PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION—JUNE 9, 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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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—JUNE 9, 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”). 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 proxy card and our annual report for the fiscal year ended December 31, 2019.

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, including by providing written notice to registered stockholders in advance of the Annual Meeting. We will also provide details in this case on how to participate in a press release issued by the Company and available in the “Investors – News/Events” section of our website at www.gulfportenergy.com.

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 enclosed proxy card in the postage-paid envelope provided or by telephone or Internet by following the instructions on the enclosed 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—JUNE 9, 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 (“Gulfport” or 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 proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed 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. Please refer to the section entitled “About the Annual Meeting” on page [79] of the attached proxy statement and the instructions on the enclosed proxy card for more information.

The accompanying proxy statement provides detailed information about the matters to be considered at the Annual Meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF THE BOARD’S NOMINEES UNDER PROPOSAL 1 AND “FOR” EACH OF PROPOSALS 2, 3 AND 4.

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 the COVID-19 outbreak, 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, including by providing written notice to registered stockholders in advance of the Annual Meeting. We will also provide details in this case on how to participate 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 proxy card or voting instruction form

 

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

 

By returning by mail a properly
completed, signed and dated
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 – JUNE 9, 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 2020 Annual Meeting of Stockholders (including any postponements or adjournments, 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 the Annual Meeting. The 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 proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed proxy card to vote by the Internet or telephone. Returning your 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

Majority 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

Permitted

No effect

[73]

4: Tax Benefits Preservation Plan Proposal

FOR

Majority of

votes cast

Not permitted

No effect

[75]

 

2020 PROXY STATEMENT 1

 

PROXY STATEMENT SUMMARY

   

About Gulfport

Gulfport Energy Corporation 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 40% of our independent director nominees are female, including the Chair of our Sustainability Committee

  Tenure of independent directors seeking re-election – average 2.2 years

     5+ years: 1

     3 – 5 years: 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 Board 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

P

     

 

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

P

 

 

 

NEW

Samantha Holroyd

Consultant and former Managing Director at Lantana Energy Advisors and TPG Sixth Street Partners

 

2020

51

P

 

 

 

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

P

 

 
 

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

P

     

 

Ben T. Morris

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

 

2014

74

P

     

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

P

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

4 2020 PROXY STATEMENT

 

 

 

BOARD SUMMARY

(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)   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 Highlight
s

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, the 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 applicable 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 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.

6 2020 PROXY STATEMENT

 

 

 

Corporate Responsibility and Sustainability Highlights

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.

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 Incident Rate (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 26%

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 four 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 after 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, and a payout cap of 100% if the Company’s absolute Total Stockholder Return (TSR) is negative during the performance period in addition to 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 all of our target goals, as discussed in the CD&A.

Since the 2019 Annual Meeting of Stockholders (the “2019 Annual Meeting”), Gulfport 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

 

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.

The directors standing for election this year are listed below. All nominees named below have consented to being named in this proxy statement and to serve as directors of the Company if elected. It is expected that all nominees proposed by the Board will be able to serve on the Board if elected. If any nominee, however, 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 director nominees, directors or executive officers.

Vote Required and Board Voting Recommendation

Directors will be elected at the Annual Meeting by a majority of the votes cast. Abstentions and broker non-votes will have no effect on the voting results for Proposal 1.

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

10 2020 PROXY STATEMENT

 

 

 

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.

 

 

2020 PROXY STATEMENT 11

 

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
March 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.

 

12 2020 PROXY STATEMENT

 

 

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   

Samantha Holroyd

Age: 51

Director Nominee

BUSINESS EXPERIENCE:

Ms. Holroyd has served as an independent consultant to the oil and gas industry since February 2020 through Golden Advisory Services, LLC, a consulting firm. Previously, Ms. Holroyd served as a Managing Director at Lantana Energy Advisors, an energy divestiture and advisory firm, which is a division of SunTrust Robinson Humphrey, Inc., the corporate and investment banking arm of Truist Financial Corporation (NYSE: TFC), a bank holding company, from February 2018 to February 2020. Prior to that, she served as a Managing Director at TPG Sixth Street Partners, a global finance and investment firm, from September 2016 to January 2018, and as Technical Director at Denham Capital Management LP, an energy and resources-focused global private equity firm, from October 2011 to September 2016. Additionally, Ms. Holroyd previously 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.

 

  

  

 
     

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.

 

 

2020 PROXY STATEMENT 13

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   
   

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 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. Mr. Johnson has served on the Board of Directors of Altus Midstream Company since November 2018.

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.

 

  

  

 
     

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.

 

14 2020 PROXY STATEMENT

 

 

 

ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES

   

John W. Somerhalder II

Age: 64

Director Nominee

Current Public Company
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 15

 

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: 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.

 

16 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.

•   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 17

 

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 Compensation 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.

18 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.

 

2020 PROXY STATEMENT 19

 

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 health, safety and environmental (“HSE”) and corporate responsibility matters, including governmental relations, political contributions and corporate philanthropy, 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 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, 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.

•   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 inclusion and diversity 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 Sustainability Committee.

•   Reviews and reassess the adequacy of the Sustainability Committee charter.

•   Carries out any other duties and responsibilities relating to 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.

(1)  The Sustainability 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.

20 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 21

 

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:

•   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 and two new independent directors nominated in Q2 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, one new female director nominee, emphasis on diversity in the Nominating and Corporate Governance Committee’s charter and the adoption of a Board Diversity Policy;

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

•   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.

22 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), and our two director nominees (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’ independence, the Board considered Ms. Adams’ service on the Board of Directors and the Audit and Compensation Committees of MRC Global Inc., a company listed on the New York Stock Exchange (the “NYSE”) 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 perform 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 23

 

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. 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 our Second Amended and Restated Bylaws (as 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.

24 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 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 to our General Counsel and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, the 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 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, the materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” on page [91] of this proxy statement 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.

 

2020 PROXY STATEMENT 25

 

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

   

Our Nominating and Corporate Governance Committee approved the director nominees submitted for election at the Annual Meeting. Two of the eight nominees, Ms. Holroyd and Mr. Somerhalder, are not directors standing for re-election. Ms. Holroyd was originally recommended for nomination to the Board of Directors by a stockholder of the Company. Mr. Somerhalder was originally recommended for nomination to the Board of Directors by the Nominating and Corporate Governance Committee following the submission of his name by a nationally-recognized third-party search firm engaged by the Nominating and Corporate Governance Committee. Each of the eight nominees 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.

26 2020 PROXY STATEMENT

 

 

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 communication 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 each Committee.

 

2020 PROXY STATEMENT 27

 

BOARD OF DIRECTORS’ ROLE IN RISK OVERSIGHT

While our management team is responsible for the day-to-day management of risks, the Board of Directors has primary responsibility for risk oversight. Boards typically exercise this oversight during regular Board meetings, but our Board of Directors also maintains constant and open dialogue with management and reviews and monitors key processes. As a result, they are better able to respond to emerging risks and to influence our strategy to address those risks.

While our Board of Directors is ultimately responsible for risk oversight at the Company, our four Committees assist the Board in fulfilling its oversight responsibilities in the areas of risk below:

Committee

Risk Areas of Focus

Audit

•   Financial Reporting

•   Internal Controls

•   Legal Compliance

•   Regulatory Compliance

•   Reserves Reporting

•   Risk Management

Compensation

•   Compensation Policies

•   Executive Performance

Sustainability

•   Environment

•   Public Health

•   Government Relations

•   Political Contributions

Nominating and Corporate Governance

•   Board Organization

•   Membership

•   Structure

•   Succession Planning

•   Corporate Governance

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EXECUTIVE OFFICERS

The following table sets forth the name, age, positions and business experience of each of our executive officers (other than David M. Wood, who also serves as a member of our Board and who is listed under “Election of Directors and Director Biographies” on page [19] of this proxy statement):

NAME

POSITIONS AND EXPERIENCE

Donnie Moore
Age: 55

Executive Vice President, Chief Operating Officer since January 2018

Mr. Moore has served as Executive Vice President, Chief Operating Officer since January 2018. Mr. Moore had also served as Interim Chief Executive Officer of the Company from October 29, 2018, the date our former Chief Executive Officer and President left the Company, to December 18, 2018, the date of the appointment of Mr. Wood as our new Chief Executive Officer and President. From 2007 until December 2017, Mr. Moore worked at Noble Energy, Inc. (“Noble”), an independent oil and gas exploration and production company, where he most recently served as Vice President of Noble’s Texas operations for its Eagle Ford and Delaware Basin assets. Prior to that, Mr. Moore held various leadership roles at Noble including Vice President of the Marcellus Business Unit, Manager for Operations of the Wattenberg/DJ Business Unit, Manager of Operations for the Gunflint discovery in the Deepwater Gulf of Mexico and Development Manager for Noble’s Mid-Continent and Gulf Coast positions. From 1989 until 2007, Mr. Moore served in a variety of roles with ARCO Oil and Gas Company, Vastar Resources, Inc. and BP America. Mr. Moore holds a Bachelor of Science degree in Petroleum Engineering from Louisiana Tech University.

Quentin Hicks
Age: 45

Executive Vice President, Chief Financial Officer since August 2019

Prior to joining the Company, Mr. Hicks served as the Executive Vice President and Chief Financial Officer of Halcón Resources Corporation (“Halcón”), an independent energy company, a position he held since March 2019, having previously served as Executive Vice President, Finance, Capital Markets and Investor Relations of Halcón since January 2018. Prior to that, Mr. Hicks held various roles at Halcón focused primarily on finance and investor relations, starting in August 1, 2012. Prior to Halcón, Mr. Hicks worked for GeoResources Inc., where he served as Director of Acquisitions and Financial Planning from 2011 until GeoResources merged with Halcón in August 2012. From 2004 to 2011, he worked in investment banking with Bear Stearns, Sanders Morris Harris and most recently Madison Williams, where he was a Director in their energy investment banking practice. Prior to that, Mr. Hicks worked as Manager of Financial Reporting for Continental Airlines. Mr. Hicks began his career in 1998 working as an auditor for Ernst and Young LLP. Mr. Hicks graduated from Texas A&M University with a Bachelor of Business Administration and a Master of Science degree in Accounting. In addition, Mr. Hicks holds a Master of Business Administration degree in Finance from Vanderbilt University and holds a Certified Public Accountant license from the State of Texas.

Patrick Craine
Age: 48

Executive Vice President, General Counsel and Corporate Secretary since May 2019

Mr. Craine has served as Executive Vice President, General Counsel and Corporate Secretary of the Company since May 2019. Mr. Craine has over 20 years of extensive senior-level experience handling a broad range of securities, corporate, regulatory, governance, compliance and litigation matters, with particular expertise in the energy industry. He joined Gulfport from Chesapeake Energy Corporation (NYSE: CHK) (“Chesapeake”), a hydrocarbon exploration company, where he served as Deputy General Counsel – Chief Risk and Compliance Officer from 2013 until 2019. Prior to joining Chesapeake, Mr. Craine was a partner with Bracewell LLP, a global law firm, where his practice focused on securities and corporate regulatory matters and investigations. Before Mr. Craine entered private practice, he served as a lawyer with the SEC and the Financial Industry Regulatory Authority, where he held leadership positions in their Oil and Gas Task Forces. Mr. Craine received his Bachelor of Arts degree, summa cum laude, Phi Beta Kappa, from Wabash College, and his Juris Doctorate, cum laude, from the Southern Methodist University Dedman School of Law.

Michael Sluiter
Age: 47

Senior Vice President, Reservoir Engineer since December 2018

Mr. Sluiter joined the Company from Noble Energy, Inc., where he held various engineering positions from 2007 to 2018, including, most recently, as the Permian Basin Business Unit Manager. Mr. Sluiter has over 20 years of experience in unconventional resource development, reservoir engineering, subsurface development, business development and acquisitions, as well as leadership skills, which he developed at Noble Energy, Santos Australia and Santos USA. Mr. Sluiter began his career as a wireline field services engineer for Schlumberger in Thailand. Mr. Sluiter holds a Bachelor of Science degree in Chemical Engineering from the University of Sydney, Australia.

 

2020 PROXY STATEMENT 29

 

COMPENSATION DISCUSSION AND ANALYSIS

Letter from the Compensation Committee Chair

As members of Gulfport’s Compensation Committee, our goal is to create an executive compensation program that promotes long-term value creation for our stockholders, strikes the right balance of pay for performance, attracts and retains an exceptionally talented executive team and steers Gulfport’s leadership to meet ambitious goals without taking undue risk. This framework was of particular importance in fiscal year 2019, which was very much a transformative year for the Company, in light of changes made to both our senior management team and our Board. The Committee recognizes that as Gulfport continues to evolve, our executive compensation programs have been, and will continue to be, essential to our ongoing success through this period of meaningful change.

Our refreshed Compensation Committee brought new ideas and viewpoints. In 2019, we approved a number of changes to the composition of our leadership teams and Committees. As part of this refreshment, Mr. Morris assumed the role of Committee Chair, and Mr. Bledsoe joined the Committee as a new member in 2020. Over the past 12 months, we performed an in-depth review of the Company’s executive compensation plans which included an assessment of peer groups, total compensation philosophy, equity usage and appropriate incentive metrics and governance practices while reflecting on the feedback of our stockholders received during the course of our ongoing engagement efforts.

We implemented a number of changes and decisions to support the Company’s transformation. In fiscal year 2019, we:

•        Aligned CEO pay with industry benchmark peer group data for base pay, short-term and long-term incentives after reviewing median pay data for other similar positions provided by the independent consultant to the Board;

•        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 in 2019;

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

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

•        Introduced free cash flow and production per debt-adjusted share metrics into the annual incentive plan and replaced the qualitative strategic initiative metric with quantifiable health, safety and environmental targets.

We conducted a substantial stockholder outreach effort that included the Committee Chair and management. This effort involved meeting and having a robust dialog with stockholders representing over 67% of the Company’s outstanding common stock. We were glad to hear support for bringing in a talented group of executives as our refreshed management team, and for implementing specific changes to the program that would help further promote transparency and alignment. We remain committed to maintaining healthy and productive ongoing conversations with our stockholders as we guide Gulfport through our shared future and will continue to consider the different viewpoints of our stockholders as we discuss future enhancements to our compensation programs.

We believe that the changes in the development of our program follow the input we have heard and are the right steps to align our management team with our financial and strategic goals. We have the highest confidence in the skills and leadership of our new CEO and his entire Gulfport senior management team, and we look forward to continued execution of our business strategy.

Thank you for your confidence and investment in Gulfport Energy.

Respectfully submitted by the Compensation Committee,

Ben T. Morris, Chairman

Dated: May 27, 2020

30 2020 PROXY STATEMENT

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs and describes compensation decisions for Gulfport’s Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, the next three highest paid executives for 2019 and two former executives who departed from the Company during 2019. These officers, known as our NEOs, are:

David M. Wood

Chief Executive Officer and President

Quentin R. Hicks

Executive Vice President, Chief Financial Officer

Donnie Moore

Executive Vice President, Chief Operating Officer

Patrick K. Craine

Executive Vice President, General Counsel and Corporate Secretary

Michael Sluiter

Senior Vice President of Reservoir Engineering

Keri Crowell

Former Chief Financial Officer

Stuart Maier

Former Senior Vice President of Geosciences

 

2020 PROXY STATEMENT 31

 

EXECUTIVE SUMMARY

Gulfport 2019 Business Performance Highlights

2019 was a challenging year for the oil and natural gas industry. Our ability to generate free cash flow despite a declining price environment was made possible by our strong commitment to capital discipline and the dedication and focus of our operations teams who worked to optimize efficiencies and improve our cost structure throughout the year. We continued to simplify our portfolio by divesting non-core assets and utilizing sale proceeds to improve our balance sheet through discounted bond repurchases, taking advantage of opportunities to retire debt on a heavily discounted basis.

Key accomplishments in 2019 included:

Strategic

•        Enhanced senior management team with hiring of a highly-qualified CFO and General Counsel and Corporate Secretary;

•        Completed non-core asset divestitures that generated $49 million in proceeds in 2019; closed additional non-core divestiture for $50 million in January 2020;

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

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

Financial

•        Generated free cash flow in a challenged commodity price environment;

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

•        Reduced general and administrative expense by 4% to $48 million from $50 million during 2018;

•        Ended 2019 with available borrowing of $636 million; further enhanced with $50 million non-core asset divestiture in January 2020; and

•        Significantly improved financial planning and analysis process to optimize performance.

Operational

•        Increased production 1% year-over-year while reducing capital expenditures by 26% year-over-year;

•        Reduced our unit lease operating expense by 10% to $0.17 per Mcfe year-over-year; and

•        Reduced average SCOOP drilling days by 36% and Utica by 12% year-over-year.

Health, Safety & Environmental

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

•        Reduced Total Recordable Incident Rate (combined employee and contractor) 36% year-over-year;

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

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

Corporate Social Responsibility

•        Awarded approximately 30 educational and environmental grants through the Ohio Gulfport Energy Fund and the Oklahoma Gulfport Energy Fund during 2019;

•        Awarded grants for programs that improve the lives of more than 15,000 individuals in our operating counties in Ohio;

32 2020 PROXY STATEMENT

 

 

 

EXECUTIVE SUMMARY

•        Partnered with the Imagination Library in Ohio to provide books to more than 7,900 children in Belmont, Jefferson and Monroe Counties;

•        Provided educational grants through the Oklahoma Gulfport Energy Fund that will benefit more than 5,000 Oklahomans; and

•        Participated in a partnership with the American Heart Association and sponsorships with the American Red Cross, Big Brothers Big Sisters of Oklahoma, National Kidney Foundation, St. Jude and the United Way.

Key 2019 Executive Compensation Actions

In consideration of our long-term strategy and considering stockholder feedback following a robust program of engagement (see “Proposal to Approve on an Advisory, Non-Binding Basis, the Compensation Paid to the Company’s Named Executives” on page [73] of this proxy statement), the Company took the following actions in 2019:

•        Implemented key changes to the equity award structure in 2019:

•        (i) 50% of the equity awards granted to our NEOs consisting of performance-based restricted stock units, vesting after a three-year performance period, based on the Company’s achievement of targeted weighted average RTSR during the performance period and the executive’s continuous service through the last day of the performance period with target performance set at the 55th percentile of the peer group and a cap of 100% in case of negative absolute TSR; 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;

•        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 each executive’s compensation to the performance of our stock and operational performance;

•        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:

•        Added a Free Cash Flow metric to further align with long-term value creation, peer benchmarking and stockholder feedback; and

•        Evaluated annual incentive award achievement, resulting in a payout of 50% against preset, aggressive targets for 2019, and included achievement of predetermined HSE goals as measured against improvement on 2018 results;

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

•        Enhanced the senior leadership team with the hiring of Patrick Craine as the General Counsel and Corporate Secretary in May 2019 and Quentin Hicks as Chief Financial Officer in August 2019;

•        Entered into employment agreements with our CEO, CFO, COO and General Counsel to evidence the terms and conditions of their employment, their compensation and severance benefits and their obligations to Gulfport during their employment and thereafter (e.g., confidentiality, non-solicitation, etc.);

•        Adjusted the base salaries of our CEO and our COO to reflect competitive pay levels when compared to other median base pay levels for similar positions at peer firms. Mr. Wood’s base salary was set at $834,000 and Mr. Moore’s base salary was set at $505,000, which more accurately reflected base pay at the 50th percentile for the CEO and COO positions as compared to our compensation peer group. No other changes to our NEOs’ base salaries were made during 2019; and

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

 

2020 PROXY STATEMENT 33

 

EXECUTIVE SUMMARY

   

The Compensation Committee will continue to consider the feedback from our stockholders when making compensation decisions for our NEOs.

Practices We Follow

Incentives Aligned with Stockholders.    All long-term incentives granted in 2019 were time or performance-based restricted stock awards, a portion of which included a RTSR metric tied to share price further aligning management with stockholders.

Majority of NEO pay is at-risk.    The majority of executive compensation is conditioned on achievement of pre-determined operational, capital efficiency and safety and environmental targets and a RTSR metric.