def14a
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 (AMENDMENT NO. )
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Soliciting Material Pursuant to § 240.14a-12 |
Oasis Petroleum Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
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OASIS
PETROLEUM INC.
1001 Fannin Street
Suite 1500
Houston, Texas 77002
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To the Stockholders of Oasis Petroleum Inc.:
Notice is hereby given that the Annual Meeting of Stockholders
of Oasis Petroleum Inc. (the Company) will be held
at the Four Seasons Hotel, 1300 Lamar Street, Houston, Texas
77010, on Thursday, May 5, 2011, at
9:00 a.m. Central Time (the Annual
Meeting). The Annual Meeting is being held for the
following purposes:
1. To elect two Class I Directors, each for a term of
three years.
2. To ratify the selection of PricewaterhouseCoopers LLP as
the Companys independent registered public accountants for
2011.
3. To approve, on an advisory basis, the compensation of
our executive officers as described in the Executive
Compensation and Other Information Compensation
Discussion and Analysis (CD&A) section of
the accompanying proxy statement and the selection of the
frequency of shareholder votes on executive compensation as
separate voting items:
(A) the shareholders approve the compensation philosophy,
policies and procedures described in the CD&A, and the
compensation of Oasis Petroleum Inc.s named executive
officers as disclosed pursuant to the SECs compensation
disclosure rules, including the compensation tables.
(B) the stockholders of the Company be provided an
opportunity to approve the compensation philosophy, policies and
procedures described in the CD&A, and the compensation of
Oasis Petroleum Inc.s named executive officers as
disclosed pursuant to the SECs compensation disclosure
rules, including the compensation tables every:
One year
Two years
Three
years .
4. To transact such other business as may properly come
before the Annual Meeting.
These proposals are described in the accompanying proxy
materials. You will be able to vote at the Annual Meeting only
if you were a stockholder of record at the close of business on
March 11, 2011.
YOUR VOTE IS IMPORTANT
Please vote over the internet at www.proxyvote.com or by
phone at
1-800-690-6903
promptly so that your shares may be voted in accordance with
your wishes and so we may have a quorum at the Annual Meeting.
Alternatively, if you did not receive a paper copy of the proxy
materials (which includes the proxy card), you may request a
paper proxy card, which you may complete, sign and return by
mail.
By Order of the Board of Directors,
Nickolas J. Lorentzatos
Corporate Secretary
Houston, Texas
March 16, 2011
OASIS
PETROLEUM INC.
1001 Fannin Street
Suite 1500
Houston, Texas 77002
PROXY
STATEMENT
2011
ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors of the Company requests your Proxy for
the Annual Meeting of Stockholders that will be held Thursday,
May 5, 2011, at 9:00 a.m. Central Time, at the
Four Seasons Hotel, 1300 Lamar Street, Houston, Texas 77010. By
granting the Proxy, you authorize the persons named on the Proxy
to represent you and vote your shares at the Annual Meeting.
Those persons will also be authorized to vote your shares to
adjourn the Annual Meeting from time to time and to vote your
shares at any adjournments or postponements of the Annual
Meeting.
If you attend the Annual Meeting, you may vote in person. If you
are not present at the Annual Meeting, your shares may be voted
only by a person to whom you have given a proper Proxy. You may
revoke the Proxy in writing at any time before it is exercised
at the Annual Meeting by delivering to the Corporate Secretary
of the Company a written notice of the revocation, by submitting
your vote electronically through the internet or by phone after
the grant of the Proxy, or by signing and delivering to the
Corporate Secretary of the Company a Proxy with a later date.
Your attendance at the Annual Meeting will not revoke the Proxy
unless you give written notice of revocation to the Corporate
Secretary of the Company before the Proxy is exercised or unless
you vote your shares in person at the Annual Meeting.
ELECTRONIC
AVAILABILITY OF PROXY STATEMENT AND ANNUAL REPORT
As permitted under the rules of the Securities and Exchange
Commission (the SEC), the Company is making this
Proxy Statement and its Annual Report available to its
stockholders electronically via the internet. The Company is
sending on or about March 21, 2011, a Notice Regarding the
Availability of Proxy Materials (the Notice) to its
stockholders of record as of the close of business on
March 11, 2011, which Notice will include
(i) instructions on how to access the Companys proxy
materials electronically, (ii) the date, time and location
of the Annual Meeting, (iii) a description of the matters
intended to be acted upon at the Annual Meeting, (iv) a
list of the materials being made available electronically,
(v) instructions on how a stockholder can request to
receive paper or
e-mail
copies of the Companys proxy materials, (vi) any
control/identification numbers that a stockholder needs to
access his or her proxy card and instructions on how to access
the proxy card, and (vii) information about attending the
Annual Meeting and voting in person.
Stockholders
of Record and Beneficial Owners
Most of the Companys stockholders hold their shares
through a broker, bank or other nominee rather than directly in
their own name. As summarized below, there are some distinctions
between shares held of record and those owned beneficially.
Stockholders of Record. If your shares are
registered directly in your name with the Companys
transfer agent, you are considered the stockholder of record
with respect to those shares, and the Notice is being sent
directly to you by our agent. As a stockholder of record, you
have the right to vote by proxy or to vote in person at the
Annual Meeting. If you received a paper copy of the proxy
materials by mail instead of the Notice, the proxy materials
include a proxy card or a voting instruction card for the Annual
Meeting.
Beneficial Owners. If your shares are held in
a brokerage account or by a bank or other nominee, you are
considered the beneficial owner of shares held in street
name, and the Notice will be forwarded to you by your
broker or nominee. The broker or nominee is considered the
stockholder of record with respect to those shares. As the
beneficial owner, you have the right to direct your broker how
to vote. Beneficial owners that receive the Notice by mail from
the stockholder of record should follow the instructions
included in the Notice to view the proxy statement and transmit
voting instructions. If you received a paper copy of the proxy
materials by mail instead of the Notice, the proxy materials
include a proxy card or a voting instruction card for the Annual
Meeting.
QUORUM
AND VOTING
Voting Stock. The Companys common stock,
par value $0.01 per share, is the only class of securities that
entitles holders to vote generally at meetings of the
Companys stockholders. Each share of common stock
outstanding on the record date is entitled to one vote.
Record Date. The record date for stockholders
entitled to notice of and to vote at the Annual Meeting was the
close of business on March 11, 2011. As of the record date,
92,310,145 shares of common stock were outstanding and
entitled to be voted at the Annual Meeting.
Quorum and Adjournments. The presence, in
person or by Proxy, of the holders of a majority of the
outstanding shares entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting.
If a quorum is not present, a majority of the stockholders
entitled to vote who are present in person or by Proxy at the
Annual Meeting have the power to adjourn the Annual Meeting from
time to time, without notice other than an announcement at the
Annual Meeting, until a quorum is present. At any adjourned
Annual Meeting at which a quorum is present, any business may be
transacted that might have been transacted at the Annual Meeting
as originally notified.
Vote Required. Directors will be elected by
the affirmative vote of the holders of a plurality of the shares
present and entitled to be voted at the Annual Meeting.
Ratification of the selection of the Companys auditors
will require the affirmative vote of the holders of a majority
of the shares present and entitled to be voted at the Annual
Meeting. Approval of Items 3(A) and (B) require the
affirmative vote of the holders of a majority of the shares
present and entitled to be voted at the Annual Meeting. An
automated system that Broadridge Financial Solutions administers
will tabulate the votes. Brokers who hold shares in street name
for customers are required to vote shares in accordance with
instructions received from the beneficial owners. Brokers are
permitted to vote on discretionary items if they have not
received instructions from the beneficial owners, but they are
not permitted to vote (a broker non-vote) on
non-discretionary items absent instructions from the beneficial
owner. Brokers do not have discretionary voting authority with
respect to the election of directors. For ratification of the
selection of the Companys auditors, brokers will have
discretionary authority in the absence of timely instructions
from their customers. For approval of Items 3(A) and (B),
brokers will not have discretionary authority in the absence of
timely instructions from their customers. Abstentions and broker
non-votes will count in determining whether a quorum is present
at the Annual Meeting. Neither abstentions nor broker non-votes
will have any effect on the outcome of voting on director
elections or on Items 3(A) or (B). For purposes of voting
on the ratification of the selection of auditors, abstentions
will be included in the number of shares voting and will have
the effect of a vote against the proposal.
Default Voting. A Proxy that is properly
completed and submitted will be voted at the Annual Meeting in
accordance with the instructions on the Proxy. If you properly
complete and submit a Proxy, but do not indicate any contrary
voting instructions, your shares will be voted as follows:
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FOR the election of the two persons named in this Proxy
Statement as the Board of Directors nominees for election
as Class I Directors.
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FOR the ratification of the selection of PricewaterhouseCoopers
LLP as the Companys auditors for 2011.
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(A) FOR the approval of the compensation of our named
executive officers, as disclosed in this proxy statement
pursuant to the compensation disclosure rules of the SEC and
(B) for a frequency of TWO (2) YEARS for
future non-binding Say on Pay stockholder votes on
compensation of our named executed officers.
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If any other business properly comes before the stockholders for
a vote at the meeting, your shares will be voted in accordance
with the discretion of the holders of the Proxy. The Board of
Directors knows of no matters, other than those previously
stated, to be presented for consideration at the Annual Meeting.
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ITEM ONE
ELECTION
OF DIRECTORS
The Board of Directors has nominated the following individuals
for election as Class I Directors of the Company to serve
for a three year term to expire in 2014 and until either they
are re-elected or their successors are elected and qualified:
Ted Collins,
Jr.
Douglas E. Swanson, Jr.
Messrs. Collins and Swanson are currently serving as
Directors of the Company. Their biographical information is
contained in the Directors and Executive Officers
section below.
The Board of Directors has no reason to believe that any of its
nominees will be unable or unwilling to serve if elected. If a
nominee becomes unable or unwilling to accept nomination or
election, either the number of the Companys Directors will
be reduced or the persons acting under the Proxy will vote for
the election of a substitute nominee that the Board of Directors
recommends.
The Board of Directors unanimously recommends that
stockholders vote FOR the election of each of the
nominees.
DIRECTORS
AND EXECUTIVE OFFICERS
After the Annual Meeting, assuming the stockholders elect the
nominees of the Board of Directors as set forth in
Item One Election of Directors
above, the Board of Directors of the Company will be, and the
executive officers of the Company are:
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Thomas B. Nusz
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Chairman, President and Chief Executive Officer
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Taylor L. Reid
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Director, Executive Vice President and Chief Operating Officer
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William J. Cassidy(1)(2)(3)
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Director
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Ted Collins, Jr.(1)(3)
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Director
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Michael McShane(1)(2)
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Director
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Douglas E. Swanson, Jr.(2)(3)
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Director
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Robert L. Zorich
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Director
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Kent O. Beers
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Senior Vice President Land
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Robert J. Candito
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Senior Vice President Exploration
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Nickolas J. Lorentzatos
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Senior Vice President, General Counsel and Corporate Secretary
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Michael H. Lou
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Senior Vice President Finance
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Roy W. Mace
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Senior Vice President and Chief Accounting Officer
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H. Brett Newton
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Senior Vice President Asset Management
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Walter S. Smithwick
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Senior Vice President Operations
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Member of the Nominating and Governance Committee. |
The Companys Board of Directors currently consists of
seven members. The Companys Directors are divided into
three classes serving staggered three-year terms. Each year, the
Directors of one class stand for re-election as their terms of
office expire. Messrs. Collins and Swanson are designated
as Class I Directors,
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and their terms of office expire in 2011. Messrs. Cassidy,
Reid and Zorich are designated as Class II Directors, and
their terms of office expire in 2012. Messrs. McShane and
Nusz are designated as Class III Directors, and their terms
of office expire in 2013.
Set forth below is biographical information about each of the
Companys Directors and nominees for Director.
Thomas B. Nusz has served as our Director, President and
Chief Executive Officer (or in similar capacities) since our
inception in March 2007 and has 29 years of experience in
the oil and gas industry. From April 2006 to February 2007,
Mr. Nusz managed his personal investments, developed the
business plan for Oasis Petroleum LLC and secured funding for
the company. He was previously a Vice President with Burlington
Resources Inc., a formerly publicly traded oil and gas
exploration and production company or, together with its
predecessors, Burlington, and served as President International
Division (North Africa, Northwest Europe, Latin America and
China) from January 2004 to March 2006, as Vice President
Acquisitions and Divestitures from October 2000 to December 2003
and as Vice President Strategic Planning and Engineering from
July 1998 to September 2000 and Chief Engineer for substantially
all of such period. He was instrumental in Burlingtons
expansion into the Western Canadian Sedimentary Basin from 1999
to 2002. From September 1985 to June 1998, Mr. Nusz held
various operations and managerial positions with Burlington in
several regions of the United States, including the Permian
Basin, the San Juan Basin, the Black Warrior Basin, the
Anadarko Basin, onshore Gulf Coast and Gulf of Mexico.
Mr. Nusz was an engineer with Mobil Oil Corporation and for
Superior Oil Company from June 1982 to August 1985. He is a
current member of the National Petroleum Council, an advisory
committee to the Secretary of Energy of the United States.
Mr. Nusz holds a Bachelor of Science in Petroleum
Engineering from Mississippi State University.
Taylor L. Reid has served as our Director, Executive Vice
President and Chief Operating Officer (or in similar capacities)
since our inception in March 2007 and has 25 years of
experience in the oil and gas industry. From November 2006 to
February 2007, Mr. Reid worked with Mr. Nusz to form
the business plan for Oasis Petroleum LLC and secure funding for
the company. He previously served as Asset Manager Permian and
Panhandle Operations with ConocoPhillips from April 2006 to
October 2006. Prior to joining ConocoPhillips, he served as
General Manager Latin America and Asia Operations with
Burlington from March 2004 to March 2006 and as General Manager
Corporate Acquisitions and Divestitures from July 1998 to
February 2004. From March 1986 to June 1998, Mr. Reid held
various operations and managerial positions with Burlington in
several regions of the continental United States, including the
Permian Basin, the Williston Basin and the Anadarko Basin. He
was instrumental in Burlingtons expansion into the Western
Canadian Sedimentary Basin from 1999 to 2002. Mr. Reid
holds a Bachelor of Science in Petroleum Engineering from
Stanford University.
William J. Cassidy has served as our Director since
September 2010, is the Chair of our Nominating and Governance
Committee, and serves on our Audit and Compensation Committees.
In March of 2010, Mr. Cassidy joined Resource Production
Advisors, LLC a firm providing investors with access to
commodity investments and advice. He is also a non-executive
director of GasValpo, SA, a Chilean gas distribution company.
Additionally, Mr. Cassidy was a founding partner at
U.S. Drilling Capital Management, LLC, a drilling
investment fund, starting in 2008. From 2006 until 2008,
Mr. Cassidy served at Barclays Capital as Head of
Exploration and Production Investment Banking. From 2002 to 2006
he worked as a senior member of the Energy and Power Investment
Banking division at Banc of America Securities. Mr. Cassidy
began his investment banking career with JPMorgan Chase in
varying capacities from 1995 to 2001. During that time he spent
two years in London, focused on the emerging deregulation of the
European natural gas industry, spending the balance of his time
in New York focused on providing strategic advice to North
American and Latin American E&P companies. He worked as a
Geophysicist for Conoco from 1989 to 1993 focused on the North
Sea and emerging deepwater Gulf of Mexico. He earned his
Bachelor of Science in Geology and Math from the National
University of Ireland, Cork, a Masters of Science in Petroleum
Geophysics from the Royal School of Mines, Imperial College,
London and a Masters of Business Administration from the Wharton
School of the University of Pennsylvania.
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Ted Collins, Jr. has served as our Director since
February 2011 and, as of May 1, 2011, will serve on our
Audit Committee and Nominating and Governance Committee.
Mr. Collins currently serves as Chairman and Chief
Executive Officer of Patriot Resources Partners, LLC and serves
as a director on the Boards of CLL Global Research Foundation
and Energy Transfer Group, L.P. Mr. Collins began his
career in 1960 as a Petroleum Engineer with Pan American
Petroleum Corporation. He left in 1963 to become an independent
oil operator. He then joined American Quasar Petroleum Company
as Executive Vice President in 1969 until 1982 at which time he
became President of Enron Oil & Gas Company, whose
predecessor companies were HNG Oil Co. and HNG/InterNorth
Exploration. He left Enron in 1988 and became President of
Collins & Ware, Inc., an independent oil and gas
exploration and production company, which sold the majority of
its assets to Apache Corp. in 2000. From 2000 to 2006, he served
as President of Collins & Ware Investments Co. He
earned his Bachelor of Science in Geological Engineering from
the University of Oklahoma.
Michael McShane has served as our director since May
2010, is the Chair of our Audit Committee, serves on our
Compensation Committee, and will serve on our Nominating and
Governance Committee until May 1, 2011. Mr. McShane
served as a director and President and Chief Executive Officer
of Grant Prideco, Inc., a manufacturer and supplier of oilfield
drill pipe and other drill stem products, from June 2002 until
the completion of the merger of Grant Prideco with National
Oilwell Varco, Inc. in April 2008, and Chairman of the Board of
Grant Prideco from May 2003 through April 2008. Prior to joining
Grant Prideco, Mr. McShane was Senior Vice
President Finance and Chief Financial Officer and
director of BJ Services Company, a provider of pressure pumping,
cementing, stimulation and coiled tubing services for oil and
gas operators, from 1990 to June 2002. Mr. McShane has also
served as a director of Complete Production Services, Inc.
(NYSE: CPX), an oilfield service provider, since March 2007,
Spectra Energy Corp (NYSE: SE), a provider of natural gas
infrastructure, since April 2008, Globalogix, a privately held
company that provides comprehensive services to upstream oil and
gas producers and operators, since June 2007 and Forum Energy
Technologies, a global provider of manufactured and applied
technologies to the energy industry, since August 2010.
Mr. McShane also serves as an advisor to Advent
International, a global private equity firm.
Douglas E. Swanson, Jr. has served as our Director
since our inception in March 2007, is the Chair of our
Compensation Committee, serves on our Nominating and Governance
Committee, and will serve on our Audit Committee until
May 1, 2011. Mr. Swanson is a Partner of EnCap
Investments L.P., an investment management firm, which he joined
in 1999. Prior to his position at EnCap, he was in the corporate
lending division of Frost National Bank from 1995 to 1997,
specializing in energy related service companies, and was a
financial analyst in the corporate lending group of Southwest
Bank of Texas from 1994 to 1995. Mr. Swanson has extensive
industry experience serving on numerous boards of private oil
and gas exploration and production companies over his
11-year
history with EnCap and is a member of the Independent Petroleum
Association of America and the Texas Independent
Producers & Royalty Owners Association.
Mr. Swanson holds a Bachelor of Arts in Economics and a
Masters of Business Administration, both from the University of
Texas at Austin.
Robert L. Zorich has served as our Director since our
inception in March 2007. Mr. Zorich is a Principal of EnCap
Investments L.P., an investment management firm which he
co-founded in 1988. Prior to the formation of EnCap,
Mr. Zorich was a Senior Vice President of
Trust Company of the West, a large, privately-held pension
fund manager, from 1986 to 1988. Prior to joining
Trust Company of the West, Mr. Zorich co-founded MAZE
Exploration, Inc., a company actively involved in oil and gas
exploration, development and reserve acquisitions, serving as
its Co-Chief Executive Officer from 1981 to 1986.
Mr. Zorich began his career at Republic National Bank of
Dallas where he worked from 1974 to 1981. He ultimately served
as Vice President and Division Manager in the Energy
Department. He serves on the board of directors of several EnCap
portfolio companies and is also a member of the board of
directors of Enerplus Resources Fund (NYSE: ERF). He is a member
of the Independent Petroleum Association of America and Texas
Independent Producers and Royalty Owners Association.
Mr. Zorich holds a Bachelor of Arts in Economics from the
University of California at Santa Barbara and a Masters
Degree in International Management from the American Graduate
School of International Management.
Kent O. Beers has served as our Senior Vice President
Land (or in similar capacities) since August 2007 and has
35 years of experience in the oil and gas industry. He
previously served as Commercial Director
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International with ConocoPhillips from March 2006 to July 2006.
Prior to joining ConocoPhillips, Mr. Beers held various
managerial positions in the Commercial and Business Development
divisions of Burlington from June 1997 to March 2006 and was
Manager Corporate Divestitures of Burlington from June 1994 to
May 1997. From June 1982 to May 1994, Mr. Beers held
various land managerial positions with Burlington in the Rocky
Mountain Region and the Williston Basin. Prior to joining
Burlington, he was a Land Manager of NuCorp Energy Inc. from
1980 to 1982 and Regional Land Manager of Hunt Energy
Corporation from 1976 to 1980. Mr. Beers holds a Bachelor
of Science in Business Administration from Montana State
University.
Robert J. Candito has served as our Senior Vice President
Exploration (or in similar capacities) since our inception in
March 2007 and has 33 years of experience in the oil and
gas industry. He previously served as Principal Geologist with
ConocoPhillips from April 2006 to August 2007. Prior to joining
ConocoPhillips, Mr. Candito was a Senior Geological Advisor
with Burlington from February 1995 to March 2006. At Burlington,
he held various positions in both exploration and development
operations in several regions of the continental United States,
including the Gulf Coast, the Rocky Mountains and the Anadarko
Basin. From January 1999 through March 2006, Mr. Candito
worked for Burlingtons International Division on South
American projects. Prior to joining Burlington, Mr. Candito
worked for several independent operators in both the Rocky
Mountain and Gulf Coast regions. Mr. Candito holds a
Bachelor of Science in Geology from Bridgewater State College
and a Master of Science in Geochemistry from the Colorado School
of Mines.
Nickolas J. Lorentzatos has served as our Senior Vice
President, General Counsel and Corporate Secretary since
September 2010 and has 11 years of experience in the oil
and gas industry and 15 years practicing law. He previously
served as Senior Counsel with Targa Resources from July 2007 to
September 2010. From April 2006 to July 2007, he served as
Senior Counsel to ConocoPhillips. Prior to joining
ConocoPhillips, he served as Counsel and Senior Counsel to
Burlington from August 1999 to April 2006. From September 1995
to August 1999, he was an associate with Bracewell &
Patterson, LLP. Mr. Lorentzatos holds a Bachelor of Arts
from Washington and Lee University, a Juris Doctor from the
University of Houston, and a Masters of Business Administration
from the University of Texas at Austin.
Michael H. Lou has served as our Senior Vice President
Finance (or in similar capacities) since September 2009 and
has 14 years of experience in the oil and gas industry.
Prior to joining us, Mr. Lou was an independent contractor
from January 2009 to August 2009. From February 2008 to December
2008, he served as the Chief Financial Officer of Giant Energy
Ltd., a private oil and gas management company, from July 2006
to December 2008 he served as Chief Financial Officer of XXL
Energy Corp., a publicly listed Canadian oil and gas company,
and from August 2008 to December 2008, he served as Vice
President Finance of Warrior Energy N.V., a publicly listed
Canadian oil and gas company. From October 2005 to July 2006,
Mr. Lou was a Director for Macquarie Investment Bank. Prior
to joining Macquarie, Mr. Lou was a Vice President for
First Albany Investment Banking from 2004 to 2006. From 1999 to
2004, Mr. Lou held positions of increasing responsibility,
most recently as a Vice President, for Bank of Americas
investment banking group. From 1997 to 1999, Mr. Lou was an
analyst for Merrill Lynchs investment banking group.
Mr. Lou holds a Bachelor of Science in Electrical
Engineering from Southern Methodist University.
Roy W. Mace has served as our Senior Vice President and
Chief Accounting Officer (or in similar capacities) since our
inception in March 2007 and has 29 years of experience in
the oil and gas industry. He previously served as Business
Process Improvement & Integration Advisor with
ConocoPhillips from March 2006 to March 2007. Prior to joining
ConocoPhillips, Mr. Mace was a Senior Accounting Manager
with Burlington from June 1999 to March 2006. Upon starting his
career with Burlington as a Senior Corporate Auditor,
Mr. Mace advanced into various managerial accounting
positions at Burlington during the period from August 1986 to
June 1999. Prior to joining Burlington, Mr. Mace worked as
an Assistant Controller for Permian Tank &
Manufacturing from June 1984 to August 1986 and as a staff
accountant for KPMG from July 1982 to June 1984. Mr. Mace
holds a Bachelor of Business Administration and Accounting from
Eastern New Mexico University and is a licensed Certified Public
Accountant.
H. Brett Newton has served as our Senior Vice
President Asset Management (or in similar capacities) since
October 2007 and has 22 years of experience in the oil and
gas industry. He previously served as Business Development and
Partner Operations Manager Algeria with ConocoPhillips from
April 2006 to
6
September 2007. Prior to joining ConocoPhillips, Mr. Newton
was Asset Manager North Africa with Burlington from May 2004 to
March 2006 and held various engineering positions with
Burlington from June 1994 to April 2004. Prior to joining
Burlington, Mr. Newton worked for Chevron from January 1992
to June 1994. Mr. Newton has worked projects in several
regions of the world, including the Berkine Basin (Algeria), the
Permian Basin, the Green River Basin and the Williston Basin.
Mr. Newton holds a Bachelor of Science from Texas A&M
University and a Master of Science from the University of Texas
at Austin, both in Petroleum Engineering.
Walter S. Smithwick has served as our Senior Vice
President Operations (or in similar capacities) since October
2007 and has 27 years of experience in the oil and gas
industry. He previously served as South Texas Operations Manager
Lobo Field with ConocoPhillips from April 2006 to June 2007.
Prior to joining ConocoPhillips, Mr. Smithwick was Asset
Manager San Juan Basin with Burlington from May 2000 to
April 2006 and Drilling Manager / Superintendent from
October 1994 to May 2000. From 1986 to 1994, Mr. Smithwick
held various operations and managerial positions with Burlington
in several regions of the continental United States, including
the San Juan Basin, Permian Basin and the Anadarko Basin.
Prior to joining Burlington, Mr. Smithwick worked as a TC
Unit Manager for Schlumberger from 1979 to 1981 and worked for
Harkins Drilling Company in 1978. Mr. Smithwick holds a
Bachelor of Science in Petroleum Engineering from Texas A&M
University.
MEETINGS
AND COMMITTEES OF DIRECTORS
The Board of Directors of the Company held four meetings during
2010, and its independent Directors met in executive session
three times during 2010. During 2010, each of the Directors
attended 100 percent of the aggregate of the total number
of meetings of the Board of Directors and the total number of
meetings of all committees of the Board of Directors on which
that director served.
The Board of Directors has three standing committees: the Audit
Committee, the Compensation Committee and the Nominating and
Governance Committee.
Audit Committee. Information regarding the
functions performed by the Audit Committee and its membership is
set forth in the Audit Committee Report included
herein and also in the Audit Committee Charter that
is posted on the Companys website at
www.oasispetroleum.com. The members of the Audit
Committee are Messrs. McShane (Chairman), Cassidy and
Swanson. Effective May 1, 2011, Mr. Collins will
replace Mr. Swanson on the Audit Committee. The Audit
Committee held two meetings during 2010.
Compensation Committee. Responsibilities of
the Compensation Committee, which are discussed in detail in its
charter that is posted on the Companys website at
www.oasispetroleum.com, include among other duties, the
responsibility to:
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periodically review the compensation, employee benefit plans and
fringe benefits paid to, or provided for, executive officers of
the Company;
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approve the annual salaries, bonuses and share-based awards paid
to the Companys executive officers;
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periodically review and recommend to the full Board of Directors
total compensation for each non-employee director for services
as a member of the Board of Directors and its
committees; and
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exercise oversight of all matters of executive compensation
policy.
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The Compensation Committee is delegated all authority of the
Board of Directors as may be required or advisable to fulfill
the purposes of the Compensation Committee. The Compensation
Committee may form and delegate some or all of its authority to
subcommittees when it deems appropriate. Meetings may, at the
discretion of the Compensation Committee, include members of the
Companys management, other members of the Board of
Directors, consultants or advisors, and such other persons as
the Compensation Committee or its chairperson may determine.
The Compensation Committee has the sole authority to retain,
amend the engagement with, and terminate any compensation
consultant to be used to assist in the evaluation of director,
CEO or executive officer
7
compensation. The Compensation Committee has sole authority to
approve the consultants fees and other retention terms and
has authority to cause the Company to pay the fees and expenses
of such consultants. During 2010, the Compensation Committee
engaged the services of Longnecker & Associates
(Longnecker). The terms of Longneckers
engagement are set forth in an engagement agreement that
provides, among other things, that Longnecker is engaged by, and
reports only to, the Compensation Committee and will perform the
compensation advisory services requested by the Compensation
Committee. Among the services Longnecker was asked to perform
were apprising the Compensation Committee of
compensation-related trends, developments in the marketplace and
industry best practices; informing the Compensation Committee of
compensation-related regulatory developments; providing peer
group survey data to establish compensation ranges for the
various elements of compensation; providing an evaluation of the
competitiveness of the Companys executive compensation and
benefits programs; assessing the relationship between executive
pay and performance; and advising on the design of the
Companys incentive compensation programs, including metric
selection and target setting and the design of the
Companys performance unit award program. Longnecker does
not provide any other services to the Company.
The members of the Compensation Committee are
Messrs. Swanson (Chairman), Cassidy and McShane. The
Compensation Committee held five meetings during 2010.
Nominating and Governance Committee. The
Nominating and Governance Committee assists the Board of
Directors in evaluating potential new members of the Board of
Directors, recommending committee members and structure, and
advising the Board of Directors about corporate governance
practices. Additional information regarding the functions
performed by the Nominating and Governance Committee is set
forth in the Corporate Governance section included
herein and also in the Nominating and Governance Committee
Charter that is posted on the Companys website at
www.oasispetroleum.com. The members of the Nominating and
Governance Committee are Messrs. Cassidy (Chairman),
McShane and Swanson. Effective May 1, 2011,
Mr. Collins will replace Mr. McShane on the Nominating
and Governance Committee. The Nominating and Governance
Committee held two meetings during 2010.
EXECUTIVE
COMPENSATION AND OTHER INFORMATION
Compensation
Discussion and Analysis
This compensation discussion and analysis, or CD&A,
provides information about our compensation objectives and
policies for our principal executive officer, our principal
financial officer and our other three most highly-compensated
executive officers, and is intended to place in perspective the
information contained in the executive compensation tables that
follow this discussion. This CD&A provides a general
description of our compensation program and specific information
about its various components.
Throughout this discussion, the following individuals are
referred to as the Named Executive Officers and are
included in the Summary Compensation Table:
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Thomas B. Nusz, Chairman, President and Chief Executive Officer;
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Taylor L. Reid, Executive Vice President and Chief Operating
Officer;
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Roy W. Mace, Senior Vice President and Chief Accounting Officer;
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Kent O. Beers, Senior Vice President Land; and
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Walter S. Smithwick, Senior Vice President Operations.
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Although this CD&A focuses on the information in the tables
below and related footnotes, as well as the supplemental
narratives relating to the fiscal year ended December 31,
2010, we also describe compensation actions taken before or
after the last completed fiscal year to the extent such
discussion enhances the understanding of our executive
compensation disclosure. This CD&A discusses the
compensatory practices in place during 2010 and prior years and
highlights specific changes that were made to our compensatory
policies and programs in connection with the completion of our
initial public offering in June 2010 (the IPO).
8
Compensation
Program Philosophy and Objectives
Our future success and the ability to create long-term value for
our stockholders depends on our ability to attract, retain and
motivate the most qualified individuals in the oil and gas
industry. Our compensation program is designed to reward
performance that supports our long-term strategy and achievement
of our short-term goals. We believe that compensation should:
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help to attract and retain the most qualified individuals in the
oil and gas industry by being competitive with compensation paid
to persons having similar responsibilities and duties in other
companies in the same and closely related industries;
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align the interests of the individual with those of our
stockholders and long-term value creation;
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be directly tied to the attainment of our annual performance
targets and reflect individual contribution thereto;
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pay for performance, whereby an individuals total
compensation is heavily influenced by the companys and
individuals performance; and
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reflect the unique qualifications, skills, experience and
responsibilities of each individual.
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Setting
Executive Officer Compensation
From our inception in 2007 through the completion of our IPO,
the base compensation of our Named Executive Officers remained
relatively unchanged and was based largely on each executive
officers base compensation level at prior positions,
although some adjustments were made as we deemed necessary to
maintain internal equity with respect to the compensation of all
executive officers.
For 2010, Mr. Nusz, our Chief Executive Officer, and
Mr. Reid, our Chief Operating Officer, together reviewed
our Named Executive Officers current compensation and made
a recommendation to our Board of Directors on overall
compensation structure and individual compensation levels for
each executive officer, including themselves, to be effective
contemporaneous with the completion of our IPO. Their
recommendation was made based on the experience of Mr. Nusz
and Mr. Reid in managing executives and establishing
compensation, as well as the use of a peer group comparison. See
Benchmarking and Peer Group below. Our
Board of Directors approved their recommendations, which became
effective upon the consummation of our IPO.
In connection with our IPO, our Board of Directors formed a
Compensation Committee to make all compensation decisions
related to our Named Executive Officers for periods following
the completion of our IPO. As discussed in greater detail
throughout this CD&A, our Compensation Committee met
numerous times during 2010 to review and discuss executive
compensation matters with respect to fiscal years 2010 and 2011.
Our Compensation Committee generally intends to target the
50th percentile for base salary and to provide our
executive officers with an opportunity to earn up to the
75th percentile for total compensation, subject to target
performance metrics being satisfied. Although our Compensation
Committee reviews survey information as a frame of reference,
ultimately the compensation decisions are qualitative, not
quantitative, and take into consideration in material part
factors such as the age of the data in the survey, the
particular officers contribution to our financial
performance and condition, as well as such officers
qualifications, skills, experience and responsibilities. Our
Compensation Committee considers outside factors as well, such
as industry shortages of qualified employees for such positions,
recent experience in the marketplace, and the elapsed time
between the surveys used and when compensation decisions are
made. In light of these qualitative and other considerations,
the base salary of a particular officer may be greater or less
than the 50th percentile and total compensation may be
greater or less than the 75th percentile and, in any event,
the Compensation Committee anticipates that it may take several
years for the compensation of our executive officers to build to
these targeted levels. The Compensation Committee reviews our
executive compensation program on an annual basis. During the
last quarter of 2010, our Compensation Committee reviewed
preliminary recommendations regarding changes to 2011 executive
compensation and met with management and other members of our
Board of Directors to discuss these recommendations. In December
2010, the Compensation Committee and
9
the Board of Directors approved certain changes to our executive
compensation program for 2011 that are described in the
following sections of this CD&A.
Benchmarking and Peer Group. Prior to 2010,
neither our Board of Directors nor our management used peer
group analysis or benchmarking for executive compensation
purposes.
For 2010, our Chief Executive Officer, Chief Operating Officer,
and Senior Vice President Finance met with representatives from
Longnecker & Associates, our compensation consultant,
to select a group of companies that they consider a peer
group for executive compensation analysis purposes. This
peer group was then used for purposes of developing the
recommendations presented to our Board of Directors for
compensation packages that became applicable to our Named
Executive Officers upon the completion of our IPO. The oil and
gas companies that comprise this peer group were selected
primarily because they (i) have similar annual revenue,
assets and market capitalization as us and (ii) potentially
compete with us for executive talent. Longnecker &
Associates compiled compensation data for the peer group from a
variety of sources, including proxy statements and other
publicly filed documents. Longnecker & Associates also
provided published survey compensation data from multiple
sources. This compensation data was then used to compare the
compensation of our Named Executive Officers to comparably
titled persons at companies within our peer group and in the
survey data, generally targeting base salaries for our Named
Executive Officers at the 50th percentile of our peer
group, and targeting annual cash and long-term incentives so
that our Named Executive Officers will have the opportunity to
realize total compensation up to the 75th percentile of our
peer group based on both company and individual performance.
The 2010 peer group for compensation purposes consists of:
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Abraxas Petroleum Corporation
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GeoMet, Inc.
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Approach Resources, Inc.
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GMX Resources, Inc.
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Arena Resources, Inc.
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Goodrich Petroleum Corporation
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Brigham Exploration Company
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Gulfport Energy Corporation
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Carrizo Oil and Gas, Inc.
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Panhandle Oil & Gas, Inc.
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Crimson Exploration, Inc.
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RAM Energy Resources, Inc.
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Delta Petroleum Corporation
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Rex Energy Corporation
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Double Eagle Petroleum Company
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At its August 2010 meeting, our Compensation Committee engaged
Longnecker & Associates to review the compensation for
our executive officers and non-employee Directors.
Longnecker & Associates, as well as members of our
management team, also worked with the Compensation Committee to
develop a peer group for purposes of determining 2011 executive
compensation. In light of the difficulty in establishing an
appropriate comparison group for market capitalization prior to
our IPO and our rapid growth and appreciation following our IPO,
it was determined that certain changes to the 2010 peer group
were necessary. The 2011 peer group for compensation purposes
consists of:
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Brigham Exploration Company
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Gulfport Energy Corp.
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Bill Barrett Corp.
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Resolute Energy Corp.
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Berry Petroleum Company
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Rex Energy Corporation
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Carrizo Oil and Gas, Inc.
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Rosetta Resources Inc.
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Comstock Resources Inc.
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Swift Energy Company
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Goodrich Petroleum Corporation
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Venoco Inc.
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For subsequent years, our Compensation Committee will review and
re-determine on an annual basis the composition of our peer
group so that the peer group will continue to consist of oil and
gas exploration and production companies (i) with annual
revenue, assets and market capitalization similar to us and
(ii) which potentially compete with us for executive talent.
10
Role of the Compensation Consultant. Prior to
2010, neither management nor our Board of Directors engaged a
compensation consultant. In connection with our IPO, we
retained, independent of our Board of Directors,
Longnecker & Associates as an independent compensation
consultant to assist us in developing the non-employee director
and executive compensation programs that were implemented
contemporaneously with the completion of our IPO.
Representatives from Longnecker & Associates met with
our Board of Directors and advised the Board of Directors with
regard to general trends in director and executive compensation
matters, including (i) competitive benchmarking;
(ii) incentive plan design; (iii) peer group
selection; and (iv) other matters relating to executive
compensation. In addition, Longnecker & Associates
provided our management with survey compensation data regarding
our 2010 peer group.
The Compensation Committee was formed in connection with our
IPO, and its charter grants the committee the sole authority to
retain, at our expense, outside consultants or experts to assist
it in its duties. In August 2010, the Compensation Committee
also engaged Longnecker & Associates to advise it with
respect to executive compensation matters, including development
of the annual compensation peer group and an annual review and
evaluation of our executive and director compensation packages
generally, based on, among other things, survey data and
information regarding general trends.
Elements
of Our Compensation and Why We Pay Each Element
From our inception through the completion of our IPO, our
compensation program consisted of base salary and an annual
performance-based cash bonus only. In addition, our Named
Executive Officers and certain other employees had the
opportunity to invest their own funds in Oasis Petroleum
Management LLC, which owned an interest in our predecessor,
Oasis Petroleum LLC. See Corporate Reorganization.
Since the consummation of our IPO, the compensation program for
our Named Executive Officers has been comprised of the following
four elements:
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base salary;
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annual performance-based cash incentive awards;
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long-term equity-based compensation; and
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other employee benefits.
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Base Salary. Base salary is the fixed annual
compensation we pay to each Named Executive Officer for
performing specific job responsibilities. It represents the
minimum income a Named Executive Officer may receive in any
year. We pay each Named Executive Officer a base salary in order
to:
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recognize each executive officers unique value and
historical contributions to our success in light of salary norms
in the industry and the general marketplace;
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remain competitive for executive talent within our industry;
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provide executives with sufficient, regularly-paid
income; and
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reflect position and level of responsibility.
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Contemporaneous with the consummation of our IPO in June 2010,
we implemented salary increases for our Named Executive Officers
in order to begin to bring their base salaries in line with
similarly titled executives at other companies within our peer
group. For Named Executive Officers other than Messrs. Nusz
and Reid, the salary increases were fairly small and ranged up
to 11.4% of their fiscal 2009 salary. Specifically,
Mr. Maces base salary was increased to $195,000, and
Mr. Smithwicks base salary was increased to $210,000.
Mr. Beers salary was increased for 2010 from $200,000
to $225,000, but his total fixed cash compensation remained the
same as in 2009 because prior to 2010 he received a separate
$25,000 per year living allowance. Because of the increased
responsibility of Messrs. Nusz and Reid with respect to our
11
overall business and their greater experience with our company,
their base salaries were increased, upon the effectiveness of
our IPO, as set forth in the following table:
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Percentage of 50th
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50th Percentile of
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Percentile of 2010
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2009 Base Salary
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2010 Base Salary(1)
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2010 Peer Group
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Peer Group
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Thomas B. Nusz
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$
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220,000
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$
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325,000
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$
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370,356
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87.8
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%
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Taylor L. Reid
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$
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210,000
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$
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275,000
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$
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263,562
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104.3
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(1) |
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2010 base salaries became effective upon consummation of our IPO. |
We believe the 2010 salary increases for our Named Executive
Officers were necessary in order for us to maintain a
competitive compensation program following the effectiveness of
our IPO.
In setting annual base salary amounts, our Compensation
Committee intends to generally target by position the
50th percentile of our peer group. The Compensation
Committee reviewed data provided by Longnecker &
Associates with respect to our 2011 compensation peer group and,
at its December 2010 meeting, approved certain changes to the
base salaries of our Named Executive Officers in order to bring
the base salaries of certain of our Named Executive Officers in
line with this targeted level of salary. Specifically,
Mr. Maces base salary was increased to $200,000 and
Mr. Smithwicks base salary was increased to $220,000,
both increases effective March 1, 2011. The base salaries
of the other Named Executive Officers were not changed.
Annual Performance-Based Cash Incentive
Awards. We have historically utilized, and expect
to continue to utilize, performance-based annual cash incentive
awards to reward achievement of specified performance goals for
the company as a whole with a time horizon of one year or less.
We include an annual performance-based cash incentive award as
part of our compensation program because we believe this element
of compensation helps to:
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motivate management to achieve key shorter-term corporate
objectives, and
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align executives interests with our stockholders
interests.
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Each year since our inception, our Board of Directors has
approved annual performance incentive program targets based on
metrics that it believes are relevant for a company of our size
and growth expectations. These metrics were derived each year
from our annual capital budgeting process based upon certain
assumptions made by our management. The weight given to these
targets and final bonus payments were discretionary during this
period.
Effective upon the completion of our IPO, we adopted the 2010
Annual Incentive Compensation Plan (the Incentive
Plan) to govern our annual cash performance incentive
program for 2010 and later years. For 2010, the annual
performance incentive metrics included production growth,
reserve growth and efficiency, cost structure (operating costs
and general and administrative expenses), Adjusted EBITDA, and
specified milestones relating to our short- and long-term
strategic objectives, including the successful execution of our
business plan, securing capital, development and management of
our project inventory and organizational improvements. Certain
broad categories such as reserve growth and
efficiency and cost structure also included
specific, quantifiable metrics to be consistent with the
remaining categories. We set threshold, target and maximum
levels for the performance metrics to serve as a guideline for
determining the actual bonus amounts earned by the Named
Executive Officers for 2010. In general, for our Named Executive
Officers, our Board of Directors attempted to set objectives for
2010 such that there was approximately a 90% probability of
achieving the threshold performance metrics, a 60% probability
of achieving the target performance metrics and a 20%
probability of achieving the maximum performance metrics. In
setting the performance incentive metrics for 2010, our Board of
Directors conducted a historical analysis of the extent to which
targets were met in prior years.
Our performance goals serve more as guidelines for the
Compensation Committee to utilize throughout the year to ensure
that our goals and targets will ultimately reflect our true
performance. The performance goals are only one factor utilized
by the Compensation Committee, alongside a number of other
subjective
12
features, such as extenuating market circumstances, individual
performance and safety performance, when determining actual
amounts of awards. Our Compensation Committee retains the
ability to apply discretion to awards based on extenuating
market circumstances or individual performance and to modify
amounts based on safety performance.
If we achieve the target performance metric, the cash incentive
awards are expected to be paid at target levels. In order to
create additional incentive for exceptional company
performance-based on the metrics described above and the
discretion of our Compensation Committee, awards can be up to a
maximum percentage of the base salary designated for each Named
Executive Officer but it is not expected that payment at this
level would occur in most years. For 2010, target awards to our
two top executive officers, Mr. Nusz and Mr. Reid,
were set at 80% and 60%, respectively, of 2010 base salary and
could range from 40% to 160% of 2010 base salary, in the case of
Mr. Nusz, and from 30% to 120% of 2010 base salary, in the
case of Mr. Reid, depending on performance relative to
specified performance metrics and subject to the discretion of
our Compensation Committee. Target awards for the remaining
Named Executive Officers were set at 50% of 2010 base salary and
could range between 25% and 100% of 2010 base salary. The actual
results we attained for 2010 exceeded our targeted performance
goals (for example, we exceeded targeted annual average daily
production volumes by twenty percent). As a result of the
performance attained in 2010, each Named Executive Officer
received in excess of the target bonus amount, but less than the
maximum.
Our Compensation Committee reviewed our performance for 2010,
along with the other subjective factors discussed above, with
members of management and our full Board of Directors to
determine the incentive awards to be paid to our Named Executive
Officers with respect to 2010. The 2010 incentive awards earned
by our Named Executive Officers are as follows:
(i) Mr. Nusz $442,000,
(ii) Mr. Reid $280,500,
(iii) Mr. Mace $165,750,
(iv) Mr. Beers $191,250, and
(v) Mr. Smithwick $178,500. On
March 15, 2011, one-half of the incentive awards will be
paid in cash, and the remaining one-half of the incentive awards
will be paid in form of restricted stock awards, which the
Compensation Committee believes will further incentivize our
executive officers to achieve exceptional performance that
increases the value of our stock and continue to align
managements interests with those of our stockholders. The
number of shares of restricted stock issued in settlement of the
2010 bonus awards for each Named Executive Officer is equal to
approximately 50% of the total dollar value of the Named
Executive Officers bonus award (as set forth above),
multiplied by 1.3, with the resulting product then divided by
the per share closing price of our common stock on
December 15, 2010, which was $25.90/share. The restricted
stock awards vest in two equal annual installments on the first
and second annual anniversaries of the grant date, such that the
awards will be fully vested on March 15, 2013. See
Long-Term Equity-Based Incentives for
further detail regarding these grants of restricted stock.
In February 2010, each of our Named Executive Officers also
received a special cash performance bonus as follows:
(i) Mr. Beers -$86,726,
(ii) Mr. Mace $833,
(iii) Mr. Nusz - $460,413,
(iv) Mr. Reid $230,453 and
(v) Mr. Smithwick $20,224. These special
bonuses were paid at the sole discretion of the board of
directors of Oasis Petroleum LLC, prior to the IPO. While our
Compensation Committee may make additional special bonuses in
the future, there is currently no plan for any other such
bonuses for future periods, and we do not anticipate that
special bonuses will be an element of our compensation program
going forward.
With respect to annual incentive awards for 2011, the
Compensation Committee has adopted substantially the same
performance metrics as those applicable to the 2010 incentive
awards, except that certain components of 2011 performance will
also be measured on a per share basis. The threshold, target,
and maximum percentages of base salary that each Named Executive
Officer is eligible to earn with respect to his annual incentive
award have not changed for 2011. On a going forward basis, our
Compensation Committee will determine an appropriate method of
evaluating our companys achievement relative to various
performance metrics and will determine if the current categories
and associated metrics should be adjusted for future fiscal
years.
Long-Term Equity-Based Incentives. Prior to
the consummation of our IPO, our compensation structure did not
include equity awards or other long-term incentive compensation,
other than the opportunity of Named
13
Executive Officers and other employees to invest their own funds
in Oasis Petroleum Management LLC, which owned an interest in
our predecessor, Oasis Petroleum LLC.
We believe a formal long-term equity incentive program is
important and more consistent with the compensation programs of
the companies in our peer group. As a result, effective upon the
completion of our IPO, we adopted the Long-Term Incentive Plan,
or LTIP, which permits the grant of our stock, options,
restricted stock, restricted stock units, phantom stock, stock
appreciation rights and other awards, any of which may be
designated as performance awards or be made subject to other
conditions, to our Named Executive Officers and other eligible
employees in 2010 and later years. We believe that long-term
equity-based incentive compensation is an important component of
our overall compensation program because it:
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balances short and long-term objectives;
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aligns our executives interests with the long-term
interests of our stockholders;
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rewards long-term performance relative to industry peers;
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makes our compensation program competitive from a total
remuneration standpoint;
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encourages executive retention; and
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gives executives the opportunity to share in our long-term value
creation.
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Our Compensation Committee has the authority under the LTIP to
award incentive equity compensation to our executive officers in
such amounts and on such terms as the committee determines
appropriate in its sole discretion. To date, our long-term
equity-based incentive compensation has consisted of restricted
stock awards; however, our Compensation Committee may determine
in the future that different
and/or
additional award types are appropriate.
In connection with our IPO, our Board of Directors approved
initial awards of an aggregate of 162,750 shares of
restricted stock to executive officers and key employees,
including the Named Executive Officers, which were granted
effective upon the completion of our IPO. We believe this type
of award aligns our executive officers with the interests of our
stockholders on a long-term basis and has retentive attributes.
The number of shares in each individual grant represented an
aggregate value at grant date equal to approximately 100% of
each individuals post-IPO annualized base salary. These
initial restricted stock awards vest over three years with the
initial one-third tranche vesting in January 2011, provided the
award recipient remains continuously employed by us through each
vesting date. The vesting of these awards will accelerate in
full if the award recipients employment is terminated due
to either death or disability, and the awards are subject to the
accelerated vesting provisions contained in any existing
employment agreement or in our Executive Change in Control and
Severance Benefit Plan, to the extent an award recipient
participates in the plan.
At its December 2010 meeting, our Board of Directors approved
restricted stock awards to our Named Executive Officers to align
our executive officers with the interests of shareholders and to
retain our executives. The awards will vest ratably over a
three-year period provided the award recipient remains
continuously employed through the vesting dates. These awards
are subject to the same accelerated vesting provisions described
above for the initial grants. At the December 2010 meeting, our
Board of Directors approved restricted stock awards for our
Named Executive Officers in the following amounts:
(i) Mr. Nusz 15,000 restricted shares,
(ii) Mr. Reid 10,600 restricted shares,
(iii) Mr. Mace 9,350 restricted shares,
(iv) Mr. Beers 6,500 restricted shares,
and (v) Mr. Smithwick 6,050 restricted
shares. The awards to Mr. Nusz and Mr. Reid are
intended to represent a number of shares with an aggregate value
approximately equal to 120% and 100%, respectively, of the
officers 2010 base salaries. Mr. Maces award
was set at approximately 125% of his 2010 base salary. Awards
for the remaining Named Executive Officers were set at
approximately 75% of their respective 2010 base salaries. In
addition, as described in greater detail above under
Elements of Our Compensation and Why We Pay Each
Element Annual Performance-Based Cash Incentive
Awards, our Named Executive Officers were paid a portion
of their 2010 annual incentive bonus in the form of restricted
stock awards. The number of shares of restricted stock granted
to each Named Executive Officers in connection with the 2010
annual incentive awards is as follows:
(i) Mr. Nusz 11,050 restricted
14
shares, (ii) Mr. Reid 7,000 restricted
shares, (iii) Mr. Mace 4,150 restricted
shares, (iv) Mr. Beers 4,750 restricted
shares, and (v) Mr. Smithwick 4,450
restricted shares. Both grants of restricted stock will be
awarded on March 15, 2011.
With respect to annual restricted stock grants to be awarded in
future years, the Compensation Committee has approved changes to
the aggregate value of the awards to be granted to the Named
Executive Officers. Specifically, future annual awards to
Mr. Nusz and Mr. Reid are intended to represent a
number of shares with an aggregate value approximately equal to
200% and 150%, respectively, of the officers base
salaries. Awards for the remaining Named Executive Officers were
set at approximately 100% of their respective base salaries. The
Compensation Committee determined that these increases in the
aggregate values for future annual restricted stock awards were
necessary for our total compensation package to remain
competitive with those of our 2011 peer group such that our
Named Executive Officers will have the opportunity to achieve up
to the 75th percentile in total compensation as targeted by
the Compensation Committee, although the Compensation Committee
anticipates that it may take several years for the compensation
of our executive officers to build to these targeted levels.
Employee Benefits. In addition to the elements
of compensation previously discussed in this section, the Named
Executive Officers are eligible for the same health, welfare and
other employee benefits as are available to all our employees
generally, which include medical and dental insurance, short and
long-term disability insurance, a health club subsidy and a
401(k) plan with a
dollar-for-dollar
match on the first 5% of eligible employee contributions. We do
not sponsor any defined benefit pension plan or nonqualified
deferred compensation arrangements at this time.
The general benefits offered to all employees (and thus to the
Named Executive Officers) are reviewed by our Compensation
Committee each year. Currently, we do not provide our Named
Executive Officers with any special benefits or perquisites that
are not available to all other employees. In the future,
benefits offered only to Named Executive Officers will be
reviewed by the Compensation Committee in conjunction with its
annual review of executive officer compensation.
How
Elements of Our Compensation Program are Related to Each
Other
We view the various components of compensation as related but
distinct and emphasize pay for performance with a
significant portion of total compensation reflecting a risk
aspect tied to long- and short-term financial and strategic
goals. Our compensation philosophy is to foster entrepreneurship
at all levels of the company by awarding long-term equity-based
incentives, currently in the form of restricted stock grants, as
a significant component of executive compensation. We determine
the appropriate level for each compensation component based in
part, but not exclusively, on our view of internal equity and
consistency, and other considerations we deem relevant, such as
rewarding extraordinary performance. We have not adopted any
formal or informal policies or guidelines for allocating
compensation between long-term and currently paid out
compensation, between cash and non-cash compensation, or among
different forms of non-cash compensation. However, we believe
that our compensation packages are representative of an
appropriate mix of compensation elements, and we anticipate that
we will continue to utilize a similar, though not identical, mix
of compensation in future years. The approximate allocation of
compensation elements in the post-IPO 2010 compensation packages
for each Named Executive Officer is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Named
|
|
|
Thomas B. Nusz
|
|
Taylor L. Reid
|
|
Executive Officers
|
|
Base Salary
|
|
|
27
|
%
|
|
|
32
|
%
|
|
|
35
|
%
|
Annual Cash Incentive Bonus
|
|
|
18
|
|
|
|
16
|
|
|
|
15
|
|
Restricted Stock Awards
|
|
|
55
|
|
|
|
52
|
|
|
|
50
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
Accounting
and Tax Considerations
Under Section 162(m) of the Internal Revenue Code of 1986,
as amended, or the Code, a limitation was placed on tax
deductions of any publicly-held corporation for individual
compensation to certain executives of
15
such corporation exceeding $1,000,000 in any taxable year,
unless the compensation is performance-based. An exception
applies to this deductibility limitation for a limited period of
time in the case of companies that become publicly-traded.
We reserve the right to use our judgment to authorize
compensation payments that do not comply with the exemptions in
Section 162(m) when we believe that such payments are
appropriate and in the best interest of the stockholders, after
taking into consideration changing business conditions or the
executives individual performance
and/or
changes in specific job duties and responsibilities. During
2010, none of our Named Executive Officers received salary,
bonus, vesting of restricted stock or other compensation that,
in the aggregate, exceeded the tax deductible limitations under
Section 162(m).
If an executive is entitled to nonqualified deferred
compensation benefits that are subject to Section 409A of
the Code, and such compensation does not comply with
Section 409A, then the benefits are taxable in the first
year they are not subject to a substantial risk of forfeiture
and are subject to certain additional adverse tax consequences.
We intend to design such arrangements to be exempt from, or to
comply with, Section 409A.
All equity awards to our employees, including our Named
Executive Officers, and to our Directors will be granted and
reflected in our consolidated financial statements, based upon
the applicable accounting guidance, at fair market value on the
grant date in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC), Topic 718,
Compensation Stock Compensation.
Employment
Agreements
On June 18, 2010, we entered into employment agreements
with Messrs. Nusz and Reid. These employment agreements are
designed to ensure an individual understanding of how the
employment relationship may be extended or terminated, the
compensation and benefits that we provide during the term of
employment and the obligations each party has in the event of
termination of the officers employment. We have not
entered into employment agreements with any of our other
employees and we expect the remainder of our employees to remain
at will. In consultation with our compensation
consultant, Longnecker & Associates, we determined
that, due to the historical roles they have played in the
success and growth of the company, Messrs. Nusz and Reid
are critical to the ongoing stability and development of the
business and, therefore, entering into employment agreements
with these individuals was advisable.
The employment agreements provide for an initial three-year term
that will be automatically renewed for successive one-year
periods unless we give notice to the executive of non-renewal at
least 60 days prior to the last day of the then-current
term. The employment agreements provide that Messrs. Nusz
and Reid initially received annual base salaries of $325,000 and
$275,000, respectively, which may be increased by our Board of
Directors in its discretion. The employment agreements also
provide that Messrs. Nusz and Reid are eligible to receive
annual performance-based bonuses each year during the employment
term. The target amount of each annual bonus is 80% for
Mr. Nusz and 60% for Mr. Reid of the executives
base salary for the year, and greater or lesser amounts may be
paid depending on the performance actually achieved. See
Elements of Our Compensation and Why We Pay
Each Element Annual Performance-based Cash Incentive
Awards. The employment agreements also provide
Messrs. Nusz and Reid with the opportunity to participate
in the employee benefit arrangements offered to similarly
situated executives and provide that they may periodically
receive stock grants pursuant to our long-term incentive
compensation plan.
The employment agreements provide for severance and change in
control benefits to be paid to Messrs. Nusz and Reid under
certain circumstances. The severance benefits are provided to
reflect the fact that it may be difficult for executive officers
to find comparable employment within a short period of time if
they are involuntarily terminated. Change in control benefits
are provided in order that the executives may objectively assess
and pursue aggressively our interests and the interests of our
stockholders with respect to a contemplated change in control,
free from personal, financial and employment considerations. The
employment agreements also impose certain non-compete,
non-disclosure and similar obligations on the executives.
16
The severance and change in control benefits and the
post-termination obligations imposed on the executives are
described in greater detail below. See
Executive Compensation Potential
Payments Upon Termination and Change in Control.
Severance
and Change in Control Arrangements
Prior to the consummation of our IPO, Messrs. Nusz and Reid
were parties to an Ancillary Agreement, dated as of
March 5, 2007, pursuant to which they were entitled to
receive certain severance benefits upon an involuntary
termination without cause or for good reason. These severance
benefits are described in detail in Amendment No. 5 to our
Registration Statement on
Form S-1,
filed with the Securities and Exchange Commission on
June 3, 2010, in the section entitled
Executive Compensation Potential
Payments Upon Termination and Change in Control
Ancillary Agreement. The Ancillary Agreement terminated
upon the consummation of our IPO and is of no further force or
effect.
Other than the Ancillary Agreement entered into with
Messrs. Nusz and Reid, we did not have any agreements in
place providing severance or change in control benefits to our
executive officers and key employees prior to the completion of
our IPO. As described above, contemporaneous with the closing of
our IPO, the employment agreements provide certain benefits and
compensation to Messrs. Nusz and Reid in the event of
certain terminations from employment, including in connection
with a change in control. These benefits are described in
greater detail above and in the section below entitled
Executive Compensation Potential
Payments Upon Termination and Change in Control.
For executive officers and other key employees other than
Messrs. Nusz and Reid, our Board of Directors adopted an
Executive Change in Control and Severance Benefit Plan,
effective as of the consummation of our IPO, to provide
severance and change in control benefits to participants. We
believe that adoption of the Executive Change in Control and
Severance Benefit Plan was appropriate because we believe that
the interests of our stockholders are best served if we provide
separation benefits to eliminate, or at least reduce, the
reluctance of executive officers and other key employees to
pursue potential corporate transactions that may be in the best
interests of our stockholders, but that may have resulting
adverse consequences to the employment situations of our
executive officers and other key employees. Further, this plan
ensures an understanding of what benefits are to be paid to
participants in the event of termination of their employment in
certain specified circumstances
and/or upon
the occurrence of a change in control. The payments and benefits
provided under the Executive Change in Control and Severance
Benefit Plan are subject to compliance with certain
post-employment obligations regarding the use of confidential
and/or
proprietary information and limiting the ability of participants
to compete with us or solicit our employees or customers. The
payments and benefits offered under the Executive Change in
Control and Severance Benefit Plan are described in greater
detail under Executive
Compensation Potential Payments Upon Termination and
Change in Control.
Gross-Ups. Under
the employment agreements with Messrs. Nusz and Reid, and
under our Executive Change in Control and Severance Benefit Plan
in which the other Named Executive Officers participate, if
benefits to which the Named Executive Officers become entitled
in connection with a change in control are considered
excess parachute payments under Section 280G of
the Code, then each Named Executive Officer is entitled to an
additional
gross-up
payment from us, unless the aggregate amount of the payments due
to the executive in connection with a change in control may be
reduced by 10% or less and fall within the safe harbor amount
for Section 280G purposes such that no excise taxes are
imposed, in which event, the payments to an executive will be so
reduced. If a reduction of more than 10% would be needed in
order for the payments to be within the Section 280G safe
harbor, then no reduction in the payment amounts will be made
and the executive will receive a
gross-up
payment in an amount such that, after payment by the Named
Executive Officer of all taxes including any excise tax imposed
upon the
gross-up
payment, the Named Executive Officer would retain an amount
equal to the excise tax imposed upon the payment.
Stock
Ownership Guidelines
The Board of Directors adopted Stock Ownership Guidelines in
November 2010 that established minimum ownership levels for
Named Executive Officers and a period during which Named
Executive
17
Officers could accumulate if they were not at minimum levels
yet. The Stock Ownership Guidelines are advisory in nature and
designate the following ownership levels: (i) Vice
Presidents one time annual base salary,
(ii) Senior Vice Presidents and above two times
annual base salary, and (iii) Chairman, President and Chief
Executive Officer five times annual base salary. All
of our Named Executive Officers currently own stock in excess of
the minimum ownership levels. For our non-employee Directors,
the Stock Ownership Guidelines designate a minimum ownership
level of three times the annual cash retainer fee.
Securities
Trading Policy
Our securities trading policy provides that executive officers,
including the Named Executive Officers, and our Directors, may
not, among other things, purchase or sell puts or calls to sell
or buy our stock, engage in short sales with respect to our
stock, buy our securities on margin, or otherwise hedge their
ownership of our stock. The purchase or sale of stock by our
executive officers and Directors may only be made during certain
windows of time and under the other conditions contained in our
policy.
Executive
Compensation
Summary
Compensation Table
The following table shows information concerning the annual
compensation for services provided to us by our Named Executive
Officers during the fiscal year ended December 31, 2009 and
the fiscal year ended December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Stock
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)(1)
|
|
($)(2)
|
|
Awards($)(3)
|
|
($)(4)
|
|
($)
|
|
Thomas B. Nusz
|
|
|
2010
|
|
|
$
|
276,875
|
|
|
$
|
681,413
|
|
|
$
|
589,124
|
|
|
$
|
1,248
|
|
|
$
|
1,548,660
|
|
Chairman, President and
|
|
|
2009
|
|
|
$
|
220,000
|
|
|
$
|
543,167
|
|
|
|
|
|
|
$
|
2,589
|
|
|
$
|
765,756
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taylor L. Reid
|
|
|
2010
|
|
|
$
|
245,208
|
|
|
$
|
370,703
|
|
|
$
|
436,989
|
|
|
$
|
1,948
|
|
|
$
|
1,054,848
|
|
Executive Vice President
|
|
|
2009
|
|
|
$
|
210,000
|
|
|
$
|
329,000
|
|
|
|
|
|
|
$
|
1,907
|
|
|
$
|
540,907
|
|
and Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roy W. Mace
|
|
|
2010
|
|
|
$
|
185,833
|
|
|
$
|
83,708
|
|
|
$
|
289,304
|
|
|
$
|
650
|
|
|
$
|
559,495
|
|
Senior Vice President,
|
|
|
2009
|
|
|
$
|
158,750
|
|
|
$
|
99,167
|
|
|
|
|
|
|
$
|
1,298
|
|
|
$
|
259,215
|
|
Chief Accounting Officer and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kent O. Beers
|
|
|
2010
|
|
|
$
|
225,000
|
|
|
$
|
182,351
|
|
|
$
|
334,175
|
|
|
|
|
|
|
$
|
741,526
|
|
Senior Vice President Land
|
|
|
2009
|
|
|
$
|
200,000
|
|
|
$
|
193,000
|
|
|
|
|
|
|
$
|
25,632
|
|
|
$
|
418,632
|
|
Walter S. Smithwick
|
|
|
2010
|
|
|
$
|
200,833
|
|
|
$
|
109,474
|
|
|
$
|
311,739
|
|
|
|
|
|
|
$
|
622,046
|
|
Senior Vice President
|
|
|
2009
|
|
|
$
|
190,000
|
|
|
$
|
127,000
|
|
|
|
|
|
|
|
|
|
|
$
|
317,000
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects the dollar value of base salary earned by each Named
Executive Officer during fiscal 2010. Contemporaneously with the
completion of our IPO, the annual base salaries of the Named
Executive Officers were increased; however, Mr. Beers
total fixed cash compensation remained the same because, prior
to 2010, he was receiving a separate $25,000 annual living
allowance. |
|
(2) |
|
Reflects amounts paid for services provided in fiscal year 2010
as annual performance-based cash bonus awards pursuant to the
Incentive Plan. As previously discussed in the CD&A, a
portion of the annual performance-based bonus awards under the
Incentive Plan for 2010 were paid in the form of restricted
stock awards, which are reported in the Stock Awards
column of the Summary Compensation Table. Only the portion of
the 2010 annual performance-based bonus under the Incentive Plan
that was paid in cash is reflected in this column. Also reflects
cash amounts of $460,413, $230,453, $833, $86,726, and $20,224
paid to Messrs. Nusz, Reid, Mace, Beers and Smithwick,
respectively, as one-time special performance bonuses that were
made in the sole discretion of the board of directors of Oasis
Petroleum LLC, prior to the IPO. |
18
|
|
|
(3) |
|
The amounts reported in the Stock Awards column
reflect the aggregate grant date fair value of restricted stock
awards granted under our LTIP for fiscal year 2010, computed in
accordance with Financial Accounting Standards Board
(FASB) Accounting Standard Codification
(ASC) Topic 718. This includes (i) the
restricted stock awards granted in connection with the
completion of our IPO, and (ii) the restricted stock awards
granted in settlement of one-half of the 2010 annual
performance-based bonuses under the Incentive Plan (for purposes
of reporting this restricted stock award in the Stock
Awards column, December 15, 2010 (the date of the
Committee approval) has been used as the grant date of the
awards, even though the awards will not be issued until
March 15, 2011. See Note 10 to our consolidated
financial statements on
Form 10-K
for fiscal 2010 for additional detail regarding assumptions
underlying the value of these equity awards. |
|
(4) |
|
The following items are reported in the All Other
Compensation column for fiscal 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Health Club
|
|
Parking
|
|
Total
|
|
Thomas B. Nusz
|
|
|
|
|
|
$
|
1,248
|
|
|
$
|
1,248
|
|
Taylor L. Reid
|
|
$
|
700
|
|
|
$
|
1,248
|
|
|
$
|
1,948
|
|
Roy W. Mace
|
|
$
|
650
|
|
|
|
|
|
|
$
|
650
|
|
Kent O. Beers
|
|
|
|
|
|
|
|
|
|
$
|
|
|
Walter S. Smithwick
|
|
|
|
|
|
|
|
|
|
$
|
|
|
Grants
of Plan-Based Awards
The following table sets forth information concerning grants of
plan-based awards to each of the Named Executive Officers under
the LTIP during fiscal year 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
Stock Awards:
|
|
|
|
|
|
|
Number of
|
|
Grant Date
|
|
|
|
|
Shares of
|
|
Fair Value of
|
|
|
Grant Date
|
|
Stock or Units
|
|
Stock Awards
|
Name
|
|
(3)
|
|
(#)(1)
|
|
($)(2)
|
|
Thomas B. Nusz
|
|
6/22/2010
|
|
|
19,200
|
|
|
$
|
301,824
|
|
|
|
12/15/2010
|
|
|
11,050
|
|
|
$
|
287,300
|
|
Taylor L. Reid
|
|
6/22/2010
|
|
|
16,200
|
|
|
$
|
254,664
|
|
|
|
12/15/2010
|
|
|
7,000
|
|
|
$
|
182,325
|
|
Roy W. Mace
|
|
6/22/2010
|
|
|
11,500
|
|
|
$
|
181,566
|
|
|
|
12/15/2010
|
|
|
4,150
|
|
|
$
|
107,738
|
|
Kent O. Beers
|
|
6/22/2010
|
|
|
13,350
|
|
|
$
|
209,862
|
|
|
|
12/15/2010
|
|
|
4,750
|
|
|
$
|
124,313
|
|
Walter S. Smithwick
|
|
6/22/2010
|
|
|
12,450
|
|
|
$
|
195,714
|
|
|
|
12/15/2010
|
|
|
4,450
|
|
|
$
|
116,025
|
|
|
|
|
(1) |
|
Reflects the grant of restricted stock awards under the LTIP
made to the Named Executive Officers (a) in connection with
the completion of our IPO and (b) in settlement of one-half
of the 2010 annual performance-based bonuses under the Incentive
Plan. |
|
(2) |
|
Reflects the grant date fair value of the restricted stock
awards granted under the LTIP during fiscal 2010, computed in
accordance with FASB ASC Topic 718. With respect to the
restricted stock awarded in settlement of one-half of the 2010
annual performance-based bonuses under the Incentive Plan,
December 15, 2010 (the date of the Committee approval) has
been used as the grant date of the awards, even though the
awards will not be issued until March 15, 2011. |
|
(3) |
|
The awards reported with a grant date of December 15, 2010
were approved by the Compensation Committee on December 15,
2010 in settlement of a portion of each Named Executive
Officers annual incentive bonus for 2010. These restricted
stock awards will not be issued until March 15, 2011. |
19
Narrative
Discussion of Summary Compensation Table and Grants of
Plan-Based Awards Table
Our executive compensation policies and practices, pursuant to
which the compensation set forth in the Summary Compensation
Table and Grants of Plan-Based Awards Table was paid or awarded,
are described above in the CD&A.
Employment
Agreements
During fiscal 2010, we had employment agreements with
Messrs. Nusz and Reid, which became effective as of
June 18, 2010. The employment agreements provide that
Messrs. Nusz and Reid will each receive an annual base
salary, which may be increased by our Board of Directors in its
discretion. The employment agreements also provide that
Messrs. Nusz and Reid are eligible to receive annual
performance-based bonuses each year during the employment term.
The target amount of each annual bonus is 80% for Mr. Nusz
and 60% for Mr. Reid of the executives base salary
for the year, and greater or lesser amounts may be paid
depending on the performance actually achieved. The employment
agreements also provide Messrs. Nusz and Reid with the
opportunity to participate in the employee benefit arrangements
offered to similarly situated executives and provide that they
may periodically receive grants pursuant to our long-term
incentive compensation plan. More detail regarding the
employment agreements with Messrs. Nusz and Reid is
provided in the section above entitled Compensation
Discussion and Analysis Employment Agreements.
The severance and change in control benefits provided by the
employment agreements are described below in the section
entitled Potential Payments upon Termination and Change in
Control Employment Agreements.
Restricted
Stock Awards
On June 22, 2010, each of the Named Executive Officers
received a grant of restricted shares under our LTIP in
connection with our IPO. The restricted shares vest in three
substantially equal annual installments on January 1, 2011,
January 1, 2012 and January 1, 2013 (so that the
awards will be 100% vested on January 1, 2013), provided
the Named Executive Officer remains an employee continuously
from the date of grant through the applicable vesting date. In
addition, in settlement of a portion of each Named Executive
Officers 2010 annual performance-based bonus under the
Incentive Plan, the Named Executive Officers each received an
additional restricted stock grant that vests in annual
installments over a two-year period, with the awards becoming
100% vested on March 15, 2013.
All restricted stock awards will become fully vested if the
Named Executive Officers employment is terminated due to
either death or disability. In addition, the awards are subject,
as applicable, to the accelerated vesting provisions in the
employment agreements with Messrs. Nusz and Reid and in the
Executive Change in Control and Severance Benefit Plan. These
accelerated vesting provisions are described in greater detail
below in the section entitled Potential Payments upon
Termination or Change in Control. While a Named Executive
Officer holds unvested restricted shares, he is entitled to all
the rights of ownership with respect to the shares, including
the right to vote the shares and to receive dividends thereon,
which dividends must be paid within 30 days of the date
dividends are distributed to our stockholders generally.
Outstanding
Equity Awards at Fiscal Year End
The following table sets forth information concerning
outstanding equity awards held by each of the Named Executive
Officers as of December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
Number of Shares or
|
|
|
Market Value of Shares
|
|
|
|
Units of Stock That
|
|
|
or Units of Stock That
|
|
Name
|
|
Have Not Vested(#)(1)
|
|
|
Have Not Vested ($)(2)
|
|
|
Thomas B. Nusz
|
|
|
19,200
|
|
|
$
|
520,704
|
|
Taylor L. Reid
|
|
|
16,200
|
|
|
$
|
439,344
|
|
Roy W. Mace
|
|
|
11,550
|
|
|
$
|
313,236
|
|
Kent O. Beers
|
|
|
13,350
|
|
|
$
|
362,052
|
|
Walter S. Smithwick
|
|
|
12,450
|
|
|
$
|
337,644
|
|
20
|
|
|
(1) |
|
The vesting schedule applicable to the outstanding restricted
stock awards is described above under Narrative Discussion
of Summary Compensation Table and Grants of Plan-Based Awards
Table. Does not include any of the restricted shares
awarded in settlement of a portion of the 2010 annual
performance-based bonus under the Incentive Plan, because those
awards will not be granted until March 15, 2011 (and hence
were not outstanding on December 31, 2010). |
|
(2) |
|
This column represents the closing price of our common stock on
December 31, 2010, which is $27.12, multiplied by the
number of restricted shares outstanding. |
Options
Exercised and Stock Vested
No equity-based awards held by our Named Executive Officers
vested or were exercised during fiscal year 2010.
Pension
Benefits
Other than our 401(k) plan, we do not have any plan that
provides for payments or other benefits at, following, or in
connection with, retirement.
Non-Qualified
Deferred Compensation
We do not have any plan that provides for the deferral of
compensation on a basis that is not tax qualified.
Potential
Payments Upon Termination and Change in Control
Contemporaneous with the consummation of our IPO, we entered
into employment agreements with Messrs. Nusz and Reid that
contain provisions regarding payments to be made to such
individuals upon termination of their employment in certain
circumstances, including in connection with a change in control.
These agreements are described in greater detail below and under
Compensation Discussion & Analysis
Employment Agreements. We have also adopted an Executive
Change in Control and Severance Benefit Plan, effective as of
the consummation of our IPO, in which our Named Executive
Officers, other than Messrs. Nusz and Reid, participate.
The payments and benefits provided under these arrangements and
pursuant to the outstanding equity-based awards granted under
our LTIP are described below.
Employment
Agreements
Under the employment agreements with Messrs. Nusz and Reid,
upon any termination of employment, Messrs. Nusz and Reid
are entitled to receive accrued but unpaid salary, any unpaid
annual performance bonus earned for the calendar year prior to
the year in which the executive terminates, reimbursement of
eligible expenses and any employee benefits due pursuant to
their terms. In addition, if Messrs. Nusz and Reid are
terminated due to death or disability, then they
will be entitled to receive the following amounts: (i) a
pro-rata portion of the annual performance bonus for the
calendar year of termination, (ii) an amount equal to
12 months worth of the executives base salary,
payable in a lump sum within 60 days or by March 15 of the
year following termination, whichever is earlier, and
(iii) an amount equal to 18 months worth of
COBRA premiums, if the executive elects and remains eligible for
COBRA.
If we terminate the employment of Messrs. Nusz and Reid for
reasons other than cause, if we elect not to renew
the employment agreement with the executive, or if the
executives terminate employment for good reason,
then Messrs. Nusz and Reid will be entitled to receive the
following amounts: (i) a pro-rata portion of the annual
performance bonus for the calendar year of termination,
(ii) an amount equal to the greater of (a) the
aggregate amount of base salary payable for the remainder of the
employment term, and (b) an amount equal to
12 months worth of the executives base salary,
payable in equal monthly installments (with amounts in excess of
certain limitations under Section 409A of the Code payable
in a lump sum within 60 days), (iii) an amount equal
to 18 months worth of COBRA premiums, if the
executive elects and remains eligible for COBRA, (iv) an
amount equal to the aggregate of each annual target performance
bonus the executive would
21
have been entitled to receive if he had continued to perform
services for the remainder of the employment term, if
termination occurs during the initial three-year term, or an
amount equal to 80% (for Mr. Nusz) and 60% (for
Mr. Reid) of base salary for the remainder of the
then-current term, if termination occurs after the initial term,
in each case minus the amount of the pro-rata bonus paid, and
(v) accelerated vesting of all outstanding equity awards.
Severance amounts, other than the pro-rata bonus amount, are
subject to the executives delivery to us (and
nonrevocation) of a release of claims within 60 days of his
termination date.
In the event a change in control occurs, all
outstanding equity awards held by Messrs. Nusz and Reid
will be immediately vested in full. In addition, in the event
Messrs. Nusz and Reid are terminated by us other than for
cause, if we elect not to renew the employment
agreements or if the executives terminate employment for
good reason, in each case, within 12 months
following a change in control, Messrs. Nusz and
Reid (or their respective estates) are entitled to receive
(i) an amount equal to two times the sum of (a) the
executives annualized base salary and (b) the maximum
annual performance bonus he is eligible to receive for the
then-current year if termination occurs during the initial three
year term, or an amount equal to 80% (for Mr. Nusz) and 60%
(for Mr. Reid) of base salary, if termination occurs after
the initial term and (ii) an amount equal to
18 months worth of COBRA premiums, if the executive
elects and is eligible to receive COBRA. If Messrs. Nusz
and Reid are terminated in connection with a change in control
and would receive greater benefits under another provision of
their employment agreements, they will be entitled to receive
the greater benefits. Because of the tax on so-called
parachute payments imposed by the Codes
Section 4999 on payments made in connection with a change
in control, we have agreed to reimburse Messrs. Nusz and
Reid for any excise taxes imposed as a result of a payment of
change in control benefits and to gross up those tax payments to
keep the executives whole, unless the aggregate payments due to
the executives may be reduced by 10% or less and, following such
reduction, will not exceed the safe harbor amount under Code
Section 280G, in which case the payments due will be so
reduced.
Messrs. Nusz and Reid are subject to certain
confidentiality, noncompete and nonsolicitation provisions
contained in the employment agreements. The confidentiality
covenants are perpetual, while the noncompete and
nonsolicitation covenants apply during the term of the
employment agreements and for 12 months following the
employees termination date, except that the latter
covenants will cease to apply if the executive is terminated for
any reason on or after a change in control.
Executive
Change in Control and Severance Benefit Plan
We have adopted an Executive Change in Control and Severance
Benefit Plan, which became effective upon the consummation of
our IPO, that provides severance and change in control benefits
to our Named Executive Officers (other than Messrs. Nusz
and Reid). Participants in the Executive Change in Control and
Severance Benefit Plan are entitled to receive, upon any
termination of their employment, accrued but unpaid base salary,
any unpaid annual performance bonus earned for the calendar year
prior to the year in which the participants employment is
terminated, reimbursement of eligible expenses and any employee
benefits due pursuant to their terms. In addition, if a
participant in the Executive Change in Control and Severance
Benefit Plan is terminated due to death or
disability, then the participant is entitled to
receive the following amounts: (i) a pro-rata portion of
the annual performance bonus for the calendar year of
termination, (ii) an amount equal to 12 months
worth of the participants base salary, payable in a lump
sum, and (iii) an amount equal to 18 months
worth of COBRA premiums, if the participant elects and remains
eligible for COBRA.
If we terminate the employment of a participant in the Executive
Change in Control and Severance Benefit Plan for a reason other
than cause or if a participant terminates employment
for good reason, then the participant is entitled to
receive the following amounts: (i) a pro-rata portion of
the annual performance bonus for the calendar year of
termination, (ii) an amount equal to 12 months
worth of the participants base salary, payable in 12 equal
monthly installments, (iii) an amount equal to
18 months worth of COBRA premiums, if the participant
elects and remains eligible for COBRA, and (iv) accelerated
vesting of all outstanding equity awards. Severance amounts,
other than the pro-rata bonus amount, are subject to the
participants delivery to us (and nonrevocation) of a
release of claims within 60 days of the termination date.
22
In the event a change in control occurs, all
outstanding equity awards held by participants in the Executive
Change in Control and Severance Benefit Plan will be immediately
vested in full. In addition, in the event a participant is
terminated by us other than for cause or if the
participant terminates employment for good reason,
in each case, within 24 months following a change in
control, the participant (or his or her estate) is
entitled to receive (i) an amount equal to two times the
sum of (a) the participants annualized base salary
and (b) the participants target performance bonus for
the calendar year in which the change in control
occurs, and (ii) an amount equal to 18 months
worth of COBRA premiums, if the participant elects and remains
eligible for COBRA. If the employment of a participant in the
Executive Change in Control and Severance Benefit Plan is
terminated in connection with a change in control
and the participant would receive greater benefits under another
provision of the Executive Change in Control and Severance
Benefit Plan, the participant will be entitled to receive the
greater benefits. Because of the tax on so-called
parachute payments imposed by Code Section 4999
on payments made in connection with a change in control, we have
agreed to reimburse participants in the Executive Change in
Control and Severance Benefit Plan for any excise taxes imposed
as a result of a payment of change in control benefits and to
gross up those tax payments to keep the participants whole,
unless the aggregate payments due to the executives may be
reduced by 10% or less and, following such reduction, will not
exceed the safe harbor amount under Code Section 280G, in
which case the payments will be so reduced.
Participants in the Executive Change in Control and Severance
Benefit Plan are subject to certain confidentiality, noncompete
and nonsolicitation provisions contained in the plan. The
confidentiality provisions are perpetual, while the noncompete
and nonsolicitation covenants apply while a participant is
employed by us and for 12 months following the
participants employment termination date, except that the
latter covenants will cease to apply if the participant is
terminated for any reason on or after a change in control.
Under our 2010 Annual Incentive Compensation Plan, upon the
occurrence of a change in control, participants
(including our Named Executive Officers) will receive the target
annual cash bonus award amount that the participant is eligible
to earn for the calendar year in which the change in
control occurs, payable within 30 days after the date
of the change in control.
For purposes of the employment agreements, the Executive Change
in Control and Severance Benefit Plan and the 2010 Annual
Incentive Compensation Plan, the terms listed below are defined
as follows:
(i) cause means (a) the executive
has been convicted of a misdemeanor involving moral turpitude or
a felony, (b) the executive has engaged in grossly
negligent or willful misconduct in performing his duties, which
has a material detrimental effect on the company, and (with
respect to participants in the Executive Change in Control and
Severance Benefit Plan) which acts continued for a period of
30 days after notice of such failure of performance,
(c) the executive has breached a material provision of the
employment agreement or the plan, as applicable, (d) the
executive has engaged in conduct that is materially injurious to
us or (e) the executive has committed an act of fraud.
Messrs. Nusz and Reid will have a limited period of
30 days to cure events (unless the cause event is that
described in clause (a) above).
(ii) change in control means (a) a
person acquires 50% or more of our outstanding stock or
outstanding voting securities, subject to certain limited
exceptions, (b) individuals who serve as board members on
the effective date of the employment agreements or the plan, as
applicable (or who are subsequently approved by a majority of
such individuals), cease for any reason to constitute at least a
majority of the Board of Directors, (c) consummation of a
reorganization, merger, consolidation or a sale of all or
substantially all of our assets, subject to certain limited
exceptions, or (d) approval by our stockholders of a
complete liquidation or dissolution.
(iii) disability means the
executives inability to perform the executives
essential functions with or without reasonable accommodation, if
required by law, due to physical or mental impairment.
(iv) good reason means, without the
executives express written consent, (a) a material
breach by us of the employment agreement or of our obligations
under the plan, as applicable, (b) a material reduction in
the executives base compensation, (c) a material
diminution in the executives authority,
23
duties or responsibilities, (d) a change in the geographic
location where the executive must normally perform services by
more than 50 miles or (e) a requirement that the
executive report to an employee instead of to our board (for
Mr. Nusz) or a material reduction in the authority, duties
or responsibilities of the person to whom the executive reports
(for all other Named Executive Officers). The executive must
notify us within 60 days of the occurrence of any such
event and we have 30 days following notice to cure.
Restricted
Stock Awards
The Named Executive Officers each hold outstanding awards of
restricted stock under our LTIP as previously described in the
sections above entitled Compensation
Discussion and Analysis Elements of Our Compensation
and Why We Pay Each Element Long-Term Equity-Based
Incentives and Executive Compensation
Narrative Discussion to the Summary Compensation Table and the
Grants of Plan-Based Awards Table. The vesting of the
restricted stock awards will accelerate in full if a Named
Executive Officers employment is terminated due to either
death or disability. In addition, the awards are subject to the
accelerated vesting provisions contained in, as applicable, the
employment agreements with Messrs. Nusz and Reid and the
Executive Change in Control and Severance Benefit Plan, which
are described above in this section Potential
Payments upon Termination and Change in Control. For
purposes of the restricted stock awards, disability
has the same meaning as set forth above with respect to the
employment agreements and the Executive Change in Control and
Severance Benefit Plan.
Quantification
of Payments
The table below discloses the amount of compensation
and/or
benefits due to the Named Executive Officers in the event of
their termination of employment
and/or in
the event we undergo a change in control effective
December 31, 2010, and that the price per share of common
stock was $27.12, which was the closing price per share of our
common stock on December 31, 2010. The table excludes
amounts accrued through fiscal 2010 year-end that would be
paid in the normal course of continued employment, such as
accrued but unpaid salary, and benefits generally available to
all our salaried employees. The amounts below constitute
estimates of the amounts that would be paid to the Named
Executive Officers upon their respective terminations
and/or upon
a change in control under such arrangements. The actual amounts
to be paid are dependent on various factors, which may or may
not exist at the time a Named Executive Officer is actually
terminated
and/or a
change in control actually occurs. Therefore, such amounts and
disclosures should be considered forward-looking
statements.
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
for Good
|
|
|
|
|
|
|
Termination
|
|
|
Due to
|
|
|
Without
|
|
|
Reason
|
|
|
|
|
|
|
Due to
|
|
|
Non-Extension
|
|
|
Cause or
|
|
|
Following a
|
|
|
|
|
|
|
Death or
|
|
|
by
|
|
|
for Good
|
|
|
Change in
|
|
|
Change in
|
|
Named Executive Officer
|
|
Disability
|
|
|
the Company
|
|
|
Reason
|
|
|
Control
|
|
|
Control
|
|
|
Thomas B. Nusz Salary(1)
|
|
$
|
325,000
|
|
|
$
|
812,500
|
|
|
$
|
812,500
|
|
|
|
|
|
|
|
|
|
Bonus Amounts(1)
|
|
$
|
442,000
|
|
|
$
|
520,000
|
|
|
$
|
520,000
|
|
|
$
|
260,000
|
|
|
$
|
260,000
|
|
COBRA Premiums(2)
|
|
$
|
30,545
|
|
|
$
|
30,545
|
|
|
$
|
30,545
|
|
|
$
|
30,545
|
|
|
|
|
|
Change in Control Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,690,000
|
|
|
|
|
|
Accelerated Equity Vesting(3)
|
|
$
|
520,704
|
|
|
$
|
520,704
|
|
|
$
|
520,704
|
|
|
$
|
520,704
|
|
|
$
|
520,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(4)
|
|
$
|
1,318,249
|
|
|
$
|
1,883,749
|
|
|
$
|
1,883,749
|
|
|
$
|
3,257,521
|
|
|
$
|
780,704
|
|
Taylor L. Reid Salary(1)
|
|
$
|
275,000
|
|
|
$
|
687,500
|
|
|
$
|
687,500
|
|
|
|
|
|
|
|
|
|
Bonus Amounts(1)
|
|
$
|
280,500
|
|
|
$
|
330,000
|
|
|
$
|
330,000
|
|
|
$
|
165,000
|
|
|
$
|
165,000
|
|
COBRA Premiums(2)
|
|
$
|
30,545
|
|
|
$
|
30,545
|
|
|
$
|
30,545
|
|
|
$
|
30,545
|
|
|
|
|
|
Change in Control Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,210,000
|
|
|
|
|
|
Accelerated Equity Vesting(3)
|
|
$
|
439,344
|
|
|
$
|
439,344
|
|
|
$
|
439,344
|
|
|
$
|
439,344
|
|
|
$
|
439,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(4)
|
|
$
|
1,025,389
|
|
|
$
|
1,487,389
|
|
|
$
|
1,487,389
|
|
|
$
|
2,364,954
|
|
|
$
|
604,344
|
|
Roy W. Mace Salary(1)
|
|
$
|
195,000
|
|
|
|
|
|
|
$
|
195,000
|
|
|
|
|
|
|
|
|
|
Bonus Amounts(1)
|
|
$
|
165,750
|
|
|
|
|
|
|
$
|
165,750
|
|
|
$
|
97,500
|
|
|
$
|
97,500
|
|
COBRA Premiums(2)
|
|
$
|
30,545
|
|
|
|
|
|
|
$
|
30,545
|
|
|
$
|
30,545
|
|
|
|
|
|
Change in Control Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
585,000
|
|
|
|
|
|
Accelerated Equity Vesting(3)
|
|
$
|
313,236
|
|
|
|
|
|
|
$
|
313,236
|
|
|
$
|
313,236
|
|
|
$
|
313,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(4)
|
|
$
|
704,531
|
|
|
|
|
|
|
$
|
704,531
|
|
|
$
|
1,271,728
|
|
|
$
|
410,736
|
|
Kent O. Beers Salary(1)
|
|
$
|
225,000
|
|
|
|
|
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
Bonus Amounts(1)
|
|
$
|
191,250
|
|
|
|
|
|
|
$
|
191,250
|
|
|
$
|
112,500
|
|
|
$
|
112,500
|
|
COBRA Premiums(2)
|
|
$
|
20,406
|
|
|
|
|
|
|
$
|
20,406
|
|
|
$
|
20,406
|
|
|
|
|
|
Change in Control Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
675,000
|
|
|
|
|
|
Accelerated Equity Vesting(3)
|
|
$
|
362,052
|
|
|
|
|
|
|
$
|
362,052
|
|
|
$
|
362,052
|
|
|
$
|
362,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(4)
|
|
$
|
798,708
|
|
|
|
|
|
|
$
|
798,708
|
|
|
$
|
1,471,589
|
|
|
$
|
474,552
|
|
William S. Smithwick Salary(1)
|
|
$
|
210,000
|
|
|
|
|
|
|
$
|
210,000
|
|
|
|
|
|
|
|
|
|
Bonus Amounts(1)
|
|
$
|
178,500
|
|
|
|
|
|
|
$
|
178,500
|
|
|
$
|
105,000
|
|
|
$
|
105,000
|
|
COBRA Premiums(2)
|
|
$
|
30,545
|
|
|
|
|
|
|
$
|
30,545
|
|
|
$
|
30,545
|
|
|
|
|
|
Change in Control Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
630,000
|
|
|
|
|
|
Accelerated Equity Vesting(3)
|
|
$
|
337,644
|
|
|
|
|
|
|
$
|
337,644
|
|
|
$
|
337,644
|
|
|
$
|
337,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(4)
|
|
$
|
756,689
|
|
|
|
|
|
|
$
|
756,689
|
|
|
$
|
1,103,189
|
|
|
$
|
442,644
|
|
|
|
|
(1) |
|
Based on rate of salary and annual bonus opportunity in effect
for each Named Executive Officer as of December 31, 2010.
For purposes of calculating any pro-rata bonus, the aggregate
dollar value of the bonus awards actually earned by each Named
Executive for 2010 was used. |
|
(2) |
|
Reflects 18 months worth of the COBRA premiums at the
following monthly rates: $1,696.93 for Mr. Nusz, $1,696.93
for Mr. Reid, $1,696.93 for Mr. Mace, $1,133.64 for
Mr. Beers, and $1,696.93 for Mr. Smithwick. |
|
(3) |
|
The accelerated vesting of restricted stock awards is based upon
the closing price per share of our common stock on
December 31, 2010, which is $27.12, multiplied by the
number of outstanding restricted shares that would vest upon the
occurrence of the event indicated. Does not include any of the
restricted shares |
25
|
|
|
|
|
awarded in settlement of a portion of the 2010 annual
performance-based bonus under the Incentive Plan, because those
awards will not be granted until March 15, 2011 (and hence
were not held by the Named Executive Officers on
December 31, 2010). |
|
(4) |
|
As described above, we have agreed to reimburse our Named
Executive Officers for any excise taxes imposed on them as a
result of a payment of change in control benefits and to gross
up those tax payments to keep the Named Executive Officers
whole, unless the aggregate payments due to an executive may be
reduced by 10% or less and, following such reduction, will not
exceed the safe harbor amount under Code Section 280G, in
which case the payments will be so reduced. The total payments
reported with respect to the Termination without Cause or
for Good Reason Following a Change in Control column for
each Named Executive Officer exceeds each of their respective
Code Section 280G safe harbor amounts. The aggregate
severance amounts reported for Messrs. Nusz, Reid, Mace and
Beers include
gross-up
payments in the following amounts because the amounts otherwise
payable to these Named Executive Officers exceed their
respective Code Section 280G safe harbor amount and would
need to be reduced by more than 10% in order to fall within the
Code Section 280G safe harbor:
(a) Mr. Nusz $756,272,
(b) Mr. Reid $520,065,
(c) Mr. Mace $245,447, and
(d) Mr. Beers - $301,631. The aggregate severance
amount reported above as payable to Mr. Smithwick following
a change in control would actually be reduced to $802,312 to
fall within his Code Section 280G safe harbor limit in
accordance with the terms of the Executive Change in Control and
Severance Benefit Plan as described above. Although this cut
back amount for Mr. Smithwick is more than 10% of the
aggregate severance amount reported above, the IRS regulations
promulgated under Section 280G of the Code prescribe a
different accelerated vesting calculation for restricted stock
awards than the calculations used for purposes of this table
pursuant to the SECs rules. |
Director
Compensation
We believe that attracting and retaining qualified non-employee
Directors is critical to our future value growth and governance,
and that providing a total compensation package between the
50th percentile and 75th percentile of our peer group
is necessary to accomplish that objective. Our Board of
Directors also believes that the compensation package for our
non-employee Directors should require a significant portion of
the total compensation package to be equity-based to align the
interests of our Directors with our stockholders.
After review with Longnecker & Associates of
non-employee director compensation paid by our peer group, our
Board of Directors approved the following compensation plan for
non-employee Directors for 2010 and later years:
|
|
|
|
|
an annual cash retainer fee of $40,000, plus cash payments of
$1,250 for each Board of Directors meeting attended and
$1,000 for each committee meeting attended;
|
|
|
|
an initial equity award of 4,500 shares of restricted
stock; and
|
|
|
|
an annual equity award of shares of our restricted stock having
a value of approximately $70,000 based on the average of the
high and low market-quoted sales prices of our common stock on
the grant date of the award.
|
Both the initial and annual grants of restricted stock vest on
the first anniversary of the grant date of the award.
In addition to the cash payments described above, the
chairpersons of our Audit Committee, Compensation Committee and
Nominating & Governance Committee receive annual cash
retainer fees of $10,000, $5,000 and $5,000, respectively. The
Compensation Committee will review the compensation of the
non-employee Directors on an annual basis. For 2011, the annual
equity award component of our non-employee director compensation
package was revised to provide for annual restricted stock
awards to each director having a value of approximately $85,000
under the Companys Long Term Incentive Plan.
Directors who are also our employees do not receive any
additional compensation for their service on the Board of
Directors.
26
Each director is reimbursed for (i) travel and
miscellaneous expenses to attend meetings and activities of our
Board of Directors or its committees; (ii) travel and
miscellaneous expenses related to such directors
participation in our general education and orientation program
for Directors; and (iii) travel and miscellaneous expenses
for each directors spouse who accompanies a director to
attend meetings and activities of our Board of Directors or any
of our committees.
The following table provides information concerning the
compensation of our non-employee Directors for the fiscal year
ended December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or Paid
|
|
|
|
All Other
|
|
|
Name
|
|
in Cash ($)(1)
|
|
Stock Awards ($)(2)
|
|
Compensation ($)
|
|
Total ($)
|
|
William J. Cassidy
|
|
$
|
19,750
|
|
|
$
|
87,885
|
|
|
$
|
7,047
|
|
|
$
|
114,682
|
|
Michael McShane
|
|
$
|
64,000
|
|
|
$
|
70,740
|
|
|
$
|
1,040
|
|
|
$
|
135,780
|
|
Douglas E. Swanson, Jr.
|
|
$
|
64,000
|
(3)
|
|
$
|
70,740
|
|
|
|
|
|
|
$
|
134,740
|
|
Robert L. Zorich
|
|
$
|
47,000
|
(3)
|
|
$
|
70,740
|
|
|
|
|
|
|
$
|
117,740
|
|
|
|
|
(1) |
|
Includes annual cash retainer fee, board and committee meeting
fees, and committee chair fees for each non-employee director as
more fully explained in the preceding paragraphs. |
|
(2) |
|
The amounts reported in the Stock Awards column
reflect the aggregate grant date fair value of restricted stock
awards granted under our LTIP in fiscal year 2010, computed in
accordance with FASB ASC Topic 718. See Note 10 to our
consolidated financial statements on
Form 10-K
for the year ended December 31, 2010 for additional detail
regarding assumptions underlying the value of these equity
awards. As of December 31, 2010, each non-employee director
held 4,500 outstanding shares of restricted stock. |
|
(3) |
|
Messrs. Swanson and Zorichs cash director fees were
assigned and paid to EnCap Energy Capital Fund VI, L.P. and
EnCap Energy Capital Fund VII, L.P. Messrs. Swanson
and Zorich have entered into other compensation arrangements
with EnCap for the services they provide to us on behalf of
EnCap. |
Compensation
Practices as They Relate to Risk Management
We believe our compensation programs do not encourage excessive
and unnecessary risk taking by executive officers (or other
employees). Because our Compensation Committee retains the
ability to apply discretion when determining the actual amount
to be paid to executives pursuant to our annual
performance-based cash incentive program, the Compensation
Committee is able to assess the actual behavior of our
executives as it relates to risk taking in awarding bonus
amounts. Further, our use of long-term equity-based compensation
serves our compensation programs goal of aligning the
interests of executives and shareholders, thereby reducing the
incentives to unnecessary risk taking.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2010, no member of the Compensation Committee served as
an executive officer of the Company. During 2010, there were no
Compensation Committee interlocks with other companies.
COMPENSATION
COMMITTEE REPORT
The information contained in this Compensation Committee
Report shall not be deemed to be soliciting material
or to be filed with the SEC, nor shall such
information be incorporated by reference into any future filing
under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that the Company specifically
incorporates such information.
The Compensation Committee of the Company has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and
27
discussions, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement.
Compensation Committee of
The Board of Directors
Douglas E. Swanson, Jr., Chairman
William J. Cassidy, Member
Michael McShane, Member
AUDIT
COMMITTEE REPORT
The information contained in this Audit Committee Report and
references in this Proxy Statement to the independence of the
Audit Committee members shall not be deemed to be
soliciting material or to be filed with
the SEC, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates such information by reference
in such filing.
The Company has determined that: (1) Mr. McShane and
Mr. Cassidy are independent, as defined in Section 10A
of the Exchange Act and under the standards set forth by the
NYSE, and that Mr. Swanson is permitted to serve as a
member of the Audit Committee for a period of up to one year
following the completion of our
IPO;1 and
(2) all current Audit Committee members are financially
literate. In addition, Mr. McShane qualifies as an audit
committee financial expert under the applicable rules
promulgated pursuant to the Exchange Act.
During the last fiscal year, and earlier this year in
preparation for the filing with the SEC of the Companys
Annual Report on
Form 10-K
for the year ended December 31, 2010, the Audit Committee:
|
|
|
|
|
reviewed and discussed the Companys audited financial
statements as of and for the year ended December 31, 2010
with management and with the independent registered public
accountants;
|
|
|
|
considered the adequacy of the Companys internal controls
and the quality of its financial reporting, and discussed these
matters with management and with the independent registered
public accountants;
|
|
|
|
reviewed and discussed with the independent registered public
accountants (1) their judgments as to the quality of the
Companys accounting policies, (2) the written
disclosures and letter from the independent registered public
accountants required by Public Company Accounting Oversight
Board Independence Rules, and the independent registered public
accountants independence, and (3) the matters
required to be discussed by the Public Company Accounting
Oversight Boards AU Section 380, Communication with
Audit Committees, by the Auditing Standards Board of the
American Institute of Certified Public Accountants;
|
|
|
|
discussed with management and with the independent registered
public accountants the process by which the Companys chief
executive officer and chief accounting officer make the
certifications required by the SEC in connection with the filing
with the SEC of the Companys periodic reports, including
reports on
Forms 10-K
and 10-Q;
|
|
|
|
pre-approved all auditing services and non-audit services to be
performed for the Company by the independent registered public
accountants as required by the applicable rules promulgated
pursuant to the Exchange Act, considered whether the rendering
of non-audit services was compatible with maintaining
PricewaterhouseCoopers LLPs independence, and concluded
that PricewaterhouseCoopers LLPs independence was not
compromised by the provision of such services (details regarding
the fees
|
1 Effective
May 1, 2011, Mr. Collins will replace Mr. Swanson
on the Audit Committee. The Board of Directors has determined
that Mr. Collins meets the additional independence
standards of the NYSE and SEC applicable to members of the Audit
Committee.
28
|
|
|
|
|
paid to PricewaterhouseCoopers LLPs in fiscal 2010 for
audit services, tax services and all other services, are set
forth at Audit and Other Fees below); and
|
|
|
|
|
|
based on the reviews and discussions referred to above,
recommended to the Supervisory Board that the consolidated
financial statements referred to above be included in the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2010.
|
As recommended by the NYSEs corporate governance rules,
the Audit Committee also considered whether, to assure
continuing auditor independence, it would be advisable to
regularly rotate the audit firm itself. The Audit Committee has
concluded that the current benefits to the Company from
continued retention of PricewaterhouseCoopers LLP warrant
retaining the firm at this time. The Committee will, however,
continue to review this issue on an annual basis.
Notwithstanding the foregoing actions and the responsibilities
set forth in the Audit Committees charter, it is not the
duty of the Audit Committee to plan or conduct audits or to
determine that the Companys consolidated financial
statements are complete and accurate and in accordance with
generally accepted accounting principles. Management is
responsible for the Companys financial reporting process,
including its system of internal controls, and for the
preparation of consolidated financial statements in accordance
with accounting principles generally accepted in the United
States. The independent registered public accountants are
responsible for expressing an opinion on those financial
statements. Committee members are not employees of the Company
or accountants or auditors by profession. Therefore, the
Committee has relied, without independent verification, on
managements representation that the consolidated financial
statements have been prepared with integrity and objectivity and
in conformity with accounting principles generally accepted in
the United States and on the representations of the independent
registered public accountants included in their report on the
Companys consolidated financial statements.
The Committee meets regularly with management and the
independent auditors, including private discussions with the
independent registered public accountants, and receives the
communications described above. The Committee has also
established procedures for (a) the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters,
and (b) the confidential, anonymous submission by the
Companys employees of concerns regarding questionable
accounting or auditing matters. However, this oversight does not
provide us with an independent basis to determine that
management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal
controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations.
Furthermore, our considerations and discussions with management
and the independent registered public accountants do not assure
that the Companys consolidated financial statements are
presented in accordance with generally accepted accounting
principles or that the audit of the Companys consolidated
financial statements has been carried out in accordance with
generally accepted auditing standards.
Audit Committee of
The Board of Directors
Michael McShane, Chairman
William J. Cassidy, Member
Douglas E. Swanson, Jr., Member
29
CORPORATE
GOVERNANCE
Corporate
Governance Guidelines
The Board of Directors believes that sound governance practices
and policies provide an important framework to assist it in
fulfilling its duty to stockholders. The Companys
Corporate Governance Guidelines cover the following principal
subjects:
|
|
|
|
|
Role and functions of the Board of Directors and its Lead
Director
|
|
|
|
Qualifications and independence of Directors
|
|
|
|
Size of the Board of Directors and director selection process
|
|
|
|
Committee functions and independence of committee members
|
|
|
|
Meetings of non-employee Directors
|
|
|
|
Self-evaluation
|
|
|
|
Ethics and conflicts of interest (a copy of the current
Code of Business Conduct and Ethics is posted on the
Companys website at www.oasispetroleum.com)
|
|
|
|
Compensation of the Board of Directors
|
|
|
|
Succession planning
|
|
|
|
Access to senior management and to independent advisors
|
|
|
|
New director orientation
|
|
|
|
Continuing education
|
The Corporate Governance Guidelines are posted on
the Companys website at
www.oasispetroleum.com/Corporate_Governance.htm. The
Corporate Governance Guidelines will be reviewed periodically
and as necessary by the Companys Nominating and Governance
Committee, and any proposed additions to or amendments of the
Corporate Governance Guidelines will be presented to the Board
of Directors for its approval.
The NYSE has adopted rules that require listed companies to
adopt governance guidelines covering certain matters. The
Company believes that the Corporate Governance Guidelines comply
with the NYSE rules.
Board
Leadership
Mr. Nusz has served as Chairman, President and Chief
Executive Officer of the Company since its initial public
offering in June 2010. Mr. Nusz also served as the
President and Chief Executive Officer of Oasis Petroleum LLC, a
predecessor of the Company, from its inception in March 2007
until the Companys initial public offering.
The Board believes the combined role of Chairman and CEO
promotes unified leadership and direction for the Company, which
allows for a single, clear focus for management to execute the
Companys strategy and business plans. As CEO, the Chairman
is best suited to ensure that critical business issues are
brought before the Board, which enhances the Boards
ability to develop and implement business strategies.
To ensure a strong and independent board, all Directors of the
Company, other than Mr. Nusz and Mr. Reid, are
independent. In addition, the Companys Corporate
Governance Guidelines provide that the Board will designate one
of its members as the Lead Director to preside over the meetings
of the non-management Directors and to provide, in conjunction
with the Chairman and CEO, leadership and guidance to the Board.
30
Mr. McShane has served as Lead Director of the Board since
August 9, 2010. In this capacity, Mr. McShane
provides, in conjunction with the Chairman, leadership and
guidance to the Board of Directors. He also (i) serves as
chairman of the executive sessions of the independent Directors;
(ii) establishes the agenda for each meeting of the
non-management Directors; and (iii) serves as the
Boards contact for employee and stockholder communications
with the Board of Directors. In addition, all Directors are
encouraged to suggest the inclusion of agenda items or revisions
to meeting materials, and any director is free to raise at any
Board meeting items that are not on the agenda for that meeting.
All of these principles are set forth in the Companys
Corporate Governance Guidelines.
Additionally, the Board regularly meets in executive session
without the presence of the CEO or other members of management.
The Lead Director presides at these meetings and provides the
Boards guidance and feedback to the Chairman and the
Companys management team. Further, the Board has complete
access to the Companys management team.
Given the strong leadership of the Companys Chairman and
CEO, the effective counterbalancing role of the Lead Director
and a Board comprised of strong and independent Directors, the
Board believes that, at the present time, the combined role of
Chairman and CEO best serves the interests of the Company and
its stockholders.
Communications
with the Board of Directors
Stockholders or other interested parties can contact any
director (including Mr. McShane, the Boards Lead
Director), any committee of the Board, or our non-management
Directors as a group, by writing to them
c/o Corporate
Secretary, Oasis Petroleum Inc., 1001 Fannin Street,
Suite 1500, Houston, Texas 77002. Comments or complaints
relating to the companys accounting, internal accounting
controls or auditing matters will also be referred to members of
the Audit Committee. All such communications will be forwarded
to the appropriate member(s) of the Board.
Director
Independence
The Companys standards for determining director
independence require the assessment of Directors
independence each year. A director cannot be considered
independent unless the Board of Directors affirmatively
determines that he or she does not have any relationship with
management or the Company that may interfere with the exercise
of his or her independent judgment, including any of the
relationships that would disqualify the director from being
independent under the rules of the NYSE.
The Board of Directors has assessed the independence of each
non-employee director and each nominee for director under the
Companys guidelines and the independence standards of the
NYSE. The Board of Directors affirmatively determined that all
five non-employee Directors (Messrs. Cassidy, Collins,
McShane, Swanson and Zorich) are independent.
In connection with its assessment of the independence of each
non-employee director, the Board of Directors also determined
that Messrs. Cassidy and McShane meet the additional
independence standards of the NYSE and SEC applicable to members
of the Audit Committee. Those standards require that the
director not be an affiliate of the Company and that the
director not receive from the Company, directly or indirectly,
any consulting, advisory or other compensatory fees except for
fees for services as a director. The Board of Directors also
determined that Mr. Swanson did not meet the additional
independence standards of the NYSE and SEC applicable to members
of the Audit Committee because he is an affiliate of the Company
due to his association with EnCap. However, under the applicable
NYSE phase-in requirements, Mr. Swanson is permitted to
serve as a member of the Audit Committee for a period of up to
one year following the completion of our initial public
offering. Effective May 1, 2011, Mr. Collins will
replace Mr. Swanson on the Audit Committee. The Board of
Directors has determined that Mr. Collins meets the
additional independence standards of the NYSE and SEC applicable
to members of the Audit Committee.
31
Financial
Literacy of Audit Committee and Designation of Financial
Experts
The Board of Directors evaluated the members of the Audit
Committee, Messrs. McShane and Swanson in June 2010,
Mr. Cassidy in September 2010, and Mr. Collins in
February 2011, for financial literacy and the attributes of a
financial expert. The Board of Directors determined that each of
the Audit Committee members is financially literate and that the
Chairman of the Audit Committee, Michael McShane, is an Audit
Committee financial expert as defined by the SEC.
Oversight
of Risk Management
Except as discussed below, the Board as a whole oversees the
Companys assessment of major risks and the measures taken
to manage such risks. For example:
|
|
|
|
|
the Board oversees management of the Companys commodity
price risk through regular review with executive management of
the Companys derivatives strategy, and the oversight of
the Companys policy that limits the Companys
authority to enter into derivative commodity price instruments
to a specified level of production, above which management must
seek Board approval;
|
|
|
|
the Board has established specific dollar limits on the
commitment authority of members of senior management and
requires Board approval of expenditures exceeding that authority
and of other material contracts and transactions; and
|
|
|
|
the Board reviews managements capital spending plans,
approves the Companys capital budget and requires that
management present for Board review significant departures from
those plans.
|
The Companys Audit Committee is responsible for overseeing
the Companys assessment and management of financial
reporting and internal control risks, as well as other financial
risks, such as the credit risks associated with counterparty
exposure. Management and the Companys independent
registered public accountants report regularly to the Audit
Committee on those subjects. The Board does not consider its
role in oversight of the Companys risk management function
to be relevant to its choice of leadership structure.
Attendance
at Annual Meetings
The Board of Directors encourages all Directors to attend the
annual meetings of stockholders, if practicable. We anticipate
that all of our Directors will attend the Annual Meeting.
32
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of common stock as of March 9, 2011 by
(i) each person who is known by the Company to own
beneficially more than five percent of the outstanding shares of
common stock, (ii) each named executive officer of the
Company, (iii) each director of the Company and
(iv) all Directors and executive officers as a group.
Unless otherwise noted, the mailing address of each person or
entity named below is 1001 Fannin Street, Suite 1500,
Houston, Texas 77002.
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
Number of
|
|
Class
|
Name of Person or Identity of Group
|
|
Shares
|
|
(1)
|
|
EnCap Energy Capital Fund VI L.P.(3)(4)
|
|
|
9,440,066
|
|
|
|
10.2
|
%
|
EnCap VI-B Acquisitions, L.P.(3)(4)
|
|
|
5,167,318
|
|
|
|
5.6
|
%
|
EnCap Energy Capital Fund VII, L.P.(3)(4)
|
|
|
7,677,369
|
|
|
|
8.3
|
%
|
David B. Miller(2)(3)(5)
|
|
|
22,284,753
|
|
|
|
24.1
|
%
|
D. Martin Phillips(2)(3)(4)
|
|
|
22,284,753
|
|
|
|
24.1
|
%
|
Gary R. Petersen(2)(3)(4)
|
|
|
22,284,753
|
|
|
|
24.1
|
%
|
T. Rowe Price Associates, Inc.(6)
|
|
|
6,143,550
|
|
|
|
6.7
|
%
|
Thomas B. Nusz(7)(8)(9)
|
|
|
3,817,150
|
|
|
|
4.1
|
%
|
Taylor L. Reid(7)(8)
|
|
|
2,476,513
|
|
|
|
2.7
|
%
|
William J. Cassidy(7)
|
|
|
4,500
|
|
|
|
*
|
|
Ted Collins, Jr.(7)(10)
|
|
|
20,550
|
|
|
|
*
|
|
Michael McShane(7)
|
|
|
40,200
|
|
|
|
*
|
|
Douglas E. Swanson, Jr.(7)
|
|
|
4,500
|
|
|
|
*
|
|
Robert L. Zorich(2)(3)(4)(7)
|
|
|
22,289,253
|
|
|
|
24.1
|
%
|
Kent O. Beers(7)
|
|
|
1,205,484
|
|
|
|
1.3
|
%
|
Robert J. Candito(7)
|
|
|
550,568
|
|
|
|
*
|
|
Nickolas J. Lorentzatos(7)
|
|
|
17,500
|
|
|
|
*
|
|
Michael H. Lou(7)
|
|
|
326,832
|
|
|
|
*
|
|
Roy W. Mace(7)
|
|
|
668,929
|
|
|
|
*
|
|
H. Brett Newton(7)
|
|
|
659,401
|
|
|
|
*
|
|
Walter S. Smithwick(7)
|
|
|
777,263
|
|
|
|
*
|
|
All Directors and executive officers as a group
(14 persons)(7)
|
|
|
32,858,643
|
|
|
|
35.6
|
%
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
Based upon an aggregate of 92,310,145 shares outstanding as
of March 9, 2011. |
|
(2) |
|
Affiliate of EnCap. |
|
(3) |
|
According to a Schedule 13G, dated February 14, 2011,
filed with the SEC by EnCap Energy Capital Fund VI, L.P.
(EnCap Fund VI), EnCap VI-B Acquisitions, L.P.
(EnCap VI-B), EnCap Energy Capital Fund VII, L.P.
(EnCap Fund VII and, together with EnCap
Fund VI and EnCap VI-B, the EnCap Funds), David
B. Miller, D. Martin Phillips, Gary R. Petersen and Robert L.
Zorich, EnCap Fund VI has sole voting power and sole
dispositive power over 9,440,066 shares; EnCap VI-B has
sole voting power and sole dispositive power over
5,167,318 shares; and EnCap Fund VII has sole voting
power and sole dispositive power over 7,667,369 shares. |
|
|
|
The EnCap Funds are controlled indirectly by David B. Miller,
Gary R. Petersen, D. Martin Phillips and Robert L. Zorich.
Messrs. Miller, Petersen, Phillips and Zorich are members
of RNBD GP LLC (RNBD) and any action taken by RNBD
to dispose or acquire securities has to be unanimously approved
by all four members. RNBD is the sole member of EnCap
Investments GP, L.L.C. (EnCap Investments GP), which
is the general partner of EnCap Investments L.P. (EnCap
Investments LP), |
33
|
|
|
|
|
which is the general partner of EnCap Equity Fund VI GP,
L.P. (EnCap Fund VI GP) and EnCap Equity
Fund VII GP, L.P. (EnCap Fund VII GP).
EnCap Fund VI GP is the sole general partner of EnCap
Fund VI and EnCap Fund VII GP is the sole general
partner of EnCap Fund VII. EnCap Fund VI GP is
also the general partner of EnCap Energy Capital
Fund VI-B
(EnCap
Fund VI-B),
which is the sole member of EnCap VI-B Acquisitions GP, LLC
(EnCap VI-B GP), which is the sole general partner
of EnCap VI-B. Each of Messrs. Miller, Petersen, Phillips
and Zorich, RNBD, EnCap Investments GP, EnCap Investments LP,
EnCap Fund VI GP, EnCap Fund VII GP, EnCap
Fund VI-B
and EnCap
VI-B GP may
be deemed to share voting and dispositive power over the
reported securities; thus, each may also be deemed to be the
beneficial owner of these securities. In addition to the shares
over which he has shared voting and dispositive power,
Mr. Zorich has sole voting and dispositive power over
4,500 shares. |
|
|
|
Each of Messrs. Miller, Petersen, Phillips and Zorich,
RNBD, EnCap Investments GP, EnCap Investments LP, EnCap
Fund VI GP, EnCap Fund VII GP, EnCap
Fund VI-B
and EnCap VI-B GP disclaims beneficial ownership of the reported
securities in excess of such entitys or persons
respective pecuniary interest in the securities. |
|
(4) |
|
The address of EnCap Energy Capital Fund VI, L.P., EnCap
VI-B Acquisitions, L.P., EnCap Energy Capital Fund VII,
L.P., D. Martin Phillips, Gary R. Peterson and Robert L. Zorich
is 1100 Louisiana St., Suite 3150, Houston, Texas 77002. |
|
(5) |
|
The address of Mr. Miller is 3811 Turtle Creek Blvd.,
Suite 1080, Dallas, Texas 75219. |
|
(6) |
|
According to a Schedule 13G, dated February 14, 2011,
filed with the SEC by T. Rowe Price Associates, Inc., it has
sole voting power over 1,058,800 of these shares, no voting
power over the remainder and the sole dispositive power over all
of these shares. These securities are owned by various
individual and institutional investors which T. Rowe Price
Associates, Inc. (Price Associates) serves as an
investment adviser with power to direct investments and/or sole
power to vote the securities. For the purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that
it is, in fact, the beneficial owner of such securities. The
address of T. Rowe Price Associates, Inc. is
100 E. Pratt Street, Baltimore, Maryland 21202. |
|
(7) |
|
Executive officer or director of the Company. |
|
(8) |
|
Includes 304,838 shares held by Oasis Petroleum Management
LLC (OPM). OPM is controlled by a board of managers
consisting of Thomas B. Nusz and Taylor L. Reid, which exercises
voting and dispositive power over all securities held by OPM.
Messrs. Nusz and Reid each disclaim beneficial ownership of
the shares owned directly by OPM except to the extent of their
respective pecuniary interest. |
|
(9) |
|
Mr. Nusz has pledged 657,986 of these shares as security
for personal loans. |
|
(10) |
|
The address of Mr. Collins is 508 W. Wall Ave.,
Suite 1200, Midland, Texas 79701. |
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The executive officers and Directors of the Company and persons
who own more than 10% of the Companys common stock are
required to file reports with the SEC, disclosing the amount and
nature of their beneficial ownership in common stock, as well as
changes in that ownership. Based solely on its review of reports
and written representations that the Company has received, the
Company believes that all required reports were timely filed
during 2010.
TRANSACTIONS
WITH RELATED PERSONS
Procedures
for Review, Approval and Ratification of Related Person
Transactions
A Related Party Transaction is a transaction,
arrangement or relationship in which the Company or any of its
subsidiaries was, is or will be a participant, the amount of
which involved exceeds $120,000, and in
34
which any related person had, has or will have a direct or
indirect material interest. A Related Person means:
|
|
|
|
|
any person who is, or at any time during the applicable period
was, one of the Companys executive officers or one of its
Directors;
|
|
|
|
any person who is known by the Company to be the beneficial
owner of more than 5.0% of the Companys common stock;
|
|
|
|
any immediate family member of any of the foregoing persons,
which means any child, stepchild, parent, stepparent, spouse,
sibling,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law
or
sister-in-law
of a director, executive officer or a beneficial owner of more
than 5.0% of the Companys common stock, and any person
(other than a tenant or employee) sharing the household of such
director, executive officer or beneficial owner of more than
5.0% of the Companys common stock; and
|
|
|
|
any firm, corporation or other entity in which any of the
foregoing persons is a partner or principal or in a similar
position or in which such person has a 10.0% or greater
beneficial ownership interest.
|
The Board of Directors has determined that the Audit Committee
will periodically review all related person transactions that
the rules of the SEC require be disclosed in the Companys
proxy statement, and make a determination regarding the initial
authorization or ratification of any such transaction.
The Audit Committee is charged with reviewing the material facts
of all related person transactions and either approving or
disapproving of the Companys participation in such
transactions under the Companys Related Persons
Transaction Policy adopted by the Board of Directors on
May 17, 2010, which pre-approves certain related person
transactions, including:
|
|
|
|
|
any employment of an executive officer if his or her
compensation is required to be reported in the Companys
proxy statement under Item 402;
|
|
|
|
director compensation which is required to be reported in the
Companys proxy statement under Item 402;
|
|
|
|
any transaction with another company at which a Related
Persons only relationship is as an employee (other than an
executive officer), director or beneficial owner of less than
10% of that companys shares is pre-approved or ratified
(as applicable) if the aggregate amount involved for any
particular service does not exceed the greater of $500,000 or
25% of that companys total annual revenues; and
|
|
|
|
charitable contribution, grant or endowment by the Company to a
charitable organization, foundation or university at which a
Related Persons only relationship is as an employee (other
than an executive officer) or a director is pre-approved or
ratified (as applicable) if the aggregate amount involved does
not exceed the lesser of $200,000 or 10% of the charitable
organizations total annual receipts.
|
In determining whether to approve or disapprove entry into a
Related Party Transaction, the Audit Committee shall take into
account, among other factors, the following: (1) whether
the Related Party Transaction is on terms no less favorable than
terms generally available to an unaffiliated third-party under
the same or similar circumstances and (2) the extent of the
Related Persons interest in the transaction. Further, the
policy requires that all Related Party Transactions required to
be disclosed in the Companys filings with the SEC be so
disclosed in accordance with applicable laws, rules and
regulations.
There were no related persons transactions since May 17,
2010 which were required to be reported in Transactions
with Related Persons, where the procedures described above
did not require review, approval or ratification or where these
procedures were not followed. In addition, since January 1,
2007, there has not been, any transaction or series of similar
transactions to which the Company was or is a party in which the
amount involved exceeded or exceeds $120,000 and in which any of
the Companys Directors, executive officers, holders of
more than 5% of any class of its voting securities, or any
member of the immediate family of any of the foregoing persons,
had or will have a direct or indirect material interest, other
than compensation
35
arrangements with Directors and executive officers, which are
described in Executive Compensation and Other
Information, and the transactions described or referred to
below.
Corporate
Reorganization
In connection with the IPO and related corporate reorganization,
the Company engaged in certain transactions with certain
affiliates and its existing equity holders. As a part of such
corporate reorganization, the Company acquired all of the
outstanding membership interests in Oasis Petroleum LLC, the
Companys predecessor, in exchange for shares of the
Companys common stock. The Companys business
continues to be conducted through Oasis Petroleum LLC, as a
wholly owned subsidiary of the Company.
In addition, the outstanding membership interests in Oasis
Petroleum LLC were converted into membership interests in OAS
Holding Company LLC (OAS Holdco) pursuant to a
merger agreement. As a result of the merger, Oasis Petroleum LLC
became a wholly owned subsidiary of OAS Holdco, and, pursuant to
a contribution agreement, OAS Holdco contributed all of the
membership interests in Oasis Petroleum LLC to the Company in
exchange for 61,630,000 shares of the Companys common
stock. In December 2010, OAS Holdco, pursuant to its limited
liability company agreement, distributed all of its shares of
the Companys common stock to its members, including
certain members of management, certain EnCap funds and certain
private investors. Following these distributions, OAS Holdco was
dissolved.
Historical
Transactions with Oasis Petroleum LLC
Since its inception and prior to the IPO, Oasis Petroleum LLC
issued additional membership interests as consideration for
capital contributions received from its members, including
EnCap, Oasis Petroleum Management LLC and other private
investors. Capital contributions for the years ended
December 31, 2009 and 2008 and the period ended
December 31, 2007 were $104.6 million,
$80.5 million and $49.9 million, respectively. In
addition, Oasis Petroleum LLC has paid the legal fees of EnCap
and Oasis Petroleum Management LLC in connection with these
transactions.
In connection with each of its capital contributions prior to
our IPO, EnCap received a placement fee in an amount equal to 2%
of its capital contributions. Such placement fees were remitted
by the Company to EnCap or its designee. Placement fees for the
years ended December 31, 2009 and 2008 and the period ended
December 31, 2007 were $1.6 million, $1.2 million
and $1.0 million, respectively.
Service
Agreement
The Company is a party to a service agreement with Oasis
Petroleum Management LLC, pursuant to which we have agreed to
provide certain administrative services, including legal and
accounting services. The Company was party to a similar service
agreement with OAS Holdco prior to its dissolution in December
2010. In return for such services, we receive a monthly fee of
$4,000, which we believe is a reasonable estimate of the costs
and expenses we will incur by providing such services as well as
reimbursement for any third party consultants engaged by the
Company to provide such services.
Registration
Rights Agreement
In connection with the IPO, the Company entered into a
registration rights agreement (the Registration Rights
Agreement) with OAS Holdco. The rights and obligations of
OAS Holdco under the Registration Rights Agreement were assigned
to certain affiliates of EnCap in connection with the
dissolution of OAS Holdco on December 15, 2010. The
Registration Rights Agreement requires the Company to file,
within one hundred and twenty (120) days of receipt of a
demand notice issued by EnCap, a registration statement with the
SEC permitting the public offering of registrable securities. In
addition, the Registration Rights Agreement grants EnCap the
right to join the Company, or piggyback, in certain
circumstances, if the Company is selling its common stock in a
primary offering or another partys common stock in a
secondary offering.
36
ITEM TWO
RATIFICATION
OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected
PricewaterhouseCoopers LLP as the independent auditors of the
Company for 2011. PricewaterhouseCoopers LLP has audited the
Companys consolidated financial statements since its
inception on February 26, 2007. The 2010 audit of the
Companys annual consolidated financial statements was
completed on March 10, 2011.
The Board of Directors is submitting the selection of
PricewaterhouseCoopers LLP for ratification at the Annual
Meeting. The submission of this matter for approval by
stockholders is not legally required, but the Board of Directors
and the Audit Committee believe the submission provides an
opportunity for stockholders through their vote to communicate
with the Board of Directors and the Audit Committee about an
important aspect of corporate governance. If the stockholders do
not ratify the selection of PricewaterhouseCoopers LLP, the
Audit Committee will reconsider the selection of that firm as
the Companys auditors.
The Audit Committee has the sole authority and responsibility to
retain, evaluate and replace the Companys auditors. The
stockholders ratification of the appointment of
PricewaterhouseCoopers LLP does not limit the authority of the
Audit Committee to change auditors at any time.
Audit and
Other Fees
The table below sets forth the aggregate fees billed by
PricewaterhouseCoopers LLP, the Companys independent
registered public accounting firm, for the last two fiscal years
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Audit Fees(1)
|
|
$
|
655
|
|
|
$
|
1,008
|
|
Tax Fees(2)
|
|
|
344
|
|
|
|
133
|
|
Other Fees
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,001
|
|
|
$
|
1,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes review of the Companys quarterly financial
statements included in its Quarterly Reports on
Form 10-Q
for the year ended December 31, 2010 and review of the
Companys other filings with the SEC, including review and
preparation of registration statements, comfort letters,
consents and research necessary to comply with generally
accepted auditing standards for the years ended
December 31, 2010 and 2009. |
|
(2) |
|
Tax return preparation and consultation on tax matters. |
The charter of the Audit Committee and its pre-approval policy
require that the Audit Committee review and pre-approve the plan
and scope of PricewaterhouseCoopers LLPs audit, tax and
other services. After June 22, 2010, the date of the
Companys IPO, the Audit Committee pre-approved 100% of the
services described above under the captions Audit
Fees and Tax Fees.
The Company expects that representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting
to respond to appropriate questions and to make a statement if
they desire to do so.
The Board of Directors unanimously recommends that
stockholders vote FOR the ratification of the selection of
PricewaterhouseCoopers LLP as the auditors of the Company for
2011.
ITEM THREE
(A)
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
Introduction
We are asking our stockholders to provide advisory, non-binding
approval of the compensation paid to our Named Executive
Officers, as described in the Executive Compensation and
Other Information section
37
of this proxy statement, beginning on page 19. Our Board of
Directors recognizes that executive compensation is an important
matter for our stockholders. As described in detail in the
CD&A section of this proxy statement, the Compensation
Committee is tasked with the implementation of our executive
compensation philosophy, and the core of that philosophy is to
pay our executives based on performance. In particular, the
Compensation Committee strives to attract, retain and motivate
exceptional executives, to reward past performance measured
against established goals and provide incentives for future
performance, and to align executives long-term interests
with the interests of our stockholders. To do so, the
Compensation Committee uses a combination of short- and
long-term incentive compensation to reward near-term excellent
performance and to encourage executives commitment to our
long-range, strategic business goals. It is the intention of the
Compensation Committee that our executive officers be
compensated competitively and consistently with our strategy,
sound corporate governance principles, other companies in the
same and closely related industries, and stockholder interests
and concerns.
As described in the CD&A, we believe our compensation
program is effective, appropriate and strongly aligned with the
long-term interests of our stockholders and that the total
compensation package provided to our Named Executive Officers
(including potential payouts upon a termination or change of
control) are reasonable and not excessive. As you consider this
Item 3(A), we urge you to read the CD&A section of
this proxy statement for additional details on executive
compensation, including information about our compensation
philosophy and objectives and the past compensation of our Named
Executive Officers, and to review the tabular disclosures
regarding Named Executive Officer compensation together with the
accompanying narrative disclosures in the Executive
Compensation and Other Information section of this proxy
statement. Among the program features incorporated by the
Compensation Committee to align with our executive compensation
philosophy are the following:
|
|
|
|
|
Equity-based awards incorporate a three-year vesting period to
emphasize long-term performance and executive officer commitment;
|
|
|
|
Our annual performance-based cash awards incorporate numerous
financial
and/or
strategic performance metrics in order to properly balance risk
with the incentives to drive our key annual financial
and/or
strategic initiatives and impose maximum payouts to further
manage risk and the possibility of excessive payments;
|
|
|
|
We have focused our executives on long-term stockholder value
creation through our use of equity-based awards and the adoption
of stock ownership guidelines that encourage our senior
executives to own a significant amount of the Companys
stock; and
|
|
|
|
Cash payments under the Change in Control and Severance Benefit
Plan and similar provisions of employment agreements require a
double trigger (i.e., a termination in connection with a change
in control).
|
We believe that the stockholders, by voting for Directors
individually as described in Item 1, have had a clear
ability to express their approval or disapproval of the
performance of our Directors and, specifically the Directors
serving on the Compensation Committee; however, Congress has
recently enacted the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Act), which requires, among
other things, a non-binding advisory Say on Pay vote
and gives our stockholders the opportunity to express their
views on our Named Executive Officers compensation. This
vote is not intended to address any specific item of
compensation, but rather the overall compensation of our Named
Executive Officers and the philosophy, policies and practices
described in this proxy statement.
As an advisory vote, Item 3(A) is not binding on our Board
of Directors or the Compensation Committee, will not overrule
any decisions made by our Board of Directors or the Compensation
Committee, or require our Board of Directors or the Compensation
Committee to take any specific action. Although the vote is
non-binding, our Board of Directors and the Compensation
Committee value the opinions of our stockholders, and will
carefully consider the outcome of the vote when making future
compensation decisions for our Named Executive Officers. In
particular, to the extent there is any significant vote against
our Named Executive
38
Officers compensation as disclosed in this Proxy
Statement, we will consider our stockholders concerns, and
the Compensation Committee will evaluate whether any actions are
necessary to address those concerns.
Text of
the Resolution to be Adopted
We are asking stockholders to vote For the following
resolution:
RESOLVED, that the stockholders approve, on an advisory
basis, the compensation philosophy, policies and procedures and
the compensation of the Named Executive Officers as disclosed in
this proxy statement pursuant to the compensation disclosure
rules of the Securities and Exchange Commission
(SEC), including the CD&A, the 2010 Summary
Compensation Table and the other related tables and
disclosures.
Vote
Required
The affirmative vote of stockholders holding at least a majority
of the shares present and entitled to be voted on the proposal
on the record date for determining stockholders entitled to vote
at the 2011 Annual Meeting is required for approval of
Item 3(A). If you own shares through a bank, broker or
other holder of record, you must instruct your bank, broker or
other holder of record how to vote in order for them to vote
your shares so that your vote can be counted on this proposal.
Recommendation
of our Board of Directors
OUR BOARD OF DIRECTORS RECOMMENDS, IN ITEM 3(A), AN
ADVISORY VOTE FOR THE APPROVAL OF THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY
STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF
THE SEC.
ITEM THREE
(B)
ADVISORY
VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
Introduction
In addition to the advisory Say on Pay vote, the Act
also requires a related non-binding advisory vote that enables
our stockholders to indicate how frequently we should seek an
advisory Say on Pay vote, such as Item 3(A)
included in this proxy statement, on the compensation of our
Named Executive Officers, as disclosed pursuant to the
SECs compensation disclosure rules. By voting on
Item 3(B), stockholders may indicate whether the advisory
Say on Pay vote should occur every three years,
every two years or every year. After careful consideration of
this Item 3(B), our Board of Directors has determined that
an advisory vote on executive compensation that occurs every two
years is the most appropriate alternative for our company, and
therefore our Board of Directors recommends that you support a
frequency period of every two years for the advisory vote on
executive compensation.
Setting a two-year period for holding this stockholder vote will
enhance stockholder communication by providing a clear, simple
means for our company to obtain information on investor
sentiment about our executive compensation philosophy. An
advisory vote once every two years will be the most effective
timeframe for us to respond to stockholders feedback by
providing us with sufficient time to engage with stockholders to
understand and respond to the vote results and to implement
changes based upon those results. We also believe a bi-annual
vote is preferable to an annual vote, which might hinder the
long-term focus of our compensation plans or overburden
investors. Our executive compensation programs are based on our
long-term business strategy, which we believe is most
appropriately assessed over at least a two-year timeframe. In
addition, as a recently public company with limited operating
history, we believe a two-year timeframe will provide sufficient
time to assess our compensation program.
39
Text of
the Resolution to be Adopted
You may cast your vote on your preferred voting frequency by
choosing the option of one year, two years, three years or
abstain from voting when you vote in response to the resolution
set forth below.
RESOLVED, that an advisory Say on Pay vote of
our stockholders to approve the compensation of the Named
Executive Officers, as disclosed pursuant to the SECs
compensation disclosure rules (which disclosure includes the
CD&A, the 2010 Summary Compensation Table, and the other
related tables and disclosures), shall be held at an annual
meeting of stockholders, beginning with the 2011 Annual Meeting
of Stockholders, (i) every three years, (ii) every two
years, or (iii) every year.
Vote
Required
Although non-binding, the Board of Directors and the
Compensation Committee will carefully review the voting results
on this Item 3(B). Notwithstanding the Boards
recommendation and the outcome of the stockholder vote, the
Board of Directors may in the future decide to conduct advisory
Say on Pay votes on a more or less frequent basis
and may vary its practice based on factors such as discussions
with stockholders or material changes to compensation programs.
If you own shares through a bank, broker or other holder of
record, you must instruct your bank, broker or other holder of
record how to vote in order for them to vote your shares so that
your vote can be counted on this proposal.
Recommendation
of our Board of Directors
OUR BOARD OF DIRECTORS RECOMMENDS THAT, IN ITEM 3(B),
STOCKHOLDERS VOTE FOR A FREQUENCY OF TWO YEARS FOR FUTURE
NON-BINDING SAY ON PAY STOCKHOLDER VOTES ON
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
STOCKHOLDER
PROPOSALS; IDENTIFICATION OF DIRECTOR CANDIDATES
Any stockholder of the Company who desires to submit a proposal
for action at the 2012 annual meeting of Stockholders and wishes
to have such proposal (a
Rule 14a-8
Proposal) included in the Companys proxy materials,
must submit such
Rule 14a-8
Proposal to the Company at its principal executive offices no
later than January 6, 2012, unless the Company notifies the
stockholders otherwise. Only those
Rule 14a-8
Proposals that are timely received by the Company and proper for
stockholder action (and otherwise proper) will be included in
the Companys proxy materials.
Any stockholder of the Company who desires to submit a proposal
for action at the 2012 annual meeting of stockholders, but does
not wish to have such proposal (a
Non-Rule 14a-8
Proposal) included in the Companys proxy materials,
must submit such
Non-Rule 14a-8
Proposal to the Company at its principal executive offices so
that it is received between January 6, 2012 and
February 5, 2012, unless the Company notifies the
stockholders otherwise. If a
Non-Rule 14a-8
Proposal is not received by the Company on or before
February 5, 2012, then the Company intends to exercise its
discretionary voting authority with respect to such
Non-Rule 14a-8
Proposal.
Discretionary voting authority is the ability to
vote proxies that stockholders have executed and submitted to
the Company, on matters not specifically reflected in the
Companys proxy materials, and on which stockholders have
not had an opportunity to vote by proxy.
It is the responsibility of the Nominating and Governance
Committee to identify, evaluate and recommend to the Board the
Directors nominees for election at the annual meeting of
stockholders, as well as to fill vacancies or additions on the
Board of Directors that may occur between annual meetings. The
Nominating and Governance Committee endeavors to recommend only
director candidates who possess the highest personal values and
integrity; who have experience and have exhibited achievements
in one or more of the key professional, business, financial,
legal and other challenges that face a U.S. independent oil
and gas company; who exhibit sound judgment, intelligence,
personal character, and the ability to make independent
analytical
40
inquiries; who demonstrate a willingness to devote adequate time
to Board of Director duties; and who are likely to be able to
serve on the Board of Directors for a sustained period.
The Nominating and Governance Committees charter requires
consideration of the diversity of, and the optimal enhancement
of the current mix of talent and experience on, the Board. In
that regard, the Nominating and Governance Committee endeavors
to achieve an overall balance of diversity of experiences,
skills, attributes and viewpoints among our Directors. The
Nominating and Governance Committee believes it has achieved
that balance through the representation on the Board of members
having experience in the oil and gas industry, accounting and
investment analysis, among other areas. In connection with this
consideration, the Nominating and Governance Committee
considered Mr. McShanes experience as a chief
executive officer, chief financial officer, and accounting
officer in the oil and gas industry. Messrs. Zorich,
Swanson, and Cassidy each have experience with investment
analysis in the oil and gas industry. Mr. Collins,
Mr. Nusz, and Mr. Reid each have significant
operational experience in the oil and gas industry. The
Nominating and Governance Committee does not discriminate based
upon race, religion, sex, national origin, age, disability,
citizenship or any other legally protected status.
In identifying potential director candidates, the Nominating and
Governance Committee relies on any source available for the
identification and recommendation of candidates, including
current Directors and officers. In addition, the Nominating and
Governance Committee from time to time will engage a third party
search firm to identify or evaluate, or assist in identifying or
evaluating potential candidates, for which the third party
search firm will be paid a fee.
The Nominating and Governance Committee will also consider any
nominee recommended by stockholders for election at the annual
meeting of stockholders to be held in 2012 if that nomination is
submitted in writing, between January 6, 2012 and
February 5, 2012, to Oasis Petroleum Inc., 1001 Fannin
Street, Suite 1500, Houston, Texas 77002, Attention:
Corporate Secretary. With respect to each such nominee, the
following information must be provided to the Company with the
written nomination:
a) the nominees name, address and other personal
information;
b) the number of shares of each class and series of stock
of the Company held by such nominee;
c) the nominating stockholders name, residential
address and telephone number, and business address and telephone
number; and
d) all other information required to be disclosed pursuant
to Regulation 14A of the Securities and Exchange Act of
1934.
Each submission must also include a statement of the
qualifications of the nominee, a notarized consent signed by the
nominee evidencing a willingness to serve as a director, if
elected, and a written representation and agreement that such
person (i) is not and will not become a party to any voting
agreement or compensation agreement that has not been disclosed
to the Company or that could limit or interfere with the
nominees ability to comply with their fiduciary duties
under applicable law and (ii) will comply with all of the
Companys applicable corporate governance, conflict of
interest, confidentiality and stock ownership and trading
policies and guidelines.
Written requests for inclusion of any stockholder proposal
should be addressed to Oasis Petroleum Inc., 1001 Fannin Street,
Suite 1500, Houston, Texas 77002, Attention: Corporate
Secretary. The Company suggests that any such proposal be sent
by certified mail, return receipt requested.
SOLICITATION
OF PROXIES
Solicitation of Proxies may be made via the Internet, by mail,
personal interview or telephone by officers, Directors and
regular employees of the Company. The Company may also request
banking institutions, brokerage firms, custodians, nominees and
fiduciaries to forward solicitation material to the beneficial
owners of the common stock that those companies or persons hold
of record, and the Company will reimburse the
41
forwarding expenses. In addition, the Company has retained
Broadridge Financial Solutions to tabulate votes for a fee
estimated not to exceed $10,000. The Company will bear all costs
of solicitation.
STOCKHOLDER
LIST
In accordance with the Delaware General Corporation Law, the
Company will maintain at its corporate offices in Houston,
Texas, a list of the stockholders entitled to vote at the Annual
Meeting. The list will be open to the examination of any
stockholder, for purposes germane to the Annual Meeting, during
ordinary business hours for ten days before the Annual Meeting.
PROXY
MATERIALS ANNUAL REPORT AND OTHER INFORMATION
The Companys Annual Report to Stockholders for the year
ended December 31, 2010, is being made available to
stockholders concurrently with this Proxy Statement and does not
form part of the proxy solicitation material.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON MAY 5, 2011:
A COPY OF THE PROXY STATEMENT, THE FORM OF PROXY, THE
COMPANYS ANNUAL REPORT ON
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2010 AND THE 2010 ANNUAL REPORT
TO STOCKHOLDERS ARE AVAILABLE FREE OF CHARGE AT
www.proxyvote.com.
A copy of the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010, as filed with the
SEC, will be sent to any stockholder without charge upon written
request. One copy of the Notice, this Proxy Statement and our
Annual Report on
Form 10-K
(the Proxy Materials) will be sent to stockholders
who share an address, unless they have notified the Company that
they want to continue receiving multiple packages. A copy of the
Proxy Materials will also be sent upon written or oral request
to any stockholder of a shared address to which a single copy of
the Proxy Materials was delivered. If two or more stockholders
with a shared address are currently receiving only one copy of
the Proxy Materials, then the stockholders may request to
receive multiple packages in the future, or if a stockholder is
currently receiving multiple packages of the Proxy Materials,
then the stockholder may request to receive a single copy in the
future. Such requests may be made by writing to Investor
Relations, Oasis Petroleum Inc., 1001 Fannin Street,
Suite 1500, Houston, Texas 77002 or by calling
(281) 404-9600.
The Annual Report on
Form 10-K
is also available at the SECs website in its EDGAR
database at www.sec.gov.
INTERNET
AND PHONE VOTING
For shares of stock that are registered in your name, you may
vote by internet or phone using procedures provided by
Broadridge Financial Solutions, Inc. (Broadridge).
Votes submitted by internet or phone must be received by
11:59 p.m., Eastern Time, on Wednesday, May 4, 2011.
The giving of such a proxy will not affect your right to vote in
person should you decide to attend the Annual Meeting.
The internet and phone voting procedures are designed to
authenticate stockholder identities, to allow stockholders to
give their voting instructions and to confirm that
stockholders instructions have been recorded properly.
Stockholders voting by internet should remember that the
stockholder must bear costs associated with electronic access,
such as usage charges from internet access providers and
telephone companies.
For shares of stock that are registered in a street name (the
stockholder owns shares in the name of a bank, broker or other
holder of record on the books of the Companys transfer
agent), you will receive instructions with your proxy materials
that you must follow in order to have your shares voted. Please
review your Proxy or voting instruction card to determine
whether you can vote by phone or electronically.
******
42
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
VOTE BY INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES
OF THE PROXY MATERIAL, BY COMPLETING, SIGNING AND RETURNING THE
PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE.
By Order of the Board of Directors,
Nickolas J. Lorentzatos
Corporate Secretary
Houston, Texas
March 16, 2011
43
OASIS PETROLEUM INC 1001 FANNIN STREET, SUITE 1500 HOUSTON TX 77002 Investor Address Line 1
Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5
John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 VOTE BY INTERNET www.proxyvote.com Use the
Internet to transmit your voting instructions and for electronic delivery of information up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in
hand when you access the web site and follow the instructions to obtain your records and to create
an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would
like to reduce the costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery, please follow the instructions above to vote
using the Internet and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years. VOTE BY PHONE 1-800-690-6903 Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE
BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have
provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME
CONTROL # SHARES THE COMPANY NAME INC. COMMON 123,456,789,012.12345 THE COMPANY NAME INC. CLASS
A 123,456,789,012.12345 THE COMPANY NAME INC. CLASS B 123,456,789,012.12345 THE COMPANY NAME INC.
- CLASS C 123,456,789,012.12345 THE COMPANY NAME INC. CLASS D 123,456,789,012.12345 THE COMPANY
NAME INC. CLASS E 123,456,789,012.12345 THE COMPANY NAME INC. CLASS F 123,456,789,012.12345 THE
COMPANY NAME INC. 401 K 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED. For Withhold For All All All Except To withhold authority to vote
for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on
the line below. The Board of Directors recommends you vote FOR the following: 1. Election of
Directors Nominees 01 Ted Collins, Jr. 02 Douglas E. Swanson, Jr. OASIS PETROLEUM INC 1001 FANNIN
STREET, SUITE 1500 HOUSTON TX 77002 Investor Address Line 1 Investor Address Line 2 Investor
Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY
CITY, ON A1A 1A1 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor
Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 VOTE
BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in
mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE -
1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy card in hand
when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card
and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote FOR
proposals 2 and 3A. For Against Abstain 2. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS 3A.
ADVISORY VOTE ON EXECUTIVE COMPENSATION The Board of Directors recommends you vote 2 YEARS on the
following proposal: 1 year 2 years 3 years Abstain 3B. ADVISORY VOTE ON THE FREQUENCY OF THE
ADVISORY VOTE ON EXECUTIVE COMPENSATION NOTE: Such other business as may properly come before the
meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When
signing as attorney, executor, administrator, or other fiduciary, please give full title as such.
Joint owners should each sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN
WITHIN BOX] Date Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date SHARES CUSIP
# SEQUENCE |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice &
Proxy Statement, Annual Report on Form 10-K is/are available at www.proxyvote.com . OASIS PETROLEUM
INC Annual Meeting of Shareholders May 5, 2011 9:00 AM CDT This proxy is solicited by the Board of
Directors The undersigned hereby appoints Thomas B. Nusz and Nickolas J. Lorentzatos, and each of
them, as attorneys in fact and proxies with full power of substitution and revocation as to each of
them, to represent the undersigned and to vote all the shares of common stock of Oasis Petroleum
Inc. that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on
May 5, 2011, and any adjournment or postponement thereof, upon the matters set forth on the reverse
side. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, THE NAMED PROXIES WILL VOTE FOR THE PROPOSALS AS TO ITEMS 1, 2, AND 3A, AND TWO
YEARS AS TO ITEM 3B. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. TO BE VALID, THIS PROXY
MUST BE SIGNED. Continued and to be signed on reverse side |