Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 1, 2012

 

 

Legacy Reserves LP

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-33249   16-1751069
(State or other jurisdiction of incorporation)  

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

303 W. Wall, Suite 1400

Midland, Texas

    79701
(Address of principal executive offices)     (Zip Code)

Registrant’s telephone number, including area code: (432) 689-5200

NOT APPLICABLE

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

2012 SALARIES

On February 1, 2012, the Compensation Committee (the “Committee”) of Legacy Reserves GP, LLC, the general partner (the “General Partner”) of Legacy Reserves LP (the “Partnership”), determined the Chief Executive Officer’s 2012 salary as follows, and on February 2, 2012, upon recommendation of the Committee, the board of directors (the “Board”) of the General Partner determined 2012 salaries for the remaining executive officers as follows, all effective March 1, 2012:

 

Executive Officer

   2012 Salary  

Cary D. Brown

        Chairman of the Board and Chief Executive Officer

   $ 425,000   

Steven H. Pruett

        President, Chief Financial Officer and Secretary

   $ 335,000   

Paul T. Horne

        Executive Vice President of Operations

   $ 300,000   

Kyle A. McGraw

        Executive Vice President of Business Development and Land

   $ 280,000   

William M. Morris

        Vice President and Chief Accounting Officer

   $ 236,000   

2011 CASH BONUSES FOR EXECUTIVE OFFICERS

Also on February 1, 2012, in accordance with the Amended and Restated Legacy Reserves LP Compensation Policy effective February 18, 2010 (the “Compensation Policy”), the Committee approved the following bonus awards for Mr. Cary Brown, and with respect to the remaining executive officers, recommended the following bonus awards to the Board and the Board approved such awards on February 2, 2012, all subject to Audit Committee approval of the final EBITDA calculation for 2011.

Subjective Cash Award. Each executive officer will be awarded such subjective amount of cash bonus (up to 50% of the aggregate annual amount), as set forth under “Subjective Factor” in the table below:

Objective Cash Award. The objective component (up to 50% of the annual cash bonus) is based on a formula based on EBITDA and growth in cash distributions per unit, weighted equally.

Accordingly, the following cash bonuses with respect to each executive officer will be awarded:

 

     Objective      Subjective      Total
Bonus
 

        Executive Officer

   2011 Salary      Objective
Factor
   % of Objective
Factor Earned
   Bonus
Amount(1)
     Subjective
Factor
   % of Subjective
Factor
   Bonus
Amount
    

Cary D. Brown

   $  400,000       55%    75.24%    $ 165,528       55%    80%    $ 176,000       $ 341,528   

Steven H. Pruett

   $ 320,000       50%    75.24%    $ 120,384       50%    80%    $ 128,000       $ 248,384   

Paul T. Horne

   $ 269,000       40%    75.24%    $ 80,958       40%    85%    $ 91,460       $ 172,418   

Kyle A. McGraw

   $ 252,000       35%    75.24%    $ 66,362       35%    80%    $ 70,560       $ 136,922   

William M. Morris

   $ 236,000       30%    75.24%    $ 53,270       30%    85%    $ 60,180       $ 113,450   

Total 2011 Cash Bonus

            $  486,502             $  526,200       $ 1,012,702   

 

(1) The amounts shown are preliminary and are subject to Audit Committee approval of the final EBITDA calculation for 2011. The amounts are determined by using a weighted earned percentage of 75.24% of the Objective Factor as determined in accordance with the formula set forth in the Compensation Policy.

 

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2012 PHANTOM UNIT GRANT

On February 1, 2012, in accordance with the Compensation Policy, the Committee approved the following phantom unit awards and associated distribution equivalent rights for Mr. Cary Brown, and, with respect to the remaining executive officers, recommended the following phantom unit awards to the Board and the Board on February 2, 2012 approved such awards.

Objective or Performance-Based Equity Compensation. In accordance with the Compensation Policy the objective or performance-based component is granted at a number determined by the “Objective Factor” percentage of the respective executive officer’s prior fiscal year salary as set forth in the table below.

Subjective or Service-Based Component. As determined by the Compensation Committee, each executive officer was awarded 85% of the percentage of 2011 salary as set forth in the table below under the heading “Subjective Grant—Subjective Factor.”

2012 Phantom Unit Grants

 

     Objective Grant      Subjective Grant  

    Executive Officer

   2011 Salary      Objective
Factor (1)
   Maximum
Phantom
Units (2)
     Subjective
Factor (1)
   Subjective
Award
   Phantom
Units (3)
 

Cary D. Brown

   $ 400,000       150%      22,043       100%    85%      11,872 (4) 

Steven H. Pruett

   $ 320,000       120%      14,107         80%    85%      7,608 (5) 

Paul T. Horne

   $ 269,000         90%      8,894         60%    85%      4,797 (5) 

Kyle A. McGraw

   $ 252,000         75%      6,943         50%    85%      3,745 (5) 

William M. Morris

   $ 236,000         60%      5,202         40%    85%      2,806 (5) 

 

(1) Represents percentage of 2011 salary.
(2) Based on the 20 day trading day average prior to January 1, 2012, or $27.22. Represents maximum number of phantom units available to vest in one-third tranches over the next three years starting February 18, 2013, pending attaining specified performance criteria. Unvested phantom units will be forfeited.
(3) Subjective grant phantom units vest annually in one-third increments beginning on February 18, 2013.
(4) Based on the 20-day average closing price of Partnership units ended on the last trading day prior to February 1, 2012, or $28.64.
(5) Based on the 20-day average closing price of Partnership units ended on the last trading day prior to February 2, 2012, or $28.60.

 

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2012 OBJECTIVE PHANTOM UNIT VESTING

In accordance with the calculation of the objective component of equity compensation as set forth in the Compensation Policy, the first tranche of phantom units granted to each executive officer on February 18, 2011 and the second tranche of phantom units granted to each executive officer on February 18, 2010 will vest on February 18, 2012 in the amounts set forth below.

The Performance Factor is determined based the Partnership’s performance during 2011 as measured by the Partnership’s total unitholder return (“TUR”) compared to the TUR of an index of other publicly traded limited partnerships and the Partnership’s TUR ranking among its peer group.

2012 Phantom Unit Vesting

 

     Objective Grant  

    Executive Officer

   Maximum
Phantom Units
Subject to
Vesting (1)
   Performance
Factor (2)
   Phantom
Units
Vested
 

Cary D. Brown

   15,347    32.27%      4,952   

Steven H. Pruett

   10,152    32.27%      3,276   

Paul T. Horne

     6,839    32.27%      2,206   

Kyle A. McGraw

     5,352    32.27%      1,727   

William M. Morris

     4,012    32.27%      1,295   

 

(1) Represents one-third of the total phantom units granted pursuant to the objective component of the Compensation Policy.
(2) Based on the Partnership’s total unitholder return for 2011 of 8.6%, Legacy ranking of third among its Peer Group (as defined in the Compensation Policy) in total unitholder return and a 50.0 percentile rank of the Partnership’s total unitholder return among the Adjusted Alerian MLP Index (as defined in the Compensation Policy).

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Legacy Reserves LP
    By:   Legacy Reserves GP, LLC,
      its General Partner
Date: February 7, 2012     By:       /s/ Steven H. Pruett
    Name:   Steven H. Pruett
    Title:   President, Chief Financial Officer and Secretary

 

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