PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION—MAY 29, 2020

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

Gulfport Energy Corporation

(Name of Registrant as Specified in Its Charter)

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PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION—MAY 29, 2020

[X], 2020

Dear Fellow Stockholders,

On behalf of your Board of Directors (the “Board”) and management, you are cordially invited to attend the 2020 Annual Meeting of Stockholders of Gulfport Energy Corporation to be held at 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 on [X], 2020, at [X] [a./p.]m. Central Time (including any adjournments or postponements thereof, the “Annual Meeting”). Due to the public health impact of the COVID-19 outbreak, we are planning for the possibility that the Annual Meeting may be held at a different location or held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be set forth in a press release issued by the Company and available in the “News – Press Releases” section of our website at www.gulfportenergy.com. Included with this letter are the Notice of 2020 Annual Meeting, a proxy statement detailing the business to be conducted at the Annual Meeting, a GOLD proxy card and our annual report for the fiscal year ended December 31, 2019.

Your vote will be especially important this year because Firefly Value Partners, LP, FVP Master Fund, L.P. and certain of their affiliates (collectively, “Firefly”) have notified us of their intent to nominate two nominees for election as directors at the Annual Meeting in opposition to the nominees recommended by the Board. We strongly urge you to read the accompanying proxy statement carefully to learn more about the directors and proposals that are being voted on at the Annual Meeting. OUR BOARD URGES YOU TO VOTE “FOR” THE BOARD’S NOMINEES BY USING THE ENCLOSED GOLD PROXY CARD AND TO DISREGARD ANY MATERIALS, AND NOT TO SIGN, RETURN OR VOTE ON ANY PROXY CARD, THAT MAY BE SENT TO YOU BY OR ON BEHALF OF FIREFLY. If you have already voted using a white proxy card sent to you by Firefly, you can revoke your vote by using the GOLD proxy card to vote. Only your latest-dated vote will count – any prior proxy card may be revoked at any time prior to the Annual Meeting.

We look forward to greeting those of you who will be able to attend the Annual Meeting. Regardless of whether you plan to join us at the Annual Meeting, it is important that your voice be heard. Accordingly, we request that you vote in advance of the Annual Meeting by signing, dating and returning the GOLD proxy card in the postage-paid envelope provided or by telephone or Internet by following the instructions on the enclosed GOLD proxy card.

Thank you for your continued support and interest in Gulfport.

Sincerely,

 

 

 

 

David M. Wood

 

David L. Houston

 

Alvin Bledsoe

Chief Executive Officer and President

 

Outgoing Chairman of the Board

 

Incoming Chairman of the Board

 

NOTICE OF
2020
ANNUAL
STOCKHOLDERS
MEETING
AND
PROXY
STATEMENT

[X], 2020
[X] [a./p.]m., Central Time

3001 Quail Springs Parkway
Oklahoma City, Oklahoma 73134

 

 

PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION—MAY 29, 2020

3001 Quail Springs Parkway
Oklahoma City, Oklahoma 73134

[X], 2020

Notice is hereby given that the 2020 Annual Meeting of Stockholders (including any adjournments or postponements thereof, the “Annual Meeting) of Gulfport Energy Corporation, a Delaware corporation (the “Company”) will be held on [X], 2020 at [X] [a./p.]m., Central Time at the location listed in the table below and to vote on the proposals listed in the same table.

It is important that your voice be heard, and your shares be represented at the Annual Meeting whether or not you are able to attend in person. We urge you to vote TODAY by completing, signing and dating the enclosed GOLD proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed GOLD proxy card to vote by the Internet or telephone. If your bank, broker or other nominee is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from such holder of record. You must follow those instructions in order for your shares to be voted. Because of the contested nature of the Annual Meeting, if you do not give instructions to your broker, your broker will not be able to vote your shares with respect to any of the proposals. Please refer to the section entitled “About the Annual Meeting” on page [79] of the attached proxy statement and the instructions on the GOLD proxy card for more information. We urge you to vote your shares or to instruct your bank, broker or other nominee to vote your shares “FOR” each of the proposals listed on the enclosed GOLD proxy card.

The accompanying proxy statement provides detailed information about the matters to be considered at the Annual Meeting. As you may know, Firefly Value Partners, LP and certain of its affiliates and associates (collectively, “Firefly”) have notified us of their intent to nominate [two nominees] for election as directors at the Annual Meeting in opposition to [two] of the eight nominees recommended by our Board of Directors. You may receive proxy solicitation materials and a white proxy card from Firefly. The Company is not responsible for the accuracy of any information provided by or relating to Firefly or their nominees contained in solicitation materials filed or disseminated by or on behalf of Firefly or any other statements that Firefly may make.

The Board strongly recommends that you NOT sign or return any proxy card sent to you by Firefly. If you have previously voted using a white proxy card sent to you by Firefly, you can subsequently revoke that proxy by following the instructions on the enclosed GOLD proxy card. Only your latest dated proxy will count.

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF THE BOARD’S NOMINEES UNDER PROPOSAL 1 AND “FOR” EACH OF PROPOSALS 2, 3 AND 4 USING THE ENCLOSED GOLD PROXY CARD. THE BOARD URGES YOU NOT TO SIGN, RETURN OR VOTE ANY WHITE PROXY CARD SENT TO YOU BY FIREFLY.

   

In addition to the formal items of business to be brought before the Annual Meeting, there will be a report on our operations and a question and answer period.

If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor:

Morrow Sodali LLC
470 West Avenue
Stamford, CT 06902
Stockholders may call toll-free: (800) 662-5200
Banks and Brokers may call collect: (203) 658-9400

Email: GPOR@investor.morrowsodali.com

 

GULFPORT ENERGY CORPORATION
3001 Quail Springs Parkway
Oklahoma City, Oklahoma 73134

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS

Date and Time

[X], 2020 at [X] [a./p.]m., Central Time

Place

3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134

Due to the public health impact of COVID-19, Gulfport is planning for the possibility that the Annual Meeting may be held at a different location or held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be set forth in a press release issued by the Company and available in the “Investors – News / Events” section of our website at www.gulfportenergy.com.

All persons attending the Annual Meeting will be required to present a current form of government-issued picture identification. If you are a holder of record and attend the Annual Meeting, you may vote by ballot in person even if you have previously voted on a proxy card. If you hold your shares in “street name” and wish to attend the Annual Meeting and vote in person, you must provide a “legal proxy” from your bank, broker or other nominee and proof of ownership on the record date (such as a recent brokerage statement) or the voting instruction form mailed to you by your bank, broker or other nominee.

Proposals

1.     To elect eight directors to serve until the Company’s 2021 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified (the Election of Directors Proposal or Proposal 1);

2.     To approve, on an advisory, non-binding basis, on the compensation paid to the Company’s named executive officers (the Say on Pay Proposal or Proposal 2);

3.     To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2020 (the Auditors Ratification Proposal or Proposal 3) and

4.     To approve, on an advisory, non-binding basis, the continuation of the Company’s Tax Benefits Preservation Plan dated April 30, 2020 (the Tax Benefits Preservation Plan Proposal or Proposal 4).

We will also transact any other business as may properly come before the Annual Meeting.

Record Date

[X], 2020 at the close of business

 

PROXY VOTING

Stockholders of the Company as of the record date are entitled to vote by proxy in the following ways:

By calling the telephone number on your GOLD proxy card or voting instruction form

 

Online by visiting the website provided on your GOLD proxy card or voting instruction form

 

By returning by mail a properly
completed, signed and dated
GOLD proxy card or voting instruction form

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON [X], 2020: This proxy statement and the Company’s 2019 Annual Report to Stockholders are available free of charge on the Company’s website at www.gulfportenergy.com/proxy.

 

By order of the Board of Directors,

 

 

   

Patrick K. Craine
General Counsel and Corporate Secretary

This notice and proxy statement are first being mailed to stockholders on or about [X], 2020.

 

TABLE OF CONTENTS

PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION – MAY 29, 2020

GULFPORT ENERGY CORPORATION

3001 Quail Springs Parkway
Oklahoma City, Oklahoma 73134

_____________________

PROXY STATEMENT
_____________________

 

2020 PROXY STATEMENT i

 

PROXY STATEMENT SUMMARY

The summary below highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider in connection with the matters before the Annual Meeting. Please read the entire proxy statement carefully before voting your shares.

ANNUAL MEETING INFORMATION

This proxy statement is being furnished to you in connection with the solicitation of proxies by the Board of Directors (the “Board” or the “Board of Directors”) of Gulfport Energy Corporation, a Delaware corporation (“Gulfport,” the “Company,” “we,” “our” or “us”) for use at Gulfport’s 2020 Annual Meeting of Stockholders (including any postponements or adjournments, the “Annual Meeting”). This notice and proxy statement are first being made available to stockholders on or about [X], 2020.

Date:

[X], 2020

Location:

3001 Quail Springs Pkwy, Oklahoma City, Oklahoma 73134

Time:

[X] [a./p.]m. Central Time

Record Date:

[X], 2020

Voting:

Stockholders at the close of business on the record date will be entitled to vote at the Annual Meeting. As of the record date, [X] shares of our common stock are entitled to vote at the Annual Meeting. Stockholders are entitled to one vote for each share of common stock held. For more information on voting and attending the Annual Meeting, please see “About the Annual Meeting” on page [79] of this proxy statement.

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible so that your shares are represented. We urge you to vote TODAY by completing, signing and dating the enclosed GOLD proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed GOLD proxy card to vote by the Internet or telephone. Returning your GOLD proxy card will not prevent you from voting in person, but rather, will ensure that your vote is counted if you are unable to attend.

PROPOSALS REQUIRING YOUR VOTE. Our Board of Directors is soliciting your vote on the following matters:

Proposal

Board
Recommendation

Vote Required for
Approval

Broker
Discretionary
Voting
*

Effect of
Abstentions
and Broker
Non-votes**

Page Reference
(for more detail)

1: Election of Directors Proposal

FOR each Board nominee

Plurality of
votes cast

Not permitted

No effect

[11]

2: Say on Pay Proposal

FOR

Majority of
votes cast

Not permitted

No effect

[72]

3: Auditors Ratification Proposal

FOR

Majority of
votes cast

Not Permitted

No effect

[73]

4: Continuation of Tax Benefits Preservation Plan Proposal

FOR

Majority of

votes cast

Not Permitted

No effect

[75]

*      To the extent brokers receive competing proxy materials (in addition to the Company’s proxy materials) with respect to the Annual Meeting, the rules of the New York Stock Exchange (the “NYSE”) governing brokers’ discretionary authority to cast votes at stockholder meetings will not permit brokers licensed by the NYSE to exercise discretionary authority with regard to any proposals to be voted upon at the Annual Meeting.

**    Because we do not expect brokers to be able to exercise discretionary authority with regard to any proposals to be voted upon at the Annual Meeting, we do not expect there to be any broker non-votes at the Annual Meeting.

 

2020 PROXY STATEMENT 1

 

PROXY STATEMENT SUMMARY

   

About Gulfport

Gulfport Energy operates in two of the premier gas-weighted plays in the United States – the Utica Shale play of Eastern Ohio and the South Central Oklahoma Oil Province (SCOOP) play in Oklahoma. Our corporate strategy is focused on the economic development of our asset base in an effort to generate sustainable free cash flow. Our substantial inventory of hydrocarbon resources, including unproved acreage positions in each of our key basins, provides a strong foundation to create future value. Concentrated blocks of unproved acreage provide us the opportunity to apply best-in-class techniques including optimum well spacing, leading completion practices and lateral length optimization to maximize overall capital efficiency. We have improved our capital and operating efficiency metrics over the last several years and today have a low-cost structure in both our Utica and SCOOP operating areas. We believe our low-cost structure provides a significant competitive advantage in the current commodity price environment, and it is our strategy to continue to seek capital and operating efficiencies to grow this advantage.

We continue focusing on reducing our leverage profile, increasing cash flow from operations, improving margins through financial discipline and operating efficiencies while at the same time maintaining strong health, safety and environmental performance. To accomplish these goals, we allocate capital to projects offering the highest rate of return, deploy leading drilling and completion techniques and technologies, and explore merger, acquisition and divestiture opportunities that strengthen our cost structure, deepen our inventory and improve our asset portfolio.

We believe that our dedication to financial discipline, the flexibility and efficiency of our capital program and our continued focus on safety and environmental stewardship provides opportunities for sustainable value creation.

Core Assets

Employees

2019 Production

2019 Production Mix

Utica Shale and SCOOP

298 people
as of Dec. 31, 2019

1,375 MMcfe
per day

91% natural gas and 9% liquids

Director Highlights

Board Composition

Key Competencies

Independent Oversight

  Oil & Gas Industry Knowledge

  Significant Operating Experience

  Accounting & Financial Expertise

  Executive Leadership Experience

  Public Company Board and Corporate Governance Experience

  All directors are independent other than the CEO, including an independent Chairman

  Recently adopted Board Diversity Policy and Corporate Governance Guidelines to enhance our director recruitment and corporate governance practices

  Over 25% of our independent directors are female including the Chair of our Sustainability Committee

  Independent Director Tenure – average 2.5 years

     5+ years: 1

     3 – 5 years: 2

  < 1 – 3 years: 3

2 2020 PROXY STATEMENT

 

 

 

PROXY STATEMENT SUMMARY

Board Refreshment

The Board continuously evaluates its needs in light of our long-term strategy and refreshment remains ongoing.

 

2020 PROXY STATEMENT 3

 

Board Summary

The following table provides summary information about each director nominee who is standing for election at the Annual Meeting. For more information about the background and qualifications of each nominee, please see “Election of Directors and Director Biographies” on page [19] of this proxy statement. We ask you to vote “FOR” each of our director nominees.

           

Nominee Skills

 

Director’s Key Work Experience

Other Current US Public Company Directorships

Dir. Since

Age

Ind.

Core Industry Experience(1)

Financial / Audit & Risks(2)

Senior
Executive
(3)

Environmental / Social(4)

Technical / Engineering(5)

Health & Safety(6)

M&A / Capital Markets(7)

 

David M. Wood

CEO and President of the Company since Dec. 2018

 

2018

63

 

NEW

Alvin Bledsoe

Various senior roles at PwC, including global leader for PwC’s Energy, Mining and Utilities Industries Assurance and Business Advisory Services Group

Crestwood Equity Partners LP
(NYSE: CEQP)

SunCoke Energy, Inc.
(NYSE: SXC)

2020

72

     

 

Deborah G. Adams

SVP of Health and Safety, Project and Procurement with Phillips 66 from May 2014 until her retirement in Oct. 2016

Austin Industries Inc.
Enlink
Midstream
(NYSE: ENLC)

MRC Global Inc.
(NYSE:MRC)

2018

59

 

 

 

NEW

Samantha Holroyd

Independent Consultant

 

2020

51

 

 

 

NEW

Valerie Jochen

Currently Professor in Practice of Reservoir Engineering at Texas A&M University; various senior roles at Schlumberger (NYSE: SLB) before her retirement in 2017, most recently, as a SLB Fellow and Technical Dir. of Unconventional Resources

 

2020

63

 

 
 

C. Doug Johnson

Various senior roles at Phillips 66 and its predecessors from 1981 until 2014, most recently, as VP, Controller and principal accounting officer of Phillips 66

Altus Midstream Company
(NASDAQ: ALTM)

2015

60

     

 

Ben T. Morris

Various senior roles at SMHG subsidiary, Sanders Morris Harris, Inc. since 2012

 

2014

74

     

NEW

John W. Somerhalder II

Interim President and Chief Executive Officer of CenterPoint Energy

CenterPoint Energy
(NYSE: CNP)

Enable Midstream
Partners, LP

(NYSE: ENBL)

2020

64

(1)   Relevant experience in the industry; degree in the area

(2)   CPA, CA, CFA, former CFO role (financial expert); current or former partner of an audit firm, current or former finance industry; degree in the area

(3)   Current or former executive of public company or large private multinational company

4 2020 PROXY STATEMENT

 

 

 

BOARD SUMMARY

(4)   Former or current executive role with direct control and responsibility for or direct accountability for environmental and sustainability in the same industry; proven knowledge of global environmental management; degree in the area

(5)   Knowledge and understanding of upstream development and production; degree in the area

(6)   Former or current executive role with direct control and responsibility for health, safety and environment; former or current role with direct accountability for health, safety and environment in the same industry; former or current executive role in HR; current member of health, safety and environment committee of a large cap company

(7)   Current or former role in investment banking, funds management, proven experience in M&A; proven experience with capital raises; current or former advisory role

 

2020 PROXY STATEMENT 5

 

Corporate Responsibility and
Sustainability Highlights

Gulfport is proud to play its part in the responsible and efficient development of domestic natural gas which is critical to our country’s economic success as it provides the primary fuel for efficient power generation in the United States. We are aware of the positive influence and potential impact we may have on the communities where we operate and live. Gulfport prioritizes safety, environmental protection, operational excellence and giving back to the communities in which we operate.

We have identified several key areas where our business could have an impact on the communities where we operate, including: greenhouse gas emissions, waste and spills, water usage, health, safety and environmental (HSE) protection, employee training and education, and community involvement. We recently renamed and refocused our Operating Excellence and Corporate Responsibility Committee as our Sustainability Committee, which oversees environmental, social, sustainability and governance (ESG) matters. Continuously improving our HSE performance remains a top priority in 2020. Our HSE performance also directly impacts the compensation of all our employees as it is one of the performance goals included in our cash incentive compensation plan. We believe having measurable HSE metrics as part of our incentive compensation program leads to improved accountability and reinforces our cultural focus on operating safely and protecting employees, environment and the communities in which we operate.

Environmental Stewardship.    Gulfport strives to minimize the environmental impact of our operations by consistently focusing on finding ways to reduce our environmental footprint. Gulfport minimizes our environmental impact by, among other things:

•        Selecting and designing our well sites to minimize impacts to sensitive habitats and surrounding areas;

•        Reducing water disposal volumes and freshwater consumption through water re-use or water sharing agreements with other operators where possible;

•        Investing in and implementing technology to reduce emissions, waste and our physical footprint on our drilling locations;

•        Testing spill prevention and response programs to confirm equipment is maintained and operating practices are continually improved to prevent spills and minimize the impact of our operations to the soil, air and water; and

•        Employing air quality programs, monitoring and operating practices to ensure that we comply with or exceed regulations.

We are a member of The Environmental Partnership which is committed to continuous improvements in environmental performance, including the reduction of methane and volatile organic compound emissions. Limiting greenhouse gas emissions, waste water and oil spills are included as part of our 2019 and 2020 incentive compensation programs to ensure we hold ourselves accountable for being good environmental stewards.

In 2019, Gulfport issued a corporate environmental policy that supports our commitment to operational excellence and our compliance obligations. The policy fosters environmental awareness and guides employee behavior consistent with Gulfport’s expectations. All Gulfport employees are expected to act and make decisions within the guidelines of the policy to ensure our business complies with all local, state and federal environmental laws and regulations applicable to our operations. Each employee and contractor is expected to protect the environment, minimize and manage waste responsibly, reduce and eliminate emissions and limit spills and discharges.

Safety.    Safety is the primary priority for all Gulfport employees and contractors supporting our activities. Gulfport provides comprehensive safety training to all employees and contractors and is fully committed to a safe working environment. We utilize and apply performance metrics to drive and improve a leading position in safe operations. Gulfport has designed and instituted emergency response and business continuity plans to address incidents involving operational disruptions, pandemics and natural disasters. These measures include prompt notification procedures enabling Gulfport personnel to quickly evaluate and mitigate risks. Limiting safety incidents is included as part of our 2019 and 2020 incentive compensation programs to ensure we train and hold our employees accountable for operating safely.

In 2019, Gulfport established the Work Safe Programs which focuses on a combination of twelve rules derived from Company policies (critical tasks) and cultural conditions that have been linked to serious safety incidents in our industry. Critical Task Rules are those requiring specific operating procedures to mitigate hazardous work site conditions to complete work safely. Cultural Condition Rules are defined as work site conditions or human behaviors that have been linked to the root cause of most incidents. Employees and contractors are expected to live by, apply and follow the requirements that coincide with the twelve rules. Our goal is to not only improve our safety performance but to proactively prevent incidents before they happen.

6 2020 PROXY STATEMENT

 

 

 

Corporate Responsibility and Sustainability Highlights

Stop Work is one of the Work Safe Program’s critical tasks. Our Chief Executive Officer, David Wood, and Chief Operating Officer, Donnie Moore, signed and communicated a Stop Work Authority and Obligation letter to the Company’s employees and our contractors. This letter outlines Gulfport’s commitment to health, safety and the environment and provides the expectation and support to all Gulfport employees and contract partners to stop work when conditions warrant. Every person on a Gulfport work site has, not only the authority, but also the obligation to stop any work that is believed to cause an unsafe condition, or places personnel or the environment at risk.

Health, Safety & Environment Highlights for 2019

•        Reduced reportable spills by 38% year-over-year

•        Reduced Total Recordable Incidents (combined employee and contractor) by 36% year-over-year

•        Reduced Lost Time Incident Rate (combined employee and contractor) by 82% year-over-year

•        Reduced our Preventable Motor Vehicle Accident rate by 85% year-over-year by implementing numerous initiatives, including a safe driver training and recognition program

Community Engagement.    Gulfport consistently strives to positively impact and improve the communities where we live and operate. We form partnerships focused on education and work with local authorities to ensure the safety and well-being of the populations where we operate. Gulfport has also formed a strong partnership with the Foundation for Appalachian Ohio and the Communities Foundation of Oklahoma and created the Gulfport Energy Fund in both Ohio and Oklahoma. Through these funds, Gulfport makes direct monetary contributions to local organizations to improve education, youth development, health, human services and environmental stewardship.

 

2020 PROXY STATEMENT 7

 

Corporate Responsibility and Sustainability Highlights

   

2019 Business Highlights

2019 demonstrated Gulfport’s unwavering commitment to capital discipline. Our ability to generate free cash flow, despite an extremely challenging price environment, was accomplished through the dedication of our team who worked to increase operational efficiencies, improve our cost structure and implement a strong hedging program. The table below highlights our 2019 strategic, operational and financial achievements.

Strategic Achievements

Operational Achievements

Financial Achievements

Enhanced senior management team with hiring of highly qualified CFO and General Counsel and Corporate Secretary

Increased production 1% year-over-year while reducing capital expenditures by ~25%

Generated free cash flow in a challenging price environment

Refreshed key accounting, control and finance functions through several key management hires

Reduced our unit lease operating expense by 10% year-over-year

Repurchased $190 million of bonds in the open market capturing $50 million discount

Continued to refresh Board with two new highly qualified additions

Reduced average SCOOP drilling days by 36% and Utica by 12% from 2018 levels

Repurchased 3.8 million shares for $30 million under board approved repurchase program

Completed non-core asset divestitures that generated ~$49 million in proceeds; closed additional non-core divestiture in January 2020 for $50 million

Reduced Total Recordable Incident Rate 36% year-over-year

Reduced general and administrative expense by 4% year-over-year

Reduced Company headcount by 13%, the majority of which was achieved through a voluntary program

Reduced reportable spills 38% year-over-year

Ended 2019 with available borrowing capacity of $636 million under our credit facility; further enhanced in January 2020 with $50 million divestiture of non-core assets

Compensation Highlights

Continue to Strengthen Compensation Governance Practices

Added Relative Total Stockholder Return (RTSR) performance-based LTI awards in 2019 for the first time.    After taking into consideration the input received from our stockholders and the recommendation of Pearl Meyer & Partners, LLC, the Compensation Committee’s independent compensation consultant (“Pearl Meyer”), the Compensation Committee determined that for 2019: (i) 50% of the equity awards granted to our named executive officers (NEOs) would consist of performance-based restricted stock units, vesting over a three-year performance period, based on the Company’s achievement of weighted average RTSR, with target performance set at the 55th percentile of the peer group, with a payout cap of 100% if the Company’s absolute Total Stockholder Return (TSR) is negative during the performance period and a service condition requiring the executive’s continuous service through the last day of the performance period; and (ii) 50% of the equity awards granted to our NEOs will consist of time vesting restricted stock units, vesting over a three-year period.

Stockholder Engagement and Annual Say-On-Pay Advisory Vote

At the Annual Meeting, our stockholders will again have an opportunity to cast an advisory say-on-pay vote on the compensation paid to our named executive officers. The details of the executive compensation program and its pay for performance alignment are discussed in the “Compensation Discussion & Analysis (CD&A)” on page [37] of this proxy statement. This alignment is evident in the substantially lower realized pay received by our CEO relative to target levels as we did not achieve our target goals, as discussed in the CD&A.

Since the 2019 Annual Meeting of Stockholders (the “2019 Annual Meeting”), Gulfport Energy has engaged in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represented approximately 67% of the shares outstanding. Through these conversations our stockholders emphasized their expectation that our compensation programs should be designed to focus our executive team on driving results that ensure the financial health of the organization while also driving long-term stockholder value.

8 2020 PROXY STATEMENT

 

 

 

Corporate Responsibility and Sustainability Highlights

Specifically, after carefully considering input from stockholders, the Company took the following actions in 2019:

•        Introduced performance-based equity awards in the form of performance-based restricted stock units tied to RTSR, vesting over a three-year performance period, comprising 50% of all equity awards granted to NEOs in August 2019;

•        Adjusted annual performance bonus opportunities and long-term equity award targets to more closely align our executives’ financial interests with those of our stockholders and to continue to link a larger portion of executives’ compensation to the performance of our stock and our operational performance;

•        Provided more robust disclosure of our performance metrics and targets for both performance-based cash and equity awards;

•        Modified metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company and including specific and quantifiable health, safety, and environmental metrics; and

•        Adopted formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that aligns their interests with their fellow stockholders.

 

2020 PROXY STATEMENT 9

 

BACKGROUND TO THE SOLICITATION

From 2013 through October 2018, the Company maintained a constructive dialogue with representatives of Firefly regarding Firefly’s views on the Company and the Company’s strategy, meeting with representatives of Firefly numerous times both by phone and in person.

In January 2018, the Board approved a share repurchase program to acquire up to $100 million of the Company’s outstanding common stock during 2018. Later in the year, in May 2018, the Board authorized the Company to acquire an additional $100 million of common stock during 2018, for a total of up to $200 million authorized for the repurchase of stock.

On November 26, 2018, Firefly, at the time claiming to hold 4.9% of the Company’s outstanding common stock, sent a letter to the Board proposing that the Company step up its share repurchase program by implementing a $500 million repurchase program over the following 12 months. Firefly also urged the Company to announce a blanket moratorium on further share issuances.

On December 10, 2018, Firefly filed with the SEC a Schedule 13D in respect of the Company (the “Firefly Schedule 13D”), disclosing beneficial ownership of 7.7% of the Company’s outstanding common stock and recent transactions of Firefly in our common stock including the purchase of certain call options.

On December 11, 2018, an in-person meeting was held in Oklahoma City between representatives of Firefly, on the one hand, and David L. Houston, Chairman of the Board, Donnie Moore, the Chief Operating Officer and Interim Chief Executive Officer, and Paul Heerwagen, the then Senior Vice President, Corporate Development and Strategy, on the other hand. At the meeting, the parties discussed Firefly’s November 26 letter, including Firefly’s proposal that the Company implement a new, $500 million share repurchase program. Firefly demanded that the Company appoint a Firefly principal to the Board, mentioning Ariel Warszawski in particular.

During this conversation, Firefly noted that it had developed a document to identify skill sets that Firefly believed would be desirable for new directors. Firefly stressed the extent of its existing investments in mineral interests, including in the Utica Shale basin where Gulfport operates. Firefly urged the Company’s representatives to share information about the Company’s business. Chairman Houston stated that he would relay these points to the Board. Mr. Houston additionally expressed concerns, noting that he and members of the Board would be cautious to not provide non-public information about the business. He stated that the Board was in the process of looking for directors who would add further energy industry experience to the Board. Mr. Houston asked Firefly to provide him with the list of skill sets Firefly believed were desirable in candidates for the Board. Firefly never provided this list to Mr. Houston.

On December 18, 2018, the Company announced the appointment of David M. Wood as President and Chief Executive Officer. On the same day, Chairman Houston sent a letter to Firefly, apprising its principals of Mr. Wood’s appointment and noting prior public disclosure that the Company had completed a $100 million share repurchase program and expanded the share repurchase authorization to $200 million. Chairman Houston noted that the Company believed that Firefly’s proposal imposing a blanket moratorium on equity issuances would be an imprudent decision, but indicated that the Company would remain mindful of Firefly’s views on the topic.

On January 7, 2019, Messrs. Wood and Heerwagen and Jessica Antle, the Company’s Director of Investor Relations, met with representatives of Firefly at Firefly’s offices in New York to learn more about Firefly’s views on the Company. During this meeting, Firefly was insistent that the Company was being mismanaged and urged the Company to step up its share repurchases.

On January 17, 2019, in the morning, Firefly issued a public letter to the Board via a press release, which, among other things, expressed disappointment with what it alleged was a failure on the part of the Company to implement the Company’s $200 million share repurchase plan. Firefly’s letter stated, “Unfortunately, Gulfport has done little to date to take advantage of this tremendous discount to fair value. The Board authorized $200M in share repurchases in early 2018, but after buying back $110M in shares through July, the Company inexplicably stopped repurchases through the end of Q3 2018.” Firefly’s letter called on the Board to implement a new $500 million share repurchase plan. Later that day, Firefly filed with the SEC Amendment No. 1 to the Firefly Schedule 13D, disclosing beneficial ownership of 8.1% of the Company’s outstanding common stock.

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Later that day, the Company issued its earnings press release and announced that the Company had fully completed its 2018 share repurchase program. The Company had repurchased 20.7 million shares for a cost of approximately $200 million, reducing common stock outstanding by over 10%. The Company also announced that the Board had recently approved a new common share repurchase program to acquire up to $400 million of outstanding common stock in the next two years. On February 14, 2019, Firefly sent a letter to the Board stating that it found the Company’s 2019 capital budget to be encouraging yet remained concerned about issues highlighted in Firefly’s previous communications. In its letter, Firefly also proposed the addition of two new independent directors to the Board: Ariel Warszawski, a principal of Firefly, and an unnamed person whom Firefly claimed was a former oil services company chief executive. The Company requested the name of the proposed candidate but Firefly did not provide it.

On February 15, 2019, Messrs. Wood and Heerwagen and Ms. Antle participated in a conference call with Firefly. On the call, Firefly strenuously urged the Company to step up its repurchase of shares.

On February 21, 2019, at the request of the Board, the respective outside counsel for Firefly and the Company participated in a conference call during which they discussed the Board’s response to Firefly’s February 14 letter. The Company’s outside counsel informed Firefly that the Board was open to an amicable solution but any director nominations would be required to proceed according to the Board’s standard process and, based on the fact that this process had not been started by Firefly to date, the Board was not prepared to add Firefly’s proposed directors to the Board at that time.

On March 6, 2019, Firefly filed with the SEC Amendment No. 2 to the Firefly Schedule 13D, disclosing beneficial ownership of 8.6% of the Company’s outstanding common stock and issuing a public letter. The letter reiterated that Firefly found the Company’s 2019 capital budget to be encouraging but that the Company should implement the 2019 capital budget urgently, set executive compensation incentives and refrain from equity issuances.

From March through September 2019, Firefly engaged with Mr. Wood and other members of Gulfport’s management team regarding Gulfport’s business and operations.

On June 25, 2019, Firefly filed with the SEC Amendment No. 3 to the Firefly Schedule 13D, disclosing beneficial ownership of 8.6% of the Company’s outstanding common stock and recent transactions of Firefly in the Company’s common stock including the purchase and sale of certain call options.

On July 17, 2019, Firefly filed with the SEC Amendment No. 4 to the Firefly Schedule 13D, disclosing beneficial ownership of 9.6% of the Company’s outstanding common stock.

In July 2019, the Company began to shift a portion of its capital allocation strategy from repurchasing stock to repurchasing debt. To this end the Company in July authorized the use of $100 million of cash for the repurchase of the Company’s senior notes in the open market at discounted values to par.

On August 1, 2019, the Company announced in an earnings press release that it had repurchased $105 million principal amount of the Company’s senior notes outstanding for a total cash spend of $80 million in July 2019. The Company also announced that as of the end of the second quarter of 2019, it had spent approximately $30 million for the repurchase of shares in connection with its $400 million repurchase plan. The Company would not make further repurchases of shares in connection with this repurchase program for the rest of 2019.

On August 23, 2019, Mr. Warszawski of Firefly contacted Mr. Wood by phone to deliver a short message, which Mr. Wood committed to convey to the Board. Mr. Warszawski’s stated: “Why don’t you just buy back stock 50 million shares right now. I am not looking for the stock to go up. I just need you need to keep the stock above $2.50.” Mr. Wood then conveyed this message to the Board, and the Board members subsequently discussed this message among themselves. As disclosed in Firefly’s proxy statement, Firefly bought 200,445 shares that same day and another 99,555 shares three days later.

On September 30, 2019, Mr. Wood hosted principals of Firefly for dinner in New York. The parties discussed the Company’s business. Firefly noted that it did not have concerns about the Company’s management team. Firefly said, however, that it would be very disappointed if the Company repurchased less than $10 million worth of its common stock by the end of the third quarter and less than $400 million by year end. Firefly stated that certain other investors could take an interest in the Company

 

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and stated, “If you don’t watch what you are doing, you could lose control of this.” Firefly also expressed concern regarding the Board’s composition and its ability to manage the Company. Firefly urged that either or both of its principals—Mr. Warszawski and Ryan Heslop—be appointed to the Board.

On October 16, 2019, Chairman Houston held a conference call with Firefly. On the call, Firefly stated concerns regarding the Board’s oversight of the Company and proposed that new independent directors be added to the Board with Firefly’s input. Firefly recommended that Mr. Heslop be among the new independent directors to join the Board. Firefly indicated that it would launch a proxy contest if its proposed directors, including Mr. Heslop, were not appointed to the Board in this manner.

On October 23, 2019, Firefly participated in a conference call with Chairman Houston and Patrick K. Craine, the Company’s General Counsel. On the call, Chairman Houston asked Firefly to send the Company a written settlement proposal, setting forth Firefly’s demands, and to include with such proposal a list of persons Firefly proposed to be considered for appointment or election to the Board. Mr. Craine proposed that Firefly and the Company plan a call for November 8, 2019, after the upcoming Board meeting, so that the Company could convey to Firefly the Board’s response to Firefly’s proposal.

From November through December 2019, representatives of Firefly and the Company remained in contact regarding Board composition and capital allocation. During these communications, Firefly insisted that Mr. Heslop be immediately appointed to the Board, whereas the Company requested that Mr. Heslop proceed according to the Board’s standard process for director candidates by submitting his resume for the Board’s review and consent to a preliminary interview with the Company’s executive search advisor, Heidrick & Struggles International, Inc. (“Heidrick & Struggles”). The Company and its advisors made clear that, in the Board’s judgment, submitting a resume and interviewing with Heidrick & Struggles was an essential step for Mr. Heslop before interviewing with individual Board members. The Company stated that this was the Board’s standard process for all director candidates. During this period, Firefly declined to provide a resume for Mr. Heslop, declined to accept the invitation for Mr. Heslop to meet with Heidrick & Struggles, and declined to provide the Company with a list of its proposed director candidates, as had been requested by Chairman Houston on October 23. Firefly did not provide a written settlement proposal, as requested by the Company on October 23, until November 14.

On November 8, 2019, Messrs. Houston and Wood participated in a call with representatives of Firefly. Firefly communicated concerns regarding Board composition and again stated that Firefly’s primary objective was for Mr. Heslop to be appointed to the Board. Chairman Houston informed Firefly that the Company had previously commenced a search for new directors, was waiting for Firefly’s list of proposed candidates, and was still open to considering Mr. Heslop in its search. Chairman Houston expressed an interest in reaching an agreement that would allow for the appointment of one or more new directors. Mr. Wood asked that counsel for Firefly, Olshan Frome Wolosky LLP (“Olshan”) and counsel for Gulfport, Sidley Austin LLP (“Sidley”) be in contact to that end.

On November 11, 2019, Mr. Heslop sent an email to Chairman Houston requesting a call with Messrs. Houston and Craine to discuss terms of a potential settlement agreement.

On November 12, 2019, Chairman Houston replied to Mr. Heslop and reiterated the Board’s preference that initial discussions regarding proposed terms for a potential settlement be had between external counsel Olshan and Sidley, given their respective experience in negotiating customary terms of settlement.

On November 14, 2019, Firefly, in response to the Company’s request of October 23, sent an email to Chairman Houston proposing terms for a settlement agreement, among them: (1) the immediate appointment of Mr. Heslop to the Board; (2) the appointment to the Board of three additional independent directors, to be mutually selected by Firefly and the Board, prior to the filing of the proxy statement for the Annual Meeting; (3) the resignation or retirement of three incumbent directors from the Board; and (4) the creation of a new “capital allocation committee” that Mr. Heslop would chair and that would be comprised of Mr. Heslop, Mr. Wood, and an additional member to be determined. Firefly urged that Gulfport’s Board refreshment should be conducted only with Firefly’s input and that otherwise Firefly would look at alternative approaches.

On November 18, 2019, following consultations of the Board with investors, outside advisors, and management, the Company issued a press release announcing that it intended to continue repurchasing debt on the open market at discounted prices and was planning to suspend its share repurchase program. In the press release, Mr. Wood stated, “[F]ollowing discussions with our large shareholders and other stakeholders, we decided that accretive repurchases of our unsecured notes at discount represent

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an attractive allocation of our capital in the current market environment.” The press release of this date additionally announced the resignations of directors Craig Groeschel and Scott E. Streller from the Board, to be effective at year-end and the decision of Chairman Houston to not seek re-election at the Annual Meeting.

Later that day, Sidley reached out to Olshan to reiterate the Board’s intention is to collaborate with Firefly on identifying suitable candidates to fill the resulting vacancies and to offer a call.

On November 19, 2019, a call was held between Olshan and Sidley. Sidley conveyed that the Company continued to be open to adding independent directors but that, in the judgment of the Board, it was excessive for Firefly to demand that Firefly have the right to select four directors. Sidley reiterated that the Company had on multiple occasions extended an open invitation to Firefly to provide input on the filling of vacancies on the Board. Sidley conveyed that the Board continued to be open to considering Mr. Heslop but still wished for Mr. Heslop to submit his resume and meet with Heidrick & Struggles, like all other director candidates under consideration by the Board. Sidley also invited Firefly to provide names or resumes of any other director candidates and desired skill sets for director candidates. Sidley conveyed that the Company was unlikely to assent to the creation of Firefly’s proposed capital allocation committee as it would be unusual and redundant of processes the Company already had in place. Olshan asked that the Company make a decision as to whether the Company was going to commit to additional share buybacks.

Later that day, Mr. Heslop called Mr. Wood to discuss the exchange between Olshan and Sidley. On the call, Mr. Wood reiterated the Company’s request that Firefly provide input on the filling of the new vacancies on the Board.

On November 21, 2019, Firefly issued a public letter criticizing the Board’s refreshment process and stating, among other things, that the Board should not be trusted to oversee the selection of new independent directors and that one of the new director vacancies should be filled with a Firefly principal.

On November 25, 2019, Firefly filed with the SEC Amendment No. 5 to the Firefly Schedule 13D, disclosing beneficial ownership of 9.9% of the Company’s outstanding common stock.

On December 3, 2019, Mr. Heslop sent an email to Mr. Wood, inviting him to visit Firefly’s office.

On December 5, 2019, Mr. Wood responded to Mr. Heslop’s email and explained that, as communicated previously, it would be more productive for initial discussions regarding terms of a potential settlement to be handled through Olshan and Sidley.

On the same day, Mr. Heslop responded by email to Mr. Wood, stating that Firefly interpreted the Company’s invitation to provide input on the filling of vacancies and the Board’s request for initial settlement discussions to be held between outside counsels as a rejection of Firefly’s settlement proposal.

Later that day, Mr. Wood responded in writing to Mr. Heslop’s email and noted that the Company had invited Firefly both in writing and over the phone, on November 18 and 19, 2019, to collaborate with the Company in the process of Board refreshment. Mr. Wood noted that Sidley had contacted Olshan earlier in the day to reiterate the Company’s willingness to receive input from Firefly in any search for new directors. Mr. Wood further stated that he understood from Mr. Heslop’s email that Firefly would like to submit only his name for consideration. Mr. Wood explained that the Company had an established baseline procedure for the consideration of any director candidates, which included the submission of a resume and an initial meeting with Heidrick & Struggles followed by interviews with the Board, and encouraged Mr. Heslop to direct Olshan to contact Sidley to initiate that process as soon as possible.

Later that day, Olshan and Sidley exchanged correspondence regarding Firefly’s proposal to add Mr. Heslop to the Board. Sidley observed that, to date, neither Firefly nor Olshan had provided names of proposed director candidates other than that of Mr. Heslop and that no resume for Mr. Heslop had been received. Sidley stated that, based on Firefly’s apparent decision to name only one candidate, it appeared that Firefly had declined the Company’s invitation to provide names or resumes of any other director candidates and desired skill sets for director candidates. Sidley also stressed to Olshan again the importance, in the Board’s judgment, that Mr. Heslop proceed according to the Board’s standard process for director nominations by providing his resume and attending an initial interview with Heidrick & Struggles followed by interviews with the Board. Sidley conveyed that it was the view of the Board that adherence to the Board’s standard nomination process was necessary so that directors could give fair treatment to all director candidates, understand the qualifications of candidates for standing committees where there were priorities to address, such as the audit committee, and ensure that the Board could make a determination regarding Mr. Heslop and any other candidate’s candidacy on an informed basis.

 

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On December 6, 2019, Olshan responded that Firefly believed Mr. Heslop should be appointed to the Board as soon as possible and before the Board appointed any other candidate. Olshan stated that after Mr. Heslop was on the Board, he would then assist the Board in evaluating other director nominees. Olshan stated that if the Board would provide Firefly with assurance that it intends to add Mr. Heslop as a director, and the Company and Firefly were then negotiating a settlement agreement consistent with Firefly’s proposals made on November 14, 2019, then Mr. Heslop could provide his resume and participate in interviews. Olshan conveyed that Firefly rejected the Board’s claims that it was necessary for the Board to demand Mr. Heslop’s resume and for Mr. Heslop to go through interviews with the Board prior to his receiving confirmation from the Board that he would be appointed to the Board.

On December 9, 2019, Sidley sent Olshan an email reiterating that the Company welcomed Mr. Heslop to submit his resume and go through the Company’s standard interview process, including an initial interview with Heidrick & Struggles followed by interviews with the Board. Sidley noted that the process could be completed in a matter of only a few weeks, which was ample time given where the Company was in its annual meeting cycle. Sidley highlighted that Firefly’s participation would not prejudice its ability to explore other pathways to effect change on the Board. Sidley reiterated that demanding assurances that Mr. Heslop be selected before even beginning the process would be asking the Board to operate with a pre-determined outcome, which would undermine the integrity and efficacy of the process. Sidley also noted that Mr. Heslop had never met any of the independent directors who would remain on the Board. Sidley stated that the Board planned to move forward with its refreshment process and again encouraged Firefly to participate in it. From January through February 2020, representatives from the Company and Firefly exchanged messages and calls further discussing Firefly’s proposal that Mr. Heslop be appointed to the Board, with Firefly demanding immediate appointment and the Company insisting that Mr. Heslop submit his resume and be interviewed, like other director candidates.

As of December 31, 2019, the Company had repurchased $190.1 million aggregate principal amount of unsecured senior notes for $138.8 million cash representing a total discount capture of $48.6 million.

On January 2, 2020, the Company announced the appointment of Alvin Bledsoe as a member of the Board. Mr. Bledsoe was subsequently appointed to the audit committee and the Nominating and Corporate Governance Committee (the “Nominating Committee”).

On January 15, 2020, Spotlight Advisors, LLC (“Spotlight”), an advisor to Firefly, called Sidley. During the call, Spotlight explained that Mr. Heslop would agree to provide the Company his resume, be interviewed and complete a director questionnaire if the interview was to be conducted in good faith and with an open mind.

On January 22, 2020, Sidley called Spotlight to discuss the process for interviewing Mr. Heslop. Spotlight advised that Mr. Heslop would provide the Company with a detailed biography and resume, agree to be interviewed by the Board, and complete the Company’s director questionnaire. In turn, Sidley assured Spotlight that the Board would conduct Mr. Heslop’s interview with an open mind and in good faith, the same as for other director candidates. Sidley also agreed that the Company would not quote from any of Mr. Heslop’s comments made during his interviews, unless required by law. Sidley advised Spotlight that the Company planned to continue with its previously announced Board refreshment process and that Mr. Heslop would be considered along with other director candidates, as one would expect from a company undertaking a refreshment process.

On January 23, 2020, Spotlight sent Sidley an email attaching certain biographical information for Mr. Heslop and other information about him that would be required in a proxy statement, but no resume was provided. In the email, Spotlight informed Sidley that Mr. Heslop was prepared to meet with members of the Board and/or management at a time and a place of their convenience.

On January 28, 2020, a representative of Heidrick & Struggles called Mr. Heslop for the purpose of setting up Mr. Heslop’s initial interview with Heidrick & Struggles and discussing the process for the Board’s review of Mr. Heslop as a potential director of the Company. Later that day, Heidrick & Struggles’s representative emailed Mr. Heslop and stated that while Heidrick & Struggles was still working to establish a specific time to meet, Mr. Heslop could nevertheless call him at any time and provided his cell phone number in case Mr. Heslop had questions or wanted to follow up.

On January 30, 2020, Heidrick & Struggles’ emailed Mr. Heslop a document from the Company specifying the criteria for joining the Board as a non-executive director.

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Between January 31 and February 27, 2020, Heidrick & Struggles and Mr. Heslop exchanged correspondence in an attempt to schedule Mr. Heslop’s preliminary interview with Heidrick & Struggles. During this period, Mr. Heslop reiterated on multiple occasions that, contrary to the Board’s preference, he would not commit to a meeting with Heidrick & Struggles without an assurance that he could meet with members of the Board before or simultaneously with his interview with Heidrick & Struggles.

On February 7, 2020, the Company announced the appointment of Valerie Jochen to the Board. Ms. Jochen was subsequently appointed to the audit committee and the Nominating Committee. On the same day, Sidley sent an email to Spotlight, at the direction of the Company, confirming that the appointment of Ms. Jochen would in no way foreclose the Board’s openness to considering Mr. Heslop and that the Board refreshment process had not come to an end.

On February 20 and 21, 2020, Spotlight and Sidley exchanged email correspondence, during which Sidley advised that the Company intended to interview Mr. Heslop the week of March 2, 2020. Sidley also advised Spotlight that the advance notice window for director nominations had not even been opened and therefore the parties still had time.

On March 2, 2020, Firefly sent a notice to the Company regarding Firefly’s nominations of Mr. Heslop and Samantha Holroyd for election to the Board at the Annual Meeting and filed Amendment No. 6 to the Firefly Schedule 13D, disclosing its nomination notice and beneficial ownership of 13.1% of the Company’s outstanding common stock. The nomination notice was the first time that Firefly proposed Ms. Holroyd as a director candidate.

Later that day, Heidrick & Struggles reached out to Mr. Heslop again to schedule an interview, noting that it had tried previously to initiate the interview process with Mr. Heslop, consistent with the process that every director candidate for the Company had followed in the past 12 months.

On March 3, 2020, Mr. Heslop responded that he would be willing to speak with Heidrick & Struggles provided that a meeting with the Board was also scheduled.

On March 4, 2020, after additional exchanges, Mr. Heslop informed Heidrick & Struggles he would be available for a videoconference and asked to confirm his interview date with the Board.

On March 10, 2020, Heidrick & Struggles scheduled a meeting with Ms. Holroyd for March 12, 2020. At approximately this time, national and global attention was shifting to the COVID-19 pandemic, which led to some and then mostly all of the Company’s employees and outside advisors to work from home. These disruptions also changed the plan of eventual in-person meetings with Mr. Helsop and Ms. Holroyd to telephonic meetings.

On March 19, 2020, as the COVID-19 pandemic was intensifying in the United States and negatively impacting business indicators and markets, and as oil and gas prices were sharply declining and affecting the oil and gas industry, Firefly issued a press release expressing its disappointment in the Board’s performance and the Board refreshment process.

On March 23, 2020, Heidrick & Struggles sent copies of the Company’s director questionnaire to Mr. Heslop and Ms. Holroyd.

On April 6, 2020, Firefly filed a preliminary proxy statement with the SEC. At this time, the Company had not yet announced a date for the 2020 Annual Meeting and its advisors were reviewing alternatives to conducting an in-person stockholder meeting.

On the same day, Firefly sent an email to the Board stating that, in light of the circumstances created by the COVID-19 pandemic, Firefly believed it would be in the interest of the parties to explore a resolution to the pending proxy contest.

On April 9, 2020, Mr. Craine responded to Firefly’s email, stating that the Board appreciated Firefly’s outreach and would consider Firefly’s request. Mr. Craine reported that the Board wanted to commence the interview process with Mr. Heslop and Ms. Holroyd without delay and requested the availability of Mr. Heslop and Ms. Holroyd for interviews with members of the Nominating Committee. Mr. Craine included with his email a copy of the Company’s director questionnaire that had previously been sent on March 23, which both Mr. Heslop and Ms. Holroyd completed prior to their interview.

On April 23, 2020, Mr. Heslop and Ms. Holroyd separately interviewed with directors Alvin Bledsoe and Ben T. Morris, both members of the Nominating Committee.

 

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On April 28, 2020, Mr. Craine sent letters to Mr. Heslop and Ms. Holroyd on behalf of the Board, requesting additional information relating to disclosures in their director questionnaires in order to assist the Board in its evaluation. In particular, the Company sought from Mr. Heslop additional information in order to evaluate potential conflicts of interest that could arise if Mr. Heslop were made a director.

On April 29, 2020, Firefly issued a press release calling on the Company to announce the date of the Annual Meeting.

Later that day, Sidley called Spotlight to understand why Firefly issued a press release that morning when the Board had interviewed both Mr. Heslop and Ms. Holroyd only the previous week and sent follow-up letters the night before. Sidley assured Spotlight that the Board was seriously considering Mr. Heslop and Ms. Holroyd as director candidates. Sidley indicated, however, that while Ms. Holroyd was relatively well received, the Board had genuine concerns about potential conflicts and other issues that could arise if Mr. Heslop were made a director. Lastly, Sidley gave Spotlight a courtesy advance notice that the Company would make significant announcements within the next day, but that such announcements were not targeted at Firefly.

On April 30, 2020, the Company announced that the Board had adopted a limited duration tax benefits preservation plan (the “Tax Benefits Preservation Plan”) in order to protect stockholder value against a possible limitation on the Company’s ability to use its estimated $1.3 billion of tax net operating losses (“NOLs”) to reduce potential future U.S. federal income tax obligations. The Company further announced that the COVID-19-related closure of the Company’s headquarters had caused a delay in the completion of the Form 10-K/A process and that the Company expected to file its Form 10-K/A, including the Part III Information, no later than June 15, 2020.

Shortly after the foregoing, Sidley called Spotlight to further explain the adoption of the Tax Benefits Preservation Plan. Spotlight asked a number of questions related to the analysis underlying such plan, which Sidley answered. Thereafter, Spotlight advised Sidley that Mr. Heslop and Ms. Holroyd would send responses to the Company’s April 28, 2020 letters in short order. Moreover, Spotlight gave Sidley advance notice that Olshan would send a written settlement proposal the next day.

Later that same day, Ms. Holroyd sent a response to the Company’s April 28, 2020 letter to her. Moreover, Olshan sent a letter on behalf of Mr. Heslop containing his response to the Company’s April 28, 2020 letter to him, which addressed questions of the Board regarding potential conflicts of interest that could arise if Mr. Heslop were made a director.

On May 1, 2020, the Company entered into an amendment to its revolving credit facility. One of the terms of the amendment prohibits the Company from undertaking further repurchases of its common stock.

On that same day, Olshan sent Sidley a settlement term sheet proposing the immediate appointments to the Board of Mr. Heslop and Ms. Holroyd. It also provided, among other terms, that Firefly would have the ability to replace its nominees so as long as Firefly held 2% of the Company’s shares, that Mr. Heslop and Ms. Holroyd would be appointed to two committees each, and that all of Firefly’s expenses incurred in connection with its involvement at the Company be reimbursed. At approximately this time, the Company was contacted by a third-party investor whom the Company understood to be potentially in contact with Firefly. The third-party investor offered that he would be willing to substitute for Mr. Helsop on the Board if this would satisfy Firefly and the Company and lead to a settlement between the Company and Firefly.

On May 5, 2020, Mr. Craine sent a letter to Mr. Heslop on behalf of the Board requesting further information about his candidacy, primarily asking follow-up questions regarding potential conflicts of interest that could arise if Mr. Heslop were made a director.

On May 6, 2020, Sidley and Spotlight had a call to discuss Mr. Heslop and Ms. Holroyd’s candidacies. On the call, Sidley advised Spotlight that the Nominating Committee had recommended to the full Board that both Mr. Heslop and Ms. Holroyd be interviewed by the remaining members of the Board. Sidley also explained that while the Nominating Committee was supportive of Ms. Holroyd, it had reservations about Mr. Heslop’s potential conflicts and lack of public company board experience, as well as Firefly’s continued focus on share repurchases to the exclusion of all other uses of capital. The Nominating Committee also did not believe it had enough information to evaluate potential conflicts of interest with Firefly that could arise with Mr. Heslop joining the Board. As a result, it was determined that the full Board would interview Mr. Heslop in an attempt to get comfortable on these issues. Sidley also gave Spotlight advance notice that the Company would send follow-up letters to Mr. Heslop and Ms. Holroyd with questions from the Nominating Committee. Lastly, Sidley shared with as a courtesy that the Annual Meeting had been scheduled to be held in mid-July.

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On the same day, Spotlight called Sidley again. On the call, Spotlight informed Sidley that Firefly would make Mr. Heslop and Ms. Holroyd available for additional calls with the Board. Spotlight also requested on behalf of Firefly that the date for the Annual Meeting be announced publicly.

On May 7, 2020, Mr. Craine sent a letter to Ms. Holroyd on behalf of the Board, requesting that Ms. Holroyd provide answers to certain unanswered sections of the director questionnaire so that the Board could evaluate her qualifications for standing committees, including the audit committee. The letter also inquired as to Ms. Holroyd’s availability to speak with additional members of the Board.

On the same day, Sidley emailed Spotlight, stating that the Company agreed to Firefly’s request and would publicly disclose the date of the Annual Meeting the next day. Sidley also stated Firefly would not be required to re-submit its nomination notice and that it would be treated as timely by the Company even though it was submitted prior to the window for director nominations based on the timing of the Annual Meeting.

On May 8, 2020, the Company announced its earnings for Q1 2020.

Later that same day, Olshan sent a letter on behalf of Mr. Heslop containing his response to the Company’s May 5, 2020 letter, which addressed questions raised by the Company regarding potential conflicts of interest that could arise if Mr. Heslop were made a director.

On May 9, 2020, the Company filed its Form 10-Q for Q1 2020, in which it disclosed July 16 as the date for the Annual Meeting.

On May 14, 2020, directors Doug Johnson and Deborah Adams conducted videoconference meetings with each of Ms. Holroyd and Mr. Heslop.

On May 16, 2020, Sidley sent Olshan a revised settlement term sheet, proposing the addition of two director candidates with their identities to be confirmed by the full Board. Prior to sending the term sheet, Sidley called Spotlight and explained that the Board would discuss the candidacies of Ms. Holroyd and Mr. Heslop at its next Board meeting. Sidley indicated that the Board would likely be amenable to appointing Ms. Holroyd as a director but may have reservations about Mr. Heslop’s candidacy. The term sheet included various other terms but no expense reimbursement.

On May 18, 2020, Olshan sent the Company a letter confirming that, in light of the announced meeting date for the Annual Meeting, Firefly planned to nominate Mr. Heslop and Ms. Holroyd to the Board at the Annual Meeting in accordance with its notice previously submitted on March 2, 2020. Sidley, on behalf of the Company, confirmed to Olshan that Firefly would not need to re-submit its nomination notice and that the Company would treat the original notice as timely.

On the same day, Spotlight called Sidley. It reiterated that Firefly would require the appointment of both Mr. Heslop and Ms. Holroyd to the Board and expense reimbursement, subject to a cap, for any settlement to take place, but that otherwise the Sidley term sheet would form a suitable basis for a settlement agreement. Sidley requested that Firefly provide an estimate for the expense reimbursement amount to allow the Board to make an informed decision.

On May 19, 2020, Spotlight called Sidley and provided the requested estimate for the expense reimbursement, which was $1.5 million at that time. Spotlight indicated that Firefly might be willing to bear some of these expenses.

On May 21, 2020, Sidley called Spotlight. On the call, Sidley indicated that the Board was amenable to appointing Ms. Holroyd as a director but continued to have reservations about Mr. Heslop’s candidacy. Sidley explained that in addition to Mr. Heslop’s lack of public company board experience, the Board was concerned about Firefly’s potential conflicts and the reactions of other stockholders and stakeholders to a Firefly representative on the Board, especially given Firefly’s strong views on share buybacks. For these reasons, the Board was uncomfortable appointing a Firefly representative to the Board without a clear mandate of the stockholders. Sidley offered, however, the appointment of another investor with extensive public company board experience, the third-party investor who had approached the Company in early May, as a compromise candidate (in addition to Ms. Holroyd).

On May 22, 2020, Spotlight called Sidley to inform the Board that Firefly had no interest in the proposed compromise candidate. Spotlight also asked Sidley to re-evaluate Mr. Heslop’s candidacy as their client did not share the concerns about Firefly’s potential conflicts of interest raised by the Board. Sidley committed to follow up with the Board.

 

2020 PROXY STATEMENT 17

 

BACKGROUND TO THE SOLICITATION

   

On May 25, 2020, Sidley emailed Spotlight and advised that, in light of Firefly’s rejection of the compromise candidate, the Board would re-evaluate Mr. Heslop’s candidacy at its next Board meeting on May 27, 2020.

On May 26, 2020, Spotlight spoke with Sidley by phone. Sidley conveyed that the Board continued to have serious concerns about Mr. Heslop’s candidacy. Sidley said that the Board understood that Firefly would not accept the Board’s proposed “compromise candidate” and suggested that a third person be identified who was not affiliated with Firefly. Spotlight said it would convey these thoughts to Firefly.

Later that day, Spotlight called Sidley and conveyed that Firefly insisted that any settlement agreement involve the appointment of Mr. Heslop to the Board. Spotlight related that Firefly did not accept the that the Board had legitimate concerns about potential conflicts with Firefly that would be posed by Mr. Heslop joining the Board. Spotlight also communicated that Firefly would be willing to agree to an announcement, in connection with a settlement agreement, that Firefly agrees with the Company’s present strategy on capital allocation.

On May 28, 2020, Mr. Bledsoe, on behalf of the Board, called Ms. Holroyd and offered to include her on the Board’s director candidates slate for the Annual Meeting if she consented to be named as a nominee of the Board in the Company’s proxy statement. Mr. Bledsoe conveyed that the Board had decided not to invite Mr. Heslop. Later that day, Mr. Bledsoe emailed Ms. Holroyd to extend the Company’s invitation in writing. Mr. Bledsoe added in his email that while the Company was of the view that, as a legal matter, Ms. Holroyd would not face liability to Firefly for accepting the Board’s offer, the Company nevertheless committed to indemnify her against any such claims in connection with her consent to be nominated by the Board.

On May 29, 2020, Ms. Holroyd accepted the offer of the Board to join the Company’s slate of director candidates for the Annual Meeting.

Later that day, the Company filed this preliminary proxy statement on Schedule 14A with the SEC.

18 2020 PROXY STATEMENT

 

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES
(Proposal 1)

The Company is asking its stockholders to vote to elect eight directors to serve on the Board of Directors until the 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”) or until their respective successors have been duly elected and qualified.

Our Board of Directors currently consists of eight members who are elected annually. Seven of these eight directors are independent under the Nasdaq Stock Market (the “Nasdaq”) listing standards. Messrs. Houston and Westerman are not standing for re-election at the Annual Meeting of Stockholders.

The directors standing for election this year are listed below. If any nominee should decline election or should become unable to serve as a director of our Company for any reason before election at the Annual Meeting, votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the Board of Directors. There are no family relationships among any of the nominees, directors or any of the executive officers.

Firefly previously indicated their intent to nominate two directors, Ms. Samantha Holroyd and Mr. Ryan Heslop, in opposition to two directors nominated by the Board for election at the Annual Meeting. However, at the invitation of the Board, Ms. Holroyd has consented to be additionally named on the Board’s slate of director candidates and to be a nominee of the Board on the Company’s GOLD proxy card. The Nominating and Corporate Governance Committee reviewed Mr. Heslop’s candidacy and determined not to invite Mr. Heslop to join the Board’s slate of director candidates. The Board recommends that stockholders support the Board’s eight nominees, including Ms. Holroyd, in light of their backgrounds, career experiences, qualifications and contributions to the Board’s mix of skills and experiences.

Vote Required and Board Voting Recommendation

Because we have received notice that Firefly intends to nominate two director candidates for election to the Board at the Annual Meeting, we expect the election of directors to be contested and the number of nominees for director to exceed the number of directors to be elected at the Annual Meeting. As a result, directors will be elected at the Annual Meeting by a plurality of the votes cast. This means that the eight director candidates for election receiving the largest number of “for” votes will be elected at the Annual Meeting.

The enclosed GOLD proxy card enables a stockholder to vote “for” or “withhold” from voting as to the directors nominated by the Board. If you vote “withhold” for any director nominee, as opposed to voting “for” any such director nominee, your votes as such will be counted for purposes of establishing a quorum, but will not be considered to have been voted “for” the director nominee and, as a result, will have no effect on the outcome of the vote on Proposal 1. Abstentions and broker non-votes, if any, will have no effect on the voting results for Proposal 1.

The Board unanimously recommends that you vote “FOR” the election of each of the nominees recommended by the Board on the enclosed GOLD proxy card. The Board strongly urges you not to sign or return any white proxy card sent to you by Firefly. Voting to “withhold” with respect to any of Firefly’s nominees on a white proxy card sent to you by Firefly is not the same as voting “for” the Board’s nominees because a vote to “withhold” with respect to any of Firefly’s nominees on Firefly’s white proxy card will revoke any GOLD proxy card you may have previously submitted. If you have previously voted using a white proxy card sent to you by Firefly, you can subsequently revoke that vote by signing, dating and returning the enclosed GOLD proxy card in the postage-paid envelope provided, or by following the instructions on the GOLD proxy card to vote by telephone or by Internet. Only your latest dated proxy will count.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE FOLLOWING NOMINEES FOR DIRECTOR ON THE GOLD PROXY CARD.

 

2020 PROXY STATEMENT 19

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   
   

David M. Wood

Age: 63

Director since: December 2018

Business Experience:

Mr. Wood has served as the Chief Executive Officer and President of the Company since December 2018. From 2016 to December 2018, Mr. Wood served as the Chief Executive Officer and Chairman of the Board of Directors of Arsenal Resources LLC (Arsenal), a West Virginia-focused natural gas producer and portfolio company of First Reserve Corporation (“First Reserve”), an energy-focused private equity firm, where he most recently served as Chairman of its Board of Directors and previously held the role of Chief Executive Officer. Prior to his tenure at Arsenal, Mr. Wood served as a Senior Advisor to First Reserve from 2013 to 2016, serving on several of its portfolio company boards. Prior to his position at First Reserve, Mr. Wood spent more than 17 years at Murphy Oil Corporation (NYSE: MUR), a global oil and natural gas exploration and production company, which we refer to as Murphy Oil, including as its Chief Executive Officer, President and a member of the Board of Directors from 2009 to 2012. From 1980 to 1994, Mr. Wood held various senior positions with Ashland Exploration and Production, an oil and natural gas exploration and production company. Mr. Wood began his career as a well-site geologist in Saudi Arabia. Mr. Wood also served on the Board of Directors of the general partner of Crestwood Equity Partners LP (NYSE: CEQP) and its wholly owned subsidiary, Crestwood Midstream Partners LP, an owner and operator of crude oil and natural gas midstream assets. In addition, Mr. Wood served as the Chairman of the Board of Directors for Lilis Energy, Inc. (NYSE: LLEX), an exploration and development company operating in the Delaware Basin. Mr. Wood also served on the Board of Directors of several private oil and natural gas companies, including Deep Gulf Energy LP (prior to its acquisition by Kosmos Energy Ltd.) and Berkana Energy Corp. (when it was majority owned by Murphy Oil).

Other Memberships and Positions:

Mr. Wood previously served on the Board of Directors and as an executive committee member of the American Petroleum Institute. He was also a member of the National Petroleum Council and is a member of the Society of Exploration Geophysicists.

Educational Background:

Mr. Wood holds a B.S. in Geology from the University of Nottingham in England and completed Harvard University’s Advanced Management Program.

Board Membership Qualifications:

Mr. Woods’ extensive experience as a Chief Executive Officer and director of public exploration and production companies and energy-focused private equity firms, executive management skills and extensive knowledge of the oil and natural gas sector and corporate governance led the Nominating and Corporate Governance Committee to conclude that he should serve as one of our directors.

 

  

  

 
     

Alvin Bledsoe

Age: 72

Director since: January 2020

Current Public Company
Directorships:

Crestwood Equity Partners LP. (NYSE: CEQP)

(since July 2007)

SunCoke Energy, Inc. (NYSE: SXC)
(since June 2011)

Business Experience:

Mr. Bledsoe is an experienced finance and public accounting executive with governance, strategic planning, managerial and leadership expertise, having led the development and execution of market and sector strategies for clients in the energy, mining and utilities industries for PricewaterhouseCoopers LLP, a multinational professional services firm (“PwC”). From 1972 to 2005, Mr. Bledsoe served in various senior roles, including as global leader for PwC’s Energy, Mining and Utilities Industries Assurance and Business Advisory Services Group, a member of the firm’s senior leadership team, Regional and Office Managing Partner and as audit and senior relationship partner on some of the firm’s largest energy industry clients. Mr. Bledsoe currently serves as Director, Audit Committee chair and Compensation Committee member of Crestwood Equity GP LLC (general partner of Crestwood Equity Partners LP, a natural gas and crude oil logistics master limited partnership holding company). In addition, he serves as Director and Audit Committee chair of SunCoke Energy, Inc. (NYSE: SXC).

Educational Background:

Mr. Bledsoe received his Bachelor of Science Degree in Accounting from Auburn University and holds a Certified Public Accountant license from the State of Texas.

Board Membership Qualifications:

The Nominating and Corporate Governance Committee nominated Mr. Bledsoe due to his background and experience as finance and public accounting executive with governance, strategic planning, managerial and leadership expertise, having led the development and execution of market and sector strategies for clients in the energy, mining and utilities industries for PwC.

 

20 2020 PROXY STATEMENT

 

 

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   

Deborah G. Adams

Age: 59

Director since: March 2018

Current Public Company
Directorships:

Austin Industries Inc.
(since May 2018)

Enlink Midstream (NYSE: ENLC)
(since Feb 2020)

MRC Global Inc. (NYSE: MRC)
(since October 2017)

Business Experience:

Ms. Adams served as Senior Vice President of Health and Safety, Project and Procurement with Phillips 66, a diversified manufacturing and logistics company, from May 2014 until her retirement in October 2016. From 2008 to May 2014, Ms. Adams served as President of Transportation for Phillips 66 and ConocoPhillips. Prior to this position, Ms. Adams worked as general manager and Chief Procurement Officer for ConocoPhillips beginning in 2005. From 2003 to 2005, Ms. Adams served as general manager, International Refining, for ConocoPhillips. Before this role, Ms. Adams served as general manager, Global Downstream Information Systems following the ConocoPhillips merger in 2002. Ms. Adams began her career in 1983 as a process engineer in the refining division of the Conoco Global Engineering Department before moving through a variety of business development, planning, supply and trading and operations positions. Ms. Adams has served on the Board of Directors of MRC Global Inc. and as a member of its Audit and Compensation Committees since October 2017, and has served on the Board of Directors of Enlink Midstream and as a member of its Audit Committee since March 2020. Ms. Adams has served on the Board of Directors of Austin Industries, Inc., an employee-owned construction company, since May 2018, and serves as a member of its Audit, Human Resources and Nomination and Governance Committees.

Other Memberships and Positions:

Ms. Adams served two full terms on the Board of BakerRipley from February 2012 to February 2018 and currently serves as a member of the Foundation Board of Trustees and the Board of Governors for the Oklahoma State University. Ms. Adams is also a governance fellow of the National Association of Corporate Directors.

Recognition and Honors:

In 2014, Ms. Adams was inducted into the Oklahoma State University College of Engineering, Architecture and Technology Hall of Fame and in 2015, the Oil and Gas Diversity Council named Ms. Adams to the list of the Top 50 Most Powerful Women in Oil and Gas.

Educational Background:

Ms. Adams received a Bachelor of Science degree in chemical engineering from Oklahoma State University in 1983.

Board Qualifications:

The Nominating and Corporate Governance Committee nominated Ms. Adams due to her diverse experience in various segments of the oil and gas industry, her high-level management positions at a public oil and gas company and recognition as one of the top 50 women in the oil and gas industry.

 

  

  

 
     

Samantha Holroyd

Age: 51

Director Nominee

BUSINESS EXPERIENCE:

Ms. Holroyd is an independent consultant to the oil and gas industry and a former Managing Director at Lantana Energy Advisors and TPG Sixth Street Partners. Additionally, Ms. Holroyd served as Global Reserves Audit Manager and Business Opportunity Manager at Royal Dutch Shell PLC (NYSE: RDS.A; OTCMKTS: RYDAF), an oil and gas company, Vice President of EIG Global Energy Partners, a provider of institutional capital to the global energy industry, and Vice President of Ryder Scott Company, a petroleum consulting firm. Earlier in her career, she served as a Senior Reservoir Engineer with Tenneco Ventures Corporation, which was an oil and gas exploration, production and financing company, and as a Reservoir Engineer with Atlantic Richfield Company (formerly NYSE: ARC), an oil and gas company.

OTHER MEMBERSHIPS AND POSITIONS:

Ms. Holroyd was honored as one of the “25 Influential Women in Energy” for 2020 by Oil and Gas Investor and Hart Energy. She previously served on the Executive Committee of the Society of Petroleum Evaluation Engineers.

EDUCATIONAL BACKGROUND:

Ms. Holroyd received her Bachelor of Science degree in Petroleum Engineering from the Colorado School of Mines and is a Registered Professional Engineer in the State of Texas.

BOARD QUALIFICATIONS:

The Nominating and Corporate Governance Committee nominated Ms. Holroyd due to her various domestic and international oil and gas experience, reservoir engineering expertise, financial expertise and recognition as one of the top “25 Influential Women in Energy.”

 

 

2020 PROXY STATEMENT 21

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   
   

Valerie Jochen

Age: 63

Director since: February 2020

Business Experience:

Ms. Jochen has more than 35 years of technical industry experience and brings significant expertise in petroleum engineering and analysis of unconventional reservoirs to Gulfport. Ms. Jochen currently serves as a Professor of Practice in Reservoir Engineering at Texas A&M University, where she began in January 2018 following a nearly 20-year career at Schlumberger Limited (NYSE: SLB), an international oilfield services company. From July 2010 to May 2016, Ms. Jochen served as a Schlumberger Fellow and Technical Director of Unconventional Resources, focused on the technology and resources needed to optimize the development of unconventional reservoirs. From November 1997 to July 2010, Ms. Jochen held various other senior level positions with Schlumberger, including Technology Director of Reservoir Stimulation, Technical Director of Unconventional Gas and Domain Career Leader for Reservoir Engineering. From May 1991 to November 1997, Ms. Jochen served as a Reservoir Engineer and Division Vice President for S.A. Holditch and Associates, and from December 1984 to December 1989, she worked as a Reservoir Engineering and Planning Supervisor for Mobil Exploration & Production. Ms. Jochen began her career in 1979 with Superior Oil Company and served in a variety of production and reservoir engineering positions.

Educational Background:

Ms. Jochen holds a Bachelor of Science degree, a Master of Science degree and a Doctor of Philosophy in petroleum engineering from Texas A&M University. In addition, Ms. Jochen is a registered Professional Engineer in the State of Texas.

Board Qualifications:

The Nominating and Corporate Governance Committee nominated Ms. Adams due to her more than 35 years of technical industry experience and significant expertise in petroleum engineering and analysis of unconventional reservoirs.

 

  

  

 
     

C. Doug Johnson

Age: 60

Director since: September 2015

Current Public Company
Directorships:

Altus Midstream Company (NASDAQ: ALTM)
(since November 2018)

Business Experience:

Mr. Johnson has an extensive financial and accounting background, with over 33 years of service in the oil and natural gas industry. Since August 1981, Mr. Johnson served in various roles at Phillips 66 and its predecessors Phillips Petroleum Co. and ConocoPhillips. Mr. Johnson most recently served as Vice President, Controller and principal accounting officer of Phillips 66, a publicly traded company engaged in midstream, chemicals, and refining, from April 2012 until his retirement on December 31, 2014. During the same period, he also served as Vice President, Controller and principal accounting officer of Phillips 66 Partners GP LLC, the general partner of Phillips 66 Partners LP, a publicly traded pipeline subsidiary of Phillips 66. From June 2010 until April 2012, Mr. Johnson served as General Manager, Upstream Finance, Strategy and Planning at ConocoPhillips. Prior to that, Mr. Johnson’s tenure at ConocoPhillips included his service as General Manager, Downstream Finance from 2008 to 2010 and General Manager, Upstream Finance from 2005 to 2008.

Other Memberships and Positions:

Mr. Johnson also served on the board of Chevron Phillips Chemical Company LLC, a joint venture of Phillips 66 Partners LP and Chevron Corp., and its Audit Committee, where he was co-chairman, from April 2012 until December 2014.

Educational Background:

Mr. Johnson received his Bachelor of Science Degree in Accounting from the University of Arkansas and holds a Certified Public Accountant certificate from the State of Oklahoma.

Board Qualifications:

The Nominating and Corporate Governance Committee recommended Mr. Johnson due to his prior public company experience, strong oil and natural gas background and financial expertise.

 

22 2020 PROXY STATEMENT

 

 

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   

Ben T. Morris

Age: 74

Director since: August 2014

Business Experience:

From 2009 to 2012, Mr. Morris served as the Vice Chairman of the Board of Directors of the Sanders Morris Harris Group, a financial services and wealth management company he co-founded in 1987, or SMHG. Since its founding, Mr. Morris has served in various capacities with SMHG, including Executive Vice President and Director of Investment Banking, President and Chief Executive Officer and a member of the Board of Directors of SMH Capital, a subsidiary of SMHG, and Chief Executive Officer and a member of the Board of Directors of SMHG. Since 2012, Mr. Morris has continued as an employee of Sanders Morris Harris, Inc., a former subsidiary of SMHG. From 1980 to 1986, Mr. Morris served as the Chief Operating Officer of Tatham Corporation, a privately-held company engaged in natural gas transportation and marketing and oil and gas exploration and production. Mr. Morris began his career as an accountant at Price Waterhouse & Co. in 1967, and in 1973 joined Mid American Oil and Gas Inc. as Chief Financial Officer, eventually serving as President of the company until its sale in 1979.

Other Memberships and Positions:

From 2011 to 2016, Mr. Morris served as a member of the Board of Directors and Chairman of the Audit Committee of Yuma Energy, Inc. (OTCMKTS: YUMAQ), a publicly traded exploration and production company. Mr. Morris has also served on the boards of several public companies, including Capital Title Group from 1998 to 2006, American Equity Investment Life Holding Company from 1997 to 2006, Tyler Technologies, Inc. from 2002 until 2005, where he served as Chairman of its Audit Committee, Fresh America Corp. from 1992 until 1996, where he served as a member of the Compensation Committee, and Deeptech International Inc. from 1988 until 1997. Mr. Morris is currently a member of the Board of Directors of Centrax International Corporation, a private holding company with its largest subsidiary in the oil and gas service industry. Mr. Morris has an extensive financial background, with over 25 years of experience in various aspects of the investment banking business.

Educational background:

Mr. Morris received his Bachelor of Business Administration Degree from the University of North Texas and holds a Certified Public Accountant certificate from the State of Texas, along with several securities licenses.

Board Qualifications:

The Nominating and Corporate Governance Committee nominated Mr. Morris due to his prior public company experience, extensive financial background (including over 25 years of experience in various aspects of the investment banking business), and strong oil and natural gas background.

 

  

  

 
     

John W. Somerhalder II

Age: 64

Directorships:

CenterPoint Energy

(NYSE: CNP)

Enable Midstream Partners, LP

(NYSE: ENBL)

(since February 2020)

Business Experience:

Mr. Somerhalder has served as Interim President and Chief Executive Officer of CenterPoint Energy (NYSE: CNP), an electric and natural gas utility serving markets in several regions of the United States, since February 2020 and has been a member of the CenterPoint Energy Board of Directors since 2016. Mr. Somerhalder also serves as a Director and Chairman of the Board of Enable Midstream Partners, LP (NYSE: ENBL). Mr. Somerhalder served as Interim President and CEO of Colonial Pipeline from February 2017 until October 2017. Colonial Pipeline is the largest refined products pipeline in the US, transporting more than 100 million gallons of fuel daily from Houston, Texas to the New York Harbor. From October 2013 to February 2020, Mr. Somerhalder served as director at Crestwood Equity GP LLC, the general partner of Crestwood Equity Partners LP (NYSE: CEQP), a master limited partnership that is a developer and operator of midstream assets. Mr. Somerhalder was named President and Chief Executive Officer of AGL Resources (NYSE: GAS) in March 2006 and was named Chairman of the company’s Board of Directors in November 2007. He retired from AGL Resources, an Atlanta-based energy services holding company with operations in natural gas distribution, retail operations, wholesale services and midstream operations, on December 31, 2015. Mr. Somerhalder joined AGL Resources from El Paso Corporation, where he spent almost 30 years, rising through the ranks from engineer to president of El Paso Pipeline Group and executive vice president of El Paso Corporation.

Other Memberships and Positions:

Mr. Somerhalder served on the Board of Directors of the American Gas Association, which he chaired in 2011. He also served on the boards of the Georgia Chamber of Commerce and the Metro Atlanta Chamber of Commerce. He has served as past chairman of the Interstate Natural Gas Association of America. Mr. Somerhalder currently serves as a director of CenterPoint Energy, Enable Midstream Partners, Piedmont Healthcare and the Gas Technology Institute. Mr. Somerhalder is chairman of the board of the Atlanta BeltLine, Inc., which is leading the development of the Atlanta BeltLine along 22 miles of historic railroad around the city. A past member of the board of the United Way of Metropolitan Atlanta, he successfully chaired the 2009 United Way Campaign for metro Atlanta during difficult economic times and served a second term as chair of the 2010 campaign.

Educational Background:

Mr. Somerhalder holds a Bachelor of Science degree in chemical engineering from the University of Arizona.

Board Qualifications:

The Nominating and Corporate Governance Committee nominated Mr. Somerhalder due to his service as a public company executive and Director, more than four decades of experience in the energy industry, including state and regulatory experience in multiple jurisdictions, and proven leadership abilities.

 

 

2020 PROXY STATEMENT 23

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   

Directors Not Standing for Re-election

   

David L. Houston

Age: 67

Director since: December 1998

Business Experience:

Mr. Houston has served as a director of the Company since July 1998 and as Chairman of the Board since July 2013. Since 1991, Mr. Houston has been the principal of Houston Financial, a firm providing wealth management products and services with a focus on the energy sector. Since 2000, Mr. Houston has managed a mineral trust with approximately 9,200 net acres in Oklahoma, Texas, Kansas and New Mexico, which includes responsibility for leasing and production matters. Mr. Houston was recognized as a Top 100 Graduate of the College of Business at Oklahoma State University in the last 100 years and served on the faculty of the Louisiana State University Graduate School of Banking from 1980 to 1981.

Other Memberships and Positions:

Mr. Houston served on the Board of Directors and Executive Committee of Deaconess Hospital, Oklahoma City, Oklahoma, from January 1993 until December 2008. Mr. Houston has served as the lead director on the Board of Directors of Diamondback Energy, Inc. (Nasdaq Global Market: FANG) since October 2012, is a member of its Audit and Compensation Committees and is the chair of its Nominating and Corporate Governance Committee. He also served as a director of Bronco Drilling Company from May 2005 until December 2010 and was a member of its Audit Committee.

Educational Background:

Mr. Houston received a Bachelor of Science Degree in business from Oklahoma State University and a graduate degree in banking from Louisiana State University.

 

  

  

 
     

Paul D. Westerman

Age: 64

Director since: October 2017

Business Experience:

Mr. Westerman has served as a Trustee and Director of the Westerman Family Trusts and Westerman Interest Inc., both of which are private wealth management vehicles, since 1999. From September 2011 to December 2012, Mr. Westerman served as Senior Executive Vice President and Chief Business Development Officer of J-W Energy Company, a diversified energy company engaged in exploration and production, energy services, midstream and manufacturing, among other businesses. Mr. Westerman joined J-W Energy Company in 1984 and, during his time there, he served in several other leadership roles, including as Chief Operating Officer. Prior to joining J-W Energy Company, Mr. Westerman served in various positions at Phillips Petroleum Company, Terra Resources and Kerr-McGee Corporation.

Other Memberships and Positions:

Mr. Westerman has served on the Board of Directors of J-W Energy Company and J-W Power Company since 1996. Mr. Westerman has also served on the Board of Directors of Oakwood Bank since February 2018. Mr. Westerman previously served as a Director of Vintage Bank, Benedictine College, the Dallas Petroleum Club, the Dallas Wildcatters Association and the Dallas Hard Hatters Association. Mr. Westerman is also a member of the National Association of Corporate Directors and the Society of Petroleum Engineers.

Educational Background:

Mr. Westerman earned his bachelor’s degree in petroleum engineering from the University of Oklahoma and is a Registered Professional Engineer in the State of Texas.

Board Qualifications:

Mr. Westerman’s strong background in oil and energy services, as well as his executive roles at an energy services company, were considered by our Nominating and Corporate Governance Committee.

 

24 2020 PROXY STATEMENT

 

 

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

WHAT ARE THE COMMITTEES OF THE BOARD?

Our Board of Directors has an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and a Sustainability Committee. The table below summarizes committee membership as of the date of this proxy statement along with the functions each committee is responsible for performing.

AUDIT COMMITTEE

Members

Doug Johnson C^+

Alvin Bledsoe ^+

Valerie Jochen +

Paul Westerman +

Number of Meetings in 2019

4

Principal Functions

•   Reviews and discusses with management and the independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance.

•   Monitors and oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor.

•   Monitors our compliance with legal and regulatory requirements.

•   Monitors compliance with the Company’s Code of Business Conduct and Ethics.

•   Establishes and oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

•   Reviews and approves related party transactions.

•   Appoints, determines compensation, evaluates and terminates our independent auditors.

•   Pre-approves audit and permissible non-audit services to be performed by the independent auditors.

•   Prepares the report required by the U.S. Securities and Exchange Commission (the “SEC”), for the inclusion in our annual proxy statement.

•   Reviews and reassesses the adequacy of the Audit Committee charter on a periodic basis.

•   Informs our independent auditors of the Audit Committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties.

C     Committee Chairperson.

+     Satisfies Nasdaq independence and other applicable independence rules for membership on such Committees.

^     Audit Committee financial expert.

 

2020 PROXY STATEMENT 25

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   

compensation committee

Members

Ben T. Morris C+
Deborah G. Adams +
Alvin Bledsoe +

Number of Meetings in 2019

5

Principal Functions

•   Oversees and administers our executive compensation policies, plans and practices, including our stock retention guidelines, and evaluates their impact on risk and risk management.

•   Assists the Board of Directors in discharging its responsibilities relating to the compensation of our executives, including our Chief Executive Officer, and other key employees.

•   Administers our equity-based compensation plans, including the grants of stock options, restricted stock awards and other equity awards under such plans.

•   Reviews, approves and administers our cash-based incentive bonus plans, including the establishment of performance criteria, targets and awards under our 2019 Executive Annual Incentive Compensation Plan.

•   Makes recommendations to the Board with respect to incentive compensation.

•   Where appropriate or required, makes recommendations to our stockholders with respect to incentive compensation and equity-based plans.

•   Conducts annual performance evaluation of the Committee.

•   Reviews disclosure related to executive compensation in our proxy statement and prepares an annual Compensation Committee report.

•   Reviews and considers the stockholders’ advisory vote on executive compensation and the frequency of holding such advisory vote.

•   Reviews and reassesses the adequacy of the Compensation Committee charter.

C     Committee Chairperson.

+     Satisfies Nasdaq independence and other applicable independence rules for membership on such Committees.

^     Audit Committee financial expert.

26 2020 PROXY STATEMENT

 

 

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

Members

Alvin Bledsoe C+
Valerie Jochen
+
Ben
T. Morris +

Number of Meetings in 2019

2

Principal Functions

•   Assists the Board of Directors in developing criteria for, identifying and evaluating individuals qualified to serve as members of our Board of Directors.

•   Selects and recommends director candidates to the Board of Directors to be submitted for election at each annual meeting of stockholders and to fill any vacancies on the Board of Directors.

•   Periodically reviews and makes recommendations regarding the composition and size of the Board of Directors and each of its Committees.

•   Reviews and recommends to the Board of Directors appropriate corporate governance guidelines and procedures for the Company.

•   Conducts an annual assessment of the qualifications and performance of the Board of Directors.

•   Reviews and reports to the Board of Directors on the performance of management annually.

•   Reviews the development and leadership capabilities of the executive officers and management’s succession process.

•   Reviews and reassesses the adequacy of the Nominating and Corporate Governance Committee charter.

C     Committee Chairperson.

+     Satisfies Nasdaq independence and other applicable independence rules for membership on such Committees.

^     Audit Committee financial expert.

 

2020 PROXY STATEMENT 27

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   

Sustainability Committee(1)

Members

Deborah G. Adams C+
Doug Johnson
+
Paul D. Westerman
+

Number of Meetings in 2019

4

Principal Functions

•   Reviews and makes recommendations to our Board of Directors regarding the health, safety and environmental protection, and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, which we refer to herein as HSE and corporate responsibility matters, and their impact on our business and operations.

•   Monitors and evaluates management’s actions with respect to the HSE and corporate responsibility matters.

•   Reviews reports from our management, consultants or other advisors regarding (i) our performance with respect to the HSE and corporate responsibility matters and compliance with any related laws and regulations applicable to us, (ii) any significant litigation relating to the HSE and corporate responsibility matters involving our Company, and (iii) any significant legislation or regulations, judicial decisions, treaties, protocols, conventions or other agreements, public policies or other scientific, medical or technological developments involving HSE and corporate responsibility matters that will or may have a material effect on our business and operations.

•   Reviews the risks and exposures relating to HSE and corporate responsibility matters, including mitigation and remedial actions.

•   Reviews crisis management planning procedures relating to HSE and corporate responsibility matters.

•   Conducts investigations or studies affecting Gulfport as they pertain to HSE and corporate responsibility matters.

•   Reviews the effectiveness of internal systems and controls necessary to ensure our compliance with applicable health, safety and environmental laws, rules and regulations.

•   Reviews our compliance with industry practices in the areas of health, safety and environmental protection.

•   Reviews our political, charitable and educational contributions/programs and the administration of any political action or similar Committees of our employees.

•   Oversees the policies and practices promoting diversity and inclusion within the Company and the Company’s human and workplace rights and policies.

•   Reviews and provides guidance on public policy advocacy efforts to confirm alignment with Company policies and values.

•   Prepares an annual performance evaluation of the Committee.

•   Reviews and reassess the adequacy the Sustainability Committee charter and recommend any appropriate revisions to our Board of Directors.

•   Carries out any other duties and responsibilities relating to the HSE and corporate responsibility matters that may be delegated to the Sustainability Committee by our Board of Directors from time to time.

C     Committee Chairperson.

+     Satisfies Nasdaq independence and other applicable independence rules for membership on such Committees.

^     Audit Committee financial expert.

(1)  This Committee was formed on October 30, 2018 as the Operating Excellence and Corporate Responsibility Committee and was renamed the Sustainability Committee to incorporate additional ESG responsibilities on April 9, 2020.

28 2020 PROXY STATEMENT

 

 

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

DO THE COMMITTEES HAVE WRITTEN CHARTERS?

Yes. The charters for each of our Committees can be found on our website at www.gulfportenergy.com under the “Investors — Corporate Governance” captions. You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our General Counsel and Corporate Secretary, Patrick K. Craine, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134.

 

2020 PROXY STATEMENT 29

 

CORPORATE GOVERNANCE MATTERS AND
COMMUNICATIONS WITH THE BOAR
D

Corporate Governance Highlights

We believe effective corporate governance requires regular constructive discussions with our stockholders. We have a proactive engagement process that encourages feedback from our stockholders. This feedback helps shape our corporate governance practices, and has specifically resulted in:

•   Amendment of the Bylaws to change the supermajority vote requirement for stockholders to amend the Bylaws to a majority vote requirement;

•   Adoption of stock ownership guidelines for our non-employee directors and executive officers to further align the long-term financial interests of our directors and executive officers with those of our stockholders;

•   Adoption of Corporate Governance Guidelines to ensure best practices and reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels;

•   Ongoing Board refreshment process which resulted in two new independent directors being added in Q1 2020;

•   All director nominees are independent, except for our Chief Executive Officer;

•   Independent chair of the Board of Directors;

•   Advancement of Board diversity, with two current female directors, emphasis on diversity in the Nominating and Corporate Governance Committee’s charter, and the adoption of a Board Diversity Policy;

•   Majority voting to elect directors in uncontested elections and plurality voting to elect directors in contested elections;

•   Creation of the Sustainability Committee to further develop our commitment to HSE and corporate responsibility and sustainability matters and their impact on our business and operations;

•   Active stockholder outreach throughout 2019, holding over 250 in-person investor meetings, attending 8 industry conferences and numerous investor outreach phone calls;

•   Active board oversight of risk and risk management;

•   Periodic Board and Committee self-assessments conducted by an outside law firm;

•   Independent director meetings in executive sessions at all regularly scheduled Board meetings; and

•   93% attendance at 2019 Board and Committee meetings.

30 2020 PROXY STATEMENT

 

 

 

CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD

WHO ARE OUR INDEPENDENT DIRECTORS?

Our Board of Directors has determined that seven of our eight current Board members (Deborah G. Adams, Alvin Bledsoe, Valerie Jochen, David L. Houston, Doug Johnson, Ben T. Morris and Paul D. Westerman), Mr. Somerhalder and Ms. Holroyd meet the independence requirements in the Nasdaq listing standards and are free of any relationship that, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. In determining Ms. Adams’s independence, the Board considered Ms. Adams’s service on the Board of Directors and the Audit and Compensation Committees of MRC Global Inc., an NYSE-listed company from which we purchased products and services representing less than 1% of either Company’s revenues in 2019. In determining Mr. Westerman’s independence, the Board considered Mr. Westerman’s service on the Board of Directors of J-W Energy Company and J-W Power Company, which performs certain compression and related oilfield services to the Company representing less than 1% of either Company’s revenues in 2019.

Annual Board Self-Assessment Process

Board and Committee Evaluations

Director Performance Evaluations

How often did the Board of Directors meet in 2019?

The Board of Directors met 14 times in 2019. In addition to these meetings, the Board of Directors adopted resolutions by unanimous written consent. Each director attended at least 93% of the aggregate meetings of the Board of Directors and the meetings of the Committees on which he or she served.

Do our non-management directors meet separately without management?

Our non-management directors routinely meet in an executive session following each regularly scheduled meeting of the Board of Directors.

 

2020 PROXY STATEMENT 31

 

CORPORATE GOVERNANCE MATTERS AND COMMUNICATIONS WITH THE BOARD

   

How can I communicate with the Board of Directors?

Individuals may communicate with our Board of Directors or individual directors by writing to our General Counsel and Corporate Secretary, Patrick K. Craine, at Gulfport Energy Corporation, 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134. Our General Counsel and Corporate Secretary will review all correspondence and forward our Board of Directors correspondence that, in the opinion of our General Counsel and Corporate Secretary, relates to the function of our Board of Directors or a Board Committee or otherwise requires their attention. Directors may review a log of all correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the chairman of the Audit Committee and handled in accordance with our Audit Committee’s procedures.

WILL directors attend the Annual Meeting?

Recognizing that director attendance at our Annual Meeting can provide our stockholders an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. All eight of our directors then serving attended the 2019 Annual Meeting in person or telephonically.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics, together with any amendments or waivers, is posted on our website at www.gulfportenergy.com under the “Investors – Corporate Governance” captions.

Bylaw Amendment for Stockholder Vote Standard

On May 29, 2020, the Board of Directors amended the Bylaws to permit our stockholders to amend the Bylaws by the affirmative vote of at least a majority of all outstanding shares of capital stock of the Company entitled to vote in the election of directors. As part of its commitment to best-in-class corporate governance, the Board of Directors regularly evaluates opportunities to improve the Company’s governance features. The Board of Directors determined, in light of evolving corporate governance practices, that it would be in the best interest of our stockholders to replace the supermajority vote standard required for stockholders to amend the Bylaws with a majority vote standard. The Board of Directors believes that adopting this majority standard will balance the opportunity for stockholders to participate meaningfully in the corporate governance of the Company with the desire to protect the interests of all stockholders from action that may only be in the interest of a small portion of stockholders.

Political Contribution Policy

Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight over this function to the Sustainability Committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws.

Aircraft Use Policy

In February 2019, we adopted an aircraft use policy for aircraft chartered or owned by the Company. We restrict personal use of Company-owned or chartered aircraft by our executive officers and other employees, as well as by members of our Board of Directors. Our aircraft use policy requires that any personal use of Company-owned or chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no personal use of Company-owned or chartered aircraft in 2019.

32 2020 PROXY STATEMENT

 

 

NOMINATING PROCESS FOR DIRECTORS, DIRECTOR QUALIFICATIONS AND REVIEW OF DIRECTOR NOMINEES

Director Qualifications

As provided by the Nominating and Corporate Governance Committee’s charter, our Nominating and Corporate Governance Committee identifies, investigates and recommends to our Board of Directors candidates with the goal of creating a balance of knowledge, experience and diversity. The Committee identifies candidates through the use of third-party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry.

It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of our Board of Directors, the skills necessary to provide effective oversight in critical areas and the evolving needs of our business. It is the policy of our Board of Directors that, at all times, at least a majority of its members meets the standards of independence promulgated by the Nasdaq and the SEC and that all members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas-related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders.

Board Diversity Policy

Our Nominating and Corporate Governance Committee is dedicated to diversity and adopted a Board Diversity Policy in November 2019. The policy requires that the Nominating and Corporate Governance Committee consider diversity in its evaluation of candidates for Board membership. Our Nominating and Corporate Governance Committee, in accordance with its charter, seeks to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the Nominating and Corporate Governance Committee in identifying director candidates to seek to include diverse candidates from traditional and nontraditional candidate groups. In accordance with its charter, our Nominating and Corporate Governance Committee periodically reviews and makes recommendations regarding the composition of the Board and the size of the Board.

We also require that the members of our Board of Directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the Board of Directors and applicable Committee meetings. In accordance with its charter, our Nominating and Corporate Governance Committee periodically reviews the criteria for the selection of directors to serve on our Board and recommends any proposed changes to our Board of Directors for approval.

Nomination Process

Our Board of Directors will consider stockholder nominations for director candidates upon written submission of such recommendation to our General Counsel and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, such nominee’s written consent to serving as a director if elected and being named in the proxy or information statement and certain information regarding the status of the stockholder submitting the recommendation, all in the manner required by the Second Amended and Restated Bylaws of the Company (the “Bylaws”) and the applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our Board of Directors at a regularly scheduled or special Board meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees.

Our Board of Directors may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. In evaluating nominations, our Board of Directors will seek to achieve a balance of knowledge, experience and diversity on the Board. Our Board of Directors uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by current Board members, professional search firms and other persons. After completing its evaluation, our Board of Directors approves the final slate of director nominees.

Our Nominating and Corporate Governance Committee approved the director nominees submitted for election at the Annual Meeting. Each nominee brings a strong and unique background and set of skills to our Board of Directors, giving our Board of Directors, as a whole, competence and experience in a variety of areas, including corporate governance and Board service, executive management, oil and natural gas industry, accounting and finance and risk assessment and management.

 

2020 PROXY STATEMENT 33

 

DIRECTOR LEADERSHIP STRUCTURE

Role of Chairman and Chief Executive Officer

The positions of Chairman of the Board and Chief Executive Officer are held by two different individuals, and the Chairman of the Board is a non-executive position elected from among the directors by the Board. Separating the positions of Chairman of the Board and Chief Executive Officer allows our Chief Executive Officer to focus on business development strategies as well as our day-to-day business and operations, while allowing our Chairman of the Board to lead the Board in its fundamental role of providing advice to and oversight of management. The Chairman of the Board provides leadership to our Board of Directors and works with the Board of Directors to define its structure and activities in the fulfillment of its responsibilities.

The duties of the non-executive Chairman of the Board include:

•        Presiding at meetings of our Board of Directors and stockholders;

•        Setting board agendas with the input from other members of the Board and our management;

•        Facilitating communications among and information flow to directors;

•        Calling special meetings of our Board of Directors and stockholders; and

•        Advising and counseling our Chief Executive Officer and other officers.

Our Board of Directors does not have a lead director.

Directors

We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. We believe that the atmosphere of our Board is collegial, that all Board members are well engaged in their responsibilities and that all Board members express their views and consider the opinions expressed by other directors. Seven out of eight director nominees are independent under the Nasdaq listing standards and SEC rules. We believe that all our independent directors have demonstrated leadership in business enterprises and are familiar with Board processes. Our independent directors are involved in the leadership structure of our Board by serving on our Audit, Nominating and Corporate Governance, Sustainability and Compensation Committees, comprised entirely of independent directors and each having an independent chairperson.

Committee Chairs

Specifically, our Audit Committee Chair oversees the accounting and financial reporting processes and compliance with legal and regulatory requirements. Our Compensation Committee Chair oversees our compensation policies and practices and their impact on risk and risk management. The Chair of our Sustainability Committee oversees our practices relating to health, safety and environmental protections, as well as social and governance matters. Our Nominating and Corporate Governance Committee Chair monitors matters related to Board and Committee composition, Board performance and best practices in corporate governance. As such, each Committee Chair provides independent leadership for purposes of many important functions delegated by our Board of Directors to such Committee.