, one share of Special B Voting Stock and up to 25,000,000 shares of preferred stock.
Mechanism for Reincorporation into Delaware
The process for reincorporating Gran Tierra from Nevada to Delaware calls for the articles of conversion to be filed with the Nevada Secretary of State and for the Delaware certificate of incorporation and a certificate of conversion to be filed with the Delaware Secretary of State at approximately the time desired for the Reincorporation to take effect.
Effect of Vote For the Reincorporation
A vote in favor of the Reincorporation is a vote in favor of the Plan of Conversion, the Nevada Articles of Conversion, the Delaware Certificate of Conversion, the Delaware Certificate of Incorporation, and thereby authorizing the Board to adopt the Delaware Bylaws and the Delaware Indemnification Agreement. Stockholders should also note that approval of the Reincorporation will also constitute approval of the Company’s equity and other employee benefit and incentive plans continuing as plans of Gran Tierra-Delaware.
Effective Time
If the Reincorporation proposal is approved, the Reincorporation will become effective upon the last to occur of the filing of the Nevada Articles of Conversion filed with the Secretary of State of Nevada and the Delaware Certificate of Conversion and the Delaware Certificate of Incorporation filed with the Secretary of State of Delaware, in each case upon acceptance thereof by the Nevada Secretary of State and the Delaware Secretary of State. If the Reincorporation proposal is approved, it is anticipated that Gran Tierra’s Board will cause the Reincorporation to be effected as soon as reasonably practicable. However, the Reincorporation may be delayed by Gran Tierra’s Board or the Plan of Conversion may be terminated and abandoned by action of the Gran Tierra’s Board at any time prior to the effective time of the Reincorporation, whether before or after the approval by Gran Tierra’s stockholders, if Gran Tierra’s Board determines for any reason that the consummation of the Reincorporation should be delayed or would be inadvisable or not in the best interests of Gran Tierra and its stockholders, as the case may be.
Effect of Not Obtaining the Required Vote for Approval
If we fail to obtain the requisite vote of stockholders for approval of the Reincorporation from the State of Nevada to the State of Delaware, the Reincorporation will not be consummated and we will continue to be incorporated in Nevada and governed by the NRS, our existing Articles of Incorporation and our existing Bylaws (the “Nevada Bylaws”).
Material U.S. Federal Income Tax Consequences of the Reincorporation
The following discussion addresses certain U.S. federal income tax considerations that are generally applicable to U.S. holders (as defined below) of our common stock who receive common stock of Gran Tiera-Delaware in exchange for their common stock of Gran Tierra-Nevada in the Reincorporation. This discussion addresses only those stockholders who hold their common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”) and does not address all the U.S. federal income tax consequences that may be relevant to particular stockholders in light of their individual circumstances or to stockholders that are subject to special rules, including, without limitation:
financial institutions, insurance companies, regulated investment companies or real estate investment trusts;
pass-through entities or investors in such entities;
tax-exempt organizations;
dealers in securities or currencies, or traders in securities that elect to use a mark-to-market method of accounting;
persons that hold common stock as part of a straddle or as part of a hedging, integrated, constructive sale or conversion transaction;
persons who are not U.S. holders;
persons that have a functional currency other than the U.S. dollar;
persons who acquired their shares of common stock through the exercise of an employee stock option or otherwise as compensation;
persons whose common stock is “qualified small business stock” for purposes of Section 1202 of the Code; and
persons who are subject to the alternative minimum tax.
For purposes of this discussion, the term “U.S. holder” means a beneficial owner of common stock that is:
a citizen or resident of the United States;
corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the U.S. or any of its political subdivisions;
a trust that (1) is subject to the supervision of a court within the U.S. and the control of one or more U.S. persons or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or
an estate that is subject to U.S. federal income tax on its income regardless of its source.
If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of common stock, the U.S. federal income tax consequences to each partner generally will depend on the status of the partner and the activities of the partnership and the partner. Partners holding common stock and partners in such partnerships should consult their own tax advisors with respect to the U.S. federal income tax consequences of the reincorporation.
The tax consequences to holders of options to acquire our common stock are also not discussed herein. In addition, the following discussion does not address the tax consequences of transactions effected prior to or after the reincorporation (whether or not such transactions are in connection with the reincorporation).
The following discussion is based on the interpretation of the Code, applicable Treasury Regulations, judicial authority and administrative rulings and practice, all as of the date hereof. The Internal Revenue Service (the “IRS”) is not precluded from adopting a contrary position. In addition, there can be no assurance that future legislative, judicial or administrative changes or interpretations will not adversely affect the accuracy of the statements and conclusions set forth herein. Any such changes or interpretations could be applied retroactively and could affect the tax consequences of the Reincorporation to Gran Tierra, Gran Tierra-Delaware and/or our stockholders. A ruling from the IRS will not be requested in connection with the Reincorporation.
EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISORS TO DETERMINE PARTICULAR FEDERAL TAX CONSEQUENCES TO SUCH STOCKHOLDERS OF THE REINCORPORATION, AS WELL AS THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER LAWS.
Subject to the limitations, qualifications and exceptions described herein, and assuming the Reincorporation qualifies as a reorganization within the meaning of Section 368(a) of the Code, the U.S. federal income tax consequences of the reincorporation will be as follows:
No gain or loss will be recognized by holders of our common stock upon receipt of common stock of Gran Tierra-Delaware pursuant to the Reincorporation;
The aggregate tax basis of the common stock of Gran Tierra-Delaware received by each stockholder of Gran Tiera-Nevada in the Reincorporation will be equal to the aggregate tax basis of the common stock of Gran Tierra-Nevada surrendered in exchange therefor;
The holding period of the common stock of Gran Tierra-Delaware received by each stockholder of Gran Tierra-Nevada will include the period for which such stockholder held the common stock of Gran Tierra-Nevada surrendered in exchange therefor, provided that such common stock of Gran Tierra-Nevada was held by such stockholder as a capital asset at the time of the Reincorporation; and
No gain or loss will be recognized by Gran Tierra-Nevada or Gran Tierra-Delaware as a result of the Reincorporation.
A U.S. holder of shares of our common stock may be required to attach a statement to its tax returns for the year of the Reincorporation that contains the information listed in Treasury Regulation Section 1.368-3(b) and may be required to maintain a permanent record of facts relating to the Reincorporation. Such information includes, among other things, the stockholder’s tax basis in the stockholder’s common stock of Gran Tierra-Nevada and the fair market value of the stockholder’s common stock of Gran Tierra-Nevada immediately prior to the Reincorporation.
Accounting Treatment
We expect that the Reincorporation will have no effect from an accounting perspective because there is no change in the entity as a result of the Reincorporation. As such, the financial statements of Gran Tierra-Nevada previously filed with the SEC will remain the financial statements of Gran Tierra-Delaware following the Reincorporation.
Regulatory Approvals
The Reincorporation will not be consummated until after stockholder approval is obtained. We will obtain all required consents of governmental authorities, including the filing of the Nevada Articles of Conversion, the Delaware Certificate of Conversion and the Delaware Certificate of Incorporation.
Rights of our Stockholders Prior to and After the Reincorporation from Nevada to Delaware
Although the Delaware Certificate of Incorporation and the Delaware Bylaws are substantially similar to provisions from the current Articles of Incorporation and Bylaws of Gran Tierra-Nevada, they also include certain provisions that are different from the provisions contained in Gran Tierra’s current Articles of Incorporation and Bylaws. The following discussion briefly summarizes some of the changes resulting from the Reincorporation and the significant differences between the NRS, the current Articles of Incorporation and Bylaws of Gran Tierra-Nevada and the DGCL, the Delaware Certificate of Incorporation and the Delaware Bylaws.
The foregoing summary does not purport to be a complete statement of the respective rights of holders of our capital stock and Gran Tierra-Delaware capital stock, and is qualified in its entirety by reference to the NRS and DGCL, respectively, and to the current Articles of Incorporation and Bylaws and to the Delaware Certificate of Incorporation and Delaware Bylaws, respectively.
pre-approval policy. |
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Provision | NRS and Gran Tierra-Nevada
Articles of Incorporation
and Bylaws
| DGCL, Delaware
Certificate of Incorporation
and Delaware Bylaws
| Commentary |
Amendment of Charter34 | Nevada law requires a vote of the Company’s board of directors followed by the affirmative vote of the majority of shares entitled to vote to approve an amendment to the Articles of Incorporation of
| Gran Tierra-Nevada.If any proposed amendment would adversely alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series adversely affected by the amendment.
| Delaware law requires a vote of a company’s board of directors followed by the affirmative vote of the majority of shares present in person or represented by proxy and entitled to vote to approve any amendment to the Certificate of Incorporation, unless a greater percentage vote is required by the Certificate of Incorporation.
Where a separate vote by class or series is required, the affirmative vote of a majority of the shares of such class or series is required unless the Certificate of Incorporation requires a greater percentage vote.
Further, Delaware law states that if an amendment would (i) increase or decrease the aggregate number of authorized shares of a class, (ii) increase or decrease the par value of shares of a class, or (iii) alter or change the powers, preferences or special rights of a particular class or series of stock so as to affect them adversely, the class or series so affected shall be given the power to vote as a class notwithstanding the absence of any specifically enumerated power in the Certificate of Incorporation.
| In general, the Delaware Certificate of Incorporation requires any amendment to the Certificate of Incorporation in the manner described by the DGCL.Tierra Energy 2023 Proxy Statement |
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Amendment of Bylaws | The NRS provides that, unless otherwise prohibited by any bylaw adopted by the stockholders, the directors may adopt, amend or repeal any bylaw, including any bylaw adopted by the stockholders.
The Nevada Bylaws currently provide that a majority of the Board at any duly called regular or special meeting may alter or amend any provisions of the Nevada Bylaws, provided, however that the affirmative vote of the stockholders holding a majority of the voting power shall be required to amend the number of directors and whether to provide for a classified Board. The holders of at least a majority of the shares of the Company entitled to vote in any duly called special or regular meeting shall be required to amend or alter any provision of the Nevada Bylaws.
| The DGCL states that the power to adopt, amend or repeal a company’s bylaws shall be vested in the stockholders entitled to vote, provided that a company’s certificate of incorporation may confer such power on the board of directors, although the power vested in the stockholders is not divested or limited where the board of directors also has such power. | The Delaware Certificate of Incorporation and the Delaware Bylaws expressly empower the Board to adopt, amend or repeal the Delaware Bylaws.
The Delaware Bylaws remained consistent with the Nevada Bylaws and provide that a majority of the Board of Directors at any duly called regular or special meeting may alter or amend any provisions of the Delaware Bylaws, provided, however that the affirmative vote of the stockholders holding a majority of the voting power shall be required to amend the number of directors and whether to provide for a classified Board. The holders of at least a majority of the shares of the Company entitled to vote in any duly called special or regular meeting shall be required to amend or alter any provision of the Delaware Bylaws.
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Director Elections | The Nevada Bylaws provide for an annual election of directors, with the directors to hold office until the next annual meeting of stockholders or until their earlier death, resignation or removal.
The Nevada Bylaws provide that election of directors is by a plurality of the votes cast in a contested director election. However, in uncontested director elections, the Nevada Bylaws establish a majority voting standard in which each director will be elected by the vote of the majority of the votes cast with respect to the director. A “majority of votes cast” means that the number of shares cast “for” a director’s election exceeds the number of votes cast “against” that director.
In an uncontested election, a director nominee who does not receive a majority of the votes cast will tender his or her resignation to the Board for consideration. The Nominating and Corporate Governance Committee will take action to determine whether to accept or reject the director’s resignation, or whether other action is appropriate, and will make a recommendation to the Board. Within ninety (90) days following the date of the certification of the election results, the Board will act on the Committee’s recommendation and publicly disclose its decision and the rationale for such decision.
| Similar to the Nevada Bylaws, the Delaware Bylaws provide for an annual election of directors, with the directors to hold office until the next annual meeting of stockholders or until their earlier death, resignation or removal.
The Delaware Bylaws similarly provide for plurality voting in a contested director election. However, in uncontested director elections, the Delaware Bylaws establish a majority voting standard in which each director will be elected by the vote of the majority of the votes cast (in person or by proxy) with respect to the director. A “majority of votes cast” means that the number of shares cast “for” a director’s election exceeds the number of votes cast “against” that director.
In an uncontested election, a director nominee who does not receive a majority of the votes cast will tender his or her resignation to the Board for consieration. The Nominating and Corporate Governance Committee will take action to determine whether to accept or reject the director’s resignation, or whether other action is appropriate, and will make a recommendation to the Board. Within ninety (90) days following the date of the certification of the election results, the Board will act on the Committee’s recommendation and publicly disclose its decision and the rationale for such decision.
| The Nevada and Delaware Bylaws both provide for annual director elections.
Similarly, the Nevada and Delaware Bylaws both provide for the same standard in the election of directors.
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Number of Authorized Directors | The Nevada Bylaws provide that the Board shall consist of no less than one (1) and no more than nine (9) members, the number may be set by resolution of the Board of Directors.
The Nevada Bylaws do not provide stockholders with the right to set the Board size, absent an amendment to the Nevada Bylaws.
| The Delaware Bylaws provide that the Board shall consist of no less than one (1) and no more than nine (9) members, the number may be set by resolution of the Board of Directors.
The Delaware Bylaws do not provide stockholders with the right to set the Board size, absent an amendment to the Delaware Bylaws.
| The Delaware Bylaws are the same as the Nevada Bylaws. |
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Filling Vacancies on the Board of Directors | The NRS provides that all vacancies, including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, unless it is otherwise provided in the articles of incorporation. Unless otherwise provided in the articles of incorporation, pursuant to a resignation by a director, the board may fill the vacancy or vacancies with each director so appointed to hold office during the remainder of the term of office of the resigning director or directors.
The Nevada Bylaws provide that a vacancy occurring in the Board other than for removal may be filled by a majority of the remaining Directors, or a sole remaining director, though less than a quorum. Any vacancy occurring in the Board of Directors by reason of removal shall be filled by a plurality of the votes cast by the holders of shares entitled to vote at a meeting of stockholders at which a quorum is present.
| The DGCL provides that, unless otherwise provided in the certificate of incorporation or bylaws, vacancies may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Further, if, at the time of filling any vacancy, the directors then in office shall constitute less than a majority of the whole board, the Delaware Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.
The Delaware Bylaws provide the same vacancy provisions as the Nevada Bylaws.
| The Nevada Bylaws and the Delaware Bylaws provide stockholders with similar rights.
In addition, the DGCL provides greater protection to the Company’s stockholders by permitting stockholders representing at least 10% of the issued and outstanding shares to apply to the Delaware Court of Chancery to have an election of directors in the situation where the directors in office constitute less than a majority of the whole Board.
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Removal of Directors | The Nevada Bylaws provide that any director may be removed only by the affirmative vote of at least two-thirds of the voting power of all of the then-outstanding voting stock, voting together as a single class. | Under the DGCL, although stockholders may generally remove directors with or without cause by the holders of a majority of the shares then entitled to vote at an election of directors, the DGCL provides that the Delaware Certificate of Incorporation may also contain provisions requiring for any corporate action, the vote of a larger portion of the stock than is required by the DGCL. | The Delaware Certificate of Incorporation will provide that any director may be removed only by the affirmative vote of at least two-thirds of the voting power of all of the then-outstanding voting stock, voting together as a single class. |
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Interested Party Transactions | The NRS provides that no contract or transaction between a company and one or more of its directors or officers, or between a company and any other entity of which one or more of its directors or officers are directors or officers, or in which one or more of its directors or officers have a financial interest, is void or voidable if (a) the director’s or officer’s interest in the contract or transaction is known to the board, committee or stockholders and the transaction is approved or ratified by the board, committee or stockholders in good faith by a vote sufficient for the purpose (without counting the vote of the interested director or officer), (b) the fact of the common interest is not known to the director or officer at the time the transaction is brought before the board, or (c) the contract or transaction is fair to the company at the time it is authorized or approved. | The DGCL provides that no contract or transaction between a company and one or more of its directors or officers, or between a company and any other entity of which one or more of its directors or officers are directors or officers, or in which one or more of its directors or officers have a financial interest, is void or voidable if (a) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or known to the board or a committee thereof, which authorizes the contract or transaction in good faith by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum, (b) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or known to the stockholders entitled to vote thereon and the contract or transaction is specifically approved in good faith by the stockholders, or (c) the contract or transaction is fair to the company as of the time it is authorized, approved or ratified by the board of directors, a committee thereof or the stockholders. | Nevada and Delaware law are substantially similar, with Delaware law providing additional provisions for the approval of related party transactions by stockholders. |
Stockholder Voting-Quorum | The NRS and the Nevada Bylaws provides that a majority of the voting power, present in person or by proxy at a meeting of stockholders (regardless of whether the proxy has authority to vote on all matters), constitutes a quorum for the transaction of business. | The DGCL and the Delaware Bylaws provides that a majority of shares entitled to vote, present in person or by proxy, constitutes a quorum at a stockholder meeting. | Nevada and Delaware law and the Nevada and Delaware Bylaws are substantially similar in respect to quorum requirements. |
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Advance Notice Bylaw Provisions | The Nevada Bylaws contain advance notice requirements for business to be brought before an annual or special meeting of stockholders, including nominations of persons for election as directors. As a result, stockholders must satisfy specific timing and information requirements in order to have a proposal considered at or in order to nominate a person for election as a director at an annual or special meeting. Any proposal or nomination that fails to comply with these timing and information requirements may be disqualified. | Similarly, the Delaware Bylaws contain advance notice requirements for business to be brought before an annual or special meeting of stockholders, including nominations of persons for election as directors. As a result, stockholders must satisfy specific timing and information requirements in order to have a proposal considered at or in order to nominate a person for election as a director at an annual or special meeting. Any proposal or nomination that fails to comply with these timing and information requirements may be disqualified. | The advance notice provisions in the Nevada and Delaware Bylaws the same. |
Duration of Proxies | Under the NRS, a proxy is effective only for a period of six months, unless it is coupled with an interest or unless provided otherwise in the proxy, which duration may not exceed seven years. | Under the DGCL, a proxy executed by a stockholder will remain valid for a period of three years, unless the proxy provides for a longer period. | The statutory default under Delaware law provides for proxies to remain valid for a longer duration than the statutory default under the NRS. |
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Stockholder Vote for Mergers and Other Corporate Reorganizations | Under the NRS, a majority of outstanding shares entitled to vote, as well as approval by the board of directors, is required for a merger or a sale of substantially all of the assets of the Company. Generally, Nevada law does not require a stockholder vote of the surviving Company in a merger if: (a) the plan of merger does not amend the existing articles of incorporation; (b) each share of stock of the surviving corporation outstanding immediately before the effective date of the merger is an identical outstanding share after the merger; (c) the number of voting shares outstanding immediately after the merger, plus the number of voting shares issued as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than 20% the total number of voting shares of the surviving domestic corporation outstanding immediately before the merger; and (d) the number of participating shares outstanding immediately after the merger, plus the number of participating shares issuable as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than 20% the total number of participating shares outstanding immediately before the merger. | Under the DGCL, a majority of outstanding shares entitled to vote, as well as approval by the board of directors, is required for a merger or a sale of substantially all of the assets of the corporation. Generally, Delaware law does not require a stockholder vote of the surviving corporation in a merger (unless the corporation provides otherwise in its certificate of incorporation) if: (a) the plan of merger does not amend the existing certificate of incorporation; (b) each share of stock of the surviving corporation outstanding immediately before the effective date of the merger is an identical outstanding share after the effective date of the merger; and (c) either no shares of common stock of the surviving corporation and no shares, securities or obligations convertible into such stock are to be issued or delivered under the plan of merger, or the authorized unissued shares or shares of common stock of the surviving corporation to be issued or delivered under the plan of merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered under such plan do not exceed 20% of the shares of common stock of such constituent corporation outstanding immediately prior to the effective date of the merger. | Nevada and Delaware law are substantially similar in relation to stockholder approval of mergers and other corporate reorganizations.
Neither the Nevada Bylaws nor the Delaware Bylaws contain any supermajority voting requirements for mergers or other corporate reorganizations.
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Special Meetings of Stockholders | Under the NRS, unless otherwise provided in the articles of incorporation or bylaws, the entire Board, any two directors or the president may call annual and special meetings of the stockholders and directors.
The Nevada Bylaws provide that special meetings of stockholders may be called by a majority of the Board, or by the Chairman, or upon the request of the shareholders owning not less than twenty-five percent the outstanding stock entitled to vote at such meeting.
| Under DGCL, a special meeting of stockholders may be called by the Board or by such persons as may be authorized by the certificate of incorporation or by the bylaws.
The Delaware Bylaws provide that a special meeting of stockholders may be called by a majority of the Board, or by the Chairman, or upon the request of the shareholders owning not less than twenty-five percent the outstanding stock entitled to vote at such meeting.
| The Delaware Bylaws are the same as the Nevada Bylaws. |
Stockholder Action by Written Consent | The Nevada Bylaws authorize the Company’s stockholders to act by written consent, except, however, if a different portion of voting power is required by law, the Nevada Articles of Incorporation or the Nevada Bylaws, then that proportion of written consents is required. Any written consent must be signed by stockholders holding Voting Stock representing a majority of votes entitled to be cast at such a meeting. | The Delaware Bylaws authorize the Company’s stockholders to act by written consent, except, however, if a different portion of voting power is required by law, the Delaware Articles of Incorporation or the Delaware Bylaws, then that proportion of written consents is required. Any written consent must be signed by stockholders holding Voting Stock representing a majority of votes entitled to be cast at such a meeting. | The Nevada Bylaws and the Delaware Bylaws both allow the Company’s stockholders to act by written consent. |
Failure to Hold an Annual Meeting of Stockholders | The NRS provides that if a corporation fails to elect directors within 18 months after the last election of directors, a Nevada district court will have jurisdiction in equity and may order an election upon petition of one or more stockholders holding at least 15% of the voting power. | The DGCL provides that if an annual meeting for election of directors is not held on the date designated or an action by written consent to elect directors in lieu of an annual meeting has not been taken within 30 days after the date designated for the annual meeting, or if no date has been designated, for a period of 13 months after the latest to occur of the organization of the corporation, its last annual meeting or the last action by written consent to elect directors in lieu of an annual meeting, the Court of Chancery may summarily order a meeting to be held upon the application of any stockholder or director. | Delaware law provides for a shorter interval than Nevada law (13 months versus 18 months) before a stockholder can apply to a court to order a meeting for the election of directors. Nevada law requires that application be made by a stockholder holding at least 15% of the voting power, whereas Delaware law permits any stockholder or director to make the application. |
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Adjournment of Stockholder Meetings | Under the NRS, a company is not required to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting, other than by announcement at the meeting at which the adjournment is taken, unless the Board fixes a new record date for the adjourned meeting. | Under the DGCL, if a meeting of stockholders is adjourned and the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting must be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. | Delaware law requires companies to provide stockholders of record entitled to vote with notice of the new record date for an adjourned meeting as described. |
Limitation on Director Liability | Under the NRS, unless the articles of incorporation or an amendment thereto provides for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that: (a) the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer; and (b) the breach of those duties involved intentional misconduct, fraud or a knowing violation of law.
The provisions in the Nevada Bylaws comply with Nevada law as set forth above.
| Under the DGCL, if a corporation’s certificate of incorporation so provides, the personal liability of a director for breach of fiduciary duty as a director may be eliminated or limited. A corporation’s certificate of incorporation, however, may not limit or eliminate a director’s personal liability (a) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, (c) for the payment of unlawful dividends, stock repurchases or redemptions, or (d) for any transaction in which the director received an improper personal benefit.
The provisions in the Delaware Certificate of Incorporation and Delaware Bylaws comply with Delaware law as set forth above.
| Delaware law is more extensive in the enumeration of actions under which the Company may not eliminate a director’s personal liability. |
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Indemnification Provision | Under the NRS, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding if the person: (a) is not liable pursuant to NRS 78.138; or (b) acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. However, indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. To the extent that such person has been successful on the merits or otherwise in defense of any proceeding subject to the Nevada indemnification laws, the corporation shall indemnify him or her against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense.
The Nevada Bylaws comply with Nevada law as set forth above.
| Under DGCL, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if: the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. With respect to actions by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit is brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses which such court shall deem proper. A director or officer who is successful, on the merits or otherwise in defending any proceeding subject to the Delaware corporate statutes’ indemnification provisions shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
The Delaware Certificate of Incorporation and Delaware Bylaws comply with Delaware law as set forth above.
| The indemnification provisions of the NRS and the DGCL are substantially similar as both the NRS and the DGCL permit the Company to indemnify officers, directors, employees and agents for actions taken in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action, which they had no reasonable cause to believe that such conduct was unlawful.
The Company intends to enter into the Delaware Indemnification Agreement with our executive officers and directors based upon the indemnification provisions of the DGCL.
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Advancement of Expenses | The NRS provides that the articles of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that the director or officer is not entitled to be indemnified by the corporation.
The Nevada Bylaws authorize the Company to advance expenses to its officers and directors.
| Delaware law provides that expenses incurred by an officer or director of the corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it is ultimately determined that such person is not entitled to be indemnified by the corporation as authorized under the indemnification laws of Delaware. Such expenses may be so paid upon such terms and conditions as the corporation deems appropriate. Under Delaware law, unless otherwise provided in its certificate of incorporation or bylaws, a corporation has the discretion whether or not to advance expenses.
Similar to the Nevada Bylaws, the Delaware Bylaws and the Delaware Certificate of Incorporation authorize the Company to advance expenses to its officers and directors. In addition, if the reincorporation is approved, the Company intends to enter into a Delaware Indemnification Agreement with each of its officers and directors to provide for the advancement of expenses.
| Nevada law and Delaware law are substantially similar in regards to the advancement of expenses. |
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Declaration and Payment of Dividends | Under the NRS, except as otherwise provided in the articles of incorporation, a board of directors may authorize and the corporation may make distributions to its stockholders, including distributions on shares that are partially paid. However, no distribution may be made if, after giving effect to such distribution: (a) the corporation would not be able to pay its debts as they become due in the usual course of business; or (b) except as otherwise specifically allowed by the articles of incorporation, the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. | Under the DGCL, subject to any restriction contained in a corporation’s certificate of incorporation, the board of directors may declare, and the corporation may pay, dividends or other distributions upon the shares of its capital stock either (a) out of “surplus” or (b) in the event that there is no surplus, out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Dividends may not be paid if the capital of the corporation is less than the total amount of capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. “Surplus” is defined as the excess of the net assets of the corporation over the amount determined to be the capital of the corporation by the board of directors (which amount cannot be less than the aggregate par value of all issued shares of capital stock). | Delaware law is more restrictive than Nevada law with respect to when dividends may be declared and paid. |
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Business Combinations | The NRS prohibits certain business combinations between a Nevada corporation and an interested stockholder for two years after such person becomes an interested stockholder. Generally, an interested stockholder is a holder who is the beneficial owner of 10% or more of the voting power of a corporation’s outstanding stock and at any time within three years immediately before the date in question was the beneficial owner of 10% or more of the then outstanding stock of the corporation. After the two year period, business combinations remain prohibited unless they are (a) approved by the board of directors prior to the date that the person first became an interested stockholder or by a majority of the outstanding voting power not beneficially owned by the interested party, or (b) the interested stockholder satisfies certain fair-value requirements. An interested stockholder is (i) a person that beneficially owns, directly or indirectly, 10% or more of the voting power of the outstanding voting shares of a corporation, or (ii) an affiliate or associate of the corporation who, at any time within the past two years, was an interested stockholder of the corporation. | The DGCL prohibits, in certain circumstances, a “business combination” between the corporation and an “interested stockholder” within three years of the stockholder becoming an “interested stockholder.” Generally, an “interested stockholder” is a holder who, directly or indirectly, controls 15% or more of the outstanding voting stock or is an affiliate of the corporation and was the owner of 15% or more of the outstanding voting stock at any time within the three-year period prior to the date upon which the status of an “interested stockholder” is being determined. A “business combination” includes a merger or consolidation, a sale or other disposition of assets having an aggregate market value equal to 10% or more of the consolidated assets of the corporation or the aggregate market value of the outstanding stock of the corporation and certain transactions that would increase the interested stockholder’s proportionate share ownership in the corporation. This provision does not apply where, among other things, (i) the transaction which resulted in the individual becoming an interested stockholder is approved by the corporation’s board of directors prior to the date the interested stockholder acquired such 15% interest, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the outstanding voting stock of the corporation at the time the transaction commenced, or (iii) at or after the date the person becomes an interested stockholder, the business combination is approved by a majority of the board of directors of the corporation and an affirmative vote of at least 66 2/3rds% of the outstanding voting stock at an annual or special meeting and not by written consent, excluding stock owned by the interested stockholder. This provision also does not apply if a stockholder acquires a 15% interest inadvertently and divests itself of such ownership and would not have been a 15% stockholder in the preceding three years but for the inadvertent acquisition of ownership. | Nevada law and Delaware law provide for different thresholds in determining whether or not a person is an “interested stockholder.” Under Delaware law, since the threshold is higher, we will be able to engage in certain transactions with stockholders that would otherwise be prohibited under Nevada law. |
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Control Share Acquisition Statute | Under the NRS, an acquiring person who acquires a controlling interest in an issuing corporation is prohibited from exercising voting rights on any control shares unless such voting rights are conferred by a majority vote of the disinterested stockholders of the issuing corporation at a special or annual meeting of stockholders. Unless otherwise provided in the articles of incorporation or the bylaws, if the control shares are accorded full voting rights and the acquiring person acquires control shares with a majority or more of all the voting power, any stockholder, other than the acquiring person, who does not vote in favor of authorizing voting rights for the control shares is entitled to dissent and demand payment of the fair value of his or her shares. A controlling interest means the ownership of outstanding voting shares of an issuing corporation sufficient to enable the acquiring person, directly or indirectly and individually or in association with others, to exercise: (i) one-fifth or more but less than one-third; (ii) one-third or more but less than a majority; or (iii) a majority or more, of all the voting power of the corporation in the election of directors. Control shares means those outstanding voting shares of an issuing corporation which an acquiring person: (a) acquires in an acquisition or offer to acquire in an acquisition; and (b) acquires within 90 days immediately preceding the date when the acquiring person became an acquiring person.
The control share acquisition statute applies to any acquisition of a controlling interest in a Nevada corporation with 200 or more stockholders of record, at least 100 of whom have addresses in Nevada, unless the articles of incorporation or bylaws of the corporation in effect on the 10th day following the acquisition of a controlling interest by an acquiring person provide that the provisions of those sections do not apply.
| Delaware does not have a similar statute. | Consistent with Delaware law, neither the Delaware Certificate of Incorporation nor the Delaware Bylaws will contain a provision similar to the NRS control share acquisition statute. |
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Blank Check Preferred Stock | Under the Nevada Articles of Incorporation, the Company is authorized to issue up to 25,000,000 shares of preferred stock.
The Nevada Articles of Incorporation authorize the Company’s Board of Directors to define the rights, preferences and privileges of the preferred stock prior to issuance.
The ability of the Board of Directors to issue and set the rights, preferences and privileges of the preferred stock could make it more difficult or discourage an attempt to obtain control of our Company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity of management. If, in the due exercise of its fiduciary obligations, our Board of Directors were to determine that a takeover proposal was not in our best interest, such shares could be issued by the Board of Directors without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover transaction by diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, by putting a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent Board of Directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.
In addition, the Nevada Articles of Incorporation grant the Company’s Board of Directors broad power to establish the rights and preferences of authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance also may adversely affect the rights and powers, including voting rights, of those holders and may have the effect of delaying, deterring or preventing a change in control of our Company.
| Under the Delaware Certificate of Incorporation, the Company is authorized to issue up to 25,000,000 shares of preferred stock.
The Delaware Certificate of Incorporation will authorize the Company’s Board of Directors to define the rights, preferences and privileges of the preferred stock prior to issuance.
The ability of the Board of Directors to issue and set the rights, preferences and privileges of the preferred stock could make it more difficult or discourage an attempt to obtain control of our Company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity of management. If, in the due exercise of its fiduciary obligations, our Board of Directors were to determine that a takeover proposal was not in our best interest, such shares could be issued by the Board of Directors without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover transaction by diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, by putting a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent Board of Directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.
In addition, the Delaware Certificate of Incorporation grants the Company’s Board of Directors broad power to establish the rights and preferences of authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance also may adversely affect the rights and powers, including voting rights, of those holders and may have the effect of delaying, deterring or preventing a change in control of our Company.
| The Company’s Board of Directors have substantially similar rights under the Nevada Articles of Incorporation and the Delaware Certificate of Incorporation to designate and issue up to 25,000,000 shares of preferred stock. |
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Taxes and Fees | Nevada charges corporations incorporated in Nevada nominal annual corporate fees based on the value of the corporation’s authorized stock with a minimum fee of $175, as well as a $200 business license fee, and does not impose any franchise taxes on corporations. | Delaware imposes annual franchise tax fees on all corporations incorporated in Delaware. The annual fee ranges from a nominal fee to a maximum of $180,000, based on an equation consisting of the number of shares authorized, the number of shares outstanding and the net assets of the corporation. | The maximum annual Delaware franchise tax fee that the Company could be required to pay is $180,000. |
Dissenters’ Rights
Proposal 3: Advisory Vote to Approve Named Executive Officer Compensation
Under the NRS,Dodd-Frank Wall Street Reform and Consumer Protection Act, and Section 14A of the Exchange Act, Gran Tierra’s stockholders are not entitled to dissenters’ rightsvote to approve, on an advisory basis, the compensation of Gran Tierra’s named executive officers as disclosed in connectionthis proxy statement in accordance with SEC rules. This vote is not intended to address any specific item of compensation, but rather the overall compensation of Gran Tierra’s named executive officers for the last completed fiscal year and the philosophy, policies and practices described in this proxy statement.
The compensation of Gran Tierra’s named executive officers subject to the vote is disclosed in the Compensation Discussion and Analysis, the compensation tables that follow, and the narrative disclosure related to such compensation tables contained in this proxy statement. As discussed in those disclosures, Gran Tierra believes that its compensation policies and decisions are consistent with current market practices and are focused on pay-for-performance principles that strongly align the interests of our named executive officers with those of our stockholders. Compensation of Gran Tierra’s named executive officers is designed to enable Gran Tierra to attract and retain talented and experienced executives to lead Gran Tierra successfully in a reincorporation ifcompetitive environment.
Accordingly, the shares heldBoard is asking the stockholders to indicate their support for the compensation of Gran Tierra’s named executive officers as described in this proxy statement in pages 39 to 49 by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the compensation paid to Gran Tierra’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion related to such compensation tables in this proxy statement, is hereby APPROVED.”
Because the vote is advisory, it is not binding on the Board or Gran Tierra. Nevertheless, the views expressed by the stockholderstockholders, whether through this vote or otherwise, are important to management and the Board and, accordingly, the Board and the Compensation Committee intend to consider the results of a class or series which is a “covered security” under Section 18(b)(1)(A) or (B) ofthis vote in making determinations in the Securities Act of 1933, as amended. Because Gran Tierra’s common stock is currently listedfuture regarding executive compensation arrangements. The next non-binding advisory vote on the NYSE MKT, a successor entitycompensation of named executive officers is expected to the American Stock Exchange, it satisfies the definition of “covered security”, and stockholders will therefore not be entitled to dissenters’ rightsoccur in connection with the Reincorporation.
Required Vote and Board of Directors Recommendation
Approval of this proposal requires the affirmative vote of a majority of the voting power of the stockholders. Abstentions and broker non-votes have the same effect as a vote "Against."
2024.THE BOARD OF DIRECTORSUNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 4.
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial ownership of Gran Tierra’sTierra common stock as of February 27, 2016,March 7, 2023 (unless otherwise indicated) by (1) each director and nominee for director; (2) each of the executive officers named in the Summary Compensation Table, (3) each person known by Gran Tierrathe Company to own beneficially own more than 5% of the outstanding shares of the Company’s common stock.
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Name of Person or Identity of Group | | | | | Amount and Nature of
Beneficial Ownership | | | Percentage
of Class (1) | |
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Entities affiliated with GMT Capital Corp. (2) | | | | | | | 22,530,309 | | | | 6.1 | % |
| (1) | Based on 346,151,157 shares of common stock outstanding. |
| (2) | As of December 31, 2022, based upon information contained in a Schedule 13G/A filed with the SEC on February 3, 2023. GMT Capital Corp. has shared voting and dispositive authority with respect to 22,530,309 shares. The address of GMT Capital Corp. is 2300 Windy Ridge Parkway, Suite 550, South Atlanta, GA 30339. |
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| Gran Tierra Energy 2023 Proxy Statement | | 35 |
PROPOSAL 3: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
DELINQUENT SECTION 16(a) REPORTS
The Company’s directors and executive officers and the beneficial owners of more than ten percent of the Company’s common shares are required to file under the Exchange Act reports of ownership and changes of ownership with the SEC. Based solely on information provided to the Company by individual directors and executive officers, the Company believes that, during fiscal year ended December 31, 2022, all filing requirements applicable to directors and executive officers have been complied with in a timely manner, except that Gary Guidry, Ryan Ellson, Rodger Trimble and Jim Evans each filed a Form 4 late with respect solely to shares acquired through the Company’s employee stock purchase plan.
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the beneficial ownership of Gran Tierra’sTierra common stock as of March 7, 2023 by (i) each named executive officer of Gran Tierra named on pages 37 and (4)38, (ii) each current director of Gran Tierra (including director nominees) and (iii) all of Gran Tierra’s executive officers and directors as a group. Thegroup as of March 7, 2023. Except as otherwise noted, the persons named in the table includes directors, director nomineeshave sole voting and named executive officers of the Company before and after the Board and Management transition in May 2015. All ownership percentage calculations below assume thatinvestment power with respect to all Exchangeable Shares have been converted on a one-for-one basis into corresponding shares of our common stock, as such shares vote together with our common stock on all matters as if shares of our common stock.
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| | | Amount and Nature of Beneficial Ownership (1) | | Percentage of Class |
Peter Dey (2) | | 33,313 |
| | * |
| Ryan Ellson | | 220,030 |
| | * |
| Gary S. Guidry | | 2,320,500 |
| | * |
David Hardy (3) | | 594,526 |
| | * |
Evan Hazell (4) | | 45,701 |
| | * |
Robert Hodgins (5) | | 10,797 |
| | * |
Duncan Nightingale (6) | | 571,933 |
| | * |
Scott Price (7) | | 3,214,412 |
| | 1.09 |
Ron Royal (8) | | 108,373 |
| | * |
David Smith (9) | | 10,822 |
| | * |
Brooke Wade (10) | | 120,373 |
| | * |
| Lawrence West | | 200,030 |
| | * |
Dana Coffield (11) | | 1,887,572 |
| | * |
Carlos Monges (12) | | 1,489 |
| | * |
James Rozon (13) | | — |
| | — |
Jeffrey Scott (14) | | 2,413,861 |
| | * |
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Entities affiliated with Amber Capital Management LP (14) | | 19,423,527 |
| | 6.57 |
Entities affiliated with West Face Capital Inc. (15) | | 17,286,552 |
| | 5.85 |
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| Directors and executive officers as a group (total of 12 persons) | | 7,450,810 |
| | 2.52 |
beneficially owned by them. | | | | | | | | | | | | | | | | |
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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) | |
| | | | |
Peter J. Dey | | | 20,000 | | | | 1,246,391 | | | | 1,266,391 | | | | * | |
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Ryan Ellson (4) (5) | | | 667,053 | | | | 628,612 | | | | 1,196,745 | | | | * | |
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Jim Evans (4) (6) | | | 411,320 | | | | 369,050 | | | | 758,788 | | | | * | |
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Gary S. Guidry (4) | | | 3,871,756 | | | | 897,328 | | | | 4,700,020 | | | | 1 | % |
| | | | |
Evan Hazell | | | 55,000 | | | | 1,059,802 | | | | 1,114,802 | | | | * | |
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Robert B. Hodgins | | | 20,000 | | | | 914,929 | | | | 934,929 | | | | * | |
| | | | |
Alison Redford | | | — | | | | 180,441 | | | | 180,441 | | | | * | |
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Ronald W. Royal | | | 254,667 | | | | 1,279,598 | | | | 1,534,265 | | | | * | |
| | | | |
Sondra Scott | | | — | | | | 840,787 | | | | 840,787 | | | | * | |
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David P. Smith (7) | | | 555,000 | | | | 716,797 | | | | 1,271,797 | | | | * | |
| | | | |
Rodger Trimble | | | 304,527 | | | | 310,237 | | | | 580,231 | | | | * | |
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Brooke Wade (8) | | | 2,133,600 | | | | 1,279,598 | | | | 2,713,198 | | | | * | |
| | | | |
Lawrence West | | | 350,000 | | | | 369,050 | | | | 719,050 | | | | * | |
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Directors and executive officers as a group (total of 13 persons) | | | | | | | | | | | 19,124,692 | | | | 5.2 | % |
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| (1) | ExceptIncludes shares which may be acquired as otherwise set forth in this footnote,of or within 60 days after March 7, 2023, upon the exercise of stock options and stock awards held by executive officers and directors. |
| (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 is as of February 27, 2016. Beneficial ownership is calculated basedany 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 295,671,584346,151,157 shares of common stock issued and outstanding as of February 27, 2016, which, for purposes of this table includes 8,542,066 Exchangeable Shares issued and outstanding as of February 27, 2016, as suchMarch 7, 2023. |
| (4) | Includes the 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. held by the Executive in the Company’s Employee Share Purchase Plan. |
| (5) | The number of common stock includes 30,000 shares beneficially owned by a person also includes sharesMr. Ellson’s spouse. |
| (6) | The number of common stock underlying options or warrants heldincludes 61,000 shares owned by that person that are currently exercisable or exercisable within 60 daysMr. Evans’ spouse. |
| (7) | The number of February 27, 2016. Thecommon stock includes 222,500 shares issuable pursuant to the exercise of those options or warrants are deemed outstanding for computing the percentage ownership of the person holding those options and warrants but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power withowned by Mr. Smith’s spouse. |
respect to the shares set forth opposite that person’s name, subject to community property laws, where applicable. The beneficial ownership by entities affiliated with Amber Capital Management LP is as of December 31, 2015, and the beneficial ownership of entities affiliated with West Face Capital Inc. is as of January 27, 2016; percentage beneficial ownership for each of these are calculated based on the number of shares outstanding as of April 27, 2016, as described above.
| (8) | The number of common stock includes 1,706,000 shares owned by Wade Capital Corporation, a corporation owned by Mr. Wade. |
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(2) | Consists of 20,000 common shares, 6,883 Deferred Stock Units and 6,430 shares issuable upon exercise of options to acquire shares of common stock exercisable within 60 days of February 27, 2016. |
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(3)36 | Consists of 539,999 shares issuable upon exercise of options to acquire shares of common stock exercisable within 60 days of February 27, 2016, 19,527 shares issuable upon exchange of Exchangeable Shares owned by Mr. Hardy’s spouse and 35,000 shares of common stock owned by Mr. Hardy’s spouse. Mr. Hardy disclaims beneficial ownership of the shares owned by his spouse, except to the extent of his pecuniary interest therein. |
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(4) | Consists of 30,000 shares, 9,271 Deferred Stock Units and 6,430 shares issuable upon exercise of options to acquire shares of common stock exercisable within 60 days of February 27, 2016. |
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(5) | Consists of 10,797 Deferred Stock Units. |
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(6) | Mr. Nightingale ceased to be an officer of Gran Tierra on February 19, 2016; however, he remains an employee of the Company until May 31, 2016. Consists of 28,600 shares and 543,333 shares issuable upon exercise of options to acquire shares of common stock exercisable within 60 days of February 27, 2016.Energy 2023 Proxy Statement |
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(7) | Consists of 2,711,080 shares issuable upon exchange of Exchangeable Shares and 503,332 shares issuable upon exercise of options to acquire shares of common stock exercisable within 60 days of February 27, 2016. |
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(8) | Consists of 88,000 shares, 13,943 Deferred Stock Units and 6,430 shares issuable upon exercise of options to acquire shares of common stock exercisable within 60 days of February 27, 2016. |
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(9) | Consists of 4,392 Deferred Stock Units and 6,430 shares issuable upon exercise of options to acquire shares of common stock exercisable within 60 days of February 27, 2016. |
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(10) | Consists of 100,000 shares, 13,943 Deferred Stock Units and 6,430 shares issuable upon exercise of options to acquire shares of common stock exercisable within 60 days of February 27, 2016 . |
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(11) | Mr. Coffield ceased to be an employee or officer of Gran Tierra on February 2, 2015. Share ownership is based on last known information provided to the Company. |
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(12) | Mr. Monges ceased to be an employee or officer of Gran Tierra on July 1, 2015. Share ownership is based on last known information provided to the Company. |
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(13) | Mr. Rozon ceased to be an employee of Gran Tierra on June 30, 2015. Share ownership is based on last known information provided to the Company. |
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(14) | Mr. Scott ceased to be an employee or officer of Gran Tierra on June 24, 2015. Share ownership is based on last known information provided to the Company. |
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(15) | Based upon a Schedule 13G filed February 5, 2016, reporting beneficial ownership as of December 31, 2015. Amber Capital Management LP (“Amber Capital Management”), Amber Capital UK LLP (“Amber UK”), Amber Capital LP (“Amber Capital”), Amber Global Opportunities Master Fund Ltd. (“Amber Global”), and Joseph Oughourlian have shared voting and dispositive power with respect to all of these shares. The address of Amber Capital Management and Amber Global is PO Box 309 Ugland House, Grand Cayman KY1-1104, Cayman Islands. The address of Amber UK and Mr. Oughourlian is 14-17 Market Place, London, United Kingdom W1W 8AJ. The address of Amber Capital is 900 Third Avenue, Suite 1103, New York, NY 10022. |
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(16) | Based upon a Schedule 13D filed January 29, 2016, reporting beneficial ownership as of January 27, 2016. The Schedule 13D reports that West Face Capital Inc. and Gregory A. Boland have shared voting and dispositive power with respect to all of these shares. The address of West Face Capital Inc. and Mr. Boland is 2 Bloor Street East, Suite 3000, Toronto, Ontario M4W 1A8. |
The following table provides certain information with respect to securities authorized for issuance under Gran Tierra’s equity compensation plans in effect as of the end of December 31, 2015:
EQUITYPROPOSAL 3: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION PLAN INFORMATION
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| Plan category | | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | | (b) Weighted average exercise price of
outstanding options, warrants and rights (2) | | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)(3) |
| Equity compensation plans approved by security holders | | 13,867,014 |
| | 4.60 |
| | 13,498,868 |
|
| Equity compensation plans not approved by security holders | | — |
| | — |
| | — |
|
| | | 13,867,014 |
| | 4.60 |
| | 13,498,868 |
|
(1) Includes shares reserved to be issued pursuant to stock options and restricted stock units (the latter of which may be settled in cash or in shares of our common stock, at our election) granted pursuant to the 2007 Equity Incentive Plan, which is an amendment and restatement of our 2005 Equity Incentive Plan.
(2) Exercise price is not applicable to restricted stock units and, as such, restricted stock units are excluded from this column.
(3) 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 our 2007 Equity Incentive Plan as of December 31, 2015, minus the awards reported in column (a), above. Note, pursuant to the terms of the 2007 Equity Incentive 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). Note further, that the 2007 Equity Incentive Plan provides that the number of shares of our common stock reserved for issuance under the plan shall be reduced by: (i) one share for each share of common stock issued pursuant to a stock option or stock appreciation right and (ii) 1.55 shares for each share of our common stock issued pursuant to an any other type of award granted under the 2007 Equity Incentive Plan that is settled in shares of our common stock. Accordingly, the number of shares available for future awards under the 2007 Equity Incentive Plan may be different than the amount shown in this column.
The only equity compensation plan approved by our stockholders is our 2007 Equity Incentive Plan, which is an amendment and restatement of our 2005 Equity Plan.
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 of ownership and reports of changes in ownership of common stock and other equity securities of Gran Tierra. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish Gran Tierra with copies of all Section 16(a) forms they file.
To Gran Tierra’s knowledge, based solely on a review of the copies of such reports furnished to Gran Tierra and written representations that no other reports were required, during the fiscal year ended December 31, 2015, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with except that: a late Form 4 was filed on behalf of each of Duncan Nightingale and Adrian Coral with respect to the vesting of a restricted stock unit award; and a late Form 4 was filed on behalf of each of Peter Dey and Ronald Royal in connection with a purchase of shares.
Our executive officers as of April 27, 2016,March 7, 2023, are as follows:
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| | | | | |
| | |
Name | | Age | | Title |
| | | | Title |
| | |
Gary S. Guidry | | 60 | 67 | | | President and Chief Executive Officer |
| | |
Ryan Ellson | | 40 | 47 | | | Executive Vice President and Chief Financial Officer |
Adrian Coral | | |
James (“Jim”) Evans | | 43 | 57 | | President, Gran Tierra Energy Colombia |
James Evans | | 50 | | Vice President, Corporate Services |
David E. Hardy | | |
Rodger Trimble | | | 61 | | Vice President, Legal and General Counsel |
Alan Johnson | | 45 | | Vice President, Asset ManagementInvestor Relations |
| | |
Lawrence West | | 59 | 66 | | | Vice President, Exploration |
| | | | |
Gary S. Guidry
. For the biography of Mr. Guidry, see "Proposal“Proposal 1, Election of Directors."”Ryan Ellson
. Mr. Ellson has been our Executive Vice President and Chief Financial Officer since May 2015. Mr. Ellson has 15over 23 years of experience in a broad range of international corporate finance and accounting roles. Mr. Ellson was CFOa Director of Onza Energy Inc. from January 2015 to May 2015.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 a reserve based lending facilityfacility’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. Adrian Coral. Mr. Coral joined Gran Tierra in August 2006 as an operations engineer in Gran Tierra Energy Colombia, Ltd.,Ellson has completed the Leadership for Senior Executives program at Harvard Business School 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. Mr. Coral has a total of 18 years of experience as an engineer or manager in the oil and gas industry. Mr. Coral graduated fromGeneral Management Program at the Universidad de América – Bogotá D.C. with a degree as a Petroleum Engineer and from theWharton School of Business Management – Bogotá D.C with degree in Project Management.
the University of Pennsylvania.James Evans
. Mr. Evans has been our Vice President, Corporate Services since May 2015. Mr. Evans has over 2028 years of finance and corporate experience including working the last 1013 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 IT,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 ofmore 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 is a Certified General Accountant and holds a Bachelor of Commerce degree from the University of Calgary. David Hardy. Mr. Hardy joined Gran Tierra as General Counsel, Vice President Legal and Secretary on March 1, 2010. He has more than 25 years’ experience in the legal profession. Before joining Gran Tierra, he worked for Encana Corporation and for Encana Corporation’s predecessor, Pan Canadian, from 2000 through 2009 where he held various positions, including: Vice President Divisional Legal Services, Integrated Oil and Canadian Plains Divisions; Vice President Regulatory Services, Corporate Relations Division; and Associate General Counsel, Offshore and International Division. For four of his eight years in the Offshore and International Division of Encana, Mr. Hardy led the Legal and Commercial Negotiations Group, where he was responsible for providing strategic legal, commercial and negotiation advice and support to the offshore and international business units. This included dealing with new venture activities and operational, joint venture and host government issues relating to projects in various countries, including Australia, Brazil, Chad, Libya, Oman, Qatar and Yemen. Prior to joining Encana, Mr. Hardy spent over 10 years in private practice and was a partner in a law firm in Calgary, Alberta. He holds a Juris Doctor Degree from the University of Calgary (converted from an LL.B Degree in 2011) and is a member of the Law Society of Alberta and the Association of International Petroleum Negotiators.
Alan Johnson. Mr. Johnson Rodger Trimble has been our Vice President, Asset Management,Investor Relations since May 2015.June 2016. Mr. JohnsonTrimble is a professional engineerProfessional Engineer with more than 20over 28 years of experience working internationally in thedomestic 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 industry. His experience includes varied technical, managerial and executive roles in drilling, production, reservoir, reserves, corporate planning and asset management. Most recentlycompany. In January 2013, Mr. Johnson was Head of Asset Management for Glencore (E&P) Canada from April 2014 to April 2015, where he was responsible for all development activities in Chad and prior theretoTrimble became Director of Asset Management atCorporate Planning, Budget & Business Development with Caracal Energy 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 developingInc., an international oil and gas assetscompany, which was acquired by Glencore E&P (Canada) in remote areas of southern Chad, achieving first productionJuly 2014. He has held several senior management positions ranging from Country Manager in less than 18 months.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. Johnson started his E&P 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. JohnsonTrimble is a Charteredan Alberta-registered Professional Engineer in the UK and a Professional Engineermember of APEGA. He received a Bachelor of Science in Alberta.
Petroleum Engineering (with Distinction) from Stanford University.Lawrence West
. Mr. West has been our Vice President, Exploration since May 2015. Mr. West has35has 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)(“AEC”), where he was on the team that merged with Conwest. He built and led the | | |
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| Gran Tierra Energy 2023 Proxy Statement | | 37 |
PROPOSAL 3: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
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. LawrenceMr. West has an Honours Bachelor of Science in Geology from McMaster University and an MBA, specializing in economics, from the University of Calgary.
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| 38 | | Gran Tierra Energy 2023 Proxy Statement |
46
Compensation Discussion And Analysis
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION DISCUSSION AND ANALYSIS
Overview
In this section, we describe the material components ofThe following discussion provides details regarding our executive compensation program and 2022 compensation arrangements for our “named executive officers,”
i.e. our executive officers appearing in the Summary Compensation Table and other compensation tables contained in this Compensation Discussion and Analysis:
| |
• | Gary S, Guidry, our President and Chief Executive Officer1;
|
| |
• | Jeffrey Scott, our former Executive Chairman2;
|
| |
• | Dana Coffield, our former President and Chief Executive Officer3;
|
| |
• | Ryan Ellson, our Chief Financial Officer4;
|
| |
• | James Rozon, our former Chief Financial Officer5;
|
| |
• | Duncan Nightingale, our former Executive Vice President6;
|
David Hardy, our Vice President, Legal and General Counsel;
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• | Lawrence West, our Vice President, Exploration7;
|
| |
• | Carlos Monges, our former President, Gran Tierra Energy Peru SRL8;
|
| |
1. | Mr. Guidry became President and Chief Executive Officer on May 7, 2015; |
| |
2. | Mr. Scott served as our Executive Chairman (our principal executive officer during the transition period from February 2, 2015 until May 7, 2015); |
| |
3. | Mr. Coffield served as our President and Chief Executive Officer until February 2, 2015; |
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4. | Mr. Ellson became Chief Financial Officer on May 11, 2015; |
| |
5. | Mr. Rozon served as our Chief Financial Officer until May 11, 2015 and ceased to be an employee of the Company on June 30, 2015; |
| |
6. | Mr. Nightingale served as our Chief Operating Officer from September 1, 2014 to February 2, 2015. On February 2, 2015, Mr. Nightingale was appointed interim President and Chief Executive Officer (but was not considered our principal executive officer during this transition period). Mr. Nightingale served as Executive Vice President from May 7, 2015 until February 19, 2016; |
| |
7. | Mr. West became Vice President, Exploration on May 11, 2015; and |
| |
8. | Mr. Monges served as President, Gran Tierra Energy Peru SRL until July 1, 2015. |
We also provide an overvieweach of our executive compensation philosophy and our executive compensation program. In addition, we explain how and why our Compensation Committee and our Board arrived at specific compensation policies and decisions involving the named executive officers.
Coincident with the transitionNamed Executive Officers (“NEOs”) who, in Directors, our Executive team underwent a transition in 2015. The newly hired executives, including our named executive officers, were brought in under existing pay programs at the time. See section 2016 Compensation Decisions for a detailed discussion of transitions made to our compensation practices following the Board and Management transition in May 2015.
Presentation in U.S. Dollars
All dollar amounts discussed below are in U.S. dollars, except as otherwise noted. Amounts paid in Canadian dollars to our directors and named executive officers other than Mr. Monges, and amounts paid in Peruvian New Soles to Mr. Monges, have been converted into U.S. dollars for the purposes of the discussion below. For additional information regarding the exchange rates used, please see the footnote 1 to the Summary Compensation Table, below.
Glossary of Oil and Gas Terms
In this document, the abbreviations set forth below have the following meanings:
|
| |
BOE | barrels of oil equivalent |
MMBOE | million barrels of oil equivalent |
BOEPD | barrels of oil equivalent per day |
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.
2015 Executive Compensation Highlights
In February of 2015, to reflect the current economic environment in the oil and gas sector, the Compensation Committee and our Board, respectively, chose to freeze executive salaries and stock option and RSU awards at 2014 levels.
In May 2015, West Face Capital oversaw a change in Board and Management that included six director nominees, including 2022 were:Gary S. Guidry assuming the role of
President and Chief Executive Officer. ExecutivesOfficer
Ryan Ellson
Executive Vice President and directors were compensated under the pay programs in place at the time. Since then, the Board has conducted an extensive review of pay philosophy and plan design to align both to the business strategy and risks of the company. The Compensation Committee has recommended and the Board has approved a philosophy whereby the Company will change its focus from primarily issuing stock options and begin to issue Performance Share Units to management and employees and Deferred Share Units to directors. The payouts for Performance Share Units will be based on Total Share Return performance relative to a group of performance peers, absolute growth in NAV/share and execution of strategy as approved by the Board of Directors. In addition, share ownership guidelines were introduced for both the Board and Management.Chief Financial Officer
Jim Evans
Vice President, Corporate Services
Rodger Trimble
Vice President, Investor Relations
Lawrence West
Vice President, Exploration
2015 Compensation Governance Highlights
We endeavor to maintain good governance standards, including with respect to the oversight of our executive compensation policies and practices.
Opportunity for Stockholder Feedback
The Compensation Committee carefully considers feedback from our stockholders regarding our executive compensation program. The process by which stockholders and other interested persons may communicate with the Board or any of its directors is available on Gran Tierra's website at http://www.grantierra.com. In addition, the annual advisory vote on the compensation of the named executive officers provides our stockholders with an opportunity to communicate their views on our executive compensation program.
Last year we conducted an advisory vote on executive compensation at our 2015 Annual Meeting. While this vote was advisory and therefore not binding on our Board or our Compensation Committee, we believe that it is important for our stockholders to have an opportunity to express their views regarding our executive compensation philosophy, our compensation policies and programs, and our decisions regarding executive compensation. Our Board and our Compensation Committee value the opinions of our stockholders and, to the extent there is any significant vote against the compensation of our named executive officers as disclosed in this proxy statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
At the 2015 annual meeting of stockholders, approximately 96% of the votes cast on the advisory vote on executive compensation were cast in favor of our named executive officer compensation as disclosed in the 2014 proxy statement. The Board and Compensation Committee reviewed these final vote results and determined that, given the significant level of support, no material changes to our executive compensation policies and processes were necessary.
Philosophy and Objectives of our Executive Compensation Program
TheOur compensation philosophy underlying our executive compensation program is to provide an attractive, flexible, and market-based total compensation program that is tied to performance and aligns the interests of our named executive officersNEOs with those of our stockholders. The Company'sCompany’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 wherein which we have a strong presence. Our compensation practicesphilosophy also serveserves as a means of communicating our goals and standards of conduct and performance, and for motivating and rewarding our named executive officersNEOs in relation to their achievements. We observeOur compensation philosophy includes the following principles:
Hire and retain top caliber executives: Executive officers should have a total compensation package, including base salary and benefits, that is market competitive and that permit us to hire and retain high-caliber individuals at all levels;
Pay for performanceprinciples 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. |
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| Gran Tierra Energy 2023 Proxy Statement | | 39 |
COMPENSATION DISCUSSION AND ANALYSIS
Responsibilities for Executive Compensation
Compensation decisions for our executive officers should be dependent onare made by the Compensation Committee, with input from our annual business performance and each individual’s contribution to that performance;
Reward achievement of short-term objectivesindependent compensation consultants as well as long-term growthfrom 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. |
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Board | | • Reviews Chief Executive Officer’s performance. • Approves Chief Executive Officer and NEO compensation. |
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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 profitability
: Executive officers should be rewarded for achieving both short-term objectives as well as long-term results to encourage a balanced approach to growth and to aligned the interests of our named executive officers with those of our stockholders; and
Limit perquisites: Perquisites for our executive officers should be minimized and limited to items that serve a reasonable business purpose.
Compensation Process
The Compensation Committee
is responsible for overseeinghold regular executive sessions at the
Company's compensation policies, plans and programs and to review and determineend of each meeting with no representatives of the
compensation to be paid to the Company's executive officers and directors. The Committee approves the goals of themanagement team present. Our Chief Executive Officer
and evaluatesdoes 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's performance in light of those goals and objectives. Officer does not play any role with respect to any matter affecting his own compensation.The Committee recommends toagenda for each meeting is usually developed by the Board the approvalChair of the annual compensation forCompensation 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 also reviews withhas direct responsibility for the Chief Executive Officer and approves the corporate performance goals and objectivesoversight of the Company's other executive officers. The Committee recommends to the Board the approvalwork of the annual compensation packageany advisers engaged for the other executive officers.
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 20142022 performance as well as the consideration of salary increases for 2015, were recommended by the Compensation Committee and approved by the Board in FebruaryJanuary of 2015. Annual bonuses in respect2023.
Assessment of 2015Company Performance
The Compensation Committee uses Company performance were recommended bymeasures 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 approved by the Board,establishes specific performance measures that determine payouts under cash and paid in March of 2016.
Role of Management
Based on management’s review of market competitive positions, each year our Chief Executive Officer recommends the level of base salary increase (if any), the annualequity-based incentive
award, and the long-term incentive award value for each of the named executive officers, including himself. These recommendations are based upon his assessment of each executive officer’s performance (including his own), the performance of the individual’s respective business or function, and employee retention considerations. The Compensation Committee reviews our Chief Executive Officer’s recommendations, along with all other relevant information, and deliberates as to whether any compensation changes should be made affecting our named executive officers. Following this deliberation, it determines, in its sole discretion, its recommendations to be made to the Board for approval. Our Chief Executive Officer does not attend any portion of the Board meeting at which his compensation is deliberated or approved. Except as described in this paragraph, our Chief Executive Officer does not play any role with respect to any matter affecting his own compensation.programs. | | |
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| 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 advisorsconsultants and scope of services provided by them are assessed on an annual basis.
In recent years, including 2015,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, directlyfor payment of reasonable compensation to any independent compensation consultants or other external advisors retained the services of Lane Caputo Compensation Inc. (“
Lane Caputo”) as its executive compensation consultant. Lane Caputo reports directly toby the Compensation Committee. During the first few months of 2015, representatives of Lane Caputo attended meetings of the Compensation Committee, as requested, and communicated with the Compensation Committee Chair between meetings; however, the Compensation Committee made all decisions and recommendations to the Board. Lane Caputo has developed and maintained a group of peer companies and provided data regarding the compensation paid by those companies to their executive officers that theRisk Considerations
The Compensation Committee and the Board finds relevant for comparison purposes. Services performed by Lane Caputo were pre-approved by the Compensation Committee and any additional work to be performed for us, including at the request of management, was pre-approved by the Chair of the Compensation Committee.
The Compensation Committee assessed the performance and independence of Lane Caputo and of each individual employee of the consulting firm who directly provides services to Gran Tierra. In January 2015, the Compensation Committee considered whether Lane Caputo could serve as an independent advisor to the Compensation Committee. As part of this determination, the Compensation Committee requested information from Lane Caputo about potential conflicts of interest. After taking into consideration the six factors prescribed by the SEC and NYSE MKT, the Compensation Committee concluded that there were no actual conflicts of interest with respect to Lane Caputo providing services to the Compensation Committee. The following specific factors were considered in making this determination:
Lane Caputo reported directly to the Compensation Committee and the Compensation Committee had the sole power to terminate or replace any of its compensation advisors at any time;
Lane Caputo provided minimal other services to Gran Tierra;
Any business or personal relationships between Lane Caputo, on one hand, and any member of the Compensation Committee or executive officer, on the other hand (no such relationships reported by Lane Caputo);
Whether Lane Caputo or any of its representatives owned any shares of Gran Tierra’s stock (no shares owned by Lane Caputo or any of its representatives);
The content of Lane Caputo’s own policies on ethics and conflicts of interest; and
The aggregate fees paid by Gran Tierra to Lane Caputo, as a percentage of the total revenue of Lane Caputo.
In August 2015, Hugessen Consulting was retained by the Compensation Committee as its executive compensation consultant to meet the Company's corporate governance objectives related to director, management and staff compensation. The Compensation Committee considered whether Hugessen Consulting would meet the definition of an independent advisor and concluded that there were no actual conflicts of interest with respect to Hugessen Consulting providing services to the Compensation Committee. We have implemented certain recommendations from Hugessen Consulting in 2016, which are discussed in greater detail in the section of this proxy statement entitled "2016 Compensation Actions".
Use of Peer Data
2015 Compensation Structure
The Compensation Committee relies on various sources of compensation information to ascertain the competitive market for our named executive officers. To assist in establishing recommendations for our 2015 executive compensation structure, base salaries and target bonuses, Lane Caputo measured the compensation paid to our named executive officers against the compensation provided by a relevant group of industry peers to similarly situated officers (the “Custom Peer Group”). Although it would have been preferable to only include peers that compete with us in the international energy arena, our relative size, and the lack of sufficient international peers of similar size, dictated that peers with domestic operations of similar size be included in the peer group, and, in fact, such domestic peers are predominate in the group. As a result, the Custom Peer Group included peers of a similar size to us based on market capitalization and average daily production volumes, and included peers with operations located both internationally and domestically. The Custom Peer Group used in 2015 was substantially similar to the 2014 Custom Peer Group. The Custom Peer Group used in 2015 was revised slightly from 2014 by removing Niko Resources Ltd. (the size of its operations were no longer comparable) and Petrominerales Ltd. (due to its acquisition) and adding Bellatrix Exploration Ltd. and Canacol Energy Ltd. The Custom Peer Group used in 2015 consisted of the following 20 companies:
|
| | |
Bankers Petroleum Ltd. | Crew Energy Inc. | Pengrowth Energy Corp. |
Baytex Energy Corp. | Enerplus Corp. | Peyto Exploration & Development Corp. |
Bellatrix Exploration Ltd. | Legacy Oil & Gas Inc. | Transglobe Energy Corp. |
Birchcliff Energy Ltd. | Lightstream Resources Ltd. | Trilogy Energy Corp. |
Bonavista Energy Corp. | NuVista Energy Ltd. | Vermilion Energy Inc. |
Bonterra Energy Corp. | Paramount Resources Ltd. | Whitecap Resources Inc. |
Canacol Energy Ltd. | Parex Resources Inc. | |
In making 2015 compensation decisions for Mr. Monges, who was located in Peru, the Compensation Committee also utilized the Mercer 2014 Compensation Survey (Colombia and Peru) and the Mercer 2014 Peru Total Remuneration Survey (Peru) to better understand the local pay practices in Peru.
Given the extensive research and analysis used to develop the peer benchmark group, the Compensation Committee was confident that the market data used provided a useful guide for comparative purposes. The Compensation Committee recognized that a successful compensation program also required an application of judgment to maintain a subjective determination of individual performance by our executive officers. Therefore, the Compensation Committee applied its judgment in reconciling the program’s objectives and peer comparisons with the realities of rewarding excellent performance and retaining valued employees.
Elements of Compensation
Our compensation program is comprised of three primary elements of compensation: base salary, annual cash bonus and equity incentive awards. Each component has a different purpose.
The Compensation Committee believes that base salaries at this stage of our growth and especially within the international exploration and production sector, must be competitive to retain the best executives. Short-term cash bonuses are a common element of compensation in our industry and among our peers with whom we compete for executive talent and emphasize the achievement of shorter-term individual and company-wide goals. The Compensation Committee believes that principal performance incentives should be granted in the form of long-term equity incentives given the longer-term nature of our business plan. Long-term incentives are delivered in the form of stock options and RSUs. The Compensation Committee believes that the combination of all three elements of compensation encourages our named executive officers to take a strong but balanced approach to growth and development. The Compensation Committee ultimately determined the optimal allocation among the three forms of compensation relative to our peers for each executive position, taking into account the contributions of each executive officer and our operational and financial goals and achievements. The Compensation Committee did not use a formula to establish the allocation between base salary, target bonus and long term incentives; rather, this allocation has been based on the consensus among the members of the Compensation Committee, all of whom have significant experience in the oil and gas exploration business. Actual bonuses were determined based on the subjective determination by the Compensation Committee and the Board of the achievement of goals established at the beginning of the year.
Salary
The Compensation Committee established 2015 base salaries after considering the market data presented by Lane Caputo, the very competitive nature of the international exploration and production sector, and the corresponding shortage of experienced executive talent, particularly in Calgary, Canada, Gran Tierra’s headquarters. The Compensation Committee determined that a general target of the 65th percentile of base salaries paid to similarly situated executives of companies included in the Custom Peer Group was appropriate to retain the services of our executive officers, with the exact amount determined by the Compensation Committee’s subjective assessment of the appropriate salary for each named executive officer given their performance and level of responsibility within Gran Tierra.
In January of 2015, the Compensation Committee recommended to the Board, and the Board approved, the following annual salaries (USD) for 2015:
|
| | | | | | |
| Name | 2015 Salary(1) | 2014 Salary (2) |
| Dana Coffield | $ | 331,647 |
| $ | 331,647 |
|
| James Rozon | $ | 248,916 |
| $ | 248,916 |
|
| Duncan Nightingale | $ | 267,052 |
| $ | 242,775 |
|
| David Hardy | $ | 231,936 |
| $ | 231,936 |
|
| Carlos Monges | $ | 212,233 |
| $ | 207,980 |
|
(1)Amounts differ from the amounts reported in Gran Tierra’s Form 8-K filed with the Securities and Exchange Commission on February 25, 2015, as in that filing the conversion from Canadian dollars to U.S. dollars was calculated at the exchange rate at December 31, 2014. The exchange rate used for the table above was the exchange rate at December 31, 2015, of one US dollar to Canadian $1.3840.
(2) For ease of comparison, amounts reported in this column are also converted from Canadian dollars and Peruvian New Soles at the exchange rate at December 31, 2015.
2015 salary for each of Messrs. Coffield, Rozon, and Hardy was unchanged from 2014 while Mr. Monges was positioned at the 65th percentile of the relevant local market data. Mr. Nightingale's salary increased 10% in 2015; however, no new compensation arrangements were made in connection with Mr. Nightingale’s promotion to Interim President and Chief Executive Officer effective February 2, 2015.
On February 2, 2015, in connection with Jeffrey Scott's appointment as Executive Chairman, the Board approved the following compensation:
|
| | | | | | |
| Name | 2015 Salary | 2014 Salary |
| Jeffrey Scott | $ | 260,116 |
| $ | — |
|
On May 7, 2015, Mr. Scott's position was changed to Director but his salary as Executive Chairman continued until June 24, 2015.
Mr. Guidry's 2015 salary was determined as part of the West Face Settlement Agreement dated May 7, 2015. On May 9, 2015 the Compensation Committee met and approved the compensation arrangements for Messrs. Ellson and West as recommended by Lane
Caputo based on the pay programs in place at the time. The salaries for 2015 are as follows:
|
| | | | | | |
| Name | Salary (USD) | Salary (CAD) |
Gary S. Guidry (1) | $ | 289,017 |
| $ | 400,000 |
|
Ryan Ellson (2) | $ | 234,827 |
| $ | 325,000 |
|
| Lawrence West | $ | 209,538 |
| $ | 290,000 |
|
(1)Mr. Guidry's 2015 salary is 12.9% less than the 2015 salary of the former President and Chief Executive Officer (calculated in CAD).
(2)Mr. Ellson's 2015 salary is 5.7% less than the 2015 salary of the former Chief Financial Officer (calculated in CAD).
2015 Annual Bonus Structure and Determination
The following bonus structure was approved by the Compensation Committee in May 2015 for the following executives in connection with 2015 performance:
|
| | | |
| Name | Target Bonus (Percent of Salary) | Corporate Performance Weighting | Personal Performance Weighting |
| Gary Guidry | 100% | 100% | 0% |
| Ryan Ellson | 80% | 80% | 20% |
| Lawrence West | 45% | 60% | 40% |
In June 2015, the Compensation Committee, along with the Board of Directors, approved eight Corporate goals as corporate performance parameters for the 2015 annual bonus structure based on the Company's budget and operating plan. For each goal, executives earn an award as long as performance targets are achieved. Once these performance targets are met, payout can be increased by reaching performance levels that exceed established targets.
Upon recommendation by the Compensation Committee, in February 2016 the Board approved the 2015 corporate performance of the Company based on operational, financial, market and strategic key performance indicators (40% operational, 30% financial, 10% market and 20% strategic) as summarized in the table below:
|
| | | |
| Actual | Met/Missed/Exceeded |
Operational Goals | | |
Reserve Additions (MMBOE)* | 7.6 |
| missed |
Finding, Development & Acquisition Costs ($/BOE) | -0.87 |
| exceeded |
Gross Annual Average Production (BOEPD) | 23,401 |
| exceeded |
* based on proved plus probable ("2P") NI 51-101 working interest reserves, with 2014 excluding Peru 2P reserves. | | |
Financial Goals | | |
General & Administration/boe ($/BOE) | 3.79 |
| exceeded |
Cash Operating Costs/boe ($/BOE) | 13.97 |
| exceeded |
Funds Flow from Operations ($MM) | 108.32 |
| missed |
| | |
Market Goals | | |
Increase in Net Asset Value/Share | 0% |
| missed |
| | |
Strategic Goals | 1 |
| partial |
For each named executive officer, the relevant performance score was applied to the portion of the officer's bonus attributable to corporate performance. Each named executive officer's score with regard to individual performance metric for 2015 was based upon the CEO’s subjective determination of that officer’s overall performance during the year and contribution to the achievement of the corporate goals.
|
| | | | | | |
| | Target | Corporate | Individual | Amount |
| | (% of Salary) | Weight | Weight | Awarded |
| Gary Guidry | 100% | 100% | 0% | $ | 140,173 |
|
| Ryan Ellson | 80% | 80% | 20% | $ | 102,601 |
|
| Lawrence West | 45% | 60% | 40% | $ | 51,301 |
|
| David Hardy | 60% | 60% | 40% | $ | 108,382 |
|
Equity Incentives
Purpose
The Board adopted the 2007 Equity Incentive Plan to provide a means by which employees, directors and consultants of Gran Tierra and its affiliates may be given an opportunity to purchase 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.
Eligibility
Employees (including officers), directors, and consultants of both Gran Tierra and its affiliates are eligible to receive all types of awards under the Incentive Plan. Under the Incentive 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 shares of common stock during any calendar year. The maximum number of shares which may be reserved for issuance to insiders, at any time, under the Incentive 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 Incentive 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 shall not exceed 2% of the issued and outstanding common stock at the time of grant.
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. If options were granted to covered executives with exercise prices below fair market value, deductions for compensation attributable to the exercise of such options could be limited by Section 162(m) of the Code.
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. If Gran Tierra’s common stock were not to be traded on a market, the Board would make a good faith determination of the fair market value in a manner that complies with specified U.S. tax requirements.
The exercise price of options granted under the Incentive 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 Incentive Plan may become exercisable in cumulative increments, or vest, as determined by the Board. Shares covered by currently outstanding options under the Incentive 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, collectively referred to as “Service.” Shares covered by options granted in the future under the Incentive Plan may be subject to different vesting terms. The Board has the power to accelerate the time during which an option may vest or be exercised. In addition, options granted under the Incentive Plan may permit exercise prior to vesting, but in such event the participant may be required to enter into an early exercise stock purchase agreement that allows Gran Tierra to repurchase unvested shares, generally at their exercise price, should the participant’s Service terminate before vesting. To the extent provided by the terms of an option, a participant may satisfy any federal, state or local tax withholding obligation relating to the exercise of such option by a cash payment upon exercise, by authorizing Gran Tierra to withhold a portion of the stock otherwise issuable to the participant, by delivering already-owned common stock of Gran Tierra or by a combination of these means.
Terms of Restricted Stock Units
The Incentive Plan authorizes the grant of RSUs, which is the right to receive shares of common stock upon the vesting of the RSUs. The Board will determine the terms and conditions, including with respect to vesting, delivery and dividends, of any RSUs granted. At the time of grant the Board will determine the consideration, if any, to be paid by the participant upon delivery of each share subject to an RSU award. If required by applicable law, the consideration to be paid by the participant for each share will not be less than the par value of a share. Consideration may be paid in any form permitted by applicable law. Except as otherwise provided in the agreement granting the RSUs, RSUs that have not vested will be forfeited upon the participant's termination of Service for any reason.
In January of 2015 the Compensation Committee approved a grant to each of Messrs. Rozon, Nightingale, Hardy, and Monges consisting of stock options and RSUs. No stock options or RSUs were granted to Mr. Coffield. In February of 2015 the Compensation Committee approved a grant to Mr. Scott consisting of stock options and RSUs in connection with his appointment as Executive Chairman. In May of 2015, the Compensation Committee approved a grant to each of Messrs. Guidry, Ellson and West consisting of stock options and RSUs.
All awards vest based on continued service over the vesting period. Following vesting, the RSUs may be settled in either a number of shares of our common stock equal to the number of RSUs that vest or cash equal to the number of RSUs that vest multiplied by the fair market value of a share of our common stock at that time. No dividends or dividend equivalents are earned or accrued with respect to the RSUs. Stock options are granted with an exercise price equal to the fair market value of a common share of our stock on the day prior to the date of grant.
The number of stock options and RSUs granted to each named executive officer is determined based on the grant date fair value of each award (Black-Scholes value for stock options and our current share price for the RSUs) and the target long-term incentive program award value established by the Compensation Committee for each position. The Compensation Committee considered the recommendations of Lane Caputo and elements of individual, business unit and corporate performance in determining its recommendations for equity incentive grants to our named executive officers in 2015. The Board granted options and RSUs under the terms of Gran Tierra’s 2007 Equity Incentive Plan to each of our named executive officers as follows:
|
| | | | |
| Name | | Number of Stock Options | | Number of RSUs |
| Gary Guidry | | 600,000 | | 95,000 |
| Jeffrey Scott | | 400,000 | | 100,000 (1) |
| Ryan Ellson | | 350,000 | | 60,000 |
| James Rozon | | 225,000 | | 60,000 |
| Duncan Nightingale | | 295,000 | | 80,000 |
| David Hardy | | 145,000 | | 35,000 |
| Lawrence West | | 200,000 | | 20,000 |
| Carlos Monges | | 80,000 | | 25,000 |
(1)The RSUs granted to Jeffrey Scott were forfeited by Mr. Scott on June 24. 2015.
The levels of these awards were based on recommendations from Lane Caputo, taking into account our desired competitive positioning of total direct compensation targeting the 65th percentile of the Custom Peer Group, as discussed in the section titled “Philosophy and Objectives of our Executive Compensation Program” above based on the fair value of awards at time of grant. In addition to the fair
value, the absolute number of awards and each award as a percentage of total shares outstanding versus the Custom Peer Group were also considered as well as the country of residence of the executive officer. All decisions regarding the grant of equity awards during 2015 were made prior to the shift in Board membership that occurred in June of 2015.
Benefits
Messrs. Coffield, Monges and Rozon were, and Messrs. Guidry, Ellson, Hardy, Nightingale and West 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 limited perquisites provided on a case-by-case basis. In addition, our executive officers will be paid 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. These are standard basic benefits in our industry and help to retain and recruit key talent.
Employment Agreements Entered into or Amended During 2015
All decisions regarding the new and amended agreements entered into during 2015 were made prior to the shift in Board membership that occurred in June of 2015.
Jeffrey Scott, Former Executive Chairman- New Employment Agreement and Amendment
Mr. Scott served as our Executive Chairman from February 2, 2015 until May 7, 2015. On February 2, 2015, in connection with his appointment as Executive Chairman, we entered into an employment agreement with Mr. Scott that provided: (i) an annual base salary of $260,116(ii)an annual bonus target of the greater of 100% of base salary and 200% of base salary in the event of a change of control; and (iii) the grant of a stock option to purchase 400,000 shares of common stock of Gran Tierra and restricted stock units to acquire 100,000 shares of common stock of Gran Tierra, each under Gran Tierra’s 2007 Equity Incentive Plan, with an exercise price equal to the fair market value on the date of grant and with a three year vesting term.
On May 7, 2015, Mr. Scott returned to the status of non-executive Chairman of the Board and in connection with that transition Gran Tierra and Mr. Scott entered into an amendment to his February 2015 employment. Pursuant to the employment agreement amendment: (a) Mr. Scott resigned as Executive Chairman of the Board effective as of May 7, 2015 but continued to receive his compensation as Executive Chairman of the Board through the 2015 annual meeting of stockholders (i.e., June 24, 2015), at which time he ceased to be a member of the Board; (b) all stock options granted to him pursuant to his employment agreement vest and, subject to approval of the Toronto Stock Exchange, the post-termination exercise period of all stock options held by Mr. Scott will be the earlier of one year from the date Mr. Scott ceases to provide services to Gran Tierra and the original expiration date of the term of the stock option; (c) no further severance payments will be made to Mr. Scott; (d) Mr. Scott’s non-competition and confidentiality obligations will terminate effective June 24, 2015; (e) Mr. Scott’s obligation to maintain and protect personal information terminated; and (f) Gran Tierra will reimburse Mr. Scott up to $10,983 for the rental of a corporate apartment. A quantification of the actual severance payments made to Mr. Scott in connection with his termination of employment can be found in the section titled “Potential Payments Upon Termination or Change in Control,” below.
James Rozon, Former Chief Financial Officer; Duncan Nightingale, Executive Vice President; and David Hardy, General Counsel- Amendment to Employment Agreements
During 2015, each of Messrs. Rozon, Nightingale, and Hardy entered into an amendment to their respective employment agreements with Gran Tierra which provide that:
| |
(1) | within 30 days of termination of the executive’s employment with us, whether by us, by the executive (including, without limitation, termination for good reason) or by death or permanent disability of the executive, the executive will be entitled to receive a cash payment equal to the greater of: |
| |
a. | $525,108 for Mr. Rozon, $750,867 for Mr. Nightingale, and $476,879 for Mr. Hardy; or |
| |
b. | 1.5 times for Messrs. Rozon and Hardy and 2 times for Mr. Nightingale multiplied by all base salary and bonus amounts either payable or paid during the 12 months preceding the executive’s termination of employment; |
| |
(2) | acceleration of the executive’s equity awards upon the earlier to occur, if any, of May 7, 2016 (if still employed with Gran Tierra on that date), the date Gran Tierra terminates his employment, and the date the executive resigns for good reason (as defined in the amendment); and |
| |
(3) | subject to approval by the Toronto Stock Exchange, the post-termination exercise period of the executive’s stock options will be extended to the earlier to occur of one year from the date of termination of employment and the original expiration date of the stock option. |
In addition, Mr. Nightingale’s amendment to employment agreement also provides that Mr. Nightingale shall receive a retention bonus of $108,382 if (a) he does not terminate his employment with Gran Tierra prior to November 7, 2015, or (b) Gran Tierra breaches the employment agreement or terminates Mr. Nightingale employment with Gran Tierra prior to six months from the date of the amendment to employment agreement. Mr. Nightingale received payment of his retention bonus in November of 2015, as scheduled.
The employment agreements for Messrs. Nightingale and Hardy were amended in order for the Company to retain as many of the current executives of the Company as possible.
A quantification of the actual severance payments made to Mr. Rozon in connection with his termination of employment can be found in the section titled “Potential Payments Upon Termination or Change in Control,” below.
Gary Guidry, President and Chief Executive Officer; Ryan Ellson, Chief Financial Officer; Lawrence West, Vice President, Exploration- New Employment Agreements
Mr. Guidry became President and Chief Executive Officer on May 7, 2015, and Messrs. Ellson and West became Chief Financial Officer and Vice President, Exploration, respectively, on May 11, 2015. In connection with their commencement of employment with us, we entered into employment agreements with each of these executives, which provided the following material terms:
|
| | | |
| | Base Salary | Target Bonus (% of Base Salary) | Equity Awards |
| Gary Guidry | $289,017 | 100% | 600,000 options; 95,000 RSUs |
| Ryan Ellson | $234,827 | 80% | 350,000 options; 60,000 RSUs |
| Lawrence West | $209,538 | 45% | 200,000 options; 20,000 RSUs |
The employment agreements do not have a fixed term. A summary of the termination and change in control provisions of the employment agreements with our named executive officers, as well as quantification of the potential severance payments for each named executive officer can be found in the section titled “Potential Payments Upon Termination or Change in Control,” which follows.
Post-Employment Arrangements
Our employment agreements with Messrs. Nightingale and Hardy provide for payments to these executives under certain termination of employment scenarios. The agreements provide that these executive officers will receive severance payments in the event that their employment is terminated other than for “cause” or if they terminate their employment with us for “good reason.” The termination and change-in-control provisions were industry standard clauses at the time that the executive officers entered into the employment agreements with us. The termination and change-in-control provisions for Messrs. Nightingale and Hardy were amended effective May 7, 2015 as stipulated in the WestFace Settlement Agreement. All decisions regarding the amendment of these employment agreements were made prior to the shift in Board membership that occurred in June of 2015. A summary of the termination and change in control provisions of agreements with our named executive officers, as well as quantification of hypothetical and, where applicable, actual severance payments for each named executive officer can be found in the section titled “Potential Payments Upon Termination or Change in Control,” which follows.
Hedging and Pledging Policy
As per the Company's policy for stock trading by officers, directors and other designated persons, no officer, director or other designated person may engage in short sales, transactions in put or call options, hedging transactions or other inherently speculative transactions with respect to the Company's stock at any time.
Risk Assessment
In early 2015, the Compensation Committee and the Board each assessedperiodically review the risks associated with our compensation policies and practices. These assessments includedinclude 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 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.
| | |
| |
Athabasca Oil Corporation | | Baytex Energy Corp. |
| |
Bonavista Energy Corporation | | Frontera Energy Corporation |
| |
Denbury 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 dependsis further explained on the valuepage 45.
| | |
| |
| Gran Tierra Energy 2023 Proxy Statement | | 41 |
COMPENSATION DISCUSSION AND ANALYSIS
Elements of our shares, discourages short-term risk taking;
our annual incentiveOur Compensation ProgramOur executive compensation program includes several different metricsa mix of fixed and variable pay with performance periods ranging from one to five years. The primary elements are summarized in the table below:
| | | | | | | | |
| | | | |
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 and align interests of management and 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.
| | | | | | |
| | | |
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) | For ease of comparison, amounts reported in this column are converted from Canadian dollars to U.S. dollars at the exchange rate of 1.3600 at December 31, 2022. |
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 drive our business and stockholder value.
In January 2023, the Compensation Committee approved the annual bonus target for each named executive officer, preventingof our NEOs which were calculated as a percentage of their respective base salaries.
The value of the executive from focusing on one metric at the exclusion of other important performance goals;
our compensation programbonus is
appropriately balanced such that if annualcalculated 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 targets are not achieved, base pay and long-term incentive compensation will still provide the executives with a reasonable minimum amount of compensation; and
incentive awards are decidedstructure 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 recommendedis 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 Board for approval.
2016 Compensation Decisions
DuringChief Executive Officer, is determined through a formal performance evaluation conducted with the
second halfChief 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 2015, the Board and Management reconsidered our compensation practices to realign our programs with our renewed short- and long-term strategy.
The members0, middle results in a multiplier of
our newly comprised Compensation Committee engaged Hugessen Consulting to evaluate our executive compensation program. After taking into consideration the recommendations made by Hugessen Consulting, the Compensation Committee recommended,1 and the
Board approved,upper threshold is a
newmultiplier 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) | | $MM | | 40 – 45 – 50 | | 10% | | 20% |
| | | | |
Strategic | | | | | | | | |
| | | | |
| Exploration success – recognized reserves by Reserve Auditor | | # | | 0 – 1 – 2 | | 15% | | 30% |
| (1) | FD&A costs are calculated as estimated exploration and development capital expenditures in Colombia, divided by the applicable reserves additions both before and after changes in FDC. |
| (2) | 1P reserves have been calculated in compliance with NI 51-101 and COGEH and are based on the GTE McDaniel Reserves Report. See “Disclosure of Oil and Gas Information” for important information. |
| (3) | Lifting Costs include production and transportation expenses. |
| (4) | Free Cash Flow equals funds from operations less capital expenditures before exploration expense and before STIP payment. |
| | |
| |
| Gran Tierra Energy 2023 Proxy Statement | | 43 |
COMPENSATION DISCUSSION AND ANALYSIS
Actual Annual Cash Bonuses Earned for 2022
The following table shows the 2022 annual cash bonus awards earned by each NEO:
| | | | | | | | | | | | | | | | |
| | | | |
| | | 2022 Base Salary ($) | | | 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 payable on February 15, 2023 |
Long-Term Equity Incentive Program
Our equity compensation program for 2016. The new 2016 equity compensation program reflects the Compensation Committee’s emphasis on pay-for-performance. In prior years, allhas been designed to incorporate equity awards granted to our named executive officers were subject to vesting conditions based solely on the recipient’s continued employment over a specified period of time. In contrast, 80% of the equity awards granted to our named executive officers in early 2016 consisted of Performance Stock Units and 20% consisted of stock options.
Performance Stock Units
Our Compensation Committee and our Board believed it was important to revise our equity compensation program to incorporate a new form of equity award that
vestsvest based on the achievement of
certain key
measuresoperational 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 performance. The purpose of this change waslong-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. The Performance Stock Units granted
Each PSU entitles the holder to our named executive officersbe issued the number of common shares designated in early 2016 may become fully vested at the endperformance 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 three-yearyear following the year in which the last performance period based upon ourapplicable to the award ends. The payout multiplier is dependent on the performance with respectof the Company relative to four separatepre-defined corporate performance periods as follows:
|
| |
Performance Period | Percentage of Target Award Subject to Performance Period |
January 1, 2016 - December 31, 2016 | 20% |
January 1, 2017 - December 31, 2017 | 20% |
January 1, 2018 - December 31, 2018 | 20% |
January 1, 2016 - December 31, 2018 | 40% |
measures for the period. The number of Performance Stock UnitsPSUs 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 | | 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 will be calculated for each performance periodis as follows:
| • | | 50% weighting: Gran Tierra’s Total Shareholder Return (“TSR”) relative to that of peer companies; |
| • | | 25% weighting: Gran Tierra’s Financial Covenant Compliance and Free Cash Flow; and |
| • | | 25% weighting: execution of strategy (as determined by the Board). |
Total Shareholder Return. The Compensation Committee believes that the Board as follows:
·50% weighting:comparison of Gran Tierra’s Relative Total Shareholder Return, which will beTSR 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 plus reinvestment of dividends relative to the performance of a pre-selected peer group of companies (selected by the Board in its sole and absolute discretion) with respect to the same measures;measures. The framework included in the table below is used in determining our relative TSR. Results between the performance levels are interpolated on a linear basis. | | |
| |
| 44 | | Gran Tierra Energy 2023 Proxy Statement |
·25% weighting: Gran Tierra’s Net Asset Value per share;COMPENSATION DISCUSSION AND ANALYSIS
| | | | |
| | |
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:
| | |
| |
Baytex Energy Corp. | | Parex Resources Inc. |
| |
Callon Petroleum Company | | Tamarack Valley Energy Ltd. |
| |
Canacol Energy Ltd. | | W&T Offshore Inc. |
| |
Crescent (Formerly Contango Oil & Gas Company) | | Tullow Oil plc |
| |
Kosmos Energy Ltd. | | Surge Energy Inc. |
| |
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 Ltd.) | | |
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 | | | | |
| | |
Performance Level | | Financial Covenant
Compliance | | Payout Multiplier
(% of the Target Award) |
| | |
Threshold | | non-compliance | | 0 |
| | |
Target | | compliance | | 200 |
|
Free Cash Flow |
| | | | |
| | |
Performance Level | | Free cash flow measured at end
of year | | Payout Multiplier
(% of the Target Award) |
| | |
Threshold | | less than $10mm | | 0 |
| | |
Target | | $20mm | | 100 |
| | |
Maximum | | Greater than $30mm | | 200 |
| | |
| |
| Gran Tierra Energy 2023 Proxy Statement | | 45 |
·25% executionCOMPENSATION DISCUSSION AND ANALYSIS
Strategy.Execution of strategy (as determinedwas 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 Board).
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 Stock UnitsResults. In January 2023, the Compensation Committee confirmed and approved the performance results for the portion of the 2022 annual PSU awards that vest may range from zero to 200%based on performance during the one-year performance period ended December 31, 2022 and continued employment through the end of 2022.
For the target numberperformance 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 basedin 2020 vested on December 31, 2022 and the calculation of the performance multiplier earned underfor the terms of the award agreement. Each recipient must also remain in the continuous service ofthree-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 fromcommon shares at a future date at the dateexercise price determined at the time of grant through the date of settlement in order for the award to vest.
Stock Options
grant.Our Compensation Committee and our Board continuecontinues 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. One-thirdStock options within the LTIP mix account for 20% of the stockvalue of equity awards granted, based on the grant date fair value.
Stock options granted to our named executive officers in early 2016 are eligible to vest on March 2, 2017, an additional one-thirdpro-rata annually over three years, beginning with the first anniversary of the stock options are eligible to vest on March 2, 2018date of grant, and the remaining one-thirdhave a term of the stock options are eligible to vest on March 2, 2019, in each casefive 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).
Director The exercise price for our stock options is equal to the market price per share at the time of grant. The Compensation
Effective January 1, 2016, Committee meets in the first quarter each non-employee director receivesyear to evaluate, review and approve the following compensation:
An annual
feestock option award design and level of
$39,740 ($66,835awards for the
ChairmanNEOs. | | |
| |
| 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) | This column represents the total target compensation of the PEO which includes: base salary, short term incentive plan and long-term incentive. |
| b) | This column represents the total compensation paid to the PEO in that year which includes: base salary, short term incentive plan and long-term incentive. |
| c) | This column represents the total target compensation of the Non-PEO NEOs which includes: base salary, short term incentive plan and long-term incentive. |
| d) | This column represents the total compensation paid to the Non-PEO NEOs in that 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 Board);
Additional fees of: $32,514exercise, 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 the audit committee chair; 21,676 for the compensation committee chair; $21,676 for the corporate governance and nominating committee chair; $21,676 for the health, safety & environment committee chair and $21,676 for the reserves committee chair; and $10,838 for each committee member other than the chair;
A travel fee of $1,084 per meeting for each director who is required to travel over three hours to attend a meeting; and
Equity awards for 2016 equal to $93,931 for the Chairman of the Board and $50,939 for each director who served on the Boardstock option award or (ii) satisfy any tax obligations, including withholding taxes, arising in connection with the
condition thatexercise, vesting or payment of an equity award. | | |
| |
| 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 portion must be taken ininterests held by the form of equity until the stock ownership guideline is achieved.
Effective January 1, 2016, the fees can be taken in the form of cash, Restricted Stock Units, Options or Deferred Stock Units or any combination thereof, as electedindividual by each non-employee director.
The Board approved a stock ownership guideline for the non-employee directors equal to three times the directors' cash retainer to be based on 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 current trading pricefraud 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 sharesaccounting 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 reached within five years effective January 1, 2016. Any Deferred Stock Unitscompetitive with compensation practices for executives in similar positions at companies of similar size and Restricted Stock Units held bycomplexity. 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 director will be includedfixed 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 calculationbest 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 directors' ownership.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 REPORT
The Compensation Committee has reviewed and discussed with management the CompensationCompany’s disclosure under “Compensation Discussion and Analysis (“CD&A”)Analysis” contained in this proxy statement..statement. Based on thissuch review and discussion, the Compensation Committee has recommended to the Board of Directors that the CD&ACompensation Discussion and Analysis be included in this proxy statement and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
The material in this report is not “soliciting material,” is furnished to, but not deemed “filed” with, the SEC and is not deemed to be incorporated by reference in any filing of Gran Tierra under the Securities Act or the Exchange Act, other than Gran Tierra’s Annual Report on Form 10-K, where it shall be deemed to be “furnished,” whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Brooke Wade, Chair
Peter Dey
Robert Hodgins
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gran Tierra’s Compensation Committee currently consists of Messrs. Wade, Dey and Hodgins. None of the membersstatement.Members of the Compensation Committee has at any time been an officer or employee of Gran Tierra. No member of the Board or of theCommittee:
Brooke Wade, Chair
Peter J. Dey
Robert B. Hodgins
David Smith
| | |
| |
| Gran Tierra Energy 2023 Proxy Statement | | 49 |
Executive Compensation Committee served as an executive officer of another entity that had one or more of Gran Tierra’s executive officers serving as a member of that entity’s board or compensation committee.
SUMMARY COMPENSATION TABLE
Summary Compensation Table
The following table showssummarizes the compensation of our NEOs for their performance during the fiscal years ended December 31, 2015, 20142022, 2021 and 2013, compensation awarded to or paid to, or earned by, any individual who, (i) served as Gran Tierra’s Chief Executive Officer or Chief Financial Officer during the year in question, (ii) was one of the three other most highly compensated executive officers, or (iii) would have been one of the three most highly compensated
executive officers but for the fact that they were not serving as an executive officer at December 31, 2015 (collectively, the “named executive officers”):
|
| | | | | | | | | | | | |
| Name and Position | Year | Salary (US$)(1) | Bonus (US$)(1) (2) | Stock Awards (US$)(1) (3)
| Option Awards (US$)(1) (4)
| All Other Compensation (US$)(1) | | Total (US$)(1) |
Gary S. Guidry President and Chief Executive Officer (9) | 2015
| 187,204 |
| 140,173 | 350,550 | 896,072 |
| 2,238 |
| | 1,576,237 |
|
Jeffrey Scott Former Executive Chair (6) | 2015 | 108,382 |
| - | 275,000 | 442,464 |
| 20,373 |
| (13) | 846,219 |
|
Dana Coffield Former President and Chief Executive Officer(5) | 2015 2014 2013 | 29,019 395,690 399,586 |
| - -
- | - 707,750 387,984 | - 650,130 622,297 |
| 1,539,265 13,007 30,372 |
| (14) | 1,568,284 1,766,577 1,440,239 |
|
Ryan Ellson Chief Financial Officer (10) | 2015
| 151,214 |
| 102,601 | 221,400 | 522,709 |
| 2,228 |
| | 1,000,152 |
|
James Rozon Former Chief Financial Officer (7) | 2015 2014 2013 | 124,458 296,938 305,566 |
| -
120,690
131,628 | 165,000
447,000
287,700 | 248,886 412,583 461,232 |
| 546,376 17,332 17,443 |
| (15) | 1,084,720 1,294,588 1,203,569 |
|
Duncan Nightingale Executive Vice President (11) | 2015 2014 2013 | 267,052 299,311 300,865 |
| 108,382 129,310 141,030 | 220,000 368,025 137,000 | 326,317 352,591 219,634 |
| 4,798 314,683 415,931 |
| (16) | 926,549 1,463,920 1,214,460 |
|
David Hardy Vice President, Legal and General Counsel | 2015 2014 2013 | 231,936 276,724 282,061 |
| 108,382 103,448 112,824
| 88,550 260,750 137,000 | 160,393 250,050 219,634 |
| 37,503 51,387 67,238 |
| (17) | 626,764 942,259 818,757 |
|
Lawrence West Vice President, Exploration (12) | 2015 | 98,522 |
| 51,301 | 73,800 | 298,691 |
| 154,681 |
| (18) | 676,995 |
|
Carlos Monges Former Business Unit President, Peru (8) | 2015 2014 | 221,321 252,409 |
| - 63,102 | 68,750 186,250 | 88,493 175,035 |
| 246,329 41,761 |
| (19) | 624,893 718,557 |
|
2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Name and Position | | Year | | | Salary(1) ($) | | | 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) | |
(1)
| Each of our named executive officersAll compensation is paid in Canadian dollars exceptand converted into U.S. dollars for Mr. Monges, who was paid in Peruvian New Soles. Amounts paid to the named executive officers and reported inpurposes of the table below have been converted to U.S. dollars.above table. For discussion of 2015 bonus and other2022 compensation amounts, the exchange rate at December 31, 2015,2022 of one USU.S. dollar to Canadian $1.3840$1.3600 is used. For discussion of 2014 bonus and other compensation amounts, the exchange rate at December 31, 2014, of one US dollar to Canadian $1.1600 is used. For discussion of 2013 bonus and other compensation amounts, the exchange rate at December 31, 2013, of one US dollar to Canadian $1.0636 is used. To the extent that amounts are in Peruvian New Soles, which is the case for Mr. Monges, the exchange rate at December 31, 2014, of one US dollar to 2.99 Peruvian New Soles or the exchange rate at December 31, 2015, of one US dollar to 3.410 Peruvian New Soles is used. |
| (2) | |
(2)
| The Compensation Committee determined incentive bonuses for Gran Tierra’s named executive officers based on a subjective assessment of corporate, business unit and personal performance in addition to consideration of Gran Tierra’s overall operational and financial results, as more fully described in “Compensation Discussion and Analysis” above. Because these amounts are established based on the Compensation Committee’s subjective assessment, they are reported as bonuses rather than non-equity incentive plan compensation. The bonus amount paid to Mr. Nightingale includes a retention bonus of $108,382 paid in November 2015. Amounts reported in the bonus“Stock Awards” column represent the aggregate grant date fair value of RSU and PSU awards, computed in accordance with ASC 718, disregarding estimated forfeitures. The PSU awards are subject to market conditions and have been valued based on the probable outcome of the market conditions as of the grant date. For a discussion of valuation assumptions, see Note 9—Share Capital of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2022. Assuming maximum performance is achieved, the value of PSUs granted in 2022 based on the price of the Company’s shares at the date of grant would be as follows: Gary S. Guidry—$ 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 bonusamount earned in that year, irrespective of when the bonus amount was paid. This is a change in the basis of presentation from prior years (where amounts were reported in the year in which they were paid rather than the year in which they were earned). |
| (5) | Amounts reported in the bonus“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 total column for each of 2013 and 2014 have been reclassified to conform to this presentation.table below. |
| | |
(3)
| Granted under terms of |
| 50 | | Gran Tierra’s 2007 Equity Incentive Plan. 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 shown representin this column reflect the aggregate grant date fair value of time-vested RSUs based on the closing price of Gran Tierra’s common stock on the grant dateawards granted to NEOs in 2022 computed in accordance with ASC 718. Under718, disregarding estimated forfeitures. The value ultimately realized by each NEO upon the termsactual vesting of the 2007 Equity Incentive Plan and Restricted Stock Unit Award Agreement, uponaward(s) or exercise of the vesting of units, the holder will receive, at the option of Gran Tierra, either the underlying number of shares of Gran Tierra’s common stock option(s) may or a cash paymentmay not be equal to the valuethis determined value. For a discussion of the underlying shares, in each case netvaluation assumptions, see Note 9 — Share Capital of taxes and other required withholdings. Assumptions made regarding the valuation of RSUs granted are discussed in Note 8Notes to Gran Tierra’s 2015 Consolidated Financial Statements which can be found inincluded under Item 8 ofin our Annual Report on Form 10-K for the Form 10-K filed with the SEC on February 29, 2016.year ended December 31, 2022. |
| | |
(4)
| Granted under terms of Gran Tierra’s 2007 Equity Incentive Plan. The value reported above reflects the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 Compensation - Stock Compensation (“ASC 718”). Assumptions made regarding the valuation of stock options granted are discussed in Note 8 to Gran Tierra’s 2015 Consolidated Financial Statements, which can be found in Item 8 of the Form 10-K filed with the SEC on February 29, 2016. |
| |
(5)
| On February 2, 2015, Mr. Coffield ceased to be an employee or officer of Gran Tierra. |
| |
(6)
| Mr. Scott served as Executive Chair from February 2, 2015 to May 7, 2015. |
| |
(7)
| Mr. Rozon ceased to be our Chief Financial Officer on May 7, 2015 and ceased to be an employee of Gran Tierra on June 30, 2015.Energy 2023 Proxy Statement | | 51 |
| |
(8)
| Mr. Monges was not a named executive officer in 2013, and consequently his compensation for 2013 was not previously reported, and in accordance with SEC rules is not reported here. Mr. Monges ceased to be an employee or officer of Gran Tierra on July 1, 2015. |
| |
(9)
| Mr. Guidry became President and Chief Executive Officer on May 7, 2015. |
| |
(10)
| Mr. Ellson became Chief Financial Officer on May 11, 2015. |
| |
(11)
| Mr. Nightingale served as our President, Gran Tierra Colombia Ltd. until August 2014, and as our Chief Operating Officer from September 2014 to February 2015, as our Interim Chief Executive Officer and President from February 2, 2015 to May 7, 2015, and as our Executive Vice President from May 7, 2015 to February 19, 2016. |
| |
(12)
| Mr. West became Vice President, Exploration on May 11, 2015. |
(13) Includes vacation payment of $9,827 and housing allowance of $10,546.
| |
(14)
| Consists of severance payment to Mr. Coffield of $1,530,347; vacation payment of $7,960, parking costs of $193 and life insurance premiums of $766. |
| |
(15)
| Consists of severance payment to Mr. Rozon of $525,108, vacation payment of $19,415, parking costs of $1,284 and life insurance premiums of $569. |
(16) Consists of parking costs of $2,853 and life insurance premiums of $2,214.
(17) Includes vacation payment of $29,688, parking costs of $2,583 and life insurance premiums of $5,232.
| |
(18)
| Consists of $59,715 allowance for housing, furniture and utilities; $27,312 driver, vehicle and parking expenses; $50,751 foreign service and settlement allowance; $6,240 goods and services costs; $7,070 club membership; $277 life insurance premiums and $3,316 language training. |
| |
(19)
| Consists of severance payment to Mr. Monges of $208,382, vehicle allowance of $33,431 and health and accident insurance premiums of $4,516. |
2015 GRANTS OF PLAN-BASEDEXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS
AT DECEMBER 31, 2022The following table shows for the fiscal year ended December 31, 2015,2022, certain information regarding grantsoutstanding equity awards held by each of plan-based awards to the Named Executive Officers:
|
| | | | | | | | | | | | |
| Name | Grant Date | Date of Corporate Approval (1) | Number of Shares Underlying Stock or Units (#) | Number of Securities Underlying Options (#) | Exercise or Base price of Option Awards ($/Sh) | Grant Date Fair Value of Option and Stock Awards ($)(2)(3) |
| Gary Guidry | May 12, 2015 |
| May 7, 2015 | | 600,000 |
| 3.69 |
| 896,072 |
|
| | May 12, 2015 |
| May 7, 2015 | 95,000 |
| | | 350,550 |
|
| Jeffrey Scott | March 4, 2015 |
| Feb. 19, 2015 | | 400,000 |
| 2.75 |
| 442,464 |
|
| | March 4, 2015 |
| Feb. 19, 2015 | 100,000 |
| | | 275,000 |
|
| Dana Coffield | — |
| — |
| — |
| — |
| — |
| — |
|
| | — |
| — |
| — |
| — |
| — |
| — |
|
| Ryan Ellson | May 12, 2015 |
| May 9, 2015 | | 350,000 |
| 3.69 |
| 522,709 |
|
| | May 12, 2015 |
| May 9, 2015 | 60,000 |
| — |
| — |
| 221,400 |
|
| James Rozon | March 4, 2015 |
| Feb. 19, 2015 | | 225,000 |
| 2.75 |
| 248,886 |
|
| | March 4, 2015 |
| Feb. 19, 2015 | 60,000 |
| | | 165,000 |
|
| Duncan Nightingale | March 4, 2015 |
| Feb. 19, 2015 | | 295,000 |
| 2.75 |
| 326,317 |
|
| | March 4, 2015 |
| Feb. 19, 2015 | 80,000 |
| | | 220,000 |
|
| David Hardy | March 4, 2015 |
| Feb. 19, 2015 | | 145,000 |
| 2.75 |
| 160,393 |
|
| | March 4, 2015 |
| Feb. 19, 2015 | 35,000 |
| | | 88,550 |
|
| Lawrence West | May 12, 2015 |
| May 9, 2015 | | 200,000 |
| 3.69 |
| 298,691 |
|
| | May 12, 2015 |
| May 9, 2015 | 20,000 |
| | | 73,800 |
|
| Carlos Monges | March 4, 2015 |
| Feb. 19, 2015 | | 80,000 |
| 2.75 |
| 88,493 |
|
| | March 4, 2015 |
| Feb. 19, 2015 | 25,000 |
| | | 68,750 |
|
NEOs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| | | Option Awards | | | Stock Awards | | | |
| | | | | | | | | |
Name | | Number of
Securities
Underlying
Unexercised
Options (#) Exercisable | | | Number of
Securities
Underlying
Unexercised
Options (#) Exercisable | | | Option
Exercise
Price ($) | | | 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) | Represents the date that the Board took the action to grant the award. |
| |
(2) | For option awards, represents the grant date fair value of such option award calculated in accordance with ASC 718Calculated using the Black Scholes valuation model. Assumptions made regarding the valuation of stock options granted are discussed in Note 8 to Gran Tierra’s 2015 Consolidated Financial Statements,$0.99 which can be found in Item 8 of the Form 10-K filed on February 26, 2016. |
| |
(3) | For stock awards, represents the grant date fair value of time-vested RSUs based onis the closing price of Gran Tierra’s common stockshares on December 31, 2022. |
| (2) | These amounts include the grant date equal to (a) $2.75 per share fortranches 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 4, 20151, 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 (b) $3.69 per sharethe 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 granted on May 12, 2015. Assumptions made regardinghas been fulfilled, the valuationcontinued 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 RSUs granted are discussed in Note 8 to Gran Tierra’s 2015 Consolidated Financial Statements, which can be found in Item 8 of the Form 10-K filed on February 26, 2016.December 31, 2022. |
NARRATIVE TO THE SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
In connection with the amendment of employment agreements with each of Messrs. Hardy, Rozon, Nightingale, and Scott, the terms of each executive’s stock options and, in the case of each executive other than Mr. Scott, RSUs were amended to provide for accelerated vesting in connection with certain terminations of employment. The incremental fair value, computed as of the modification date in accordance with FASB ASC Topic 718, for all stock options or RSUs modified during 2015 is included in the Summary Compensation Table in either the Stock Awards or Option Awards column, as appropriate, and in the Grants of Plan-Based Awards table. For additional information regarding the details of these employment agreement amendments please see the section of the Compensation Discussion & Analysis entitled “Employment Agreements Entered into or Amended During 2015” and for additional information regarding the payment of cash amounts and the acceleration of equity awards that occurred in connection with actual terminations of employment by named executive officers during 2015, please see the Summary Compensation Table (above), and the section entitled “Potential Payments Upon Termination or Change in Control” which follows.
2015 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table shows for the fiscal year ended December 31, 2015, certain information regarding outstanding equity awards at fiscal year-end for the Named Executive Officers.
|
| | | | | | | | | | | | | | |
| | 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 Shares or Units That Have Not Vested ($) (1) |
| Gary Guidry | — |
| 600,000 |
| (4 | ) | 3.69 |
| May 11, 2020 | 95,000 |
| 206,150 |
|
Jeffrey Scott (2) | 100,000 |
| — |
| * |
| 1.27 |
| June 24, 2016 | — |
| — |
|
| | 150,000 |
| — |
| * |
| 2.14 |
| June 24, 2016 | — |
| — |
|
| | 425,000 |
| — |
| * |
| 2.51 |
| June 24, 2016 | — |
| — |
|
| | 75,000 |
| — |
| * |
| 5.90 |
| June 24, 2016 | — |
| — |
|
| | 55,000 |
| — |
| * |
| 8.40 |
| June 24, 2016 | — |
| — |
|
| | 125,000 |
| — |
| * |
| 5.83 |
| June 24, 2016 | — |
| — |
|
| | 55,000 |
| — |
| * |
| 6.28 |
| June 24, 2016 | — |
| — |
|
| | 100,000 |
| — |
| * |
| 7.09 |
| June 24, 2016 | — |
| — |
|
| | 400,000 |
| — |
| * |
| 2.75 |
| June 24, 2016 | — |
| — |
|
| Dana Coffield | — |
| — |
| | — |
| — |
| — |
| — |
|
| Ryan Ellson | — |
| 350,000 |
| (4 | ) | 3.69 |
| May 11, 2020 | 60,000 |
| 130,200 |
|
James Rozon (3) | 25,000 |
| — |
| * |
| 1.72 |
| June 30, 2016 | — |
| |
| | 125,000 |
| — |
| * |
| 2.51 |
| June 30, 2016 | — |
| — |
|
| | 40,000 |
| — |
| * |
| 5.90 |
| June 30, 2016 | — |
| — |
|
| | 35,000 |
| — |
| * |
| 8.40 |
| June 30, 2016 | — |
| — |
|
| | 35,000 |
| — |
| * |
| 5.83 |
| June 30, 2016 | — |
| — |
|
| | 157,500 |
| — |
| * |
| 6.28 |
| June 30, 2016 | — |
| — |
|
| | 165,000 |
| — |
| * |
| 7.09 |
| June 30, 2016 | — |
| — |
|
| | 225,000 |
| — |
| * |
| 2.75 |
| June 30, 2016 | — |
| — |
|
| Duncan Nightingale | 166,667 |
| — |
| * |
| 3.95 |
| Sep. 8, 2019 | 8,334 |
| 18,085 |
|
| | 30,000 |
| — |
| * |
| 5.90 |
| Mar. 3, 2020 | 16,667 |
| 36,167 |
|
| | 50,000 |
| — |
| * |
| 8.40 |
| Mar. 9, 2021 | 18,334 |
| 39,785 |
|
| | 50,000 |
| — |
| * |
| 5.83 |
| Feb. 28, 2022 | 80,000 |
| 173,600 |
|
| | 50,000 |
| 25,000 |
| (5 | ) | 6.28 |
| May 7, 2018 | | |
| | 25,000 |
| 50,000 |
| (6 | ) | 7.09 |
| Feb. 28, 2019 | | |
| | 23,333 |
| 46,667 |
| (6 | ) | 6.71 |
| Aug. 31, 2019 | | |
| | — |
| 295,000 |
| (7 | ) | 2.75 |
| Mar. 3, 2020 | | |
| David Hardy | 150,000 |
| — |
| * | 5.90 |
| March 1, 2020 | 8,334 |
| 18,085 |
|
| | 100,000 |
| — |
| * | 8.40 |
| March 9, 2021 | 23,334 |
| 50,635 |
|
| | 100,000 |
| — |
| * | 5.83 |
| Feb. 28, 2022 | 35,000 |
| 75,950 |
|
| | 50,000 |
| 25,000 |
| (8 | ) | 6.28 |
| May 7, 2018 | | |
| | 33,333 |
| 66,667 |
| (9 | ) | 7.09 |
| Feb. 28, 2019 | | |
| | — |
| 145,000 |
| (10 | ) | 2.75 |
| March 3, 2020 | | |
| Lawrence West | — |
| 200,000 |
| (4 | ) | 3.69 |
| May 11, 2020 | 20,000 |
| 43,400 |
|
| Carlos Monges | — |
| — |
| | — |
| — |
| — |
| — |
|
(1) Calculated using $2.17 which is the closing price of Gran Tierra's shares on December 31, 2015.
| |
(2) | Includes accelerated vesting pursuant to Mr. Scott's amended employment agreement with us. |
(3) Includes accelerated vesting pursuant to Mr. Rozon's amended employment agreement with us.
| |
| (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 option willoptions vest one-third on May 12, 2016, February 28, 2021, one-third on May 12, 2017February 28, 2022, and the remaining one-third on May 12, 2018,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. |
(5)(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 option became fully vestedoptions vest one-third on February 28, 2016. |
| |
(6) | The right to exercise this portion ofMarch 1, 2022, one-third on March 1, 2023 and one-third on March 1, 2024, in each case if the option will vest on May 7, 2016 (per the amendment to Mr. Nightingale's employment agreement) provided that he remainsholder is still employed through that date or, if earlier, on the date of his termination of employment by Gran Tierra or due to his resignation for good reason (as defined in the amendment to his employment agreement).on such date. |
| |
(7) | The right to exercise one-third of this option vested on March 4, 2016, and the remaining two-thirds on May 7, 2016 (per the amendment to Mr. Nightingale's employment agreement) provided that he remains employed through that date or, if earlier, on the date of his termination of employment by Gran Tierra or due to his resignation for good reason (as defined in the amendment to his employment agreement). |
| |
(8) | The right to exercise this portion of the option vested on March 1, 2016. |
| |
| (9) | The right to exercise this portion of the option vested one-half on February 28, 2016 and the remaining one-half will vest on May 7, 2016 (per the amendment to Mr. Hardy's employment agreement). |
| |
(10) | 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 vested one-third on March 4, 2016, and the remaining two-thirds will vest on May 7, 2016 (per the amendment to Mr. Hardy's Employment Agreement) provided that he remainsholder is still employed through each date or, if earlier, on the date of his termination of employment by Gran Tierra or due to his resignation for good reason (as defined in the amendment to his employment agreement).on such date. |
20152022 OPTION EXERCISES AND STOCK VESTED
The following table presents information concerning the aggregate number of shares for which options that were exercised and stock awardsthe PSUs that vested during the fiscal year ended December 31, 2015,2022, for the Named Executive Officers.
|
| | | | | | | | | | |
| | Option Awards | Stock Awards |
| Name | Number of shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) |
| Gary S. Guidry | — |
| — |
| | — |
| | — |
|
| Jeffrey Scott | 150,000 |
| 277,500 |
| | — |
| | — |
|
| Dana Coffield | 200,000 |
| 25,014 |
| | — |
| | — |
|
| Ryan Ellson | — |
| — |
| | — |
| | — |
|
| James Rozon | — |
| — |
| | 155,000 |
| | 445,025 |
|
| Duncan Nightingale | — |
| — |
| | 25,832 |
| | 63,888 |
|
| David Hardy | — |
| — |
| | 19,999 |
| | 50,597 |
|
| Lawrence West | — |
| — |
| | — |
| | — |
|
| Carlos Monges | — |
| — |
| | 13,883 |
| | 35,124 |
|
| | | | | | | | | | | | | | | | |
| | |
| | Option Awards | | | Stock Awards | |
| | | | |
Name | | Number of Shares
Acquired on
Vesting (#) | | | Value Realized on Vesting ($) | | | 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 RSUsPSUs that vested during 20152022 were settled in cash, and no shares of common stock were issued. |
| |
| (2) | RepresentsThe amounts in this column were calculated by multiplying the number of shares of common stock subject to the PSU that vested by the closing market price of common stock on the vesting date the shares of common stock subject to the stock award vested multiplied by the number of shares vested.December 31, 2022 which was $0.99. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Actual Terminations of Employment During 2015
Mr. Coffield
Mr. Coffield ceased to be the President and Chief Executive Officer on February 2, 2015. Pursuant to Mr. Coffield’s Executive Employment Agreement, he was entitled to a separation package equal to two times his base salary plus bonus earned during the 12 months prior to his termination of employment. Such payment equated to $1,530,347 (CAD $2,118,000) and was deferred until August 4, 2015 at the election of Mr. Coffield. Mr. Coffield forfeited any unvested RSUs and unvestedPotential Payment Upon Termination or unexercised stock options in connection
with his termination of employment. Mr. Coffield was required to, and did, timely enter into a release of claims in order to receive this severance payment.
Mr. Scott
Mr. Scott ceased to be Chairman of the Board on June 24, 2015. In connection with his termination of employment, the vesting of 485,000 stock options were accelerated in accordance with Mr. Scott’s employment agreement, as amended. The value of this acceleration is estimated to be $360,000, which represents the difference between the closing market price of our common stock as of the last day of Mr. Scott’s employment and the exercise price of each the stock option that was accelerated. For a summary of Mr. Scott’s employment agreement and the amendment thereto please see the section of the Compensation Discussion & Analysis entitled “Employment Agreements Entered into or Amended During 2015.” Mr. Scott did not receive any other payments or benefits in connection with his termination of employment. He ceased to serve as Chairman of the Board effective June 24, 2015.
Mr. Rozon
Mr. Rozon ceased to be an employee of the Company on June 30, 2015. Pursuant to Mr. Rozon’s employment agreement, as amended, we provided him with a cash payment equal to $525,108, which represents 1.5 times all base salary and bonus amounts either payable or paid during the 12 months preceding Mr. Rozon’s termination of employment. Additionally, the vesting of 117,500 RSUs and 387,500 stock options was accelerated effective as of his termination date. The value of this acceleration of vesting is estimated to be $401,950, which, for RSUs represents the closing market price of a share of our common stock on Mr. Rozon’s last day of employment multiplied by the number of RSUs that vested and for the stock options represents the difference between the closing market price of our common stock as of the last day of Mr. Rozon’s employment and the exercise price each stock option that was accelerated. For a summary of the amendment to Mr. Rozon’s employment please see the section of the Compensation Discussion & Analysis entitled “Employment Agreements Entered into or Amended During 2015.” Mr. Rozon executed a release of claims.
Mr. Monges
Our employment agreement with Mr. Monges contained a termination provision, which provided that Mr. Monges would receive severance payments in the event he was terminated without cause and has the legal right to severance under Peruvian labor laws. Mr. Monges ceased to be the President, Peru on July 1, 2015. Pursuant to Mr. Monges’ employment agreement, we provided him with severance payments equal to $246,336 which represents 0.8 times the base salary and bonus amounts either paid or payable to Mr. Monges during the 12 months preceding his termination of employment.
Termination of Employment and Change of Control Provisions Applicable to Continuing Named Executive Officers
Messrs. Nightingale and Hardy
During 2015, each of Messrs. Nightingale and Hardy entered into an amendment to their respective employment agreements with Gran Tierra which provide that:
| |
(1) | within 30 days of termination of the executive’s employment with us, whether by us, by the executive (including, without limitation, termination for good reason) or by death or permanent disability of the executive, the executive will be entitled to receive a cash payment equal to the greater of: |
| |
a. | $750,867 for Mr. Nightingale and $476,879 for Mr. Hardy; or |
| |
b. | 2 times for Mr. Nightingale and 1.5 times for Mr. Hardy multiplied by all base salary and bonus amounts either payable or paid during the 12 months preceding the executive’s termination of employment; |
| |
(2) | acceleration of the executive’s equity awards upon the earlier to occur, if any, of May 7, 2016 (if still employed with Gran Tierra on that date), the date Gran Tierra terminates his employment, and the date the executive resigns for good reason (as defined below); and |
| |
(3) | subject to approval by the Toronto Stock Exchange, the post-termination exercise period of the executive’s stock options will be extended to the earlier to occur of one year from the date of termination of employment and the original expiration date of the stock option. |
As defined in the amendment to the employment agreements with Messrs. Nightingale and Hardy, “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 (as defined below);
(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 agreements with Messrs. Nightingale and 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.
As defined in the amendment to the employment agreements with Messrs. Nightingale and Hardy, “cause” generally means any of the following:
(i) participation in a fraud or dishonesty against the company;
(ii) participation in an act of dishonesty against the company intended to result in your personal enrichment;
(iii) the intentional making by the executive of any material personal profit at the expense of the company without the prior written consent of the company;
(iv) willful material breach by the executive of a provision of the employment agreement or of the company’s written policies;
(v) intentional significant damage to the company’s property; or
(vi) conduct by you that, in the good faith and reasonable determination of the Board, demonstrates gross unfitness to serve, provided that the company will provide the executive a notice describing the nature of the gross unfitness and the executive will have ten (10) days to cure.
The Company cannot terminate the executive’s employment for cause unless and until the executive receives a copy of a resolution adopted by at least a majority of the Board finding that in the good faith opinion of the Board that “cause” exists and specifying the particulars thereof in reasonable detail.
Messrs. Guidry, Ellson, Evans, Trimble and West
In the event that Messrs. Guidry, Ellson, 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.
| | |
| |
| Gran Tierra Energy 2023 Proxy Statement | | 53 |
The named executive officersEXECUTIVE 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 named executive officerNEO 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 |
In addition, ifUnder the terms of Mr. GuidryGuidry’s employment agreement, as he is required to file a USU.S. income tax return with the Internal Revenue Service, and if any of theas 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: | | | | |
| |
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. The definition of “good reason”
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 same aschange is adverse to the definition summarized above for Messrs. Nightingale and Hardy.
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 |
(c)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, Ellison,Ellson, Evans, Trimble and West forfeit any unvested RSUs and stock options.
2007 Equity Incentive Plan
Except as otherwise stated in the 2007 Equity Incentive Plan, in the event of specified significant corporate transactions (as defined in the 2007 Equity Incentive Plan), such as a sale or other disposition of all or substantially all of Gran Tierra’s assets, a sale of at least 50% of Gran Tierra’s outstanding securities, a merger in which Gran Tierra is not the surviving entity, or a merger in which Gran Tierra is the surviving entity, but Gran Tierra’s common stock outstanding immediately prior to the transaction is exchanged or converted into other property, any surviving corporation or acquiring corporation may assume, continue or substitute similar awards for any or all outstanding stock awards under the 2007 Equity Incentive Plan. If the acquiring company assumes, continues or substitutes the awards under the plan, then any awards that are held by employees, including the named executive officers, performing services for Gran Tierra or any of Gran Tierra’s affiliates at the time of the transaction will vest and become fully exercisable in connection with the transaction and any repurchase rights held by Gran Tierra with respect to such awards shall lapse. Any awards that are not assumed, continued or substituted will not accelerate and shall be terminated if not exercised prior to the effective date of the corporate transaction.
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, 2015,2022, for the named executive officersNEOs using $2.17,$0.99, the closing price of the stock on that date.
|
| | | | | | | | | | | | |
| | | Acceleration of Vesting | | | | |
| Name | | Stock Options ($) (1) | RSUs ($)(1) | | Severance Payment ($) | | Total ($) |
Gary S. Guidry (2) | | | | | | | | |
| Termination without Cause or Resignation for Good Reason | | — |
| | — |
| | 1,086,911 |
| | 1,086,911 |
|
| Corporate Transaction | | — |
| | 206,150 |
| | — |
| | 206,150 |
|
| Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | — |
| | 206,150 |
| | 1,086,911 |
| | 1,293,061 |
|
| Ryan Ellson | | | | | | | | |
| Termination without Cause or Resignation for Good Reason | | — |
| | — |
| | 447,827 |
| | 447,827 |
|
| Corporate Transaction | | — |
| | 130,200 |
| | — |
| | 130,200 |
|
| Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | — |
| | 130,200 |
| | 447,827 |
| | 578,027 |
|
Duncan Nightingale (3) | | | | | | | |
| Termination without Cause or Resignation for Good Reason | | — |
| | 267,637 |
| | 967,630 |
| | 1,235,267 |
|
| Corporate Transaction | | — |
| | 267,637 |
| | — |
| | 267,637 |
|
| Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | — |
| | 267,637 |
| | 967,630 |
| | 1,235,267 |
|
David Hardy (3) | | | | | | | | |
| Termination without Cause or Resignation for Good Reason | | — |
| | 144,670 |
| | 456,936 |
| | 601,606 |
|
| Corporate Transaction | | — |
| | 144,670 |
| | — |
| | 144,670 |
|
| Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | — |
| | 144,670 |
| | 456,936 |
| | 601,606 |
|
| Lawrence West | | | | | | | | |
| Termination without Cause or Resignation for Good Reason | | — |
| | — |
| | 280,538 |
| | 280,538 |
|
| Corporate Transaction | | — |
| | 43,400 |
| | — |
| | 43,400 |
|
| Termination without Cause or Resignation for Good Reason following a Corporate Transaction | | — |
| | 43,400 |
| | 280,538 |
| | 323,938 |
|
| | | | | | | | | | | | | | | | |
| | |
| | | | | | Acceleration of Vesting | |
| | | | |
Name | | Cash
Severance
($) | | | 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 $2.17,$0.99, the closing price of our common stock on December 31, 2015,2022, and the exercise price of the applicable option, multiplied by (b) the number of unvested options subject to accelerated vesting held by the applicable named executive officer. As of December 31, 2015, all stock options held by the named executive officers in the table above had an exercise price that was greater than $2.17. As such, no value is reported with respect to the stock options held by the named executive officers in the table above.NEO. With respect to RSUs,PSUs, the value is calculated as (a) $2.17,$0.99, the closing price of our common stock on December 31, 2015,2022, multiplied by (b) the number of unvested RSUsPSUs subject to accelerated vesting held by the applicable named executive officer.NEO, assuming a performance factor of 1. |
| |
| (2) | Under the terms ofIn addition, if Mr. Guidry's employment agreement, as heGuidry is required to file a USU.S. income tax return with the Internal Revenue Service, and as certainif 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 |
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| 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 In 2015,2022, this amount would have been $409,894.$3,257,013, calculated as follows: |
| |
(3) | In May 2015, in connection with the settlement agreement with West Face Capital Inc., each of Duncan Nightingale, James Rozon and David Hardy (each, an “executive”) entered into an amendment to their respective employment agreements with Gran Tierra which provide that: (1) upon the executive ceasing to be employed by Gran Tierra, the executive will be entitled to receive the cash severance payment to which he would have been entitled under his then current employment agreement if his employment with Gran Tierra was terminated following a change of control of Gran Tierra; (2) that the executive’s equity awards will vest |
upon the earlier to occur, if any, of May 7, 2016 (if still employed with Gran Tierra on that date), the date Gran Tierra terminates his employment, and the date the executive resigns for good reason (as defined in the amendment); and (3) subject to approval by the Toronto Stock Exchange, the post-termination exercise period of the executive’s stock options will be extended to the earlier to occur of one year from the date of termination of employment and the original expiration date of the stock option. In addition, Mr. Nightingale’s amendment to employment agreement provided that Mr. Nightingale receive a retention bonus of $108,382 if (a) he does not terminate his employment with Gran Tierra prior to November 7, 2015, or (b) Gran Tierra breaches the employment agreement or terminates Mr. Nightingale employment with Gran Tierra prior to six months from the date of the amendment to employment agreement. This retention bonus payment was paid to Mr. Nightingale in November 2015.
2015 DIRECTOR COMPENSATION
The following table shows for the fiscal year ended December 31, 2015, certain information with respect to the compensation of all non-employee directors of Gran Tierra:
|
| | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash (1) | | Option Awards (2)(6) | | Total ($) |
Jeffrey Scott (3) | | $ | 29,143 |
| | | | | $ | 29,354 |
|
Nicholas G. Kirton (4) | | $ | 64,027 |
| | $ | 64,095 |
| | $ | 128,122 |
|
| J. Scott Price | | $ | 116,134 |
| | $ | 93,228 |
| | $ | 209,362 |
|
Gerald Macey (5) | | $ | 75,403 |
| | $ | 64,095 |
| | $ | 139,497 |
|
| Peter Dey | | $ | 44,549 |
| | $ | 132,939 |
| | $ | 177,485 |
|
| Evan Hazell | | $ | 33,782 |
| | $ | 109,858 |
| | $ | 143,638 |
|
| Robert Hodgins | | $ | 60,910 |
| | $ | 132,939 |
| | $ | 193,846 |
|
| Ron Royal | | $ | 45,345 |
| | $ | 132,939 |
| | $ | 178,281 |
|
| David Smith | | $ | 43,611 |
| | $ | 132,939 |
| | $ | 176,547 |
|
| Brooke Wade | | $ | 39,480 |
| | $ | 109,858 |
| | $ | 149,336 |
|
| |
(1) | All compensation to non-employee directors is paid in Canadian dollars and converted into U.S. dollars for the purposes of the above table. See “Presentation in U.S. Dollars” above for conversion rates. |
| |
(2) | Assumptions made in the valuation of stock options granted are discussed in Note 7 to Gran Tierra’s 2015 Consolidated Financial Statements, which can be found in Item 8 of the Form 10-K filed with the SEC on February 29, 2016. Reflects the aggregate grant date fair value computed in accordance with ASC 718. Each director received only one option grant award in 2015, the fair market value of which is reflected in the table. |
| |
(3) | Mr. Scott was paid director fees for the period where he was considered to be an independent director. Mr. Scott was not an independent director from February 2, 2015 to May 7, 2015 and ceased to be a director on June 24, 2015. See section Summary Compensation table which discusses fees paid to Mr. Scott for acting as Executive Chairman during the period February 2, 2015 to May 7, 2015. |
| |
(4) | Mr. Kirton ceased to be a director on June 24, 2015. All unexercised stock options held by Mr. Kirton will expire on June 24, 2016. |
| |
(5) | Mr. Macey ceased to be a director on June 24, 2015. All unexercised stock options held by Mr. Macey will expire on June 24, 2016. |
| |
(6) | At December 31, 2015, the following non-employee directors held options to purchase the following number of shares: |
|
| | | | |
Name | | Shares |
Peter DeyTotal termination payment | | | 85,0006,263,486 |
|
Evan Hazell | |
Gross-Up of taxable income | | | 85,0002,654,230 |
|
Robert Hodgins | |
Total taxable income | | | 85,0008,917,717 |
|
Scott Price | |
Canadian tax payable | | | 585,000(4,280,504 |
) |
Ron Royal | |
Net cash | | | 85,0004,637,213 |
|
David Smith | |
US Excise tax payable | | | 85,000(1,380,200 |
) |
Brooke Wade | |
Net after tax | | | 3,257,013 | |
Pay Ratio Disclosure
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 $2,644,976 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.
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85,00056 |
| Gran Tierra Energy 2023 Proxy Statement |
AllPay 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 | | | $ | 491,487,000 | |
| | | | | | | | |
| 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 the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the 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 | ) |
| | |
| |
Gran Tierra Energy 2023 Proxy Statement | | |
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 | EBITDA is 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. |
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
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| | Gran Tierra Energy 2023 Proxy Statement |
PAY VERSUS PERFORMANCE DISCLOSURE
Analysis of the Information Presented in the Pay versus Performance Table
As described in more detail in the section “Executive Compensation—Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variablephilosophy. 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
| | |
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Gran Tierra Energy 2023 Proxy Statement | | |
PAY VERSUS PERFORMANCE DISCLOSURE
Compensation Actually Paid and EBITDA
| | |
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| | Gran Tierra Energy 2023 Proxy Statement |
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 directors whoissued 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
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| Gran Tierra Energy 2023 Proxy Statement | | 61 |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTI FI CATE OF I NCORPORATI ON TO GI VE THE BOARD OF DI RECTORS DI SCRETI ONARY AUTHORI TY TO EFFECT A REVERSE STOCK SPLI T
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 named executive officersmarket 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 service during 2015our 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 describedeffected, 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 preceding sectionsper 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 proxy statementReverse 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.
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| 62 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTI FI CATE OF I NCORPORATI ON TO GI VE THE BOARD OF DI RECTORS DI SCRETI ONARY AUTHORI TY TO EFFECT A REVERSE STOCK SPLI T
At the close of business on March 7, 2023, 368,808,619 shares of Common Stock were issued (including 22,747,462 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 36,880,862 shares of Common Stock issued (including 2,274,747 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 heading “Executive Compensationequity 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 Related Information.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.
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| Gran Tierra Energy 2023 Proxy Statement | | 63 |
Each non-employee director receivedPROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTI FI CATE OF I NCORPORATI ON TO GI VE THE BOARD OF DI RECTORS DI SCRETI ONARY AUTHORI TY TO EFFECT A REVERSE STOCK SPLI T
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.
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| 64 | | Gran Tierra Energy 2023 Proxy Statement |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTI FI CATE OF I NCORPORATI ON TO GI VE THE BOARD OF DI RECTORS DI SCRETI ONARY AUTHORI TY TO EFFECT A REVERSE STOCK SPLI T
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 compensation for 2015:
An annual feeU.S. federal income tax purposes: (i) a citizen or resident of
$25,289 ($32,514the 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 U.S. dollar; |
| • | | stockholders who actually or constructively 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 performance of 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 the Lead Independent Director);
Additional fees of: $21,676U.S. federal income tax purposes) for the audit committee chair; $16,257 for the compensation committee chair; $10,838 for each other committee chair; $10,838 for each audit committee member other than the chair; $9,032 for each compensation committee member other than the chair; and $7,225 for each other committee member other than the chair;
A fee of $867 for each Board or committee meeting attended; and
A stock option to purchase 55,000 shares (other than the Lead Independent Director, who received a stock option to purchase 80,000 shares) ofU.S. federal income tax purposes holds common stock,
the tax treatment of
Gran Tierra under Gran Tierra’s 2007 Equity Incentive Plan, with an
exercise priceequity holders in such entity will generally depend on the status of such equity holder and the activities of such entity. | | |
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| Gran Tierra Energy 2023 Proxy Statement | | 65 |
PROPOSAL 4: APPROVE AN AMENDMENT TO THE COMPANY’S CERTI FI CATE OF I NCORPORATI ON TO GI VE THE BOARD OF DI RECTORS DI SCRETI ONARY AUTHORI TY TO EFFECT A REVERSE STOCK SPLI T
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 fair marketaggregate 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.
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 the date of grantthis proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE REVERSE SPLIT PROPOSAL.
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| 66 | | Gran Tierra Energy 2023 Proxy Statement |
Certain Relationships and with a three year vesting term.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related TransactionsRELATED 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 approvingrecommending to the Board the approval or disapprovingdisapproval 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 NevadaDelaware law and Gran Tierra’s Bylaws.
STOCKHOLDER PROPOSALS
Stockholder Proposals
Stockholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at the 20172023 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 200, 150-13th Avenue S.W.500 Centre Street S.E., Calgary, Alberta, T2R 0V2, Canada)Canada T2G 1A6), not later than the close of business on January 11, 2017.November 25, 2023. If the date of the 20172024 annual meeting is changed by more than 30 days from the date of the 20162023 annual meeting, the deadline for submitting proposals is a reasonable time before we begin to print and mail the proxy materials for our 2017 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.
2023 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 20172024 annual meeting of stockholders only by sending to our Corporate Secretary a notice containing the information required by our Bylaws no earlierBylaws. Notice to us must be made not less than 30 or more than 65 days prior to the closedate of businessthe annual meeting; provided, however, that if the annual meeting is to be held on March 25, 2017 and noa 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 April 24, 2017. If we schedule our 2017the 10th day following the day on which public announcement of the date of the annual meeting to a date that is more than 30 days before or 60 days after June 23, 2017, then such notice must be given no earlier than the close of business 90 days, and no later than the close of business 60 days, before the rescheduled meeting, or notice must be given within 10 days following the date public notice of the rescheduled meeting is givenfirst made by us.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.
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| Gran Tierra Energy 2023 Proxy Statement | | 67 |
HOUSEHOLDING OF PROXY MATERIALS
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. Direct your writtenYou can also request toprompt delivery of a copy of the proxy statement and annual report by contacting Gran Tierra Energy Inc., Diane Phillips, Corporate Secretary, 200, 150 - 13th Avenue S.W.500 Centre Street S.E., Calgary, Alberta, T2R 0V2, Canada T2G 1A6or contact David Hardy, Vice President, Legal and General Counsel,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
brokersOther 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.
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| By Order of the Board of Directors |
| /s/ Gary Guidry |
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| Gary S. Guidry |
| President and Chief Executive Officer |
April [_____], 2016
March 24, 2023
A copy of Gran Tierra’s Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2015,2022, 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., 200, 150 – 13 Avenue S.W.500 Centre Street S.E., Calgary, Alberta, T2R 0V2, Canada T2G 1A6, Attention: Corporate Secretary.
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| 68 | | Gran Tierra Energy 2023 Proxy Statement |
71
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
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.
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 (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.
See the GTE 51-101F1 for additional definitions regarding terms used in this document.
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| Gran Tierra Energy 2023 Proxy Statement | | 69 |
PLANCERTIFICATE OF CONVERSION
AMENDMENT TO CERTIFICATE OF
INCORPORATION OF GRAN TIERRA ENERGY INC.,
A NEVADA CORPORATION,
INTO
GRAN TIERRA ENERGY INC.,
A DELAWARE CORPORATION
THIS PLAN OF CONVERSION, dated as of [ ], 2016 (including all of the Exhibits attached hereto, this “Plan”), is hereby adopted by Gran Tierra Energy Inc., a Nevada corporation, in order to set forth the terms, conditions and procedures governing the conversion of Gran Tierra Energy Inc. from(the “Corporation”), a Nevada corporation to a Delaware corporation pursuant to Section 265organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware as amended (the “
DGCLGeneral Corporation Law”), and Section 92A.105 of the Nevada Revised Statutes,does hereby certify as amended (the “NRS”).RECITALS
WHEREAS, Gran Tierra Energy Inc. is a corporation organized and existing under the laws of the State of Nevada (the “Converting Entity”);
WHEREAS, the Board of Directors of the Converting Entity has determined that it would be advisable and in the best interests of the Converting Entity and its stockholders for the Converting Entity to convert from a Nevada corporation to a Delaware corporation pursuant to Section 265 of the DGCL and Sections 92A.120 and 92A.250 of the NRS;
WHEREAS, the form, terms and provisions of this Plan have been authorized, approved and adopted by the Board of Directors of the Converting Entity;
WHEREAS, the Board of Directors of the Converting Entity has submitted this Plan to the stockholders of the Converting Entity for approval; and
WHEREAS, this Plan has been authorized, approved and adopted by the stockholders of the Converting Entity.
NOW, THEREFORE, the Converting Entity hereby adopts this Plan as follows:
PLAN OF CONVERSION
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| 1. | Conversion; Effect of Conversion.
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(a) | Upon the Effective Time (as defined in Section 3 below), the Converting Entity shall be converted from a Nevada corporation to a Delaware corporation pursuant to Section 265 of the DGCL and Sections 92A.120 and 92A.250 of the NRS (the “Conversion”) and the Converting Entity, as converted to a Delaware corporation (the “Converted Entity”), shall thereafter be subject to all of the provisions of the DGCL, except that notwithstanding Section 106 of the DGCL, the existence of the Converted Entity shall be deemed to have commenced on the date the Converting Entity commenced its existence in the State of Nevada.
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(b) | Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, the Converted Entity shall, for all purposes of the laws of the State of Delaware, be deemed to be the same entity as the Converting Entity existing immediately prior to the Effective Time. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, for all purposes of the laws of the State of Delaware, all of the rights, privileges and powers of the Converting Entity existing immediately prior to the Effective Time, and all property, real, personal and mixed, and all debts due to the Converting Entity existing immediately prior to the Effective Time, as well as all other things and causes of action belonging to the Converting Entity existing immediately prior to the Effective Time, shall remain vested in the Converted |
Entity and shall be the property of the Converted Entity and the title to any real property vested by deed or otherwise in the Converting Entity existing immediately prior to the Effective Time shall not revert or be in any way impaired by reason of the Conversion; but all rights of creditors and all liens upon any property of the Converting Entity existing immediately prior to the Effective Time shall be preserved unimpaired, and all debts, liabilities and duties of the Converting Entity existing immediately prior to the Effective Time shall remain attached to the Converted Entity upon the Effective Time, and may be enforced against the Converted Entity to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by the Converted Entity in its capacity as a corporation of the State of Delaware. The rights, privileges, powers and interests in property of the Converting Entity existing immediately prior to the Effective Time, as well as the debts, liabilities and duties of the Converting Entity existing immediately prior to the Effective Time, shall not be deemed, as a consequence of the Conversion, to have been transferred to the Converted Entity upon the Effective Time for any purpose of the laws of the State of Delaware.
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(c) | The Conversion shall not be deemed to affect any obligations or liabilities of the Converting Entity incurred prior to the Conversion or the personal liability of any person incurred prior to the Conversion. |
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(d) | Upon the Effective Time, thecurrent name of the Converted Entity shall remain unchanged and continue to be “Gran Tierra Energy Inc.” |
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(e) | The Converting Entity intends for the Conversion to constitute a tax-free reorganization qualifying under Section 368(a) of the Internal Revenue Code of 1986, as amended. |
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2. | Filings. As promptly as practicable following the adoption of this Plan by the Board of Directors and the stockholders of the Converting Entity, the Converting Entity shall cause the Conversion to be effective by:
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(a) | executing and filing (or causing the execution and filing of) Articles of Conversion pursuant to Section 92A.205 of the NRS, substantially in the form of Exhibit A hereto (the “Nevada Articles of Conversion”), with the Secretary of State of the State of Nevada;
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(b) | executing and filing (or causing the execution and filing of) a Certificate of Conversion pursuant to Sections 103 and 265 of the DGCL, in the form of Exhibit B hereto (the “Delaware Certificate of Conversion”), with the Secretary of State of the State of Delaware; and
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(c) | executing and filing (or causing the execution and filing of) a Certificate of Incorporation of the Converted Entity, in the form of Exhibit C hereto (the “Delaware Certificate of Incorporation”), with the Secretary of State of the State of Delaware.
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3. | Effective Time. The Conversion shall become effective upon the last to occur of the filing of the Nevada Articles of Conversion, the Delaware Certificate of Conversion and the Delaware Certificate of Incorporation (the time of the effectiveness of the Conversion, the “Effective Time”).
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(a) | Effect on Common Stock. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each share of Common Stock, $0.001 par value per share, of the Converting Entity (“Converting Entity Common Stock”) thatCorporation is issued and outstanding immediately prior to the Effective Time shall convert into one validly issued, fully paid and nonassessable share of Common Stock, $0.001 par value per share, of the Converted Entity (“Converted Entity Common Stock”).
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(b) | Effect on Special A Voting Stock. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each share of Special A Voting Stock of the Converting Entity (“Converting Entity Special A Voting Stock”) that is issued and outstanding immediately prior to the Effective Time shall convert into one share of Special A Voting Stock of the Converted Entity (“Converted Entity Special A Voting Stock”).
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(c) | Effect on Special B Voting Stock. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each share of Special B Voting Stock of the Converting Entity (“Converting Entity Special B Voting Stock”) that is issued and outstanding immediately prior to the Effective Time
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shall convert into one share of Special B Voting Stock of the Converted Entity (“Converted Entity Special B Voting Stock”).
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(d) | Effect on Outstanding Stock Options. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each option to acquire shares of Converting Entity Common Stock outstanding immediately prior to the Effective Time shall convert into an equivalent option to acquire, upon the same terms and conditions (including the vesting schedule and exercise price per share applicable to each such option) as were in effect immediately prior to the Effective Time, the same number of shares of Converted Entity Common Stock.
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(e) | Effect on Outstanding Convertible or Exchangeable Securities or Other Rights. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each convertible or exchangeable security or other right to acquire or receive shares of Converting Entity Common Stock outstanding immediately prior to the Effective Time, including the shares of Converting Entity Common Stock issuable upon exchange of exchangeable shares of Gran Tierra Exchangeco Inc., the shares of Converting Entity Common Stock issuable upon exchange of exchangeable shares of Gran Tierra Goldstrike Inc. and the convertible notes shall convert into an equivalent convertible or exchangeable security or other right to acquire or receive, upon the same terms and conditions as were in effect immediately prior to the Effective Time, the same number of shares of Converted Entity Common Stock.
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(f) | Effect on Stock Certificates. All of the outstanding certificates representing shares of Converting Entity Common Stock, Converting Entity Special A Voting Stock and Converting Entity Special B Voting Stock immediately prior to the Effective Time shall be deemed for all purposes to continue to evidence ownership of and to represent the same number of shares of Converted Entity Common Stock, Converted Entity Special A Voting Stock and Converted Entity Special B Voting Stock, as applicable.
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(g) | Effect on Employee Benefit, Equity Incentive or Other Similar Plans. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each employee benefit plan, equity incentive plan or other similar plan to which the Converting Entity is a party shall continue to be a plan of the Converted Entity. To the extent that any such plan provides for the issuance of Converting Entity Common Stock, upon the Effective Time, such plan shall be deemed to provide for the issuance of Converted Entity Common Stock.
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(h) | Effect of Conversion on Directors and Officers. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, the members of the Board of Directors and the officers of the Converting Entity holding their respective offices in the Converting Entity existing immediately prior to the Effective Time shall continue in their respective offices as members of the Board of Directors and officers, respectively, of the Converted Entity.
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5. | Further Assurances. If, at any time after the Effective Time, the Converted Entity shall determine or be advised that any deeds, bills of sale, assignments, agreements, documents or assurances or any other acts or things are necessary, desirable or proper, consistent with the terms of this Plan, (a) to vest, perfect or confirm, of record or otherwise, in the Converted Entity its right, title or interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of the Converting Entity existing immediately prior to the Effective Time, or (b) to otherwise carry out the purposes of this Plan, the Converted Entity and its officers and directors (or their designees), are hereby authorized to solicit in the name of the Converted Entity any third-party consents or other documents required to be delivered by any third party, to execute and deliver, in the name and on behalf of the Converted Entity, all such deeds, bills of sale, assignments, agreements, documents and assurances and do, in the name and on behalf of the Converted Entity, all such other acts and things necessary, desirable or proper to vest, perfect or confirm its right, title or interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of the Converting Entity existing immediately prior to the Effective Time and otherwise to carry out the purposes of this Plan.
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6. | Delaware Bylaws. As promptly as practicable following the Effective Time, the Board of the Converted Entity shall adopt the Bylaws of Gran Tierra Energy Inc., substantiallyand the Corporation was incorporated pursuant to the General Corporation Law on October 31, 2016 (the “Certificate of Incorporation”).
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| 2. | The amendments to the existing Certificate of Incorporation set forth in the formthis Certificate of Exhibit D hereto. |
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7. | Delaware Indemnification Agreements. As promptly as practicable following the Effective Time, the Converted Entity shall enter into an Indemnification Agreement substantiallyAmendment were duly authorized and adopted in the form of Exhibit E heretoaccordance with each memberSection 242 of the BoardGeneral Corporation Law.
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| 3. | The amendments to the existing Certificate of DirectorsIncorporation being effected hereby are to amend and restate Article IV of the Converted Entity and each executive officerCertificate of the Converted Entity.Incorporation in its entirety to read as follows: |
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8. | Copy of Plan of Conversion. After the Conversion, a copy of this Plan will be kept on file at the offices of the Converted Entity, and any stockholder of the Converted Entity (or former stockholder of the Converting Entity) may request a copy of this Plan at no charge at any time.
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9. | Termination. At any time prior to the Effective Time, this Plan may be terminated and the transactions contemplated hereby may be abandoned by action of the Board of Directors of the Converting Entity if, in the opinion of the Board of Directors of the Converting Entity, such action would be in the best interests of the Converting Entity and its stockholders. In the event of termination of this Plan, this Plan shall become void and of no further force or effect.
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10. | Third-Party Beneficiaries. This Plan shall not confer any rights or remedies upon any person other than as expressly provided herein.
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11. | Severability. Whenever possible, each provision of this Plan will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Plan is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Plan.
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[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned hereby causes this Plan to be duly executed as of the date hereof.
GRAN TIERRA ENERGY INC.
a Nevada corporation
By:
[_________________]
Its:
AP
APPENDIX C
STATE OF DELAWARE
CERTIFICATE OF CONVERSION
FROM A NON-DELAWARE CORPORATION
TO A DELAWARE CORPORATION
PURSUANT TO SECTION 265 OF THE
DELAWARE GENERAL CORPORATION LAW
[•], 2016
Pursuant to the provisions of Section 265 of the Delaware General Corporation Law, Gran Tierra Energy Inc., a corporation existing under the laws of the State of Nevada (the “Non-Delaware Corporation”), hereby executes this Certificate of Conversion (the “Certificate”) for the purpose of converting the Non-Delaware Corporation into a Delaware Corporation (the “Corporation”) and, in connection therewith, does hereby certify:
FIRST: The jurisdiction where the Non-Delaware Corporation first formed is the State of Nevada.
SECOND: The jurisdiction immediately prior to filing this Certificate is the State of Nevada.
THIRD: The date the Non-Delaware Corporation first formed is June 6, 2003.
FOURTH: The name of the Non-Delaware Corporation immediately prior to filing this Certificate is Gran Tierra Energy Inc.
FIFTH: The name of the Corporation as set forth in the Certificate of Incorporation is Gran Tierra Energy Inc.
(Signature Page Follows)
IN WITNESS WHEREOF, the undersigned being duly authorized to sign on behalf of the converting Non-Delaware Corporation has executed this Certificate on the date first written above.
GRAN TIERRA ENERGY INC.
By: __________________________________________
Name:
Title:
APPENDIX D
CERTIFICATE OF INCORPORATION
OF
GRAN TIERRA ENERGY INC.
The undersigned, a natural person (the “Incorporator”) for the purpose of organizing a corporation to conduct the business and promote the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware hereby certifies that:
ARTICLE I
The name of this corporation is Gran Tierra Energy Inc. (the “Corporation”).
ARTICLE II
The address of the registered office of the Corporation in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 in New Castle County, Delaware. The name of the registered agent of the Corporation at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as amended from time to time (the “DGCL”).
The Corporation is authorized to issue fourtwo classes of stock to be designated respectively Common Stock, par value $0.001 per share (the “Common Stock”), Special A Voting Stock, par value $0.001 per share (the “Special A Voting Stock”), Special B Voting Stock, par value $0.001 per share (the “Special B Voting 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 595,000,002,82,000,000, consisting of 570,000,00057,000,000 shares of Common Stock, one (1) share of Special A Voting Stock, one (1) share of Special B Voting 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.
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| Gran Tierra Energy 2023 Proxy Statement | | A-1 |
B. Special A Voting Stock
The Special A Voting Stock shall have the designation, preferences and rights as set forth below:
1. Number of Shares: There shall be one (1) share of Special A Voting Stock.
2. Dividends or distributions: Neither the holder nor, if different, the owner of the Special A Voting Stock shall be entitled to receive dividends or distributions in its capacity as holder or owner thereof.
3. Voting Rights: The holder of the Special A Voting Stock shall have the following voting rights:
3.1 The holder of the Special A Voting Stock shall be entitled to vote on each matter on which stockholders of the Corporation generally are entitled to vote, and the holder of the Special A Voting Stock shall be entitled, in accordance with and subject to paragraph
3.2 below, to cast on each such matter a number of votes equal to the number of non-voting exchangeable shares (“Goldstrike Exchangeable Shares”) of Gran Tierra Goldstrike, Inc., an Alberta corporation, and its successors-at-law, whether by merger, amalgamation or otherwise, then outstanding that are not owned by the Corporation or any other entity of which a majority of the shares (or similar interests) entitled to vote in the election of members of the board of directors (or similar governing body) of such other entity is held, directly or indirectly, by the Corporation (any such entity a “subsidiary” of the Corporation).
3.2 The holder of the Special A Voting Stock shall have the right to receive notice of and to attend and, subject to paragraph 3.4 below, vote at any general meeting of the Corporation as follows:
(a) on a show of hands, the holder of the Special A Voting Stock, or its proxy, shall have one vote in addition to any votes which may be cast by a holder of Goldstrike Exchangeable Shares (other than Corporation and any subsidiary of the Corporation) (a “Goldstrike Beneficiary”) (or its nominee) on such show of hands as proxy for the holder of the Special A Voting Stock in accordance with paragraph 3.4 below;
(b) on a poll, the holder of the Special A Voting Stock shall have one vote for every Goldstrike Exchangeable Share then outstanding (a) that is owned by a Goldstrike Beneficiary, and (b) as to which the holder of the Special A Voting Stock has received timely voting instructions from the Goldstrike Beneficiary. Votes may be given either personally or by proxy and a Goldstrike Beneficiary entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.
3.3 The holder of the Special A Voting Stock shall be entitled to demand that a poll be taken on any resolution, whether before or after a show of hands.
3.4 If so instructed by a Goldstrike Beneficiary, the holder of the Special A Voting Stock shall be entitled to appoint the Goldstrike Beneficiary, or such other person as that Goldstrike Beneficiary nominates, as proxy to attend and to exercise personally in place of the holder of the Special A Voting Stock that number of votes equal to the number of Goldstrike Exchangeable Shares held by the Goldstrike Beneficiary (the “Goldstrike Beneficiary Votes”). A proxy need not be a stockholder of the Corporation. A Goldstrike Beneficiary (or its nominee) exercising its Goldstrike Beneficiary Votes shall have the same rights as the holder of the Special A Voting Stock to speak at the meeting in favor of any matter and to vote on a show of hands or on a poll in respect of any matter proposed.
4. Redemption: At such time as no Goldstrike Exchangeable Shares (other than Goldstrike Exchangeable Shares belonging to the Corporation or any subsidiary of the Corporation) shall be outstanding and there are no shares of stock, debt, options, rights, warrants, or other securities convertible, exchangeable or exercisable for, or other agreements which could give rise to the issuance of, any Goldstrike Exchangeable Shares to any person (other than the Corporation or any subsidiary of the Corporation), the share of Special A Voting Stock shall be automatically redeemed for $0.001, but only out of funds legally available therefor, and upon any such redemption of the Special A Voting Stock by the Corporation, the share of Special A Voting Stock shall be deemed retired and cancelled and may not be reissued.
5. Voting as a Single Class: Except as otherwise provided herein or by applicable law, the holder of the Special A Voting Stock, the holder of the Special B Voting Stock and the holders of the Common Stock, together with any other class or series of the Corporation’s voting stock to the extent provided in the applicable certificate(s) of amendment or designation, shall vote together as one class for the appointment of directors of the Corporation and on all other matters submitted to a vote of the stockholders of the Corporation.
C. Special B Voting Stock
The Special B Voting Stock shall have the designation, preferences and rights as set forth below:
1. Number of Shares: There shall be one (1) share of Special B Voting Stock.
2. Dividends or distributions: Neither the holder nor, if different, the owner of the Special B Voting Stock shall be entitled to receive dividends or distributions in its capacity as holder or owner thereof.
3. Voting Rights: The holder of the Special B Voting Stock shall have the following voting rights:
3.1 The holder of the Special B Voting Stock shall be entitled to vote on each matter on which stockholders of the Corporation generally are entitled to vote, and the holder of the Special B Voting Stock shall be entitled, in accordance with and subject to paragraph 3.2 below, to cast on each such matter a number of votes equal to the number of non-voting exchangeable shares (“Solana Exchangeable Shares”) of Gran Tierra Exchangeco Inc., an Alberta corporation, and its successors-at-law, whether by merger, amalgamation or otherwise, then outstanding that are not owned by the Corporation or its affiliates (as such term is defined in the Securities Act (Alberta)) (any such entity an “affiliate” of the Corporation).
3.2 The holder of the Special B Voting Stock shall have the right to receive notice of and to attend and, subject to paragraph 3.4 below, vote at any annual or special meeting of the stockholders of the Corporation as follows:
(a) on a show of hands, the holder of the Special B Voting Stock, or its proxy, shall have one vote for each Solana Exchangeable Share then outstanding (i) that is owned by a holder of Solana Exchangeable Shares (other than the Corporation and any affiliate of the Corporation) (a “Solana Beneficiary”) and (ii) as to which the holder of the Special B Voting Stock has received timely voting instructions from the Solana Beneficiary;
(b) on a poll, the holder of the Special B Voting Stock shall have one vote for each Solana Exchangeable Share then outstanding (i) that is owned by a Solana Beneficiary, and (ii) as to which the holder of the Special B Voting Stock has received timely voting instructions from the Solana Beneficiary.
Votes may be given either personally or by proxy and a Solana Beneficiary entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.
3.3 The holder of the Special B Voting Stock shall be entitled to demand that a poll be taken on any resolution, whether before or after a show of hands.
3.4 If so instructed by a Solana Beneficiary, the holder of the Special B Voting Stock shall be entitled to appoint the Solana Beneficiary, or such other person as that Solana Beneficiary nominates, as proxy to attend and to exercise personally in place of the holder of the Special B Voting Stock that number of votes equal to the number of Solana Exchangeable Shares held by the Solana Beneficiary (the “Solana Beneficiary Votes”). A proxy need not be a stockholder of the Corporation. A Solana Beneficiary (or its nominee) exercising its Solana Beneficiary Votes by such a proxy shall have the same rights as the holder of the Special B Voting Stock to speak at the meeting in favor of any matter and, with respect to the number of Solana Exchangeable Shares subject to such proxy, to vote on a show of hands or on a poll in respect of any matter proposed.
4. Redemption: At such time as no Solana Exchangeable Shares (other than Solana Exchangeable Shares belonging to the Corporation or any affiliate of the Corporation) shall be outstanding and there are no shares of stock, debt, options, rights, warrants, or other securities convertible, exchangeable or exercisable for, or other agreements which could give rise to the issuance of, any Solana Exchangeable Shares to any person (other than the Corporation or any affiliate of the Corporation), the share of Special B Voting Stock shall be automatically redeemed for $0.001, but only out of funds legally available therefor, and upon any such redemption of the Special B Voting Stock by the Corporation, the share of Special B Voting Stock shall be deemed retired and cancelled and may not be reissued.
5. Voting as a Single Class: Except as otherwise provided herein or by applicable law, the holder of the Special B Voting Stock, the holder of the Special A Voting Stock and the holders of the Common Stock, together with any other class or series of the Corporation’s voting stock to the extent provided in the applicable certificate(s) of amendment or designation, shall vote together as one class for the election or appointment of directors of the Corporation and on all other matters submitted to a vote of the stockholders of the Corporation.
D.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:
| 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.
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| A-2 | | Gran Tierra Energy 2023 Proxy Statement |
(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.
ARTICLE V
A director or officerAPPENDIX 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 shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as it presently exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right arising prior to the time of such amendment, modification or repeal.
The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans (any such entity, an “Other Entity”), against all liability and loss suffered (including, but not limited to expenses (including but not limited to, attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Covered Person in connection with any such Proceeding), provided that the Covered Person acted in good faith and in a manner such Covered Person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any Proceeding that is criminal in nature, had no reasonable cause to believe that his or her conduct was unlawful. The termination of any Proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the Covered Person did not act in good faith and in a manner in which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, or that, with respect to any criminal proceeding he or she had reasonable cause to believe that his or her conduct was unlawful. The Corporation shall not indemnify a Covered Person for any claim, issue or matter as to which the Indemnitee has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Corporation or for any amounts paid in settlement to the Corporation, unless and only to the extent that the court in which the Proceeding was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the Covered Person is fairly and reasonably entitled to indemnity for such amounts as the court deems proper. Notwithstanding the foregoing, except as otherwise provided in this Article V, the Corporation shall not be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person unless the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board.
The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by (i) a former or current officer or director of the Corporation, or (ii) any person designated by the Board as a person subject to this advancement provision, in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by such former or current officer or director or designated person to repay all amounts advanced if it should be ultimately determined that such former or current officer or director or designated person is not entitled to be indemnified under this Article V or otherwise.
The rights conferred upon any person under this Article V shall not be exclusive of any other rights to which such person may have or hereafter acquire under any statute, any other provision ofcaused this Certificate of Incorporation, the Bylaws of the Corporation, or any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in their official capacity, and as to action in any other capacity while holding such office.
No amendment to, or repeal of, any of the provisions of this Article V will adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any acts or omissions of such director occurring prior to such amendment or repeal of these provisions. Indemnification and advancement of expenses as provided by, or granted pursuant to, this Article V shall continue, unless otherwise provided when authorized or ratified, as to a person who has ceased to be a director, officer, employee, or agent, and shall inureAmendment to the benefit of the heirs, executors, and administrators of such a person.
This Article V shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by the statute, the Board is expressly authorized:
(a) Subject to the Bylaws, if any, adopted by the stockholders, to make, alter, amend or repeal the Bylaws of the Corporation.
(b) To authorize and cause to be executed, mortgages and liens upon the real and personal property of the Corporation.
(c) By resolution passed by a majority of the whole Board, to designate one (1) or more committees, each committee to consist of one or more of the Directors of the Corporation, which, to the extent provided in the resolution, or in the Bylaws of the Corporation, shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation. Such committee, or committees, shall have such name, or names as may be stated in the Bylaws of the Corporation, or as may be determined from time to time by resolution adopted by the Board.
ARTICLE VII
The Corporation is to have perpetual existence.
ARTICLE VIII
The business and affairs of the Corporation shall be managed by or under the direction of the Board, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the Bylaws, provided that the number of directors shall not be reduced to fewer than one (1). Unless and except to the extent that the Bylaws of the Corporation so provide, the election of directors need not be by written ballot .Any director, or the entire Board, may be removed, with or without cause, from office at any time by the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
ARTICLE IX
Advance notice of new business at stockholders’ meetings and stockholder proposals and stockholder nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation.
ARTICLE X
Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the laws of the State of Delaware) outside of the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws of the Corporation.
ARTICLE XI
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation
to be signed by its Chief Executive Officer this day of . | | |
By: | | |
| | Gary S. Guidry |
| | President and Chief Executive Officer |
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| Gran Tierra Energy 2023 Proxy Statement | | A-3 |
QUESTIONS?
NEED HELP
VOTING?
CONTACT US
North American Toll Free Phone
1.855.476.7987
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 | | E-mail: contactus@kingsdaleadvisors.com |
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| | Fax: 416.867.2271 |
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| | Toll Free Facsimile: 1.866.545.5580 |
| |
| | Outside North America, Banks and Brokers |
| Call Collect: 416.867.2272 |
| | | | |
 | | GRAN TIERRA ENERGY INC. | |  |
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Form of Proxy – Annual Meeting to be held on May 3, 2023 | | Stock Exchange Tower 1230, 300 5th Ave SW Calgary, AB T2P 3C4 |
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Appointment of Proxyholder I/We being the undersigned holder(s) of Gran Tierra Energy Inc. hereby appoint Gary S. Guidry and Ryan Ellson, or either of them, | | OR | | Print the name of the person you are appointing if this person is someone other than the Proxyholders listed herein: |
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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 manner now or hereafter prescribed by the laws of the State of Delaware,Notes to Proxy below) and all rights conferred herein are granted subject to this reservation.
ARTICLE XII
The name and mailing addressother matters that may properly come before the Annual Meeting of the Incorporator is as follows:
[ ]
[ ]
[ ]
IN WITNESS WHEREOF, this Certificate of Incorporation has been subscribed this __th day of [ ], 2016 by the undersigned who affirms that the statements made herein are true and correct.
[ ]
Incorporator
APPENDIX E
BYLAWS
OF
GRAN TIERRA ENERGY INC.
(Incorporated under the Laws of the State of Delaware)
ARTICLE I
OFFICES AND RECORDS
SECTION (1) Registered Office. The registered officeStockholders (the “Meeting”) of Gran Tierra Energy Inc. (the “Corporation”) in the State of Delaware shall be located at The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 in New Castle County, Delaware. The name of its registered agent at such address is The Corporation Trust Company. The registered office and registered agent of the Corporation may be changed from time to time by the Board of Directors of the Corporation (the “Board of Directors” or the “Board”) in the manner provided by applicable law.
SECTION (2) Other Offices. The Corporation may have such offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require.
SECTION (3) Books and Records. The books and records of the Corporation may be kept at such place or places as may from time to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION (1) Annual Meeting. Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held virtually at such place, either withinhttps://web.lumiagm.com/251955864 on WEDNESDAY, MAY 3, 2023, AT 10:00 A.M. (MOUNTAIN TIME) or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. any adjournment thereof.The Board of Directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware, as amended from time to time (the “DGCL”). At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors, and they may transact such other corporate business as shall be stated in the notice of the meeting.
SECTION (2) Special Meeting.
Special meetings of the stockholders may be held at such time and place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine in accordance with this Article II, Section (2) and as set forth in the notice of the meeting.
a.A special meeting of stockholders may be called by the Chairman of the Board, byrecommend a vote of a majority of the directors then in office or by the Secretary upon the written request (a “Special Meeting Request”) of holders of record of at least 25% of the outstanding common stock of the Corporation (the “Requisite Percentage”) at the time such request is properly submitted by the holders of the Requisite Percentage. A Special Meeting Request must be delivered to the Secretary at the Corporation’s principal executive offices and shall be signed by each stockholder requesting the special meeting (each, a “Requesting Stockholder”) and shall be accompanied by a notice setting forth the information required by Article II, Section (6) of the bylaws of the Corporation (the “Bylaws”) with respect to each such Requesting Stockholder. In determining whether a Special Meeting Request has been properly requested, multiple Special Meeting Requests delivered to the Secretary will be considered together only if (i) each Special Meeting Request identifies the same purpose or purposes of the special meeting and the same matters to be acted on at such meeting (in each case as determined in good faith by the Board) and (ii) such Special Meeting Requests have been dated and delivered to the Secretary within sixty (60) days of the earliest dated Special Meeting Request. Requesting Stockholders who collectively hold at least the Requisite Percentage on the date the Special Meeting Request is submitted to the Secretary must (A) continue to hold at least the number of shares of common stock set forth in the Special Meeting Request with respect to each such Requesting Stockholder through the date of the special meeting and (B) submit a written certification (an “Ownership Certification”) confirming the continuation of such holdings on the business day immediately preceding the special meeting, which Ownership Certification shall include any information required by Article II, Section (6) of these
Bylaws as of the date of such special meeting with respect to each such Requesting Stockholder. For the avoidance of doubt, with respect to a Special Meeting Request, no stockholder other than a Requesting Stockholder shall be required to provide the information required by Article II, Section (6) of these Bylaws.
b.A special meeting called pursuant to Article II, Section (2)(b) shall be held at such date, time and place as determined by the Board of Directors in accordance with these Bylaws; provided, however, that the date of any special meeting called by the Secretary pursuant to a Special Meeting Request shall not be more than 90 days after a Special Meeting Request that satisfies the requirements of this Section (2) is received by the Secretary. The date, time and place of such special meeting shall be set forth in the notice of special meeting. If a valid Special Meeting Request is received by the Secretary subsequent to a valid Special Meeting Request and before the date of the corresponding special meeting of stockholders, all items of business contained in the subsequent Special Meeting Request may be presented at one special meeting.
c.Notwithstanding the foregoing provisions of this Section (2), a special meeting requested by stockholders pursuant to Section (2)(b) shall not be held if (i) the Special Meeting Request does not comply with this Section (2); (ii) the Special Meeting Request relates to an item of business that is not a proper subject for stockholder action under applicable law; (iii) the Special Meeting Request is received by the Corporation during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting; (iv) an annual or special meeting of stockholders that included a similar item of business (“Similar Item”) (as determined in good faith by the Board of Directors) was held not more than 120 days before the Special Meeting Request was received by the Secretary; (v) the Board of Directors has called or calls for an annual or special meeting of stockholders to be held within 90 days after the Special Meeting Request is received by the Secretary and the Board of Directors determines in good faith that the business to be conducted at such meeting includes a Similar Item; (vi) such Special Meeting Request was made in a manner that involved a violation of Regulation 14A under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the “Exchange Act”), or other applicable law; or (vii) two or more special meetings of stockholders called pursuant to the request of stockholders have been held within the 12-month period before the Special Meeting Request was received by the Secretary.
d.Any Requesting Stockholder may revoke such stockholder’s participation in a Special Meeting Request at any time by written revocation delivered to the Secretary at the Corporation’s principal executive offices and if, following any such revocation, there are outstanding requests from stockholders holding less than the Requisite Percentage in accordance with this Section (2), the Board of Directors may, in its discretion, cancel the special meeting. If none of the Requesting Stockholders appears or sends a duly authorized agent to present the business to be presented for consideration that was specified in the Special Meeting Request, or if the Ownership Certification does not satisfy the requirements set forth in Section (2)(b) of these Bylaws, the Corporation need not present such business for a vote at such special meeting.
e.Business conducted at a special meeting requested by stockholders pursuant to Section (2)(b) of these Bylaws shall be limited to the matters described in the applicable Special Meeting Request; provided, however, the Board of Directors shall not be prohibited from submitting matters to the stockholders at any such special meeting requested by stockholders.
SECTION (3) Notice of Meeting. Written or printed notice, stating the date, time and place of the meeting and the purpose or purposes for which the meeting is called, shall be delivered by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation. Such further notice shall be given as may be required by law. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting.
SECTION (4) Quorum, Chairman of the Meeting, Conduct of Meetings and Postponement.
a.Quorum. Except as otherwise provided by applicable law or by the Corporation’s certificate of incorporation (the “Certificate of Incorporation”), the holders of outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the “Voting Stock”), which shares represent a majority of the total number of votes which may be cast by all holders of Voting Stock by virtue of holding such Voting Stock, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. The Chairman of the Meeting (as defined below) or a majority of the shares so represented may adjourn or recess the meeting at any time and for any reason, whether or not there is a quorum. When a meeting is adjourned or recessed to another time or place, notice need not be given of the adjourned or recessed meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned or recessed meeting are announced at the meeting at which the adjournment or recess is taken. At the adjourned or recessed meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment or recess is for more than thirty (30) days, a notice of the adjourned or recessed meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment or recess a new record date for stockholders entitled to vote is fixed for the adjourned or recessed
meeting, the Board of Directors shall fix a new record date for notice of such adjourned or recessed meeting, and shall give notice of the adjourned or recessed meeting to each stockholder of record entitled to vote at such adjourned or recessed meeting as of the record date fixed for notice of such adjourned or recessed meeting.
b.Chairman of the Meeting. The Chairman of the Board, or in his absence or at his direction, the Chief Executive Officer, or in his absence, the President, shall preside at all meetings of the stockholders or, if such officers are not present at a meeting, by such other person as the Board of Directors shall designate or if no such person is designated by the Board of Directors, the most senior officer of the Corporation present at the meeting (such person, the “Chairman of the Meeting”). The Secretary, if present, shall act as secretary of each meeting of stockholders; if the Secretary is not present at a meeting, the Chairman of the Meeting may appoint any other person to act as secretary of the meeting.
c.Conduct of the Meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate and which do not conflict with applicable provisions of law, the Certificate of Incorporation and these Bylaws. Except to the extent inconsistent with applicable provisions of law or the Certificate of Incorporation, these Bylaws and such rules and regulations as adopted by the Board of Directors, the Chairman of the Meeting may prescribe such rules, regulations and procedures and do all such acts as, in the judgment of such Chairman of the Meeting, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the Chairman of the Meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the Chairman of the Meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; (v) restrictions on the use of audio or video recording devices at the meeting and (vi) limitations on the time allotted to questions or comments by participants.
d.Postponement. The Board of Directors may, at any time prior to the holding of a meeting of stockholders, and for any reason, cancel, postpone or reschedule such meeting by public announcement made prior to the time previously scheduled for such meeting of stockholders. The meeting may be postponed or rescheduled to such time and place as is specified in the notice of postponement or rescheduling of such meeting. For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reportable by any national news service or in a document publicly filed by the Corporation with the United States Securities and Exchange Commission (the “SEC”) pursuant to Section 13, 14 or 15(d) of the Exchange Act.
SECTION (5) Voting. Each stockholder shall be entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these Bylaws, in person or by proxy, but no proxy shall be voted after three (3) years from the date of its creation, unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest legally sufficient to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing with the person recording the proceedings of the meeting an instrument in writing revoking the proxy or another duly executed proxy bearing a later date.
The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing contained in this Section (5) shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then such list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
SECTION (6) Notice of Stockholder Business and Nominations.
a.Annual Meetings of the Stockholders. Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at the meeting and who complies with the notice procedures set forth in these Bylaws.
1.For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a) above, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of adjournment or recess of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above.
2.Such stockholder’s notice shall set forth as to each person whom the stockholder proposes to nominate for election or reelection as a director: (i) the name, age, business address and, if known, residence address of each such nominee; (ii) the principal occupation or employment of each such nominee; (iii) the number of shares of each class of the capital stock of the Corporation which are beneficially owned by each such nominee; (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 14a-11 thereunder, (v) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, (vi) a complete and accurate description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between the stockholder giving the notice, on the one hand, and each proposed nominee, his or her respective affiliates and associates (each within the meaning of Rule 12b-2 under the Exchange Act) and any other persons with whom such proposed nominee (or any of his or her respective affiliates and associates) is acting in concert and (vii) a completed and signed questionnaire, representation and agreement as provided in Article II, Section (6)(c)(1) of these Bylaws. The stockholder’s notice must also contain, as to the stockholder giving the notice,FOR all the informationnominees listed in Proposal 1 and representations set forth in clauses (ii) through (vi)FOR Proposals 2, 3 and 4. | | | | | | | | | | | | | | | | | | | | | | |
1. Election of Directors. | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain |
a. Peter J. Dey | | ☐ | | ☐ | | ☐ | | b. Gary S. Guidry | | ☐ | | ☐ | | ☐ | | c. Evan Hazell | | ☐ | | ☐ | | ☐ |
d. Robert B. Hodgins | | ☐ | | ☐ | | ☐ | | e. Alison Redford | | ☐ | | ☐ | | ☐ | | f. Ronald W. Royal | | ☐ | | ☐ | | ☐ |
g. Sondra Scott | | ☐ | | ☐ | | ☐ | | h. David P. Smith | | ☐ | | ☐ | | ☐ | | i. Brooke Wade | | ☐ | | ☐ | | ☐ |
2. Proposal to ratify the appointment of KPMG LLP as Gran Tierra Energy Inc.’s independent registered public accounting firm for 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 ☐ |
4. Proposal to approve an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of the Common Stock at a reverse stock split ratio of 1-for-10. | | For ☐ | | Against ☐ | | Abstain ☐ |
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Authorized Signature(s) – This section must be completed for
your instructions to be executed. |
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| I/we 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 Proxy will be voted as recommended by the Board of Directors. |
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| Signature(s): | | | | Date |
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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 Section (6)(a)(3) below.
3.A stockholder’s notice shall set forth as to any business that the stockholder proposes to bring before the meeting, (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposalproxy is made, (iii) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business and of such beneficial owner, if any, (iv) (A) the class or series, if any, and number of shares of the Corporation that are beneficially ownedsolicited by such stockholder or such beneficial owner, if any, (B) any option, warrant, convertible security, stock appreciation right, swap or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “Derivative Instrument”) owned beneficially by such stockholder or any such beneficial owner and any other opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (C) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or such beneficial owner, if any, has a right to vote any shares of the Corporation, (D) any short interest in any security of the Corporation (for purposes of these Bylaws, a person shall be deemed to have a “short interest” in a security if such person has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder or such beneficial owner, if any, that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or such beneficial owner, if any, is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, (G) any performance-related fees (other than an asset-based fee) that such stockholder or such beneficial owner, if any, is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including, without limitation, any such interests held by members of such stockholder’s or such beneficial owner’s, if any, immediate family sharing the same household, and (H) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such stockholder in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act, (v) a summary of any material discussions regarding the business proposed to be brought before the meeting between such stockholder and any other record or beneficial holder of the shares of any class or series of the Corporation (including their names) and (vi) a representation that the stockholder is a holder of record of shares entitled to vote at the meeting, will continue to be a holder of record of shares entitled to vote at the meeting through the date of the meeting and intends to appear in person or by proxy at the meeting to make the proposal.
4.Notwithstanding anything in these Bylaws to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement by the Corporation naming all of the nominees for
director or specifying the size of the increase of the Board of Directors at least seventy (70) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by these Bylaws shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.
b.Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting and as shall have been accompanied by a notice setting forth the information required by Article II, Section (6) of these Bylaws, as if such Section were applicable to special meetings of stockholders. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders in which directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors, (ii) pursuant to Article II, Section (2) of these Bylaws and (iii) by any stockholder of the Corporation who (A) is a stockholder of record at the time of giving of notice provided for in this Bylaw and at the time of the special meeting, (B) is entitled to vote at the meeting and (C) who complies with the notice procedures set forth in these Bylaws as to such nomination. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if its stockholder’s notice required by these Bylaws shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 100th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominee, proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment, recess or postponement of a special meeting commence a new time period for the giving of a stockholder’s notice as described above.
c.General.
1.Director Questionnaire and Agreement. To be eligible to be a nominee for election as a director of the Corporation, each proposed nominee must deliver (in accordance with the time periods prescribed for delivery of notice under this Article II, Section (6)) to the Secretary at the principal executive office of the Corporation a written questionnaire with respect to the background and qualification of such proposed nominee (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in form provided by the Secretary upon written request) that such proposed nominee (A) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation and (C) in such proposed nominee’s individual capacity and on behalf of the stockholder (orBoard of Directors.Proxies must be received by 10:00 am, Mountain Time, on May 1, 2023.
Notes to Proxy
| 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 proxyholder 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 registered owners must sign this proxy 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 proxy with signing capacity stated. |
| 3. | This proxy should be signed in the exact manner as the name appears on the proxy. |
| 4. | If this proxy 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 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 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 proxy 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 proxy 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 proxy should be read in conjunction with the accompanying documentation provided by Gran Tierra Energy Inc. . |
Important Notice Regarding the beneficial owner, if different) on whose behalfAvailability of Proxy Materials for the nomination is made, would be in compliance, if elected as a director of the Corporation, and will comply with applicable, publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.
2.Additional Information Requests. The Corporation may require any proposed nominee to furnish such other information (A) as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation in accordance with Section 803 of the NYSE MKT Rules and the Corporation’s corporate governance documents, including the Board committee charters and the Code of Conduct and Business Ethics, or (B) that could be material to a reasonable stockholder’s understanding of the independence or lack of independence of such proposed nominee.
3.Duty to Update and Supplement Notice. A stockholder providing notice of business proposedAnnual Meeting to be brought 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:
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 | | To Vote Your Proxy 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 proxy. | |
Shareholder Address and Control Number Here |
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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 | | |
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| 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. | | |
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 | | GRAN TIERRA ENERGY INC. | |  |
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Voting Instruction Form (“VIF”) – ANNUAL MEETING OF STOCKHOLDERS to be held on MAY 3, 2023 | | Stock Exchange Tower 1230, 300 5th Ave SW Calgary, AB T2P 3C4 |
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Appointee(s) I/We being the undersigned holder(s) of Company name hereby appoints Gary S. Guidry and Ryan Ellson, or either of them, | | OR | | Print the name of the person you are appointing if this person is someone other than the Appointees listed herein: |
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as my/our appointee with full power of any nomination proposedsubstitution and to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Article II, Section (6) shall be true and correct (A) as of the record date for the meeting and (B) as of the date that is ten (10) business days prior to the meeting or any adjournment, recess or postponement thereof, and such update and supplement shall be delivered to, or mailed to and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date) and not later than seven (7) business days prior to the date for the meeting, if practicable (or, if not practicable, on the first practicable date prior to) any adjournment, recess or postponement thereof (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment, recess or postponement thereof).
4.Only such persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders and shall have been brought before the meeting in accordance with the proceduresattend, act, forth in these Bylaws. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the Chairman of the Meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with this Bylaw, to declare that such defective proposal or nomination shall be disregarded.
5.Notwithstanding the foregoing provisions of these Bylaws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in these Bylaws. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposal in the Corporation’s proxy statement pursuant to Rule 14a-5 under the Exchange Act.
SECTION (7) Procedure for Election of Directors; Required Vote. Election of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot. Directors shall be elected by a majority of the votes cast by the holders of Voting Shares at a meeting of stockholders at which a quorum is present; provided, however, that if the number of nominees exceeds the number of directors to be elected, directors shall be elected by a plurality of the votes cast. For purposes of this Section (7), a majority of the votes cast means that the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that director nominee. Unless the director election standard is a plurality, if an incumbent director is not elected by a majority of votes cast, the incumbent director shall promptly tender his or her resignation to the Board of Directors for consideration. The Nominating and Corporate Governance Committee (the “Nominating Committee”) of the Corporation shall make a recommendation to the Board of Directors on whether to accept or reject the director’s resignation or whether other action should be taken. The Board of Directors shall act on the Nominating Committee’s recommendation and publicly disclose its decision within ninety (90) days from the date of the certification of the election results. An incumbent director who tenders his or her resignation for consideration shall not participate in the Nominating Committee’s or the Board of Directors’ recommendation or decision, or any deliberations related thereto. If a director’s resignation is accepted by the Board of Directors pursuant to this Section (7), or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors may fill the resulting vacancy pursuant to the provisions of Article III, Section (2) or may decrease the size of the Board of Directors pursuant to Article III, Section (2). Except as otherwise provided by law, the Certificate of Incorporation, or these Bylaws, in all matters other than the election or removal of directors, the affirmative vote of shares representing a majority of the votes present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders.
SECTION (8) Inspectors of Elections; Opening and Closing the Polls. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the Chairman of the Meeting may appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.
The Chairman of the Meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware upon application by a stockholder shall determine otherwise.
SECTION (9) Action Without a Meeting. Unless otherwise provided by law, and subject to the procedures set forth in this Section (9), any action required to be taken at a meeting of the stockholders, or any other action which may be taken at a meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote if written consents are signed by stockholders holding Voting Stock representing a majority of votes entitled to be cast at such a meeting, except however, if a different portion of voting power is required by law, the Certificate of Incorporation or these Bylaws, then that proportion of written consents is required. Such written consents must be filed with the minutes of the proceedings of the stockholders of the Corporation and must be delivered to the Corporation’s registered office or principal place of business in a manner permitted by law.
a.In order that the Corporation may determine the stockholders entitled to take corporate action by written consent without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary (each such notice, a “Record Date Request”), request the Board of Directors fix a record date for such purpose; provided, however, that any such Record Date Request must be delivered to the Secretary at the Corporation’s principal executive offices by a holder or holders of record of at least 10% of the
outstanding common stock of the Corporation as of the time such Record Date Request is properly submitted by such holder or holders. To be properly submitted, a Record Date Request must (i) be signed by each stockholder requesting the Board of Directors fix a record date (each such stockholder, a “Record Date Requesting Stockholder”) and (ii) be accompanied by a notice setting forth the information required by Article II, Section (6) of these Bylaws as of the date of such Record Date Request with respect to each Record Date Requesting Stockholder. In determining whether a Record Date Request has been properly requested, multiple Record Date Requests delivered to the Secretary will be considered together only if (x) each Record Date Request identifies the same purpose or purposes of the proposed action by written consent and the same matters to be acted on by written consent (in each case as determined in good faith by the Board) and (y) such Record Date Request has been dated and delivered to the Secretary within sixty (60) days of the earliest dated Record Date Request. Record Date Requesting Stockholders who collectively hold at least 10% of the outstanding common stock of the Corporation at the time the Record Date Request is submitted to the Secretary must (A) continue to hold at least the number of shares of common stock set forth in the Record Date Request with respect to each Record Date Requesting Stockholder through the date that any corporate action by written consent becomes effective and (B) submit a written certification confirming the continuation of such holdings on the business day immediately preceding the date that any corporate action by written consent becomes effective, which certification shall include any information required by Article II, Section (6) of these Bylaws as of the date that any corporate action by written consent becomes effective with respect to each such Record Date Requesting Stockholder. For the avoidance of doubt, with respect to a Record Date Request, no stockholder other than a Record Date Requesting Stockholder shall be required to provide the information required by Article II, Section (6) of these Bylaws. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such Record Date Request is received by the Secretary, adopt a resolution fixing such record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a Record Date Request is received, the record date for determining stockholders entitled to take corporate action by written consent without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery in a manner permitted by applicable law. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to take corporate action by written consent without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
b.Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required hereby to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery in a manner permitted by applicable law.
c.A facsimile, electronic mail message, telegram, cablegram or other electronic transmission (each an “electronic transmission”) consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes hereof if such electronic transmission sets forth or is delivered with information from which the Corporation can determine: (i) that the electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (ii) the date on which such stockholder or proxyholder or authorized person or persons transmitted such electronic transmission. The date on which such electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery in a manner permitted by applicable law.
d.Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used; provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.
e.In the event of the delivery to the Corporation of a written consent or consents purporting to represent the requisite voting power to authorize or take corporate action and/or any related revocations, the Secretary shall provide for the safekeeping of such consents and revocations. The Secretary, or such other officer of the Corporation as the Board of Directors may designate, shall, as promptly as practicable, conduct a ministerial review of the validity of the consents and/or any related revocations deemed necessary and appropriate; provided, however, that if the corporate action to which the written consent relates is the removal or replacement of one or more members of the Board of Directors, the Secretary, or such other officer of the Corporation as the Board of Directors may designate, shall promptly designate two persons, who may be employees of the Corporation, but who shall not be members of the Board of Directors or officers of the Corporation, to serve as inspectors with respect to such written consent and such inspectors shall discharge the functions of the Secretary, or such other officer of the Corporation as the Board of Directors may designate, under this Section (9).
f.No action by written consent without a meeting shall be effective until such date as the Secretary, such other officer of the Corporation as designated by the Board of Directors or inspectors as appointed in accordance with this Section (9)(e), as applicable, completes their review, determines that the consents delivered to the Corporation in accordance with this Section (9) represent not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and certifies such determination to the Board of Directors for entry in the records of the Corporation kept for the purpose of recording the proceedings of meetings of stockholders.
g.Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation as provided herein.
h.Any stockholder giving a written consent, or the stockholder’s proxyholder, may revoke the consent in any manner permitted by applicable law.
ARTICLE III
BOARD OF DIRECTORS
SECTION (1) General Powers. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by the DGCL or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders.
SECTION (2) Number, Tenure and Qualifications.
a.The Board of Directors shall consist of not less than one (1) and not more than nine (9) directors. The number of directors may be fixed and changed from time to time by a resolution of the Board of Directors in accordance with this Section (2)(a). All directors are in the same class and shall have equal voting rights.
b.The directors shall hold office until the next meeting of stockholders held for the purpose of electing the Board of Directors or until their successors have been duly elected and qualified, or until a director’s prior death, resignation or removal. Any director may resign at any time upon written notice of such resignation to the Corporation.
c.A vacancy occurring in the Board of Directors for any reason other than removal may be filled by a majority of the remaining Directors, or a sole remaining director, though less than a quorum. Any vacancy occurring in the Board of Directors by reason of removal shall be filled by a plurality of the votes cast by the holders of shares entitled to vote at a meeting of stockholders at which a quorum is present.
d.Between successive annual meetings, the directors shall have the power to appoint one or more additional directors to fill any vacancies occurring in the Board of Directors for any reason other than removal. A director so appointed shall hold office only until the next following annual meeting of the Corporation or until his successor is duly elected and qualified, but such director shall be eligible for election at the next meeting of stockholders held for the purpose of electing directors and the number of directors will be increased accordingly.
SECTION (3) Notice of Meeting. A regular meeting of the Board of Directors shall be held without other notice than as provided by these Bylaws immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may, by resolution, provide the time and place for the holding of different or additional regular meetings without other notice than such resolution.
SECTION (4) Special Meetings. Special meetings of the Board of Directors shall be called at the request of the Chairman of the Board, the President or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings.
SECTION (5) Notice. Notice of any special meeting of directors shall be given to each director at his business or residence in writing, by hand delivery, first-class or overnight mail or courier service, telegram or facsimile transmission, electronic mail or other electronic transmission, or orally, including in person or by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least two (2) days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company or the notice a delivered to the overnight mail or courier service at least twenty-four (24) hours before such meeting. If by facsimile transmission or electronic mail or other electronic transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. If orally, including in person or by telephone, or by hand delivery, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments
to these Bylaws, as provided under Article VIII. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Article VI, Section (3) of these Bylaws.
SECTION (6) Action by Consent of Board of Directors. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or transmission or transmissions are filed with the minutes of proceedings of the Board or committee.
SECTION (7) Conference Telephone Meetings. Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.
SECTION (8) Quorum. Subject to Article III, Section (2), a whole number of directors equal to at least a majority of the directors then in office shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn or recess the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly organized meeting may continue to transact business until adjournment or recess, notwithstanding the withdrawal of enough directors to leave less than a quorum.
SECTION (9) Executive and Other Committees. The Board of Directors may, by resolution adopted by a majority of the directors then in office, designate one or more committees to exercise, subject to applicable provisions at law, the powers of the Board in the management of the business and affairs of the Corporation when the Board is not in session. Each such committee shall consist of two or more directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee may to the extent permitted by law exercise such powers and shall have such responsibilities as shall be specified in the designating resolution and in the charter of such committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board of Directors when required.
A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Article III, Section (5) of these Bylaws. The Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Nothing herein shall be deemed to prevent the Board of Directors from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided, however, that no such committees shall have or may exercise any authority of the Board of Directors.
SECTION (10) Records. The Board of Directors shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board of Directors and of the stockholders, appropriate stock books and registered and such books of records and accounts as may be necessary for the proper conduct of the business of the Corporation.
SECTION (11) Compensation. Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the Board of Directors a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefore.
ARTICLE IV
OFFICERS
SECTION (1) Elected Officers. The elected officers of the Corporation shall be: a Chairman of the Board of Directors, a President, a Secretary, a Treasurer, and such other officers as the Board of Directors from time to time may deem proper. The Chairman of the Board shall be chosen from among the directors. All officers elected by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may he conferred by the Board of Directors or by any committee thereof. The Board of
Directors or any committee thereof may from time to time elect, or the Chairman of the Board or President may appoint, such other officers (including one or more Vice Presidents, Assistant Secretaries, and Assistant Treasurers) and such agents, as may be necessary or desirable for the conduct of the business of the Corporation. Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in these Bylaws or as may be prescribed by the Board or such committee or by the Chairman of the Board of Directors or President, as the case may be.
SECTION (2) Election and Term of Office. The elected officers of the Corporation shall be elected from time to time, but no less than annually, by the Board of Directors at a regular meeting of the Board of Directors. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign, but any officer (other than the Chairman of the Board or President) may be removed from office at any time by either the affirmative vote of a majority of the directors then in office or by the Chairman of the Board or President. The Chairman of the Board and the President may only be removed from office by the affirmative vote of a majority of the directors then in office. Such removal shall be without prejudice to the contractual rights, if any, of the person so removed.
SECTION ((3) Chairman of the Board. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall be responsible for the general management of the affairs of the Corporation and shall perform all duties incidental to his office which may be required by law and all such other duties as are properly required of him by the Board of Directors. He shall make reports to the Board of Directors and the stockholders, and shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect. The Chairman of the Board may also serve as President, if so elected by the Board of Directors.
SECTION (4) President. The President shall act in a general executive capacity and shall assist the Chairman of the Board in the administration and operation of the Corporation’s business and general supervision of its policies and affairs. The President shall, in the absence of or because of the inability to act of the Chairman of the Board, perform all duties of the Chairman of the Board and preside at all meetings of stockholders and of the Board of Directors.
SECTION (5) Vice Presidents. Each Vice President shall have such powers and shall perform such duties as shall be assigned to him by the Board of Directors, the Chairman of the Board or the President.
SECTION (6) Treasurer. The Treasurer shall be a Vice President and act in an executive financial capacity. He shall assist the Chairman of the Board and the President in the general supervision of the Corporation’s financial policies and affairs. The Treasurer shall exercise general supervision over the receipt, custody and disbursement of corporate funds. The Treasurer shall cause the funds of the Corporation to be deposited in such bank, as may be authorized by the Board of Directors, or in such banks as may be designated as depositaries in the manner provided by resolution of the Board of Directors. He shall have such further powers and duties and shall be subject to such directions as may be granted or imposed upon him from time to time, by the Board of Directors, the Chairman of the Board or the President.
SECTION (7) Secretary. The Secretary shall keep or cause to be kept in one or more books provided for that purpose, the minutes of all meetings of the Board, the committees of the Board and the stockholders; he shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; he shall be custodian of the records; and he shall see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and in general, he shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board, the Chairman of the Board or the President.
SECTION (8) Removal. Any officer elected, or agent appointed, by the Board of Directors may be removed by the affirmative vote of a majority of the directors then in office whenever, in their judgment, the best interests of the Corporation would be served thereby. Any officer or agent appointed by the Chairman of the Board or the President may be removed by him whenever, in his judgment, the best interests of the Corporation would be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his successor, his death, his resignation or his removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee compensation plan.
SECTION (9) Vacancies. A newly created elected office and a vacancy in any elected office because of death, resignation, or removal may be filled by the Board of Directors for the unexpired portion of the term at any meeting of the Board of Directors. Any vacancy in an office appointed by the Chairman of the Board or the President because of death, resignation, or removal may be filled by the Chairman of the Board or the President, as the case may be.
ARTICLE V
STOCK, STOCK CERTIFICATES, TRANSFERS AND RECORD DATE
SECTION (1) Stock. Stock shall be issued in accordance with the Fourth section of the Certificate of Incorporation at a fair market value determined by the Board of Directors. Consideration received by the Corporation for such shares shall not be in the form of promissory notes or services to be performed, or any combination thereof.
SECTION (2) Stock Certificates, Uncertificated Shares and Transfers. The interest of each stockholder of the Corporation shall be in shares of stock, which shall be either uncertificated shares or certificated shares. Certificated shares shall be evidenced by certificates for shares of stock in such form as the proper officers of the Corporation may from time to time prescribe. The certificates of stock shall be signed, counter-signed and registered in such manner as the Board of Directors may by resolution prescribe, which resolution may permit all or any of the signatures on such certificates to be in facsimile. In case any officer, transfer agent or registrar who have signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
SECTION (3) Lost, Stolen or Destroyed Certificates. No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, nor shall the shares of stock represented by such certificate alleged to have been lost, destroyed or stolen be represented by uncertificated shares, except on production of such evidence of such loss, destruction or theft of the certificate and on delivery to the Corporation of a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors or any financial officer may in its or his discretion require.
SECTION (4) Transfer of Shares. The shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorney or legal representatives, and upon such transfer the old certificates (in the case of shares of stock represented by certificates) shall be surrendered to the Corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates (or no certificates in the event that such shares are to be uncertificated) shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.
SECTION (5) Stockholders Record Date. In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment or recess thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment or recess of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned or recessed meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned or recessed meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 5 at the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
ARTICLE VI
MISCELLANEOUS
SECTION (1) Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January and end on the thirty-first day of December of each year.
SECTION (2) Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation.
SECTION (3) Waiver of Notice. Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the DGCL or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to such notice, or a waiver by electronic transmission by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or the bylaws.
SECTION (4) Resignations. Any director or any officer, whether elected or appointed, may resign at any time by giving written notice of such resignation to the Chairman of the Board, the President, or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chairman of the Board, the President, or the Secretary, or at such later time as is specified therein. No formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective.
SECTION (5) Severability. Whenever possible, each provision or portion of any provision of these Bylaws will be interpreted in such manner as to be effective and valid under applicable law but if any provision or any portion of any provision of these Bylaws shall be held to be invalid, illegal or unenforceable, in any respect under any applicable law or rule in any jurisdiction, such provision or portion of any provision shall be severable and the invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction and these Bylaws shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
ARTICLE VII
CONTRACTS, PROXIES, ETC.
SECTION (1) Contracts. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. The Chairman of the Board, the President or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the President or any Vice President of the Corporation may delegate contractual powers to others under his jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.
SECTION (2) Voting of Shares in Other Corporations. Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation,holder in accordance with the following direction (or if no directions have been given, as indicated in the Notes to castVIF below) and all other matters that may properly come before the votes which the Corporation may be entitledANNUAL MEETING OF STOCKHOLDERS (the “Meeting”) of GRAN TIERRA ENERGY INC. (the “Corporation”) to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held byvirtually 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 Corporation, at a meetingnominees listed in Proposal 1 and FOR Proposals 2, 3 and 4.
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1. Election of Directors. | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain |
a. Peter J. Dey | | ☐ | | ☐ | | ☐ | | b. Gary S. Guidry | | ☐ | | ☐ | | ☐ | | c. Evan Hazell | | ☐ | | ☐ | | ☐ |
d. Robert B. Hodgins | | ☐ | | ☐ | | ☐ | | e. Alison Redford | | ☐ | | ☐ | | ☐ | | f. Ronald W. Royal | | ☐ | | ☐ | | ☐ |
g. Sondra Scott | | ☐ | | ☐ | | ☐ | | h. David P. Smith | | ☐ | | ☐ | | ☐ | | i. Brooke Wade | | ☐ | | ☐ | | ☐ |
2. Proposal to ratify the appointment of KPMG LLP as Gran Tierra Energy Inc.’s independent registered public accounting firm for 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 ☐ |
4. Proposal to approve an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of the Common Stock at a reverse stock split ratio of 1-for-10. | | For ☐ | | Against ☐ | | Abstain ☐ |
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Authorized Signature(s) – This section must be completed for
your instructions to be executed. |
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| I/we authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any VIF previously given with respect to the Meeting. If no voting instructions are indicated above, this VIF will be voted as recommended by the Board of Directors. |
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This form of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any actionVIF is solicited by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
SECTION (1) By Stockholders. All Bylaws of the Corporation shall be subject to alteration or repeal, and new Bylaws may be made by the stockholders holding no less than a majority of the votes represented by the then-issued and outstanding shares of stock entitled to vote thereon, at an annual meeting or special meeting called for that purpose.
SECTION (2) By Directors. The Board of Directors shall haveDirectors.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 power to make, adopt, alter, amend and repeal, from time to time,Availability of Proxy Materials for the Bylaws of the Corporation,
provided, however, the affirmative vote of the stockholders holding a majority of the voting power of all of the then-issued and outstanding shares of Voting Stock shall be required to amend Article III, Section 2(a) of these Bylaws.
ARTICLE IX
INDEMNITY
SECTION (1) Liabilities and Expenses in Actions. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnitee”) who was or is made or is threatenedAnnual Meeting to be made a party or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans (any such entity, an “Other Entity”), against all liabilityHeld on May 3, 2023.The Notice, Proxy Statement and loss suffered (including, but not limited to expenses (including but not limited to, attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in connection with any such Proceeding), provided that the Indemnitee acted in good faith and in a manner such Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any Proceeding that is criminal in nature, had no reasonable cause to believe that his or her conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner in which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, or that, with respect to any criminal proceeding he or she had reasonable cause to believe that his or her conduct was unlawful. The Corporation shall not indemnify an Indemnitee for any claim, issue or matter as to which the Indemnitee has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Corporation or for any amounts paid in settlement to the Corporation, unless and only to the extent that the court in which the Proceeding was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such amounts as the court deems proper. Notwithstanding the foregoing, except as otherwise provided in this Article IX, the Corporation shall not be required to indemnify an Indemnitee in connection with a Proceeding (or part thereof) commenced by such Indemnitee unless the commencement of such Proceeding (or part thereof) by the Indemnitee was authorized in the specific case by the Board.
SECTION (2) Breach of Fiduciary Duty. A director or officer of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as it presently exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right arising prior to the time of such amendment, modification or repeal.
SECTION (3) Repeal. No amendment to, or repeal of, any of the provisions of this Article IX will adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any acts or omissions of such director occurring prior to such amendment or repeal of these provisions.
SECTION (4) Advancement of Expenses. The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by (i) a former or current officer or director of the Corporation, or (ii) any person designated by the Board as a person subject to this advancement provision, in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by such former or current officer or director or designated person to repay all amounts advanced if it should be ultimately determined that such former or current officer or director or designated person is not entitled to be indemnified under this Article X or otherwise.
SECTION (5) Non-Exclusivity. The rights conferred upon any person under this Article IX shall not be exclusive of any other rights to which such person may have or hereafter acquire under any statute, any other provision of these Bylaws, the Certificate of Incorporation, or any agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in their official capacity, and as to action in any other capacity while holding such office. This Article IX shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Indemnitees when and as authorized by appropriate corporate action.
SECTION (6) Continuation. Indemnification and advancement of expenses as provided by, or granted pursuant to, this Article IX shall continue, unless otherwise provided when authorized or ratified, as to a person who has ceased to be a director, officer, employee, or agent, and shall inure to the benefit of the heirs, executors, and administrators of such a person.
ARTICLE X
FORUM FOR ADJUDICATIONAnnual Report are available at: https://www.grantierra.com/investor-relations/2023-annual-meetingINSTEAD OF DISPUTES
SECTION (1) Exclusive Forum. To the fullest extent permitted by law, and unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for: (i) any derivative action or proceeding brought in the name or right of the corporation or on its behalf, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, stockholder or other agent of the corporation to the corporation or the corporation’s stockholders, (iii) any action arising or asserting a claim arising pursuant to any provision of the DGCL or any provision of the certificate of incorporation or these bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforce or determine the validity of the certificate of incorporation or these bylaws. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article X.
APPENDIX F
INDEMNITY AGREEMENT
This Indemnity Agreement (this “Agreement”) dated as of [•], 20[•], is made by and between Gran Tierra Energy Inc., a Nevada corporation (the “Company”), and [•](“Indemnitee”).
Recitals
A. The Company desires to attract and retain the services of highly qualified individuals as directors, officers, employees and agents.
B. The Company’s Certificate of Incorporation (the “Certificate”) and the Company’s bylaws (the “Bylaws”) require that the Company indemnify its directors, officers, employees and agents and advance defense expenses to its directors and officers, as authorized by the Delaware General Corporation Law, as amended (the “DGCL”), under which the Company is organized and such Certificate and Bylaws expressly provide that the indemnification provided therein is not exclusive and contemplates that the Company may enter into separate agreements with its directors, officers and other persons to set forth specific indemnification and advancement provisions.
C. Indemnitee does not regard the protection currently provided by applicable law, the Company’s governing documents and available insurance as adequate under the present circumstances, and the Company has determined that Indemnitee and other directors, officers, employees and agents of the Company may not be willing to serve or continue to serve in such capacities without additional protection.
D. The Company desires and has requested Indemnitee to serve or continue to serve as a director, officer, employee or agent of the Company, as the case may be, and has proffered this Agreement to Indemnitee as an additional inducement to serve in such capacity.
E. Indemnitee is willing to serve, or to continue to serve, as a director, officer, employee or agent of the Company, as the case may be, if Indemnitee is furnished the indemnity and advancement rights provided for herein by the Company.
Agreement
Now Therefore, in consideration of the mutual covenants and agreements set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows:
1.Definitions.
(a)Agent. For purposes of this Agreement, the term “agent” of the Company means any person who: (i) is or was a director, officer, employee or other fiduciary of the Company or a subsidiary of the Company; or (ii) is or was serving at the request or for the convenience of, or representing the interests of, the Company or a subsidiary of the Company, as a director, officer, employee or other fiduciary of a foreign or domestic corporation, partnership, joint venture, trust or other enterprise.
(b)Expenses. For purposes of this Agreement, the term “expenses” shall be broadly construed and shall include, without limitation, all direct and indirect costs of any type or nature whatsoever (including, without limitation, all attorneys’, witness, or other professional fees and related disbursements, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, and other out-of-pocket costs of whatever nature), actually and reasonably incurred by Indemnitee in connection with the investigation, defense or appeal of a proceeding or establishing or enforcing a right to indemnification under this Agreement, the DGCL or otherwise, and amounts paid as a result of a judgment or in settlement by or on behalf of Indemnitee, but shall not include any judgments, fines or penalties actually levied against Indemnitee for such individual’s violations of law. The term “expenses” shall also include reasonable compensation for time spent by Indemnitee for which he is not compensated by the Company or any subsidiary or third party: (i) for any period during which Indemnitee is not an agent, in the employment of, or providing services for compensation to, the Company or any subsidiary; and (ii) if the rate of compensation and estimated time
involved is approved by the directors of the Company who are not parties to any action with respect to which expenses are incurred, for Indemnitee while an agent of, employed by, or providing services for compensation to, the Company or any subsidiary.
(c)Proceedings. For purposes of this Agreement, the term “proceeding” shall be broadly construed and shall include, without limitation, any threatened, pending, or completed action, suit, claim, counterclaim, cross claim, mediation, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, and whether formal or informal in any case, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness, or otherwise by reason of: (i) the fact that Indemnitee is or was a director, officer, employee or other agent of the Company; (ii) the fact that any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting as director, officer, employee or other agent of the Company; or (iii) the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and in any such case described above, whether or not serving in any such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses may be provided under this Agreement. If the Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a proceeding, this shall be considered a proceeding under this paragraph.
(d)Subsidiary. For purposes of this Agreement, the term “subsidiary” means any corporation or limited liability company of which more than 50% of the outstanding voting securities or equity interests are owned, directly or indirectly, by the Company and one or more of its subsidiaries, and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.
(e)Independent Counsel. For purposes of this Agreement, the term “independent counsel” means a law firm, or a partner (or, if applicable, member) of such a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5)years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to the proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “independent counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
2.Agreement to Serve. Indemnitee will serve, or continue to serve, as a director, officer, employee or agent of the Company or any subsidiary, as the case may be, faithfully and to the best of his or her ability, at the will of such corporation (or under separate agreement, if such agreement exists), in the capacity Indemnitee currently serves as an agent of such corporation, so long as Indemnitee is duly appointed or elected and qualified in accordance with the applicable provisions of the bylaws or other applicable charter documents of such corporation, or until such time as Indemnitee tenders his or her resignation in writing; provided, however, that nothing contained in this Agreement is intended as an employment agreement between Indemnitee and the Company or any of its subsidiaries or to create any right to continued employment of Indemnitee with the Company or any of its subsidiaries in any capacity.
The Company acknowledges that it has entered into this Agreement and assumes the obligations imposed on it hereby, in addition to and separate from its obligations to Indemnitee under the Bylaws, to induce Indemnitee to serve, or continue to serve, as a director,officer, employee or agent of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer, employee or agent of the Company.
3.Indemnification.
(a)Indemnification in Third Party Proceedings. Subject to Section 10 below, the Company shall indemnify Indemnitee to the fullest extent permitted by the DGCL, as the same may be amended from time to time (but, only to the extent that such amendment permits Indemnitee to broader indemnification rights than the DGCL permitted prior to adoption of such amendment), if Indemnitee is a party to or threatened to be made a party to or otherwise involved in any proceeding, for any and all expenses, actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement, judgment or appeal of such proceeding.
(b)Indemnification in Derivative Actions and Direct Actions by the Company. Subject to Section 10 below, the Company shall indemnify Indemnitee to the fullest extent permitted by the DGCL, as the same may be amended from time to time (but, only to the extent that such amendment permits Indemnitee to broader indemnification rights than the DGCL permitted prior to adoption of such amendment), if Indemnitee is a party to or threatened to be made a party to or otherwise involved in any proceeding by or in the right of the Company to procure a judgment in its favor, against any and all expenses actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement, judgment or appeal of such proceedings.
4.Indemnification of Expenses of Successful Party. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any proceeding or in defense of any claim, issue or matter therein, including the dismissal of any action without prejudice, the Company shall indemnify Indemnitee against all expenses actually and reasonably incurred in connection with the investigation, defense or appeal of such proceeding.
5.Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any expenses actually and reasonably incurred by Indemnitee in the investigation, defense, settlement, judgment or appeal of a proceeding, but is precluded by applicable law or the specific terms of this Agreement to indemnification for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
6.Advancement of Expenses. To the extent not prohibited by law, the Company shall advance the expenses incurred by Indemnitee in connection with any proceeding, and such advancement shall be made within twenty (20) days after the receipt by the Company of a statement or statements requesting such advances (which shall include invoices received by Indemnitee in connection with such expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditures made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice) and upon request of the Company, an undertaking to repay the advancement of expenses if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company. Advances shall be unsecured, interest free and without regard to Indemnitee’s ability to repay the expenses. Advances shall include any and all expenses actually and reasonably incurred by Indemnitee pursuing an action to enforce Indemnitee’s right to indemnification under this Agreement, or otherwise and this right of advancement, including expenses incurred preparing and forwarding statements to the Company to support the advances claimed. Indemnitee acknowledges that the execution and delivery of this Agreement shall constitute an undertaking providing that Indemnitee shall, to the fullest extent required by law, repay the advance if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company. The right to advances under this Section shall continue until final disposition of any proceeding, including any appeal therein. This Section 6 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 10(b).
7.Notice and Other Indemnification Procedures.
(a)Notification of Proceeding. Indemnitee will notify the Company in writing promptly upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any proceeding or matter which may be subject to indemnification or advancement of expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise.
(b)Request for Indemnification and Indemnification Payments. Indemnitee shall notify the Company promptly in writing upon receiving notice of any demand, judgment or other requirement for payment that Indemnitee reasonably believes to be subject to indemnification under the terms of this Agreement, and shall request payment thereof by the Company. Indemnification payments requested by Indemnitee under Section 3 hereof shall be made by the Company no later than sixty (60) days after receipt of the written request of Indemnitee. Claims for advancement of expenses shall be made under the provisions of Section 6 herein.
(c)Application for Enforcement. In the event the Company fails to make timely payments as set forth in Sections 6 or 7(b) above, Indemnitee shall have the right to apply to any court of competent jurisdiction for the purpose of enforcing Indemnitee’s right to indemnification or advancement of expenses pursuant to this Agreement. In such an enforcement hearing or proceeding, the burden of proof shall be on the Company to prove that indemnification or advancement of expenses to Indemnitee is not required under this Agreement or permitted by applicable law. Any determination by the Company (including its Board of Directors, shareholders or independent counsel) that Indemnitee is not entitled to indemnification hereunder, shall not be a defense by the Company to the action nor create any presumption that Indemnitee is not entitled to indemnification or advancement of expenses hereunder.
(d)Indemnification of Certain Expenses. The Company shall indemnify Indemnitee against all expenses incurred in connection with any hearing or proceeding under this Section 7 unless the Company prevails in such hearing or proceeding on the merits in all material respects.
8.Assumption of Defense. In the event the Company shall be requested by Indemnitee to pay the expenses of any proceeding, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, or to participate to the extent permissible in such proceeding, with counsel reasonably acceptable to Indemnitee. Upon assumption of the defense by the Company and the retention of such counsel by the Company, the Company shall not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that Indemnitee shall have the right to employ separate counsel in such proceeding at Indemnitee’s sole cost and expense. Notwithstanding the foregoing, if Indemnitee’s counsel delivers a written notice to the Company stating that such counsel has reasonably concluded that there may be a conflict of interest
between the Company and Indemnitee in the conduct of any such defense or the Company shall not, in fact, have employed counsel or otherwise actively pursued the defense of such proceeding within a reasonable time, then in any such event the fees and expenses of Indemnitee’s counsel to defend such proceeding shall be subject to the indemnification and advancement of expenses provisions of this Agreement.
9.Insurance. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company or of any subsidiary (“D&O Insurance”), Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
10.Exceptions.
(a)Certain Matters. Any provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee on account of any proceeding with respect to (i) remuneration paid to Indemnitee if it is determined by final judgment or other final adjudication that such remuneration was in violation of law (and, in this respect, both the Company and Indemnitee have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication, as indicated in Section 10(d) below); (ii) a final judgment rendered against Indemnitee for an accounting, disgorgement or repayment of profits made from the purchase or sale by Indemnitee of securities of the Company against Indemnitee or in connection with a settlement by or on behalf of Indemnitee to the extent it is acknowledged by Indemnitee and the Company that such amount paid in settlement resulted from Indemnitee's conduct from which Indemnitee received monetary personal profit, pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or other provisions of any federal, state or local statute or rules and regulations thereunder; (iii) a final judgment or other final adjudication that Indemnitee’s conduct was in bad faith, knowingly fraudulent or deliberately dishonest or constituted willful misconduct (but only to the extent of such specific determination); or (iv) on account of conduct that is established by a final judgment as constituting a breach of Indemnitee’s duty of loyalty to the Company or resulting in any personal profit or advantage to which Indemnitee is not legally entitled. For purposes of the foregoing sentence, a final judgment or other adjudication may be reached in either the underlying proceeding or action in connection with which indemnification is sought or a separate proceeding or action to establish rights and liabilities under this Agreement.
(b)Claims Initiated by Indemnitee. Any provision herein to the contrary notwithstanding, the Company shall not be obligated to indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought by Indemnitee against the Company or its directors, officers, employees or other agents and not by way of defense, except (i) with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or under any other agreement, provision in the Bylaws or Certificate or applicable law, or (ii) with respect to any other proceeding initiated by Indemnitee that is either approved by the Board of Directors or Indemnitee’s participation is required by applicable law. However, indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors determines it to be appropriate.
(c)Unauthorized Settlements. Any provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee under this Agreement for any amounts paid in settlement of a proceeding effected without the Company’s written consent. Neither the Company nor Indemnitee shall unreasonably withhold consent to any proposed settlement; provided, however, that the Company may in any event decline to consent to (or to otherwise admit or agree to any liability for indemnification hereunder in respect of) any proposed settlement if the Company is also a party in such proceeding and determines in good faith that such settlement is not in the best interests of the Company and its shareholders.
(d)Securities Act Liabilities. Any provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee or otherwise act in violation of any undertaking appearing in and required by the rules and regulations promulgated under the Securities Act of 1933, as amended (the “Act”), or in any registration statement filed with the SEC under the Act. Indemnitee acknowledges that paragraph (h) of Item 512 of Regulation S-K currently generally requires the Company to undertake in connection with any registration statement filed under the Act to submit the issue of the enforceability of Indemnitee’s rights under this Agreement in connection with any liability under the Act on public policy grounds to a court of appropriate jurisdiction and to be governed by any final adjudication of such issue. Indemnitee specifically agrees that any such undertaking shall supersede the provisions of this Agreement and to be bound by any such undertaking.
11.Nonexclusivity and Survival of Rights. The provisions for indemnification and advancement of expenses set forth in this Agreement shall not be deemed exclusive of any other rights which Indemnitee may at any time be entitled under any provision of applicable law, the Company’s Certificate, Bylaws or other agreements, both as to action in Indemnitee’s official capacity and Indemnitee’s action as an agent of the Company, in any court in which a proceeding is brought, and Indemnitee’s rights hereunder shall continue after Indemnitee has ceased acting as an agent of the Company and shall inure to the benefit of the heirs, executors, administrators and assigns of Indemnitee. The obligations and duties of the Company to Indemnitee under this Agreement shall be binding on the Company and its successors and assigns until terminated in accordance with its terms. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her corporate status prior to such amendment, alteration or repeal. To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification or advancement of expenses than would be afforded currently under the Company’s Certificate, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, by Indemnitee shall not prevent the concurrent assertion or employment of any other right or remedy by Indemnitee.
12.Term. This Agreement shall continue until and terminate upon the later of: (a) five (5) years after the date that Indemnitee shall have ceased to serve as a director or and/or officer, employee or agent of the Company; or (b) one (1) year after the final termination of any proceeding, including any appeal then pending, in respect to which Indemnitee was granted rights of indemnification or advancement of expenses hereunder.
No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against an Indemnitee or an Indemnitee's estate, spouse, heirs, executors or personal or legal representatives after the expiration of five (5) years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such five-year period; provided, however, that if any shorter period of limitations is otherwise applicable to such cause of action, such shorter period shall govern.
13.Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who, at the request and expense of the Company, shall execute all papers required and shall do everything that may be reasonably necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
14.Interpretation of Agreement. It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the fullest extent now or hereafter permitted by law.
15.Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (a) the validity, legality and enforceability of the remaining provisions of the Agreement (including without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to Section 14 hereof.
16.Amendment and Waiver. No supplement, modification, amendment, or cancellation of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
17.Notice. Except as otherwise provided herein, any notice or demand which, by the provisions hereof, is required or which may be given to or served upon the parties hereto shall be in writing and, if by telegram, telecopy or telex, shall be deemed to have been validly served, given or delivered when sent, if by overnight delivery, courier or personal delivery, shall be deemed to have been validly served, given or delivered upon actual delivery and, if mailed, shall be deemed to have been validly served, given or delivered three (3) business days after deposit in the United States mail, as registered or certified mail, with proper postage prepaid and addressed
to the party or parties to be notified at the addresses set forth on the signature page of this Agreement (or such other address(es) as a party may designate for itself by like notice). If to the Company, notices and demands shall be delivered to the attention of the Secretary of the Company.
18.Governing Law. This Agreement shall be governed exclusively by and construed according to the laws of the State of Delaware, without regard to the principles of conflicts of laws.
19.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence of this Agreement.
20.Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.
21.Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, written and oral, between the parties with respect to the subject matter of this Agreement; provided, however, that this Agreement is a supplement to and in furtherance of the Company’s Certificate, Bylaws, the DGCL and any other applicable law, and shall not be deemed a substitute therefor, and does not diminish or abrogate any rights of Indemnitee thereunder.
In Witness Whereof, the parties hereto have entered into this Agreement effective as of the date first above written.
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COMPANY
By: ________________________________
Name:
Title:
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. | INDEMNITEE
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