SANCHEZ ENERGY CORPORATION (OTCMKTS:SNZYP) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 9.01. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April17, 2018, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Sanchez Energy Corporation (the “Company”) approved new equity grants to the Company’s Third Amended and Restated 2011 Long Term Incentive Compensation Plan (the “Plan”) to the Company’s Chief Executive Officer, the Executive Chairman of the Board, the Executive Vice President and Chief Financial Officer, the Executive Vice President and the Senior Vice President and Chief Operating Officer (each an “Officer”).
Each of the Chief Executive Officer, the Executive Chairman of the Board, the Executive Vice President and Chief Financial Officer, the Executive Vice President and the Senior Vice President and Chief Operating Officer, respectively, received a grant of (i)a cash-settled performance phantom stock award and (ii)a stock-settled performance phantom stock award from the Company to the Plan, for (a)506,230 and 506,230 target phantom shares, respectively, (b)506,230 and 506,230 target phantom shares, respectively, (c)186,916 and 186,916 target phantom shares, respectively, (d)253,115 and 253,115 target phantom shares, respectively, and (e)186,916 and 186,916 target phantom shares, respectively.
The awards will vest (if any) in annual increments over a three-year period performance period beginning on January1, 2018 and ending on December31, 2020 (the “performance period”) ranging from 0% to 200% of the target amount granted based on four performance criteria (the “Performance Measures”): (1)leverage metrics (net debt to EBITDAX ratio); (2)reserves replacement (reserve replacement ratio); (3)LOE/Boe (production expense divided by production); and (4)safety (TRIR) (“TRIR”) (Sanchez Oil& Gas Corporation’s (“SOG”) total recordable injuries related to performance of services for the Company multiplied by 200,000 and divided by the number of labor hours at SOG for services for the Company) for each calendar year in the performance period, subject to the Officer’s continuous service with the Company or its affiliate through the applicable vesting date, which for each calendar year within the performance period will be a date within 60 days following the end of such calendar year. Vested awards will be settled, in the case of the stock-settled awards, by the delivery of one share of the Company’s common stock, par value $0.01 per share (the “Common Stock”), times the number of phantom shares that vest on the applicable vesting date, or, in the case of cash-settled awards, by the payment in cash of an amount equal to the fair market value of the Common Stock on the vesting date times the number of phantom shares that vest on the applicable vesting date and, in each case, as soon as reasonably practicable following the applicable vesting date, but in all events, no later than the end of the year in which the applicable vesting date occurs. The level of achievement of each of the Performance Measures for each calendar year within the performance period are weighted 30% (or 10% in the case of TRIR) to determine the number of phantom shares earned (if any) during that calendar year, and the overall results of each Performance Measure during a calendar year within a performance period are weighted by approximately 33% to determine the number of phantom shares earned (if any) during the entire performance period.
Notwithstanding the foregoing, if the Officer’s continuous service is terminated prior to December31, 2020 due to a Qualifying Termination (as defined in the performance phantom stock agreement), a Constructive Termination (as defined in the performance phantom stock agreement) or the Officer’s death or disability, the Officer will become vested in a pro-rated number of phantom shares determined as follows: (i)the number of phantom shares that would otherwise have vested on each remaining vesting date with respect to the performance period based on actual performance results for the applicable calendar year multiplied by (ii)a fraction, the numerator of which is the number of completed calendar days in the performance period prior to the date of such termination and the denominator of which is the total number of calendar days in the performance period. Upon a Change of Control (as defined in the Plan), the Officer will become vested in a number of phantom shares for each remaining calendar year during the performance period equal to the greater of (x)the number of phantom shares that would otherwise vest based on actual performance results for such calendar year determined as if the date of the Change of Control is the last day of each remaining calendar year or (y)the number of target phantom shares for each remaining calendar year, in which event vested phantom shares will be settled no later than the 15th day following the date of the Change of Control.