Legacy Reserves LP (NASDAQ:LGCY) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02
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Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On February 21, 2017, the Compensation Committee (the Committee)
of the Board of Directors (the Board) of Legacy Reserves GP, LLC,
the general partner (the General Partner) of Legacy Reserves LP
(the Partnership), approved certain amendments to the Legacy
Reserves LP Compensation Policy, as previously adopted on March
7, 2013 and subsequently amended, applicable to the General
Partners executive officers (as amended, the Compensation
Policy). Except as otherwise noted, the amendments to the
Compensation Policy apply to incentive awards granted commencing
in fiscal year 2018 in accordance with the Compensation Policy
with respect to the Partnerships and the executive officers
performance during fiscal year 2017. The amendments to the
Compensation Policy are highlighted below.
of the Board of Directors (the Board) of Legacy Reserves GP, LLC,
the general partner (the General Partner) of Legacy Reserves LP
(the Partnership), approved certain amendments to the Legacy
Reserves LP Compensation Policy, as previously adopted on March
7, 2013 and subsequently amended, applicable to the General
Partners executive officers (as amended, the Compensation
Policy). Except as otherwise noted, the amendments to the
Compensation Policy apply to incentive awards granted commencing
in fiscal year 2018 in accordance with the Compensation Policy
with respect to the Partnerships and the executive officers
performance during fiscal year 2017. The amendments to the
Compensation Policy are highlighted below.
Cash Incentive Compensation (Cash Bonus). The objective component
pertaining to growth in cash distributions has been deleted and
replaced by a measure of ratio of Total Debt (as defined in the
Partnerships Third Amended and Restated Credit Agreement, as
amended) to EBITDA (as defined as Adjusted EBITDA in the
Partnerships annual report on Form 10-K) at the last day of the
given period.
pertaining to growth in cash distributions has been deleted and
replaced by a measure of ratio of Total Debt (as defined in the
Partnerships Third Amended and Restated Credit Agreement, as
amended) to EBITDA (as defined as Adjusted EBITDA in the
Partnerships annual report on Form 10-K) at the last day of the
given period.
The percentage levels that may be earned each year are based on
the ranges of performance levels with respect to the target as
set forth in the following table, as determined by straight-line
interpolation. In addition, such levels pertaining to the EBITDA
target have been amended as set forth in the table below.
the ranges of performance levels with respect to the target as
set forth in the following table, as determined by straight-line
interpolation. In addition, such levels pertaining to the EBITDA
target have been amended as set forth in the table below.
The General Partners executive officers will not receive a cash
bonus (with respect to either of the two performance measures)
under this objective component unless the Partnership achieves a
Total Debt to EBITDA ratio that is less than 125% of the target
Total Debt to EBITDA ratio or achieves EBITDA that is greater
than 75% of the target EBITDA for the year.
bonus (with respect to either of the two performance measures)
under this objective component unless the Partnership achieves a
Total Debt to EBITDA ratio that is less than 125% of the target
Total Debt to EBITDA ratio or achieves EBITDA that is greater
than 75% of the target EBITDA for the year.
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Measure
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Weight
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Performance Level/Percent Earned
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||
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EBITDA
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50%
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75% of Target
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50% of Target
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125% of Target
|
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0%
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50%
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200%
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||
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Ratio of Total Debt to EBITDA
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50%
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125% of Target
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Target
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75% of Target
|
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0%
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50%
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200%
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||
The target levels and the related tiers of percent earned
relative to performance level, for purposes of the annual cash
bonus determination only, will be set by the Committee at the
beginning of each year after considering managements
recommendation.
relative to performance level, for purposes of the annual cash
bonus determination only, will be set by the Committee at the
beginning of each year after considering managements
recommendation.
All other components of the Cash Incentive Compensation (Cash
Bonus) remain in effect.
Bonus) remain in effect.
Equity-Based Incentive Compensation.
Subjective or Service-Based Component. Phantom units granted to
the subjective or service-based component, including those
granted in 2017 with respect to 2016 performance, will be settled
two thirds in cash and one third in Partnership units. The
phantom units to be settled in cash will not be subject to a cap
on the maximum amount payable per phantom unit. The grants of
phantom units to the subjective or service-based component of the
equity-based incentive compensation terms of the Compensation
Policy, including those granted in 2017 with respect to 2016
performance, will be made to grant agreements between the
Partnership and the applicable executive officers in
substantially the forms attached hereto as Exhibit 10.1 and 10.2,
as applicable.
the subjective or service-based component, including those
granted in 2017 with respect to 2016 performance, will be settled
two thirds in cash and one third in Partnership units. The
phantom units to be settled in cash will not be subject to a cap
on the maximum amount payable per phantom unit. The grants of
phantom units to the subjective or service-based component of the
equity-based incentive compensation terms of the Compensation
Policy, including those granted in 2017 with respect to 2016
performance, will be made to grant agreements between the
Partnership and the applicable executive officers in
substantially the forms attached hereto as Exhibit 10.1 and 10.2,
as applicable.
Objective or Performance-Based Component. The matrix used to
evaluate the Partnerships total unitholder return for determining
the percentage of equity grants made under the objective
component that will vest has been amended to the following:
evaluate the Partnerships total unitholder return for determining
the percentage of equity grants made under the objective
component that will vest has been amended to the following:
|
Legacy TUR Ranking vs Peer Group/Adjusted Alerian Index
(as defined in the Compensation Policy) |
=90th %ile
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50%
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125%
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150%
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175%
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200%
|
||||||||
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75th %ile
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75%
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50%
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125%
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150%
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175%
|
|||||||||
|
50th %ile
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50%
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75%
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50%
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125%
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150%
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|||||||||
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25th %ile
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0%
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50%
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75%
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50%
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125%
|
|||||||||
|
=10th %ile
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0%
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25%
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50%
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75%
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50%
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|||||||||
|
=0%
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8.0%
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12.0%
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20.0%
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=25%
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||||||||||
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Three-Year Average Annual Legacy TUR
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||||||||||||||
Phantom units granted to the objective component, including those
granted in 2017 with respect to 2016 performance, will be settled
in cash and will not be subject to a cap on the maximum amount
payable per phantom unit. The grants of phantom units to the
objective component of the equity-based incentive compensation
terms of the Compensation Policy, including those granted in 2017
with respect to 2016 performance, will be made to grant
agreements between the Partnership and the applicable executive
officers in substantially the form attached hereto as Exhibit
10.3.
granted in 2017 with respect to 2016 performance, will be settled
in cash and will not be subject to a cap on the maximum amount
payable per phantom unit. The grants of phantom units to the
objective component of the equity-based incentive compensation
terms of the Compensation Policy, including those granted in 2017
with respect to 2016 performance, will be made to grant
agreements between the Partnership and the applicable executive
officers in substantially the form attached hereto as Exhibit
10.3.
All other components of the Equity-Based Incentive Compensation
remain in effect.
remain in effect.
Quarterly Cash Retention Bonuses
On February 21, 2017, the Committee approved the payment of
quarterly cash retention bonuses to the General Partners
executive officers for each quarter of the fiscal year ending
December 31, 2017. The quarterly cash retention bonuses shall be
paid with respect to quarters ending March 31, June 30, September
30 and December 31, 2017 in the event that the executive officer
remains continuously employed with the Partnership through the
end of such quarter. The quarterly cash retention bonuses will be
paid to retention bonus agreements between an affiliate of the
Partnership and the applicable executive officers in
substantially the form attached hereto as Exhibit 10.4. The
amounts of the quarterly cash retention bonuses will not offset
any award of phantom units to the executive officers that are
payable in cash. The quarterly cash retention bonuses with
respect to each of the quarters ended March 31, June 30,
September 30 and December 31, 2016 to the following executive
officers are as follows:
quarterly cash retention bonuses to the General Partners
executive officers for each quarter of the fiscal year ending
December 31, 2017. The quarterly cash retention bonuses shall be
paid with respect to quarters ending March 31, June 30, September
30 and December 31, 2017 in the event that the executive officer
remains continuously employed with the Partnership through the
end of such quarter. The quarterly cash retention bonuses will be
paid to retention bonus agreements between an affiliate of the
Partnership and the applicable executive officers in
substantially the form attached hereto as Exhibit 10.4. The
amounts of the quarterly cash retention bonuses will not offset
any award of phantom units to the executive officers that are
payable in cash. The quarterly cash retention bonuses with
respect to each of the quarters ended March 31, June 30,
September 30 and December 31, 2016 to the following executive
officers are as follows:
|
Executive Officer
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Amount
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Paul T. Horne
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$
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125,000
|
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James Daniel Westcott
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$
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100,000
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Kyle M. Hammond
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$
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100,000
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Kyle A. McGraw
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$
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50,000
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Dan G. LeRoy
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$
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25,000
|
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit Number
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Description
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10.1
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Form of Grant of Phantom Units (Units) Under Subjective
Component of Long-Term Equity Incentive Compensation. |
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10.2
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Form of Grant of Phantom Units (Cash) Under Subjective
Component of Long-Term Equity Incentive Compensation. |
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10.3
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Form of Grant of Phantom Units Under Objective
Component of Long-Term Equity Incentive Compensation. |
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10.4
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Form of Retention Bonus Agreement.
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About Legacy Reserves LP (NASDAQ:LGCY)
Legacy Reserves LP (Legacy) is a master limited partnership company. The Company is focused on the acquisition and development of oil and natural gas properties located in the Permian Basin, Rocky Mountain and Mid-Continent regions of the United States. The Company has proved reserves of approximately 164.2 million barrels of crude oil equivalent (MMBoe), of which over 73% are natural gas, approximately 27% are oil and natural gas liquids (NGLs) and over 97% are classified as proved developed producing. The Company has completed approximately 140 acquisitions of oil and natural gas properties. It owns interests in producing oil and natural gas properties in over 720 fields in the Permian Basin, East Texas, Piceance Basin of Colorado, Texas Panhandle, Wyoming, North Dakota, Montana, Oklahoma and several other states. Legacy’s fields and regions include East Texas, Spraberry/War San, Piceance Basin, Lea, Texas Panhandle, Deep Rock, Shafter Lake, Jalmat, Winchester and Denton. Legacy Reserves LP (NASDAQ:LGCY) Recent Trading Information
Legacy Reserves LP (NASDAQ:LGCY) closed its last trading session down -0.15 at 2.11 with 494,377 shares trading hands.
