Item 5.02 - Departure of Directors or Certain Officers? Election of Directors?
Appointment of Certain Officers? Compensatory Arrangements of Certain Officers.
On January 18, 2023, the Board of Directors (the "Board") of Gulfport Energy
Corporation (the "Company") appointed John Reinhart as Chief Executive Officer
of the Company, effective as of January 24, 2023 (the "Effective Date"). Mr.
Reinhart succeeds Timothy Cutt, who resigned as Chief Executive Officer of the
Company, effective as of the Effective Date, and was appointed as Executive
Chairman of the Company, effective as of the Effective Date.
Reinhart Employment Agreement and Equity Awards
In connection with Mr. Reinhart's appointment as Chief Executive Officer of the
Company, he and the Company entered into an Employment Agreement (the
"Employment Agreement"), effective as of the Effective Date. The Employment
Agreement provides for, among other things, (i) an initial employment term
ending on December 31, 2026, with one-year automatic renewals unless either
party provides at least 90 days' prior written notice of its intention to not
extend the term; provided, that if a Change in Control (as defined in the
Gulfport Energy Corporation 2021 Stock Incentive Plan, as may be amended from
time to time (the "Plan")) occurs, the employment term will be extended to the
later of the original expiration date of the term and the expiration of the 24
month period following the effective date of such Change in Control, (ii) an
annualized base salary of $785,000, (iii) eligibility to receive an annual
performance-based cash bonus, with the target value for fiscal year 2023 equal
to 120% of his base salary, and (iv) eligibility to receive annual grants of
incentive equity awards pursuant to the Plan, as determined in the sole
discretion of the Company's Compensation Committee.
Under the Employment Agreement, if Mr. Reinhart's employment is terminated by
the Company without Cause or if Mr. Reinhart resigns for Good Reason (each as
defined in the Employment Agreement), Mr. Reinhart will receive, subject to his
execution and non-revocation of a release of claims against the Company and its
affiliates and his continued compliance with restrictive covenants, (i) a cash
severance payment equal to one times the sum of his then-current base salary
plus his target annual bonus for the fiscal year in which such termination
occurs (which is increased to three times the sum of base salary and target
annual bonus in the event such a termination occurs within 24 months following a
Change in Control), (ii) payment of the prorata portion of his target annual
bonus for the fiscal year in which such termination occurs, and (iii) subject to
Mr. Reinhart's timely election of continuation coverage under COBRA, a cash
payment equal to his aggregate monthly COBRA premiums for the 12 month period
following such termination date, to be used by Mr. Reinhart to subsidize his
COBRA premiums (which is increased to 18 months in the event such a termination
occurs within 24 months following a Change in Control), in each case, payable in
a lump sum on the 60th date following such termination date.
The Employment Agreement also provides for the following restrictive covenants:
(i) non-solicitation of customers, employees and independent contractors during
employment and for 12 months following termination, (ii) non-disclosure of
confidential information and trade secrets, and (iii) assignment of intellectual
property.
The foregoing description of the terms of the Employment Agreement is not
complete and is qualified in its entirety by reference to the full text of the
Employment Agreement, a copy of which is attached hereto as Exhibit 10.1.
In addition, in connection with Mr. Reinhart's appointment as Chief Executive
Officer of the Company, subject to approval by the Company's Compensation
Committee and contingent upon Mr. Reinhart commencing employment with the
Company on the Effective Date, Mr. Reinhart will be granted an initial equity
award under the Plan, with a target value equal to approximately $4,250,000.
Such award will be granted as follows: (i) 40% in the form of time-based
restricted stock units, granted pursuant to the Form of Employee Restricted
Stock Unit Award Agreement which was filed as Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2021, filed on March
1, 2022, and (ii) 60% in the form of performance-based restricted stock units,
granted pursuant to the Form of Performance-Based Restricted Stock Unit Award
Agreement (which was filed as Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2021, filed on March 1, 2022).
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Reinhart Indemnification Agreement
On the Effective Date, Mr. Reinhart entered into an Indemnification Agreement
with the Company (the "Indemnification Agreement"). This Indemnification
Agreement requires the Company to indemnify Mr. Reinhart to the fullest extent
permitted under Delaware law against liability that may arise by reason of his
service to the Company, and to advance certain expenses incurred as a result of
any proceeding against him as to which he could be indemnified.
The foregoing description of the terms of the Indemnification Agreement is not
complete and is qualified in its entirety by reference to the full text of the
Indemnification Agreement, a copy of which is attached hereto as Exhibit 10.2.
Cutt Transition Agreement
On the Effective Date, Mr. Cutt entered into a Transition and Services Agreement
with the Company (the "Transition Agreement").
Pursuant to the Transition Agreement, effective as of the Effective Date, Mr.
Cutt will step down as the Chief Executive Officer of the Company, and will
assume the role of Executive Chairman of the Company. It is expected that Mr.
Cutt will continue to remain employed with the Company as the Executive Chairman
of the Board until March 1, 2023 (such date, the "Separation Date", and such
period, the "Transition Period"). Mr. Cutt's employment with the Company will be
terminated on the Separation Date, however, Mr. Cutt will continue to serve on
the Board as its Chairman following the Separation Date.
The Transition Agreement provides that Mr. Cutt will receive, subject to his
continued employment with the Company as Executive Chairman of the Board through
the Separation Date, his execution and non-revocation of a release of claims
against the Company and its affiliates, and his continued compliance with the
restrictive covenants contained in his employment agreement, dated April 29,
2022, (i) payment of his base salary during the Transition Period, at the rate
in effect as of the date Mr. Cutt stepped down as Chief Executive Officer, (ii)
payment of his annual bonus for fiscal year 2022, based on actual performance,
payable at the same time as such bonus is paid to other executive officers, but
in no event later than March 15, 2023, and (iii) payment of the prorata portion
of his target annual bonus for fiscal year 2023, determined based on the number
of days Mr. Cutt remains employed as Executive Chairman of the Board during the
Transition Period, payable on March 31, 2023.
Following the expiration of the Transition Period, in consideration for Mr.
Cutt's service as Chairman of the Board, Mr. Cutt will be entitled to receive
compensation pursuant to the Company's non-employee director compensation
policy. In addition, the Transition Agreement provides that any outstanding
time-based restricted stock units and/or performance-based restricted stock
units held by Mr. Cutt as of the Separation Date will continue to be eligible to
vest following such date in accordance with the vesting provisions contained in
the applicable award agreement during the period in which he continues to
provide services to the Company as a member of the Board.
The foregoing description of the terms of the Transition Agreement is not
complete and is qualified in its entirety by reference to the full text of the
Transition Agreement, a copy of which is attached hereto as Exhibit 10.3.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
10.1 Employment Agreement, by and between Gulfport Energy Corporation and
John Reinhart.
10.2 Indemnification Agreement, by and between Gulfport Energy Corporation
and John Reinhart.
10.3 Transition and Services Agreement, by and between Gulfport Energy
Corporation and Timothy Cutt.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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