Jones Energy,Inc. (NYSE:JONE) Files An 8-K Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of ListingItem 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Ruleor Standard; Transfer of Listing.
On September27, 2018, Mr.Paul Lloyd Jr. and Mr.John Lovoi resigned from the board of directors (the “Board”) of Jones Energy,Inc. (the “Company”) and all committees thereof, effective as of September28, 2018. Mr.Lloyd was a member of the Audit Committee and Mr. Lovoi was a member of the Compensation Committee and the chair of the Nominating and Corporate Governance Committee. As a result of Mr.Lloyd’s departure from the Board, the Company is temporarily deficient of the requirement under Section303A.07(a)of the New York Stock Exchange (“NYSE”) Listed Company Manual that audit committees be comprised of at least three independent directors. As a result of Messrs. Lloyd and Lovoi’s resignations the Company is temporarily deficient of the requirement under Section 303A.01 of the NYSE Listed Company Manual that requires that the board of directors of a listed company be comprised of a majority of independent directors. On September28, 2018, the Company filed an interim written affirmation with the NYSE notifying the NYSE that it is deficient in meeting these requirements of the NYSE listed Company Manual. The Company has commenced its search for candidates to replace Messrs.Lloyd and Lovoi on the Board and Audit Committee who will meet the independence requirements of Section10A-3 of, and Rule10A-3 under, the Securities Exchange Act of 1934, as amended, and Section303A.02 of the NYSE Listed Company Manual. The Company expects to receive an official notice from the NYSE that it is deficient in the NYSE Listed Company Manual requirement to have an audit committee comprised of at least three independent directors and a board of directors comprised of a majority of independent directors.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Director Resignations
As described above, on September27, 2018, Mr.Lloyd resigned from the Board and all committees thereof, effective as of September28, 2018. Mr.Lloyd was a member of the Audit Committee.
As described above, on September27, 2018, Mr. Lovoi resigned from the Board and all committees thereof, effective as of September28, 2018. Mr.Lovoi was a member of the Compensation Committee and the chair of the Nominating and Corporate Governance Committee.
In connection with these resignations, to the bylaws of the Company, the Board voted to decrease the size of the Board from eight to seven members. Further, as of September28, 2018, the Board appointed Mr.Hal Washburn as chair of the Nominating and Governance Committee.
Appointment to the Board of Directors
On September28, 2018, the Board appointed Mr.Carl Giesler to the Board. Mr.Giesler currently serves as the Chief Executive Officer of the Company.
On August8, 2018, Jones Energy, LLC, a wholly owned subsidiary of the Company, entered into an Amended and Restated Employment Agreement (the “Agreement”) with Mr.Giesler, in his capacity as the Company’s Chief Executive Officer which amended and restated the employment agreement entered into with Mr.Giesler on July12, 2018 and effective July23, 2018 (the “Employment Date”). Unless terminated earlier in accordance with its terms, the Agreement will continue for an initial term of two years. In addition, on each anniversary of the Employment Date following the initial term, unless the Agreement has been terminated, the term of the Agreement will automatically be extended for an additional year unless either party provides written notice of non-renewal at least 90 days prior to such anniversary.
The Agreement provides that for his services as the Company’s Chief Executive Officer, Mr.Giesler will receive an annualized base salary of $495,000. In addition, Mr.Giesler will (1)be entitled to discretionary incentive payments under the Company’s short-term bonus plan based on an annual target bonus of 50% to 150% of his base salary upon the attainment of specified performance goals established by the Board, or the Compensation Committee of the Board, in its sole discretion and (2)be entitled to a guaranteed bonus payment of $371,250 in respect of the 2018 performance year within 30 days of the Effective Date, provided that Mr.Giesler will be required to repay such bonus if he is terminated for Cause (as defined in the Agreement) or resigns without Good Reason (as defined in the Agreement) before July23, 2019. The Agreement also reflects grants, which were both made by the Company effective as of the Employment date, of (i)a compensatory cash award in an aggregate amount of $320,000 (the “Cash Award”), which will vest and be paid out in equal one-third installments on April1, 2019, October1, 2019 and April1, 2020 and will be made to a cash award agreement (the “Cash Award Agreement”) under the Company’s Amended and Restated 2013 Omnibus Incentive Plan (the “Plan”) and (ii)3,000,000 Restricted Stock Units (“RSUs”), with each RSU representing one share of ClassA common stock of the Company, which will vest in equal one-third installments on July1, 2019, July1, 2020 and July1, 2021 subject to Mr.Giesler’s continued employment. The grant of RSUs was offered by the Company as a material inducement to Mr.Giesler’s hiring as Chief Executive Officer outside the terms of the Plan or any other incentive plan and was approved by the Compensation Committee of the Company’s Board of Directors in reliance on the employment inducement exemption under the NYSE’s Listed Company Manual Rule303A.08.