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
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Denbury Resources Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
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NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
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April 21, 2011
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To our Stockholders:
You are hereby notified that the 2011 Annual Meeting of Stockholders of Denbury Resources
Inc., a Delaware corporation (Denbury or the Company), will be held at the Marriott at Legacy
Town Center located at 7120 Dallas Parkway, Plano, Texas 75024, at 3:00 P.M., Central Daylight Time
(CDT), on Wednesday, May 18, 2011, for the following purposes:
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to elect nine directors, each to serve until their successor is elected
and qualified; |
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to hold an advisory vote on executive compensation; |
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to vote on the frequency of the advisory vote on executive compensation
prospectively; |
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to increase the number of shares reserved for use under our Employee Stock
Purchase Plan; |
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to ratify the appointment by the audit committee of PricewaterhouseCoopers
LLP as the Companys independent registered public accounting firm for 2011; |
and to transact such other business as may properly come before the annual meeting or any
adjournment or postponement thereof. Only stockholders of record at the close of business on March
31, 2011, are entitled to notice of and to vote at the annual meeting.
Stockholders are urged to vote their proxy promptly by either returning the enclosed proxy,
voting by telephone or voting via the Internet, each as more fully described in the enclosed proxy
statement, whether or not they expect to attend the annual meeting in person. If your shares are
held in street name by a broker or bank, you will need to obtain a written proxy from the broker,
bank or other nominee holding your shares to be able to vote at the meeting.
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/s/ Mark C. Allen
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Mark C. Allen |
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Senior Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary |
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It is important that proxies be returned promptly. Therefore, stockholders are urged to vote and
return their proxy whether or not they expect to attend the annual meeting in person. You may
revoke your proxy at any time before it is voted.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 18, 2011:
This proxy statement, along with the Companys Annual Report to Stockholders, which includes our
Annual Report on Form 10-K for the year ended December 31, 2010, are available free of charge at
www.proxyvote.com. Please contact Laurie Burkes at (972) 673-2166 for directions to our annual
meeting.
DENBURY RESOURCES INC.
TABLE OF CONTENTS
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DENBURY RESOURCES INC.
5320 Legacy Drive
Plano, Texas 75024
Proxy Statement
Annual Meeting of Stockholders
to be held on Wednesday, May 18, 2011
THE ENCLOSED PROXY IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF VOTES BY THE MANAGEMENT
OF DENBURY for use at its annual meeting of stockholders to be held on the 18th day of
May 2011 at the Marriott at Legacy Town Center located at 7120 Dallas Parkway, Plano, Texas 75024,
at 3:00 P.M. Central Daylight Time (CDT), or at any adjournment thereof.
We anticipate that this proxy statement, proxy card and our 2010 Annual Report to Stockholders
will first be mailed on or about April 25, 2011.
RECORD DATE AND COMMON STOCK OUTSTANDING
Our Board of Directors has fixed the record date for the annual meeting as of the close of
business on Thursday, March 31, 2011. Only Denbury stockholders of record as of the record date
are entitled to receive notice of and to vote at the meeting. If you are a holder of our common
stock, you are entitled to one vote at the meeting for each share of common stock you held as of
the record date. As of the record date, there were approximately 401,435,363 shares of Denbury
common stock issued and outstanding and entitled to vote at the meeting.
VOTING OF COMMON STOCK
A proxy card is included with this proxy statement. In order to be valid and acted upon at the
annual meeting, your proxy must be received before 11:59 P.M.
Eastern Daylight Time on May 17, 2011. If you
attend the meeting, your proxy card must be received by the Secretary of Denbury before the time
set for the holding of the meeting or any adjournment thereof. You may vote your shares via mail by
marking, signing and dating your proxy card and returning it in the postage-paid envelope included
with this proxy statement, or returning it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717, via phone by calling 1-800-690-6903, or via the
Internet at www.proxyvote.com.
If you submit a proxy, you may revoke it any time prior to the meeting, or if you attend the
meeting personally, you may revoke your proxy at that time and vote in person. In addition,
regardless of which method you used to submit your proxy, you may revoke it by any later-dated vote
via the telephone, the Internet or in writing. A later-dated written proxy may be deposited at
either our registered office or our principal place of business at any time up to the time of the
meeting, or with the Chairman of the meeting on the day of the meeting. However, you should note
that your mere presence at the meeting will not constitute a revocation of a previously submitted
proxy. If your shares are held in street name by a broker or bank, you will need to obtain a
written proxy from the broker, bank or other nominee holding your shares to be able to vote at the
meeting.
In order for us to have a quorum at our annual meeting, we must have present in person or
represented by proxy at least one-third of our issued and outstanding shares of common stock
entitled to vote at the meeting. You will not be allowed to cumulate your votes for the election
of directors. If you do not wish to vote for a particular nominee, you must clearly identify such
nominee on your proxy card. A plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of directors is required
to elect each nominee for director and a majority of the shares present in person or by proxy at
the meeting is required to approve each other item to be voted upon at the meeting. We will
include abstentions in the vote total on Proposals Two, Three, Four and Five, which means that they
have the same effect on each proposal as a negative vote. However, broker non-votes, if any, will
not be included in the vote total and therefore will not have any effect.
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We will vote all properly executed proxies at the meeting in accordance with the direction on
the proxy. You should note that if no direction is indicated, the shares will be voted FOR all the
director nominees; FOR the advisory, non-binding resolution approving executive compensation; for
an ANNUAL advisory vote on executive compensation; FOR the increase of shares reserved for use
under our Employee Stock Purchase Plan; and FOR the appointment of PricewaterhouseCoopers LLP as
our independent registered public accounting firm. Our Board has designated Wieland F. Wettstein
and/or Phil Rykhoek to serve as proxies. We do not know of any matters, other than those matters
listed on the Notice of Annual Meeting of Stockholders, that will be brought before the meeting.
However, if any other matters are properly presented for action at the meeting, we intend for
Wieland F. Wettstein and Phil Rykhoek, and each of them acting singly, as proxies named in the
enclosed proxy card, to vote at their discretion on such matters.
PERSONS MAKING THE SOLICITATION
We will bear all costs incurred in the preparation and mailing of the proxy statement, proxy
card and our 2010 Annual Report to Stockholders. In addition to solicitation by mail, our
directors, officers or employees may solicit proxies by personal interviews, telephone or other
means of communication. If they do so, these individuals will not receive any special compensation
for these services. We may also retain a proxy solicitor to assist us with the distribution and
solicitation of proxies for the annual meeting at our expense.
BUSINESS TO BE CONDUCTED AT THE MEETING
Proposal One
Election of Directors
Our Bylaws provide that our Board of Directors shall consist of a minimum of three and a
maximum of fifteen directors. Each of the directors is elected annually and holds office until the
close of the next annual meeting of stockholders unless he resigns from that position or ceases to
be a director by operation of law. We presently have nine directors, all of whom are serving terms
that expire at the meeting. Unless you mark a proxy to the contrary, we plan to vote the proxies
for the election of the nine nominees as directors as listed herein. All nine of these individuals
are current members of the Board. We do not foresee any reason why any of these nominees would
become unavailable, but if they should, we may either vote your proxy for a substitute that is
nominated by the Board or reduce the size of our Board accordingly.
Wieland F. Wettstein
Michael L. Beatty
Michael B. Decker
Ronald G. Greene
David I. Heather
Gregory L. McMichael
Gareth Roberts
Phil Rykhoek
Randy Stein
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The names, ages, offices held, period of time served as a director and the principal
occupation of each person nominated for election as a director are as follows:
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Principal Occupation |
Weiland F. Wettstein (1) (2)
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Chairman
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1990 |
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President of Finex Financial Corporation Ltd. |
Michael L. Beatty (1) (3)
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Director
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2007 |
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Chairman and Chief Executive Officer of
Beatty & Wozniak, P.C. |
Michael B. Decker (2) (4)
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Director
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2007 |
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Principal with Wingate Partners |
Ronald G. Greene (3)
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Director
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1995 |
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Principal Stockholder, Officer and Director
of Tortuga Investment Corp. |
David I. Heather (1) (4)
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Director
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2000 |
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Independent Consultant |
Gregory L. McMichael (2) (4)
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Director
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2004 |
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Independent Consultant |
Gareth Roberts
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Director
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1992 |
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Non-Executive Chairman of Petro Harvester
Oil & Gas, LLC |
Phil Rykhoek
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Director
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2010 |
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Chief Executive Officer of Denbury Resources Inc. |
Randy Stein (1) (3)
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Director
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2005 |
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Independent Consultant |
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Member of the Audit Committee. |
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Member of the Compensation Committee. |
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Member of the Nominating/Corporate Governance Committee. |
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Member of the Reserves Committee. |
Directors
Our directors bring various skills, experience and insight to our Board. We have our current
CEO (Mr. Rykhoek), two former CEOs of large public oil and gas companies (Messrs. Greene and
Roberts), a lawyer (Mr. Beatty), two qualified financial experts (Messrs. Wettstein and Stein), a
private equity investor and former COO (Mr. Decker), a petroleum engineer (Mr. Heather), and a
former oil and gas analyst (Mr. McMichael). These board members were selected in order to give the
Denbury Board insight from various points of view, all of which relate to various aspects of our
business. The narrative below gives more specific biographical information for each of the Board
candidates.
Wieland F. Wettstein has been a director of Denbury since 1990 and Chairman of the Board since
May 2008, including between June 2009 and October 2010 when he acted as Co-Chairman of the Board.
Mr. Wettstein was a founding stockholder and director of Denbury, and held the position of Chairman
of the Board from its inception to 1995. Mr. Wettstein is the President and controls Finex
Financial Corporation Ltd., an investment company in Calgary, Alberta, a position he has held since
November 2003. Prior to that, Mr. Wettstein was Executive Vice President and Managing Director of
Finex since its founding in 1987. Under his leadership, Finex developed into a diversified
merchant banking operation with actively managed interests in real estate development, emerging
energy companies, participation lending, infrastructure leasing, and venture capital. Mr.
Wettstein has continuously been a director of numerous Canadian public and private companies during
the past 25 years and has been a founding shareholder, director, and chairman of several oil and
gas companies. Mr. Wettstein is a Chartered Accountant. Mr. Wettsteins long association with the
Company and extensive industry knowledge allow him to provide valuable insights to the Board. In
addition, his financial background, leadership experience and service on the boards of several
other oil and gas companies over his career provide him invaluable perspectives in the Boards
oversight of the Companys execution of its long-term business strategy.
Michael L. Beatty has been a director of Denbury since December 2007. Mr. Beatty has been
Chairman and Chief Executive Officer of the law firm of Beatty & Wozniak, P.C. located in Denver,
Colorado since 1998. Mr. Beatty began his career at Vinson & Elkins LLP and later became a
professor of law at the University of Idaho before joining the legal department of the Colorado
Interstate Gas Company, a subsidiary of The Coastal Corporation. Mr. Beatty served in a variety of
positions with Coastal, ultimately becoming Executive Vice President, General Counsel. Mr. Beatty
also served as Chief of Staff to Colorado Governor Roy Romer from 1993 to 1995. Mr. Beatty serves
on the Board of Directors of MarkWest Energy GP, L.L.C. Mr. Beatty is a graduate of Harvard Law
School. Mr. Beattys extensive legal background, focused primarily in the oil and gas industry,
provides him a wealth of knowledge that he brings to the Board. Mr. Beattys experience and
background includes significant involvement in political and legislative activities in the oil and
gas industry and have provided him an expansive understanding of corporate governance matters.
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Michael B. Decker has been a director of Denbury since December 2007. Mr. Decker has been a
principal and partner of Wingate Partners, a Dallas-based private equity investment company, since
1996. Prior to joining Wingate Partners, Mr. Decker held the position of Chief Operating Officer of
the Trammell Crow Company. He previously was President of Huffco Group, Inc., an energy exploration
company. Mr. Decker currently serves as a board member for S&N Communications, Sunrise Oilfield
Supply and USA Environment LP, has served as a consultant for the Boston Consulting Group and has
worked as an investment officer for the World Bank. Mr. Decker holds an MBA from Harvard
Business School, an MA from Oxford University, and an AB from Princeton University. Mr. Deckers
educational background and current and past roles provide him with significant financial,
managerial and leadership experience. Mr. Decker has significant experience in the oil and gas
industry as well as several other industries, which broadens the perspectives he brings to the
Board.
Ronald G. Greene has been a director of Denbury since 1995 and was the Chairman of the Board
until 2008. Mr. Greene was the founder and served as Chairman of the Board and Chief Executive
Officer of Renaissance Energy Ltd. from its inception in 1974 until May 1990, and remained as
Chairman until Renaissance was merged with Husky Oil Operations to create Husky Energy, Inc. in
August 2000. Mr. Greene served as a director of Husky Energy, Inc. from August 2000 until April
2003. He is the principal stockholder, officer and director of Tortuga Investment Corp., a private
investment company. Mr. Greene also served as lead director of WestJet Airlines Ltd. from June 1995
until April 2008, and he has previously served on the boards of several public and private
companies, as well as industry organizations and community and international charitable
organizations. Mr. Greene has vast experience in the oil and gas industry, including past oversight
of, and experience in building and running, a large public oil and gas company. He has extensive
knowledge of Denbury based on his long tenure on the Board, having
served 13 years as Denburys
previous Chairman. This, combined with his leadership experience, has been instrumental in the
Boards oversight of the Companys long-term business strategy.
David I. Heather has been a director of Denbury since 2000. Mr. Heather is currently a
self-employed engineering consultant. Mr. Heather was a founding partner and director of The Scotia
Group, an independent geoscience and reservoir engineering firm in Dallas and Houston, Texas,
formed in 1981. He retired as President of Scotia in 2002 and as a director in 2007 when the firm
was acquired by RPS Energy PLC. Mr. Heather is a Chartered Engineer of Great Britain and received
his Bachelor of Science degree in Chemical Engineering from the University of London in 1963. Mr.
Heathers professional and technical qualifications and extensive industry experience provide the
Board with valuable perspectives and oversight of the Companys oil and gas reserves. As Chairman
of the Boards Reserves Committee, he oversees one of the most critical areas for any oil and gas
company, the estimating, review and audit of its oil and gas reserves.
Gregory L. McMichael has been a director of Denbury since December 2004. Mr. McMichael is
currently a self-employed business consultant, having retired in 2004 from his position of Vice
President and Group Leader Energy Research of A.G. Edwards, where he was responsible for all of
the firms equity research in the energy sector. Prior to his employment by A.G. Edwards, which
commenced in 1998, Mr. McMichael was Director of Equity Research of Hanifen, ImHoff, Inc., a
regional investment banking firm based in Denver, Colorado for eight years. Prior to his employment
by Hanifen, he worked directly in the oil and gas industry for 15 years, most recently as Chief
Executive Officer of Point Resources Inc, a privately held oil and natural gas exploration and
production company. Mr. McMichael has previously served as a director of Matador Resources Company,
Quest Resource Corporation and Admiral Bay Resources Inc. Mr. McMichaels experience in the oil and
gas industry, coupled with his service on other boards and experience as an analyst covering the
energy sector, provides the Board with broad and extensive analytical perspectives. Mr. McMichael
monitors and provides the Board with analyses of activities in the oil and gas industry.
Gareth Roberts has been a director of the Board since 1992 and was Co-Chairman of the Board
along with Mr. Wettstein between June 2009 and October 2010. In October 2010, Mr. Roberts resigned
his position as Co-Chairman and Mr.Wettstein has served as Chairman of the Board since that time.
Mr. Roberts currently serves as a geological advisor to Denbury and has been the Non-Executive
Chairman of Petro Harvester Oil & Gas, LLC, a Houston-based exploration and production company,
since October 2010. Mr. Roberts founded Denbury Management, Inc., the former primary operating
subsidiary of the Company, in April 1990. Mr. Roberts later became President, Chief Executive
Officer and Director of the Company in 1992. Mr. Roberts has more than 30 years of experience in
the exploration and development of oil and natural gas properties with Texaco, Inc., Murphy Oil
Corporation and Coho Resources, Inc. His expertise is particularly focused in the Gulf Coast region
where he specializes in the acquisition and development of old fields with low productivity. Mr.
Roberts holds honors and masters degrees from St. Edmund Hall, Oxford University, where he has been
elected to an Honorary Fellowship. Mr. Roberts also served as Chairman of the Board of Directors of
Genesis Energy, L.P., a public master limited partnership, between May 2002 and June 2009. Mr.
Roberts brings years of industry experience and extensive knowledge of the Company to the Board.
Mr. Roberts years of leadership with the Company and ongoing role as an advisor allow him to
provide strategic perspectives to the Board. Mr. Roberts also has a strong geological background
and a deep understanding of the Companys tertiary oil recovery operations in the Gulf Coast
region.
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Phil Rykhoek has been a director of the Board since December 2010 and is the Chief Executive
Officer of Denbury. Mr. Rykhoek served as Senior Vice President, Chief Financial Officer,
Secretary and Treasurer until June 30, 2009. Before joining Denbury in June 1995, Mr. Rykhoek was
co-founder and an executive officer of Petroleum Financial, Inc. (PFI), a private company formed
in May 1991 to provide accounting, financial, and management services on a contract basis to other
entities. While at PFI, Mr. Rykhoek was also an officer of Amerac Energy Corporation, where he had
been employed in various positions for eight years, most recently as Vice President and Chief
Accounting Officer. Mr. Rykhoek also served as a director of Encore Energy Partners LP (ENP)
between August 2010 and December 2010, and Genesis Energy, L.P. between May 2002 and February 2010.
As CEO of the Company, Mr. Rykhoek is intimately knowledgeable of the day-to-day and strategic
operations of the Company, providing the Board with a management perspective.
Randy Stein has been a director of Denbury since January 2005. Mr. Stein is currently a
self-employed business consultant having retired from PricewaterhouseCoopers LLP, formerly Coopers
& Lybrand LLP, in 2000. Mr. Stein was employed for 20 years with PricewaterhouseCoopers LLP, most
recently as principal in charge of the Denver, Colorado tax practice. Mr. Stein served as Audit
Committee Chairman, Co-Chairman of the Nominating and Governance Committee, and a member of the
Compensation Committee of Westport Resources Corp., a Denver-based public oil and gas company, from
2000 until it was acquired in 2004. Mr. Stein is currently a board member and Audit Committee
Chairman of Bill Barrett Corporation, a Denver-based public oil and gas company, and also served on
the board and audit committee of Koala Corporation, a Denver-based company engaged in the design,
production and marketing of family convenience products, from 2001 through 2005. Mr. Steins
experience in public accounting with a major accounting firm provides our Board with insights into
many aspects of the financial reporting and tax issues facing oil and gas companies. Mr. Steins
background also brings additional financial, accounting and tax expertise to the Board through
prior experience as a vice president of taxation for a publicly traded oil and gas company, and an
expansive understanding of corporate governance and audit committee matters through his service on
other boards.
Board of Directors Recommendation
Our Board of Directors recommends that stockholders vote FOR election of each of the foregoing
director nominees.
Proposal Two:
Advisory Vote on Executive Compensation
The Dodd-Frank Act requires all public companies, beginning with most companies 2011 annual
meetings, to solicit from stockholders a non-binding vote to approve the compensation of their
named executive officers.
This proposal, commonly known as a say on pay proposal, grants shareholders the opportunity
to express their views on our Chief Executive Officers, Chief Financial Officers, and our next
three most highly compensated executive officers (collectively, the named executive officers)
compensation. This vote is not intended to address any specific item of compensation, but rather
the overall compensation of the named executive officers as described in this proxy statement.
The Board is asking stockholders to approve, on an advisory basis, the 2010 compensation of
our named executive officers, as described in the Compensation Discussion and Analysis beginning on
page 22 of this proxy statement and the compensation tables and narrative which follow, which we
urge you to review in voting on this resolution. Although this vote is non-binding, the
Compensation Committee values your opinion and will consider the voting results when making future
decisions about executive compensation. We always welcome feedback from our stockholders. So that
we can receive the benefits of meaningful stockholder input, if you abstain or vote against this
proposal, we urge you to write us a letter or send us an email and tell us more specifically about
the aspects of our compensation practices to which you object. Stockholders can communicate
directly with members of the Compensation Committee of our Board of Directors on these matters by
either writing them in care of Denbury Resources Inc., Attention: Compensation Committee, at 5320
Legacy Drive, Plano, Texas 75024, or emailing them at:
compensationcommittee@denbury.com. Your correspondence will be received by the Chairman of the
Compensation Committee of the Board of Directors with a copy to our Chief Executive Officer and Chief Financial Officer.
5
As described in the Compensation Discussion and Analysis section of this proxy statement
beginning on page 22, our executive compensation policies are designed to ensure that salary levels
and compensation incentives attract and retain top-level individuals in key positions and are
commensurate with each individuals level of executive responsibility, the type and scope of our
operations, and our Company-wide financial condition and performance. Our compensation philosophy
for our named executive officers is based on the following:
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we pay base salaries at the level to attract and retain outstanding talent, generally
targeted near the median level (60% for 2010) of salaries of comparable companies; |
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long-term equity incentives are the primary focus of executive compensation, which aligns
the interests of our executive officers with those of our stockholders; |
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a significant portion of our executives compensation is tied to performance measures; and |
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annual discretionary bonuses for our executive officers compensate for the effort and
results of the Company as a whole, rather than compensating for individual performance,
and bonuses are paid in the same manner as bonuses paid to all other employees. |
A majority of the votes being cast on this Proposal (including abstentions) will constitute
approval on a non-binding advisory basis.
Brokers do not have discretion to vote on this proposal
without your instruction. If you do not instruct your broker how to vote on this proposal, your
broker will deliver a non-vote on this proposal.
Board of Directors Recommendation
The Board of Directors recommends approval of the following advisory, non-binding resolution:
RESOLVED, that the compensation of the Companys named executive officers, as disclosed in
the Compensation Discussion and Analysis, compensation tables and related disclosures contained in
this proxy statement, is hereby approved.
Our Board of Directors recommends a vote FOR approval of the preceding advisory, non-binding
resolution.
Proposal Three:
Frequency of Advisory Vote on Executive Compensation
The Dodd-Frank Act requires us to solicit the advisory vote of our stockholders on how
frequently we should seek an advisory vote on the compensation of our named executive officers. By
voting on this proposal, stockholders may indicate whether they would prefer an advisory say on
pay vote every one, two, or three years, or they may abstain from voting on this matter.
After careful consideration, our Board of Directors has determined that an advisory say on
pay vote that occurs every year is the most appropriate choice for Denbury. Therefore, our Board
of Directors recommends that you vote for an annual advisory vote on executive compensation, for
the reasons stated below:
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An annual advisory vote will give stockholders a formal mechanism for providing their
direct input on our most recent executive compensation information, philosophy, policies
and practices as disclosed in our proxy statement every year. |
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An annual advisory vote is consistent with our policy of promoting regular
communications with our stockholders regarding executive compensation (and other matters)
and may encourage additional dialogue. |
While this is an advisory vote and as such is not binding on the Board, our Board will carefully
consider the results of the vote when deciding when to call for the next advisory vote on executive
compensation. The affirmative vote of a majority of those shares present in person or represented
by proxy is required to approve Proposal Three. If none of the frequency options receive a
majority vote, the option that receives the highest number of votes cast will be considered to be
the frequency selected by stockholders. Nonetheless, if two or more frequency alternatives receive
a similar level of votes and thus there is no clear mandate from stockholders, the Board may
determine that it is in the best interests of the stockholders of the Company to hold a say on
pay vote more or less frequently than the frequency option receiving the highest number of votes.
6
Brokers do not have discretion to vote on this proposal without your instructions. If you do
not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this
proposal.
Please indicate your preference as to the frequency of holding stockholder advisory votes
on executive compensation as either every year, every two years, or every three years, or you may
Abstain on this proposal.
Board of Directors Recommendation
Our Board of Directors recommends an ANNUAL advisory vote on executive compensation.
Proposal Four:
Increase the Number of Shares Reserved for Use under our Employee Stock Purchase Plan
The fourth proposal before stockholders is the approval of an amendment to our Employee Stock
Purchase Plan (ESPP) previously passed by our Board, which increases the number of shares
reserved for use under the ESPP by 1,000,000 shares. Without stockholder approval of the proposed
increase, there are 955,713 shares remaining for future purchases by employees under the ESPP as of
February 28, 2011. Without stockholder approval, once these remaining available shares are issued,
we would effectively be required to terminate the ESPP and any employee contributions that remain
will be refunded to them.
When we first adopted the ESPP in 1996, a maximum of 1,000,000 shares of common stock were
reserved for the plan. Subsequent amendments by the Board and stockholders have increased the
maximum number of reserved shares to 8,900,000. If stockholders approve this proposal, the maximum
shares available for the plan will further increase to 9,900,000, leaving 1,955,713 shares
available for future issuance (based on shares issued under the ESPP as of February 28, 2011). We
anticipate that these additional shares will provide our ESPP with adequate shares through 2014.
Our Board is proposing to increase the number of shares available under the ESPP to ensure
that there will be sufficient shares available for employees to purchase. The ESPP is a vital
element of our employees compensation and helps align the interest of our employees with you, our
stockholders. We also believe that the ESPP helps us recruit and retain employees. See also
Executive Compensation Compensation Discussion and Analysis Stock Purchase Plan.
Summary of the Key Terms of the ESPP
Our ESPP, adopted as of February 1996, is designed to provide our employees with an
opportunity to purchase our common stock, aligning their interests with our stockholders
interests. In addition, with its partial matching provisions, the ESPP provides additional
compensation to our employees. Our ESPP is administered by the Compensation Committee of the
Board, which is comprised of Messrs. McMichael, Decker and Wettstein. In 2009, the term of the
ESPP was extended by the stockholders until August 2015.
The ESPP provides that full-time employees may elect to participate in the plan before the
beginning of each quarter. The employees may elect to contribute up to 10% of their base salary to
the plan either by payroll deductions or by making a cash payment prior to the end of each quarter.
At each quarter-end, we contribute an amount equal to 75% of the employees contributions and
convert the combined funds into shares of our common stock for the account of the employee
calculated by using the current market price at that time. The market price is defined as the
average closing price on the NYSE for the ten trading days prior to the issue date. In addition, we
pay the income tax on the Company matching portion for employees that are in a certain salary grade
or tier, which usually consists of first-line personnel and entry-level positions.
To date, we have issued both new, previously unissued shares of common stock and shares of
treasury stock to our employees under the ESPP, although since late 2003 we have only used treasury
shares. The shares of common stock are held by our transfer agent for the employee for one year
after issuance, after which time the employee is able to sell the shares at his or her discretion.
Even though the employee may not sell the shares during the first year, the shares are fully vested
at the time of issuance. If an employee is terminated for any reason prior to the quarter-end or
makes an election to withdraw during the quarterly period, any contributions made by such employee
during the quarter are refunded, without interest, and such employee does not receive our matching
contribution.
As the shares are not subject to a vesting condition upon issuance, there are no provisions
for a change of control in the ESPP. Any change in the capitalization of our Company such as stock
dividends, stock splits, mergers, etc., will be taken into account at the time of issuance at each
quarter-end.
7
Summary of Shares Available for Grant and Outstanding Awards Under All Other Equity Compensation
Plans
We have two stock compensation plans. The first plan has been in existence since 1995 (the
1995 Plan) and expired in August 2005 (although options granted under the 1995 Plan prior to that
time can remain outstanding for up to 10 years). The 1995 Plan provided only for the issuance of
stock options, and in January 2005, we issued stock options under the 1995 Plan that utilized
substantially all of the remaining authorized shares. The second plan, the 2004 Omnibus Stock and
Incentive Plan (the 2004 Plan) was approved by stockholders in May 2004. At February 28, 2011,
10,001,065 shares were available for issuance under our 2004 Plan. As of February 28, 2011,
13,158,535 stock options and stock appreciation rights (SARs) with a weighted average exercise
price of $12.87 and a weighted average remaining term of 4.8 years were outstanding under our two
stock compensation plans. Also as of February 28, 2011, there were a total of 3,589,673 unvested
restricted shares outstanding and 1,030,064 unvested performance share awards at the maximum level.
Board of Directors Recommendation
Although approval of this increase is not required by NYSE regulations, our board has elected
to present it to the stockholders for ratification. A majority of votes present in person or by
proxy at the meeting will approve the amendment, provided that there is a quorum. Our Board of
Directors believes that our employee stock purchase plan is an integral part of our overall
compensation plan and recommends that you vote FOR the amendment. Unless otherwise directed by a
proxy marked to the contrary, it is the intention of management to vote the proxies for the
approval of the amendment.
Proposal Five:
Ratify the Appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting
Firm
PricewaterhouseCoopers LLP has been our independent registered public accounting firm for each
of the last seven years. It is the recommendation of our Audit Committee to appoint them to serve
as the independent registered public accounting firm of the Company until the next annual meeting
of the stockholders and to authorize the Audit Committee to approve their remuneration as such. A
representative of PricewaterhouseCoopers LLP is expected to be present at the meeting, will be
available to answer questions, and will be afforded an opportunity to make a statement, if desired.
Board of Directors Recommendation
Based on the recommendation of our Audit Committee, our Board of Directors recommends that
stockholders vote FOR the appointment of PricewaterhouseCoopers LLP as our independent registered
public accounting firm.
GOVERNANCE OF THE COMPANY
The business, properties and affairs of the Company are managed by the Chief Executive Officer
under the direction of the Board of Directors. The Board has responsibility for establishing broad
corporate policies and for overall performance and direction of the Company, but is not involved in
day-to-day operations, except for the Companys Chief Executive Officer, Mr. Rykhoek. Members of
the Board keep informed of the Companys business by participating in Board and committee meetings,
by reviewing analyses and reports sent to them regularly, and through discussions with the Chief
Executive Officer and other officers.
Board Leadership Structure
Currently, Wieland F. Wettstein serves as Chairman of our Board of Directors and Phil Rykhoek
serves as our Chief Executive Officer. Separating the positions of Chief Executive Officer and
Chairman of the Board allows our Chief Executive Officer to focus on the day-to-day leadership and
performance of the Company, while allowing the Chairman of the Board to lead the Board in its
fundamental role of providing advice and oversight to management.
The Board does not have a policy as to whether the Chairman of the Board should be a
non-management director or a member of management. Instead, the Companys Corporate Governance
Guidelines allow the Board the flexibility to select the best director to serve as Chairman of the
Board at any given time, regardless of whether the director is an independent director.
Between June 30, 2009 and October 6, 2010, Mr. Wettstein and Mr. Roberts served as Co-Chairmen
of the Board. On the latter date, Mr. Roberts resigned his positions as Co-Chairman of the Board
and Chief Strategist of the Company and became a director of the Board and geological advisor of
the Company in conjunction with his assumption of the role as the non-executive Chairman of the
Board of Directors of a newly-formed private equity-funded oil and natural gas entity.
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The Board recognizes that no single leadership structure is right for all companies, and
depending on the circumstances other leadership structures might be appropriate. The Board believes
the current leadership structure is effective and appropriate, allows for a separation of executive
powers, provides an experienced Chairman with whom the Chief Executive Officer can discuss issues
facing the Company, and gives a significant voice to non-management directors.
Corporate Governance Guidelines
The Board has adopted corporate governance guidelines that address significant issues of
corporate governance and set forth the procedures by which the Board carries out its
responsibilities. Among the areas addressed by the guidelines are director qualifications, their
responsibilities, Board committee responsibilities, selection and election of directors, director
compensation and tenure, director orientation and continuing education, access to management,
succession planning and management development, Board meetings, and Board and committee performance
evaluations. The Boards Nominating/Corporate Governance Committee is responsible for assessing and
periodically reviewing the adequacy of these guidelines. The guidelines are available on the
Companys website at www.denbury.com under the Investor Relations Corporate Governance
link. The Company will provide a printed copy of the guidelines free of charge to stockholders
upon request to Laurie Burkes at our corporate headquarters.
Risk Oversight
The Board of Directors takes an active role in overseeing management of the Companys risks
through its reviews of risks associated with our operations and strategic initiatives, both as a
board and through Board committees. For example, the Audit Committee reviews and discusses with
management our major financial risks, including any risk assessment or risk management policies.
The Audit Committee receives regular reports regarding enterprise risk from our Internal Audit
Department and management and informs the Board through regular committee reports. In addition to
receiving regular reports from the Audit Committee concerning our enterprise risk, the Board of
Directors routinely discusses enterprise risk with management and the Internal Audit Department.
The Board of Directors also reviews information concerning other risks through regular reports of
its committees.
Director Independence
The guidelines provide that at least a majority of the members of the Board must be
independent as required by the NYSE corporate governance listing standards. The Board has
affirmatively determined that all nominees for director, with the exception of Mr. Rykhoek, the
Companys CEO, and Mr. Roberts, the Companys geological advisor, qualify as independent directors
under these standards based on its review of all relevant facts and circumstances.
Code of Conduct and Ethics
The Company has a code of conduct and ethics that applies to its officers, employees and
directors. This code assists employees in resolving ethical issues that may arise in complying with
Denburys policies. The Chief Executive Officer, Senior Vice President and Chief Financial Officer,
and Vice President and Chief Accounting Officer are also subject to the Code of Ethics for Senior
Financial Officers and Principal Executive Officer. The purpose of these codes is to promote, among
other things:
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ethical handling of actual or apparent conflicts of interest; |
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full, fair, accurate and timely disclosure in filings with the United
States Securities and Exchange Commission (SEC) and in other public disclosures; |
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compliance with the law and other regulations; |
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protection of the Companys assets; |
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insider trading policies; and |
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prompt internal reporting of violations of the codes. |
Both of these codes are available on the Companys website at www.denbury.com, under
the Investor Relations Corporate Governance link. The Company will provide a printed copy of
these codes free of charge to stockholders who request them. Any waiver of these codes with respect
to executive officers and directors of the Company may be made only by the Board of Directors and
will be disclosed to stockholders on the Companys website, along with any amendments to these
codes.
9
Related Party Transaction Policy
Under the Companys related party transaction policy adopted in February 2007, information
about transactions involving related persons is to be assessed by the Nominating/Corporate
Governance Committee. Related parties include the Companys directors and executive officers, as
well as immediate family members of directors and executive officers and beneficial owners that
hold 5% or more of our common stock. If the determination is made that a related party has a
material interest in any Company transaction, then the Nominating/Corporate Governance Committee
would review the transaction, approve or ratify it, and the transaction would be required to be
disclosed in accordance with the SEC rules. The written policy relating to the Nominating/Corporate
Governance Committees review and approval of related party transactions is available on our
website at www.denbury.com, under the Investor Relations Corporate Governance link.
The Company will provide a printed copy of the related party transaction policy free of charge to
stockholders upon request to Laurie Burkes at our corporate
headquarters.
Communication with the Board
The Board has approved the process that stockholders or other interested parties may use in
contacting the members of the Board. All parties wishing to communicate with the Board should
address letters to:
Denbury Resources Inc.
Attn: Corporate Secretary
5320 Legacy Drive
Plano, TX 75024
In addition, interested parties may e-mail the Corporate Secretary and Board members at:
secretary@denbury.com. All such communications will be forwarded by the Corporate Secretary
directly to the Board.
Wieland Wettstein, our Chairman of the Board, is the presiding director at the meetings of
non-management directors; to contact him please address your letters to:
Denbury Resources Inc.
Attn: Chairman of the Board of Directors
5320 Legacy Drive
Plano, TX 75024
Identification of Director Candidates
Our Nominating/Corporate Governance Committee is responsible for identifying and reviewing
director candidates to determine whether they qualify for and should be considered for membership
on the Board. The Nominating/Corporate Governance Committee has not established a specific minimum
or maximum age, education, years of experience or specified types of skills for potential director
candidates, but in general, consideration is given to the candidates business and professional
backgrounds, and the committee seeks candidates with outstanding integrity, achievements, judgment
and other skills and experience that will enhance the Boards ability to serve the long-term
interests of stockholders. The Board and the Nominating/Corporate Governance Committee aim to
assemble a diverse group of Board members and believe that no single criterion such as gender or
minority status is determinative in obtaining diversity on the Board. The Board defines diversity
as differences of viewpoint, professional experience, education and skills such as serving on other
public company boards, the balance of business interest and experience of the candidate as compared
to the incumbent or other nominated directors, and the need for any particular expertise on the
Board or one of its committees. Members of the Board will be asked to submit recommendations when
there is an opening or anticipated opening for a director position. The Nominating/Corporate
Governance Committee may also use outside sources or third parties to find potential Board member
candidates, and similarly may use the services of outside sources or a third party to identify,
evaluate or assist in identifying or evaluating nominees brought to their attention.
The Nominating/Corporate Governance Committee will also consider director candidates
recommended by the stockholders. For the 2012 annual meeting of stockholders, any such
recommendation should be submitted in writing on or before
December 20, 2011, to permit adequate
time for review by the committee. The recommendation should also provide the reasons supporting a
candidates recommendation, the candidates qualifications, the candidates consent to being
considered as a nominee, and a way to contact the candidate to verify his or her interest and to
gather further information, if necessary. In addition, the stockholder should submit information
demonstrating the number of shares he or she owns. Stockholders may send recommendations for
director candidates to the address listed above under Communication with the Board. Stockholders
who wish to nominate an individual to the Board must follow the advance notice and other
requirements of the Companys Bylaws.
10
BOARD MEETINGS, ATTENDANCE AND COMMITTEES
The Board met 14 times during the year ended December 31, 2010, including telephone meetings.
All directors attended at least 75% of the meetings held. The Board took all other actions by
unanimous written consent during 2010. In addition, all directors attended at least 75% of all
meetings of each of the committees on which they served. Mr. Wettstein, Chairman of the Board,
acted as chairman of each Board meeting.
At each in-person meeting, the Board holds an executive session with only the non-management
Board members. Mr. Wettstein, Chairman of the Board, was elected by the independent Board members
to chair the executive session.
The Company encourages the directors to attend the annual meeting of stockholders, but does
not have a policy that all of the directors must be present. All of the directors attended last
years annual meeting of stockholders. The Board has an Audit Committee, Compensation Committee,
Reserves Committee and a Nominating/Corporate Governance Committee.
On occasion, the Board appoints other committees to deal with certain matters.
Audit Committee Report
The Audit Committee is currently comprised of four outside independent directors, Messrs.
Beatty, Heather, Stein and Wettstein, with Mr. Stein currently acting as Chairman. The purpose of
the committee is to appoint, oversee, compensate and evaluate the Companys independent registered
public accounting firm and the Companys internal audit function, and to provide assistance to the
Board in fulfilling its oversight responsibility with respect to:
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the integrity and quality of the Companys financial statements; |
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evaluation of the internal controls of the Company; |
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the performance of the Companys internal audit function and its independent
registered public accounting firm; |
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the independent registered public accounting firms qualifications and independence; |
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compliance by the Company with legal and regulatory requirements; |
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evaluating whether the Company has effective processes for business risk assessment
and risk management; and |
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compliance with the Companys code of conduct and ethics. |
The Audit Committee meets regularly with financial management, the Companys Director of
Internal Audit and the independent registered public accounting firm to review financial reporting
and accounting and financial controls of the Company. The Audit Committee reviews and gives prior
approval for fees and non-audit related services of the independent registered public accounting
firm. The Director of Internal Audit and independent registered public accounting firm all have
unrestricted access to the Audit Committee and meet with the Audit Committee without management
representatives present to discuss the results of their examinations and their opinions. The Audit
Committee has the power to conduct internal audits and investigations, receives recommendations or
suggestions for changes in accounting procedures, and has the power to initiate or supervise any
special investigations it may choose to undertake. Each year, the Audit Committee recommends to the
Board an independent registered public accounting firm. The Audit
Committee met eight times during
2010, including telephone meetings.
The NYSE and the SEC have adopted standards with respect to independence and financial
experience of the members of the Audit Committee. The standards require that all of the members of
audit committees be independent and that they all be able to read and understand fundamental
financial statements, including balance sheets, income statements and cash flow statements.
Additionally, at least one member of the committee must be deemed to be the audit committee
financial expert. The financial expert must be knowledgeable in the application of generally
accepted accounting principles, the understanding and preparation of financial statements,
accounting for estimates, accruals and reserves, internal accounting controls and audit committee
functions. Such knowledge is to have been obtained through past education and experience in
positions of financial oversight. Both Mr. Stein and Mr. Wettstein have such experience and have
been designated as audit committee financial experts. All members of the Audit Committee satisfy
the criteria for both independence and experience.
The Audit Committee reports to the Board on its activities and findings. The Board adopted a
written charter for the Audit Committee in 2000 and last amended it in March 2011 to incorporate
changes in several administrative provisions. The charter is available on our website at
www.denbury.com under the Investor Relations Corporate Governance link. We will send
stockholders a printed copy of the Audit Committee written charter, without charge, upon request to
Laurie Burkes at our company headquarters.
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The Audit Committee reports as follows with respect to the Companys 2010 audited financial
statements:
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The Committee reviewed and discussed with management the Companys 2010 audited financial statements; |
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The Committee discussed with the independent registered public accounting firm,
PricewaterhouseCoopers LLP, the matters required to be discussed by SAS 61, as modified or
supplemented, which include matters related to the conduct of the audit of the Companys financial
statements; |
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In accordance with the applicable requirements of the Public Company Accounting Oversight Board, the
Committee has received written disclosures and the letter from the independent registered public
accounting firm in accordance with its communications with the Audit Committee concerning
independence and has discussed with the independent registered public accounting firm its
independence from Denbury; |
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The Committee reviewed the Companys adherence to Section 404 of the Sarbanes-Oxley Act of 2002 and
related regulations; |
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Based on review and discussions of the Companys 2010 audited financial statements, including
managements discussion and analysis of financial condition and results of operations, with
management and the independent registered public accounting firm, the Audit Committee approved
Denburys audited financial statements and managements discussion and analysis of financial
condition and results of operations for inclusion in the Companys 2010 Annual Report on Form 10-K;
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The Committee performed other matters as set forth in the Audit Committee Charter. |
The Audit Committee
Randy Stein, Chairman
Michael L. Beatty
David I. Heather
Wieland F. Wettstein
Compensation Committee
The Compensation Committee is comprised of three outside independent directors, Messrs.
Decker, Wettstein, and McMichael, with Mr. McMichael acting as its Chairman. The purpose of the
Compensation Committee is to provide assistance to the Board in discharging its responsibilities
relating to the compensation and development of the Chief Executive Officer and other officers, and
to oversee and administer equity and other compensation and benefit plans, including:
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recommending to the Board the design of an overall
compensation program and structure for the Company and
reviewing the program annually, recommending to the Board
overall salary increases, bonuses and other annual
compensation, and proposing modifications to the
compensation program as deemed necessary; |
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reviewing and approving corporate goals and objectives
relevant to the Chief Executive Officers compensation and
evaluating the Chief Executive Officers performance in
light of these goals, and determining and recommending to
the Board his compensation in light of this evaluation as
well as reviewing and setting compensation details of all
key senior executives and elected corporate officers on an
annual basis; |
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recommending to the Board the adoption or amendment of the
Companys equity-based and other incentive compensation
plans, and approving, administering and granting awards
under these plans; and |
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reviewing and discussing with management the compensation
discussion and analysis and preparing and publishing an
annual report on executive compensation, both of which are
included in this proxy statement. |
The Compensation Committee is granted the authority to delegate any of its responsibilities to
subcommittees, as it deems appropriate. During the fourth quarter of each year, management reviews
the entire Companys compensation, based on recommendations from their subordinate managers and
supervisors, and makes a proposal to the Compensation Committee for its review and approval. The
specific responsibilities of the Compensation Committee are identified in its charter, which is
available on the Companys website at www.denbury.com under the Investor Relations -
Corporate Governance link. We will send stockholders a printed copy of the Compensation Committee
charter, without charge, upon request to Laurie Burkes at our company headquarters. The
Compensation Committee met six times during 2010.
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Reserves Committee
In February 2008, the Board created a Reserves Committee which assumed the duties of
the Audit Committee related to the oversight of the Companys independent petroleum engineers. This
committee currently consists of Messrs. Heather, McMichael and Decker, with Mr. Heather acting as
chairman. The purpose of the Committee is to provide assistance to the Board in fulfilling its
oversight responsibility with respect to:
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the performance of the Companys independent petroleum engineer; |
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the independent petroleum engineers qualifications and
independence; and |
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the calculation and reporting of the Companys oil and natural
gas reserves. |
The
Reserves Committee met twice during 2010 and on other occasions as part of the full Board
meeting. The specific responsibilities of the Reserves Committee are identified in its charter,
which is available on the Companys website at www.denbury.com under the Investor
Relations Corporate Governance link. We will send stockholders a printed copy of the Reserves
Committee charter, without charge, upon request to Laurie Burkes at our company headquarters.
Nominating/Corporate Governance Committee
The Nominating/Corporate Governance Committee is currently comprised of Messrs. Beatty,
Greene, and Stein, with Mr. Beatty acting as chairman. All of the members of the
Nominating/Corporate Governance Committee are independent under the NYSE corporate governance
listing standards. The purpose of the Committee is to provide assistance to the Board in
discharging its responsibilities for ensuring the effective governance of the Company, including:
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identifying individuals qualified to become members of the Board; |
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recommending to the Board the director nominees for the annual meeting of stockholders or for appointment by the
Board if a vacancy occurs between annual meetings; |
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seeking to maintain the independence and quality of the Board through an annual self-evaluation and compliance with
applicable laws and regulations for each director and committee member; |
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developing and recommending to the Board adoption of its various codes of conduct, ethics, and governance guidelines; |
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monitoring and developing the necessary training for new and existing Board members; |
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recommending to the Compensation Committee director compensation and benefits for directors on an annual basis; |
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reviewing related party transactions; and |
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reviewing the Companys proxy statement prior to its publication. |
The specific responsibilities of the Nominating/Corporate Governance Committee are identified
in its charter, which is available on the Companys website at
www.denbury.com under the Investor
Relations Corporate Governance link. We will send stockholders a printed copy of the
Nominating/Corporate Governance Committee charter, without charge, upon request to Laurie Burkes at
our company headquarters. The Nominating/Corporate Governance Committee met twice during 2010 and
on other occasions as part of the full Board meeting. Also, see Identification of Director
Candidates.
COMPENSATION OF DIRECTORS
Directors Fees
We provide both cash and equity compensation to all of our non-employee directors so as to
attract, motivate, and retain experienced and knowledgeable persons to serve as our directors and
to promote an identity of interest between our directors and you, our stockholders.
In 2010, our directors were paid an annual retainer fee of $60,000 plus $2,000 per Board
meeting attended, $1,000 per telephone conference attended and $1,000 for non-committee meetings or
conferences attended as part of their duties as a Board or committee member. The Board meeting
attendance fees also apply to any committee meeting if they occur on a different date than the
Board meetings. We also reimburse our non-employee directors for out-of-pocket travel expenses in
connection with each Board meeting attended. The Chairman of the Compensation Committee is also
paid an additional fee of $10,000 per year, and the additional fee for Mr. Wettstein serving as
Chairman of the Board is $100,000 per year. Mr. Roberts received a fee of $187,500 for serving as
Co-Chairman and Chief Strategist of the Company for the first three quarters of 2010 and received a
fee of $50,000 for his role as a director during the fourth quarter of 2010.
The Chairman of the
Audit Committee is paid an additional fee of $30,000 per year and all Audit Committee members are paid an additional annual retainer of $5,000 for serving on the
Audit Committee. Directors may also receive an additional $5,000 per year fee for performing
special services. In March 2010, each non-employee director received 4,747 shares of restricted
stock and 4,515 SARs, which restricted shares and SARs both vested in March 2011, one year from the
date of grant.
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The Nominating/Corporate Governance Committee hired Longnecker & Associates in 2010 to perform
a director compensation review utilizing the same peer group of companies utilized for the 2010
executive compensation review (see further discussion at Executive Compensation Compensation
Discussion and Analysis Independent Compensation Consultant). Based on the analysis prepared by Longnecker &
Associates and other supplemental schedules prepared by the Companys management, the
Nominating/Corporate Governance Committee recommended that board compensation for 2011 be targeted
at approximately 60% of the anticipated peer groups board compensation levels. As a result of the
board compensation review, the following changes were made to board compensation for 2011:
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The annual retainer paid to the Chairman of the Compensation Committee has been
increased from $10,000 per year to $12,000 per year; and |
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Equity granted to directors will consist solely of restricted stock instead of
restricted stock and SARs, as in prior years, and the value of equity compensation will
increase by approximately $16,900 per year, from approximately $114,100 to approximately
$131,000 per year. |
In addition to his receiving the same compensation as the other directors for 2011, Mr. Roberts is
also being paid $35,000 per year for his services as an employed geological advisor. All other
director retainers and fees will remain the same for 2011. In January 2011, each non-employee
director received 6,961 shares of restricted stock which vest one year from the date of grant. The
Company has established stock ownership guidelines for its directors
(see Executive Compensation Compensation Discussion and
Analysis Objectives and Philosphy). All restricted shares vest upon death, disability or a change of control.
We adopted a Director Compensation Plan effective July 1, 2000, for a term of ten years, and
amended the plan in May 2005 to remove any deferred compensation aspects of the plan, which aspects
had not been used by any director since its adoption. The Board further amended the plan in
February 2009 to extend the term of the plan for an additional five years to July 2015. The
Director Compensation Plan allows each non-employee director to make a quarterly election to
receive his or her compensation either in cash or in shares of our common stock. The number of
shares issued to a director who elects to receive shares of common stock under the Director
Compensation Plan is calculated by dividing the director fees to be paid to such director by the
closing price of the Companys common stock on the date the fees are payable, which is the last day
of each quarter. We have reserved 400,000 shares for issuance under the Director Compensation Plan,
for directors who elect to receive their compensation in stock, and as of February 28, 2011, had
210,430 shares remaining available under the plan.
2010 Director Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
Fees Earned or
Paid in Cash(1)
|
|
|
Stock Awards(2)
|
|
|
SARs(3)
|
|
|
All Other
Compensation
(4) |
|
|
Total |
|
Wieland F. Wettstein
|
|
$ |
194,000
|
|
|
$ |
76,664
|
|
|
$ |
37,429
|
|
|
$ |
232
|
|
|
$ |
308,325 |
|
Michael L. Beatty(5)
|
|
|
105,994
|
|
|
|
76,664
|
|
|
|
37,429
|
|
|
|
14,733
|
|
|
|
234,820 |
|
Michael B. Decker(5)
|
|
|
83,995
|
|
|
|
76,664
|
|
|
|
37,429
|
|
|
|
232
|
|
|
|
198,320 |
|
Ronald G. Greene(5)
|
|
|
82,994
|
|
|
|
76,664
|
|
|
|
37,429
|
|
|
|
232
|
|
|
|
197,319 |
|
David I. Heather
|
|
|
103,000
|
|
|
|
76,664
|
|
|
|
37,429
|
|
|
|
14,733
|
|
|
|
231,826 |
|
Gregory L. McMichael
|
|
|
95,000
|
|
|
|
76,664
|
|
|
|
37,429
|
|
|
|
21,764
|
|
|
|
230,857 |
|
Gareth Roberts(6)
|
|
|
237,500
|
|
|
|
|
|
|
|
|
|
|
|
21,764
|
|
|
|
259,264 |
|
Phil Rykhoek(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randy Stein
|
|
|
125,000
|
|
|
|
76,664
|
|
|
|
37,429
|
|
|
|
13,406
|
|
|
|
252,499 |
|
|
|
|
(1) |
|
Represents fees earned for services as a director during 2010, including the annual
base retainer fee and chairmanship or membership fees associated with service on the
Board or any committee of the Board. |
|
(2) |
|
Represents the fair value of restricted stock granted during 2010, which was the fair
market value of the stock on the date of grant. These awards include awards made
pursuant to our 2004 Plan. Further discussion regarding the
underlying awards is included in Note 8 to the Companys audited financial statements
for the year ended December 31, 2010, included in the Companys Annual Report on Form
10-K filed with the SEC on March 1, 2011. |
14
|
|
|
(3) |
|
Represents the fair value of stock-settled SARs granted during 2010 using the
Black-Scholes option pricing model as of the date of grant. These awards were made
pursuant to our 2004 Plan. Further discussion regarding
the underlying awards, including assumptions, is included in Note 8 to the Companys
audited financial statements for the year ended December 31, 2010, included in the
Companys Annual Report on Form 10-K filed with the SEC on March 1, 2011. |
|
(4) |
|
Represents insurance premiums paid for medical, dental, vision and/or life insurance
coverage. Medical insurance premiums paid for 2010 were $13,330 for Messrs. Beatty and Heather,
$19,678 for Messrs. McMichael and Roberts and $12,061 for Mr. Stein. |
|
(5) |
|
Fees earned represent amounts paid in cash or stock pursuant to our Director
Compensation Plan. Mr. Beatty received 6,404 shares of stock in lieu of $105,994 in
cash. Mr. Decker received 4,694 shares of stock in lieu of $77,380 in cash. Mr. Greene
received 5,020 shares of stock in lieu of $82,994 in cash. |
|
(6) |
|
The compensation above reflects Mr. Roberts 2010 compensation for serving as
Co-Chairman of the Board of Directors until October 6, 2010 and as a director
thereafter, and does not include amounts paid to him as Chief Strategist of the Company
until October 6, 2010 and a geological advisor thereafter. Beginning in 2011, Mr.
Roberts will be compensated as a director in the same manner and amount as other
non-executive members of the Board of Directors. |
|
(7) |
|
Mr. Rykhoek, Chief Executive Officer of Denbury, joined the Board as a director on
December 16, 2010, and is not compensated separately for serving as a director. All
compensation paid to Mr. Rykhoek is reported in the Summary
Compensation Table on page
36. |
15
Director 2010 Outstanding Equity Awards at Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Value of |
|
|
|
Unexercised Options |
|
|
Unexercised Options |
|
|
|
|
|
|
|
|
|
|
Number of Shares of |
|
|
Shares of Stock |
|
|
|
(#) |
|
|
(#) |
|
|
Option Exercise |
|
|
Option Expiration |
|
|
Stock That Have Not |
|
|
That Have Not |
|
Director |
|
Exercisable |
|
|
Unexercisable |
|
|
Price ($) |
|
|
Date |
|
|
Vested (#) |
|
|
Vested ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wieland F. Wettstein |
|
|
12,000 |
|
|
|
|
|
|
$ |
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
|
|
|
|
13.5150 |
|
|
|
2/22/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
6,489 |
|
|
|
|
|
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,515 |
(1) |
|
|
16.1500 |
|
|
|
3/11/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400 |
(2) |
|
$ |
45,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,747 |
(3) |
|
|
90,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael L. Beatty |
|
|
6,489 |
|
|
|
|
|
|
$ |
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,515 |
(1) |
|
|
16.1500 |
|
|
|
3/11/2017 |
|
|
|
4,800 |
(4) |
|
$ |
91,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,747 |
(3) |
|
|
90,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael B. Decker |
|
|
6,489 |
|
|
|
|
|
|
$ |
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,515 |
(1) |
|
|
16.1500 |
|
|
|
3/11/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,800 |
(4) |
|
$ |
91,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,747 |
(3) |
|
|
90,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald G. Greene |
|
|
12,000 |
|
|
|
|
|
|
$ |
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
|
|
|
|
13.5150 |
|
|
|
2/22/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
6,489 |
|
|
|
|
|
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,515 |
(1) |
|
|
16.1500 |
|
|
|
3/11/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400 |
(2) |
|
$ |
45,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,747 |
(3) |
|
|
90,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David I. Heather |
|
|
12,000 |
|
|
|
|
|
|
$ |
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
|
|
|
|
13.5150 |
|
|
|
2/22/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
6,489 |
|
|
|
|
|
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,515 |
(1) |
|
|
16.1500 |
|
|
|
3/11/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400 |
(2) |
|
$ |
45,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,747 |
(3) |
|
|
90,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory L. McMichael |
|
|
12,000 |
|
|
|
|
|
|
$ |
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
|
|
|
|
13.5150 |
|
|
|
2/22/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
6,489 |
|
|
|
|
|
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,515 |
(1) |
|
|
16.1500 |
|
|
|
3/11/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400 |
(2) |
|
$ |
45,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,747 |
(3) |
|
|
90,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gareth Roberts (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil Rykhoek (6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randy Stein |
|
|
12,000 |
|
|
|
|
|
|
$ |
6.7625 |
|
|
|
1/21/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
|
|
|
|
13.5150 |
|
|
|
2/22/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
6,489 |
|
|
|
|
|
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,515 |
(1) |
|
|
16.1500 |
|
|
|
3/11/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400 |
(2) |
|
$ |
45,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,747 |
(3) |
|
|
90,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
(1) |
|
These stock-settled SARs cliff vested 100% on March 11, 2011, one year after the date of
grant. |
|
(2) |
|
These shares of restricted stock cliff vested 100% on January 7, 2011, three years after the
date of grant. |
|
(3) |
|
These shares of restricted stock cliff vested 100% on March 11, 2011, one year after the date of
grant. |
|
(4) |
|
These shares of restricted stock vest on December 12, 2011 and 2012, at the rate of
2,400 shares of unvested stock per year. In addition to the foregoing vesting provisions, all
of these unvested shares will vest upon a holders death or disability or a change of control
of the Company. |
|
(5) |
|
During 2010 until October 6, 2010, Mr. Roberts served in a dual capacity as both the Chief
Strategist of the Company and as Co-Chairman of the Board of Directors and did not receive any
director equity compensation. Mr. Roberts retains certain equity awards he received as Chief
Executive Officer of the Company prior to his resignation from that office on June 30, 2009.
Effective October 6, 2010, Mr. Roberts resigned as Co-Chairman of the Board and now serves in
a dual capacity as geological advisor to the Company and as a director. |
|
(6) |
|
Mr. Rykhoek, Chief Executive Officer of Denbury, joined the Board as a director on December
16, 2010, and is not compensated separately for serving as a director. All compensation paid
to Mr. Rykhoek is reported in the Summary Compensation
Table on page 36. |
17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of February 28, 2011, the stockholders of which we are aware
that beneficially owned more than 5% of our issued and outstanding common stock and the common
stock held by our executive officers and directors, individually and as a group to our knowledge
solely based upon public filings. Unless otherwise indicated, each stockholder identified in the
table is believed to have sole voting and investment power with respect to the shares beneficially
held. The table includes shares that were acquirable within 60 days following February 28, 2011
under our 1995 Plan and 2004 Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership of |
|
|
|
Common Stock as of |
|
|
|
February 28, 2011 |
|
|
|
|
|
|
|
|
|
|
Percent of |
|
Name and Address of |
|
|
|
|
|
|
|
|
Shares |
|
Beneficial Owner |
|
Shares |
|
|
|
|
|
Outstanding |
|
Wieland F. Wettstein |
|
|
215,103 |
|
|
|
(1)(2) |
|
|
|
* |
|
Michael L. Beatty |
|
|
59,850 |
|
|
|
(3) |
|
|
|
* |
|
Michael B. Decker |
|
|
55,019 |
|
|
|
(3) |
|
|
|
* |
|
Ronald G. Greene |
|
|
4,136,090 |
|
|
|
(1)(4) |
|
|
|
1.0% |
|
David I. Heather |
|
|
113,753 |
|
|
|
(1)(5) |
|
|
|
* |
|
Gregory L. McMichael |
|
|
60,953 |
|
|
|
(1) |
|
|
|
* |
|
Gareth Roberts |
|
|
2,264,917 |
|
|
|
(6)(7) |
|
|
|
* |
|
Randy Stein |
|
|
94,015 |
|
|
|
(1) |
|
|
|
* |
|
Phil Rykhoek |
|
|
769,415 |
|
|
|
(8)(9) |
|
|
|
* |
|
Ronald T. Evans |
|
|
882,487 |
|
|
|
(8) |
|
|
|
* |
|
Mark C. Allen |
|
|
606,063 |
|
|
|
(8) |
|
|
|
* |
|
Robert Cornelius |
|
|
265,488 |
|
|
|
(8) |
|
|
|
* |
|
H. Raymond Dubuisson |
|
|
447,893 |
|
|
|
(8) |
|
|
|
* |
|
All of the executive officers and directors as a group (14 persons) |
|
|
10,087,805 |
|
|
|
(10) |
|
|
|
2.5% |
|
Capital World Investors |
|
|
43,852,300 |
|
|
|
(11) |
|
|
|
10.9% |
|
33 South Hope Street |
|
|
|
|
|
|
|
|
|
|
|
|
Los Angeles, CA 90071 |
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc. |
|
|
28,675,325 |
|
|
|
(12) |
|
|
|
7.2% |
|
40 East 52nd Street |
|
|
|
|
|
|
|
|
|
|
|
|
New York, NY 10022 |
|
|
|
|
|
|
|
|
|
|
|
|
FMR LLC |
|
|
27,387,607 |
|
|
|
(13) |
|
|
|
6.8% |
|
82 Devonshire Street |
|
|
|
|
|
|
|
|
|
|
|
|
Boston, MA 02109 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes (a) 4,747 shares of unvested restricted common stock which vested on March 11,
2011, (b) 6,961 shares of unvested restricted common stock which vest on January 7, 2012
(c) 12,000 stock options that are currently exercisable, (d) 12,489 SARs that are
currently exercisable and (e) 4,515 SARs that became exercisable on March 11, 2011. In
addition to the foregoing vesting provisions, all of these awards will vest upon a
holders death or disability or a change of control of the Company. |
|
(2) |
|
Includes 90,072 shares of common stock held by Mr. Wettsteins spouse. |
|
(3) |
|
Includes (a) 4,800 shares of unvested restricted common stock which vest on December 12,
2011 and 2012, at the rate of 2,400 shares per year, (b) 4,747 shares of unvested
restricted common stock which vested on March 11, 2011, (c) 6,961 shares of unvested
restricted common stock which vest on January 7, 2012, (d) 6,489 SARs that are currently
exercisable, and (e) 4,515 SARs which became exercisable on March 11, 2011. All of these
awards will vest upon a holders death or disability or a change of control of the
Company. |
18
(4) |
|
Includes 80,600 shares of common stock held by Mr. Greenes spouse in her retirement plan
and 2,736,012 shares held by Tortuga Investment Corp., which is solely owned by Mr.
Greene. Mr. Greenes shares held by Tortuga Investment Corp. include 90,000 shares that
are pledged as security. Amount includes 1,000,000 shares on which
Mr. Greene wrote a call option
in March 2011 whereby the purchaser(s) of the call option(s) can purchase the
shares from Mr. Greene for $28 per share. The call option expires in late November 2011. |
|
(5) |
|
Includes 73,041 shares of common stock held in a family trust of which Mr. Heather is a
trustee. |
|
(6) |
|
Includes 223,320 shares of common stock held by a corporation which is solely owned by
Mr. Roberts, 8,912 shares held by his spouse and 1,000 shares held by his minor child.
Mr. Roberts has 1,740,477 shares pledged as security. |
|
(7) |
|
Includes (a) 251,888 stock options and SARs that are currently exercisable or that become
exercisable within 60 days from February 28, 2011, (b) 25,996 shares of performance-based
stock for which the performance criteria have been met and which vested on March 31, 2011,
(c) 21,662 shares of unvested restricted stock which vested on March 31, 2011, (d) 6,961
shares of unvested restricted stock which vest on January 7, 2012, (e) 54,128 shares of
unvested restricted stock which vest on March 31, 2012, and (f) 131,600 shares of unvested
restricted stock that vest ratably each January 31 until the final vesting upon the date
of retirement eligibility. In addition to the foregoing vesting provision, all of these
shares will vest upon the holders death or disability or a change of control of the
Company. |
|
(8) |
|
Includes the following shares of common stock (as shown in the table below) for each
respective individual which they respectively have the right to acquire pursuant to (a)
stock options and SARs that are currently exercisable or that become exercisable within 60
days from February 28, 2011, (b) shares of performance-based stock for which the
performance criteria have been met and which vested on March 31, 2011 (c) shares of
unvested restricted stock which vested on March 31, 2011, (d) shares of unvested
restricted stock granted to Phil Rykhoek, Ronald T. Evans, and Mark C. Allen, which vest
annually over the next two years on June 30 of 2011 and 2012, (e) shares of unvested
restricted stock which vest on March 31, 2012 (f) shares of unvested restricted common
stock that vest on March 31, 2013, (g) shares of unvested restricted common stock that
will vest on March 31, 2014 and (h) shares of unvested restricted stock that vest ratably
between January 31, 2012 and the date the officer becomes retirement eligible, which is
upon the officer reaching a retirement age between the ages of 60 and 65, depending on
length of service. In addition to the foregoing vesting provisions, all of these shares
will vest upon a holders death or disability or a change of control of the Company, with
the exception of the shares that vest on March 31, 2011; March 31, 2012 and March 31, 2013
for Messrs. Rykhoek, Evans, Allen, and Dubuisson. These amounts only include shares
related to performance-based awards if the performance period is complete. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil |
|
|
Ronald T. |
|
|
Mark C. |
|
|
Robert |
|
|
H. Raymond |
|
|
|
|
|
|
|
Rykhoek |
|
|
Evans |
|
|
Allen |
|
|
Cornelius |
|
|
Dubuisson |
|
Stock Options |
|
|
(a |
) |
|
|
65,472 |
|
|
|
99,286 |
|
|
|
123,223 |
|
|
|
|
|
|
|
203,820 |
|
Performance-based Awards Vested on March 31, 2011 |
|
|
(b |
) |
|
|
77,361 |
|
|
|
77,361 |
|
|
|
54,027 |
|
|
|
58,360 |
|
|
|
29,393 |
|
Unvested Restricted Stock Vested on March 31, 2011 |
|
|
(c |
) |
|
|
12,644 |
|
|
|
12,644 |
|
|
|
9,034 |
|
|
|
12,644 |
|
|
|
7,221 |
|
Unvested Restricted Stock Vesting on June 30, 2011 |
|
|
(d |
) |
|
|
3,394 |
|
|
|
3,394 |
|
|
|
1,244 |
|
|
|
|
|
|
|
|
|
Unvested Restricted Stock Vesting on March 31, 2012 |
|
|
(e |
) |
|
|
34,937 |
|
|
|
34,937 |
|
|
|
29,524 |
|
|
|
34,937 |
|
|
|
19,231 |
|
Unvested Restricted Stock Vesting on June 30, 2012 |
|
|
(d |
) |
|
|
3,395 |
|
|
|
3,395 |
|
|
|
1,245 |
|
|
|
|
|
|
|
|
|
Unvested Restricted Stock Vesting on March 31, 2013 |
|
|
(f |
) |
|
|
38,387 |
|
|
|
38,387 |
|
|
|
26,658 |
|
|
|
26,658 |
|
|
|
12,795 |
|
Unvested Restricted Stock Vesting on March 31, 2014 |
|
|
(g |
) |
|
|
40,530 |
|
|
|
36,891 |
|
|
|
24,048 |
|
|
|
24,048 |
|
|
|
9,620 |
|
Unvested Restricted Stock Retirement Vesting |
|
|
(h |
) |
|
|
163,334 |
|
|
|
196,001 |
|
|
|
101,999 |
|
|
|
|
|
|
|
29,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
439,454 |
|
|
|
502,296 |
|
|
|
371,002 |
|
|
|
156,647 |
|
|
|
311,830 |
|
(9) |
|
Mr. Rykhoek has 223,583 shares pledged as security for a personal credit line under
which no amounts were drawn as of April 15, 2011. |
|
(10) |
|
Our executive officers are those officers who, as of March 9, 2011, fall within the definition of Rule 16a-1(f) of the Securities and Exchange Act of
1934, and include our named executive officers and our Chief Accounting Officer. Shares
beneficially owned by these executive officers and directors as a group include (a)
950,690 shares of common stock which the executive officers and directors as a group have
the right to acquire pursuant to stock options which are currently exercisable or which
become exercisable within 60 days from February 28, 2011, (b) 1,346,799 shares of
restricted stock which vest over time, and (c) 310,153 shares to be issued pursuant to
performance-based awards for which (i) the performance period has lapsed and (ii) that
will vest within 60 days of February 28, 2011. The maximum number of shares at February
28, 2011 that could be issued to executive officers pursuant to performance share awards
for which the performance period has not lapsed is 289,514 shares. |
19
(11) |
|
Information based on Schedule 13G/A filed with the SEC on February 14, 2011. Capital
World Investors claims sole power to vote or to direct the vote of 43,852,300 shares and
sole power to dispose or to direct the disposition of 43,852,300 shares. |
|
(12) |
|
Information based on Schedule 13G/A filed with the SEC on February 4, 2011. BlackRock
Inc. claims sole power to vote or to direct the vote of 28,675,325 shares and sole power
to dispose or to direct the disposition of 28,675,325 shares. |
|
(13) |
|
Information based on Schedule 13G/A filed with the SEC on February 14, 2011. FMR LLC
claims sole power to vote or to direct the vote of 2,410,366 shares and sole power to
dispose or to direct the disposition of 27,387,607 shares. Fidelity Management & Research
Company (Fidelity), a wholly-owned subsidiary of FMR LLC, is the beneficial owner of
24,607,510 shares as a result of acting as an investment adviser to various investment
companies registered under Section 8 of the Investment Company Act of 1940. Edward C.
Johnson III and FMR LLC, through its control of Fidelity, and the funds each has sole
power to dispose of the 24,607,510 shares owned by the Funds. The power to vote or direct
the voting of the 24,607,510 shares directly owned by the Fidelity Funds resides with the
Funds Boards of Trustees. |
MANAGEMENT
The names of our officers, the offices held by them and the period during which such offices
have been held are set forth below. Each officer holds office until his successor is duly elected
and qualified in accordance with our Bylaws.
|
|
|
|
|
|
|
Name |
|
Age |
|
Position |
Phil Rykhoek
|
|
|
54 |
|
|
Director & Chief Executive Officer |
Ronald T. Evans
|
|
|
48 |
|
|
President & Chief Operating Officer |
Mark C. Allen
|
|
|
43 |
|
|
Senior Vice President, Chief Financial Officer, Treasurer &
Assistant Secretary |
Robert L. Cornelius
|
|
|
56 |
|
|
Senior Vice President Operations & Assistant Secretary |
Dan E. Cole
|
|
|
58 |
|
|
Vice President Marketing |
Bradley A. Cox
|
|
|
49 |
|
|
Vice President Business Development |
Greg Dover
|
|
|
58 |
|
|
Vice President North Region |
H. Raymond Dubuisson
|
|
|
60 |
|
|
Vice President Legal |
John Filiatrault
|
|
|
45 |
|
|
Vice President CO2 Supply & Pipeline Operations |
Charlie Gibson
|
|
|
52 |
|
|
Vice President West Region |
Jeff Marcel
|
|
|
49 |
|
|
Vice President Drilling |
Steve McLaurin
|
|
|
44 |
|
|
Vice President Chief Information Officer |
Alan Rhoades
|
|
|
46 |
|
|
Vice President Chief Accounting Officer |
Barry Schneider
|
|
|
48 |
|
|
Vice President East Region |
Whitney Shelley
|
|
|
43 |
|
|
Vice President Human Resources |
Set forth below is a description of the business experience of each of our current officers.
Phil Rykhoek is a director and Chief Executive Officer of Denbury. Biographical information
for Mr. Rykhoek is included under Proposal One Election of Directors.
Ronald T. Evans, President and Chief Operating Officer, is a registered Professional Engineer
who joined us in September 1999. Mr. Evans served as Senior Vice President, Reservoir Engineering
until June 30, 2009. Before joining Denbury, he was employed as a manager with Matador Petroleum
Corporation for 3 years and employed by Enserch Exploration, Inc. for 12 years in various
positions. Mr. Evans received his Bachelor of Science degree in Petroleum Engineering from the
University of Oklahoma in 1984 and his MBA from the University of Texas at Dallas in 1995. Mr.
Evans also served as a director of ENP between August 2010 and December 2010, and Genesis Energy,
L.P. between May 2002 and February 2010.
Mark C. Allen, a Certified Public Accountant, is Senior Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary. Mr. Allen served as Vice President and Chief
Accounting Officer until June 30, 2009. Before joining Denbury in April 1999, Mr. Allen was
Manager of Financial Reporting for ENSCO International Incorporated from November 1996 to April
1999. Prior to November 1996, Mr. Allen was a manager in the accounting firm of Price Waterhouse
LLP. Mr. Allen also served as a director of ENP between August 2010 and December 2010, and Genesis
Energy, L.P. between June 2006 and February 2010.
20
Robert L. Cornelius, Senior Vice President Operations and Assistant Secretary, is an
engineer and is responsible for all aspects of production, drilling, facilities and operations and
has over thirty years of relevant industry experience. Before joining us in September 2006, Mr.
Cornelius was Vice President of Operations with J.M. Huber Corporation, a large privately-owned
company, beginning his employment there in 1982. Mr. Cornelius graduated from The University of
Texas with a Bachelor of Science degree in Petroleum Engineering in 1977. Mr. Cornelius served as
a director of ENP between August 2010 and December 2010.
Dan E. Cole, Vice President Marketing, joined us in October 2006. Prior to joining
Denbury, Mr. Cole was Director of the Mississippi/Alabama Business Unit for Plains Marketing, LP,
since April 2004, and Manager, Gulf Coast Region for EOTT Operating, for the prior eight years
before its being acquired by Plains Marketing. Mr. Cole has 30 years of marketing, transportation
and supply experience in the natural gas and crude oil industry. Mr. Cole received his Bachelor of
Business Administration degree from Texas A&M University in 1974.
Bradley A. Cox, Vice President Business Development, joined us in January 1999. Prior to
joining Denbury, Mr. Cox was employed with National Energy Group for two years where he was
responsible for reserves and acquisitions, and was employed by Enserch Exploration, Inc. for 11
years in various onshore and offshore engineering positions. Mr. Cox received his Bachelor of
Science degree in Petroleum Engineering from the University of Oklahoma in 1985.
Greg Dover, Vice President North Region, has been with Denbury for almost 14 years in
various operations roles. Prior to coming to Denbury, Mr. Dover had previous experience with Coho
Resources, Graham Resources and Petro-Lewis Corporation in various operations and reservoir
engineering positions. Mr. Dover is a registered Professional Engineer in the State of Texas and
received his Bachelor of Science degree in Petroleum Engineering from the University of Wyoming in
1979.
H. Raymond Dubuisson, Vice President Legal, joined Denbury in July 2002. Prior to joining
Denbury, Mr. Dubuisson was a practicing oil and gas attorney in the Houston area primarily involved
in exploration and production transaction work, preparation of title opinions, and negotiation and
preparation of acquisition and divestiture agreements. He is licensed to practice law in the State
of Texas, and has previously served as Vice President of Land for Weber Energy Corporation and
Quanah Petroleum in Dallas, as Gulf Coast District Land Manager for Aminoil in Houston, and as
Landman for Chevron in New Orleans.
John Filiatrault, Vice President CO2 Supply and Pipeline Operations, joined
Denbury in June 2010. Prior to joining the Company, his career spanned 23 years in the energy
industry with Natural Gas Pipeline Company of America, El Paso Corporation and Kinder Morgan in a
variety of assignments relating to engineering and operations. His most recent assignments were
Director, Risk Engineering and Director of Gas Pipeline Operations with Kinder Morgan. Mr.
Filiatrault received his Bachelor of Science degree in Civil Engineering from Valparaiso University
in 1988, and his MBA from Samford University in 2001.
Charlie Gibson, Vice President West Region, is a registered Professional Engineer, who
joined us in September 2002. Mr. Gibson served as Vice President, Reservoir Engineering, from
August 1, 2007 to March 31, 2008. Prior to joining Denbury, Mr. Gibson was employed as a manager
with Coho Resources for six years and employed by Sun/Oryx for 14 years in various reservoir and
production engineering positions. Mr. Gibson received his Bachelor of Science degree in Petroleum
Engineering from Louisiana State University in 1981.
Jeff Marcel, Vice President Drilling, joined Denbury in 1996 and served in a variety of
operational roles prior to his promotion to Vice President Drilling in March 2010. Prior to
joining Denbury, Mr. Marcel worked for Hunt Petroleum Corporation, Rosewood Resources Inc. and
Placid Oil Company in various onshore and offshore engineering and management positions. Mr.
Marcel received his Bachelor of Science degree in Petroleum Engineering from Louisiana State
University in 1983.
Steve McLaurin, Vice President Chief Information Officer, joined Denbury in January 2011.
Prior to joining Denbury, Steve was previously a partner with PricewaterhouseCoopers LLP, IBM and
SolomonEdwardsGroup. Steve brings with him over 20 years of experience working with leading
organizations and helping them manage their information technology solutions. He started his
career as a systems analyst at General Dynamics. Steve holds a
Bachelor of Science degree in Computer
Science from Evangel University and is a Certified Information Systems Auditor (CISA).
Alan Rhoades, Vice President Chief Accounting Officer, is a Certified Public Accountant.
Before joining Denbury in July 2003, Mr. Rhoades was Assistant Controller for Amerada Hess
Corporation from 2001 to 2003, and held that same position for Triton Energy Limited from 1996
until it was acquired by Amerada Hess Corporation in 2001. Prior to joining Triton Energy Limited,
Mr. Rhoades was a manager in the accounting firm of KPMG LLP.
21
Barry Schneider, Vice President East Region, joined us in September 1999. Prior to joining
Denbury, Mr. Schneider was employed as a production engineer for Wiser Oil for six years and by
Conoco for nine years in various production, engineering and operation positions. Mr. Schneider
received his Bachelor of Science degree in Natural Gas Engineering from Texas A&MKingsville in
1985.
Whitney Shelley, Vice President Human Resources, joined us in November 2009. Prior to
joining Denbury, Ms. Shelley was Executive Vice President of Human Resources for Bank of America,
joining them in 2004, and prior to that was Senior Director Human Capital Business Solutions at
Blockbuster. Ms. Shelley achieved her Microsoft Certified Systems Engineer (MCSE) certification
in 1994 and graduated with a Bachelor of Science degree from the University of North Texas in 1990.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following discussion and analysis contains statements regarding future individual and
Company performance targets and goals. These targets and goals are disclosed in the limited context
of Denburys compensation programs and should not be understood to be statements of managements
expectations or estimates of results or other guidance. Denbury specifically cautions investors not
to apply these statements to other contexts.
Executive Summary
During 2010, we completed several strategic initiatives and reached several milestones:
|
|
|
Acquired Encore Acquisition Company (Encore), which established a new core area in
the Rocky Mountain region; |
|
|
|
|
Sold $1.5 billion of non-strategic Encore properties, including our interests in
Encore Energy Partners LP (ENP), to reduce debt, which had increased in conjunction
with our Encore acquisition; |
|
|
|
|
Completed construction of our 325-mile Green Pipeline and commenced injecting CO2
transported by that pipeline into our Oyster Bayou and Hastings Fields in southeast
Texas; |
|
|
|
|
Acquired an interest in the Riley Ridge Federal Unit (Riley Ridge) in Wyoming, a
property that contains significant volumes of CO2 potentially available for
use in our proposed future tertiary operations in the Rocky Mountain region; |
|
|
|
|
Sold our interests in Genesis Energy, L.P. and recognized a gain on the sales of
$101.5 million; |
|
|
|
|
Commenced tertiary production at Delhi Field and booked proved reserves of 29.5
million barrels of oil at that field; |
|
|
|
|
Increased our proved reserves in our Bakken Shale play by 33.4 million barrels of oil
equivalent, or 251%, to 46.7 million barrels of oil equivalent; and |
|
|
|
|
Increased our proved CO2 reserves by 27% to 8.0 trillion cubic feet. |
Thus, 2010 was a very active year and one that transformed Denbury in many ways. Our
agreement to acquire Encore was originally announced on November 1, 2009 and was consummated on
March 9, 2010. In late 2009, the Committee recognized that significant incremental work would be
necessary to make the Encore acquisition a success, and put in place a Company-wide incentive for
2010 under which each employee could earn an incremental 25% of their targeted bonus percentage for
the successful integration of Encore. Also, with the increased size and expanded operations of the
Company, the Committee expanded their normal executive compensation review for 2010 and hired an
independent compensation consultant, Longnecker & Associates (Longnecker) to help analyze and
make recommendations on the Companys peer group selection, conduct a complete analysis of
executive compensation against that peer group and perform a change-in-control analysis for our
executive officers. The discussion below will discuss in detail our philosophy regarding
compensation of our executive officers, the results of our analysis and the details around specific
compensation decisions.
Objectives and Philosophy
Our compensation policies are designed to ensure that salary levels and compensation
incentives attract and retain top level individuals in key positions and are commensurate with each
individuals level of executive responsibility, the type and scope of our operations, and our
Company-wide financial condition and performance.
Our overall compensation philosophy is that:
|
|
|
we pay base salaries at the level to attract and retain outstanding talent, generally targeted at the
median level (60% for 2010) of salaries of comparable companies; |
|
|
|
|
long-term incentives are the main focus of executive compensation; |
22
|
|
|
we encourage all employees to be stockholders to better align their interests with those of our
stockholders; and |
|
|
|
|
we reward employees primarily for the effort and results of the team or Company as a whole, rather than
compensating only for individual performance. |
The components of our Company-wide compensation consist of:
|
|
|
competitive base salaries; |
|
|
|
|
a bonus plan for all employees; |
|
|
|
|
long-term awards for all employees, but with higher amounts for our professionals; |
|
|
|
|
long-term awards that consist of a mix of deferred cash, SARs
and time-vested restricted stock, with a
higher percentage of these long-term awards being restricted stock for our managers and others in critical
roles; |
|
|
|
|
stock for our officers, of which one-third is comprised of restricted stock, one-third is comprised of SARs
settled in stock, and one-third is comprised of performance-based stock; |
|
|
|
|
for our executive officers that are part of the Investment Committee, a performance-based cash award,
effectively increasing the amount of compensation subject to meeting performance criteria; and |
|
|
|
|
a stock purchase plan for all employees. |
We believe that our overall program has proven to be an effective retention and motivation
tool for our employees and management as evidenced by our low employee turnover ratio. In spite of
the highly competitive environment that currently exists in our industry and the demand for
experienced personnel, our turnover rate has averaged only 3% per year during the last two years,
excluding involuntary terminations. We also believe that the combination of base salaries,
discretionary annual bonuses, SARs, restricted stock and performance-based shares and cash for our
executive officers provides a proper balance of compensation between short-term and long-term
awards and between cash and equity awards, with over half the target related to long-term equity
awards, an important part of our plan. We believe our equity awards align our executives
objectives with those of our stockholders, with approximately one-third of those equity awards
resulting in value to the executive only if the stock price increases (SARs) and another one-third
tied to specific corporate performance objectives. A significant portion of total compensation
(cash bonuses) is also determined based on subjective performance measures, assuring that our
executives focus on the entire business and not just isolated narrow statistical categories (see
more detailed discussions below).
We have a mix of vesting parameters associated with our equity
awards, although for the executive officers, our annual recurring long-term awards of time-based
vesting restricted stock and SARs vest approximately three years from the date of grant. In the
past, restricted stock awards have vested over various periods, most recently between three and
five years. For performance-based stock awards, beginning in 2009 we changed the performance
period from a three-year period to a one-year performance period. We believe this shorter vesting
period is a better way to evaluate the results of these awards.
During 2008, our Board adopted stock ownership guidelines. Under
our stock ownership guidelines, all officers are expected to hold stock with a value equal to three
times their then annual base salary, and directors will be expected to hold stock with a value of
three times their annual cash compensation. If an officer that is part of our Investment Committee
or a director has not yet met such stock ownership levels or falls below such levels for a
specified period, the guidelines will provide that no shares of common stock can be sold by that
officer or director (except in connection with tax withholding or a hardship exception granted by
the Board) until such ownership levels are reached. If an officer that is not part of our
Investment Committee has not yet met such stock ownership levels or falls below such levels for a
specified period, the guidelines will provide that such officer must retain and hold at least
one-third of any restricted shares that vest until such ownership levels are reached, unless a
hardship exception is granted by the Board.
We do not currently have a policy providing for specific compensation penalties if we were
required to restate our financial statements. The only specific impact of this event would be a
potential downward adjustment to our performance awards, not to exceed 25%, based on the subjective
review by the independent directors of our Compensation Committee of our Board of Directors (the
Committee) (see Performance-based Shares and Cash below), although such an event would also
likely affect the more subjective cash bonuses awarded by the Committee each year which considers
overall Company performance and would likely affect the value of the equity awards granted to our
employees pursuant to our stock purchase plan and 2004 Plan.
We believe it is important to have flexibility in designing our compensation programs in a
manner that achieves our objectives. Under U.S. federal income tax law, we cannot take a tax
deduction for certain compensation in excess of $1 million per year paid to our named executive
officers. However, performance-based compensation, as defined in the Internal Revenue Code, is
fully deductible if the programs are approved by the stockholders and meet other requirements. We
have designed certain aspects of our compensation program to meet performance-based compensation
criteria and maximize our tax deductible compensation. However, while we consider accounting and
tax treatment of certain forms of compensation in the design of our compensation program, we choose
to weigh all factors, and therefore we have not adopted a policy that limits our compensation
options.
Although portions of our compensation program are performance-based, we do not believe that
our compensation policies and practices for our employees are reasonably likely to have a material
adverse effect on the Companys risk profile.
Independent Compensation Consultant
During 2010 the Compensation Committee engaged Longnecker to serve as its independent
compensation consultant. At the direction of the Compensation Committee, Longnecker performed
reviews related to the Companys peer group selection, executive compensation, and executive
change-in-control value analysis. These reports provided the Committee with comparative data,
analyses, conclusions and recommendations that the Committee used in making its compensation
decisions for 2010. The data provided by Longnecker was primarily taken from public peer company
proxy statements and other SEC filings. The ultimate compensation decisions for our named
executive officers are made by our Compensation Committee. Other than the services mentioned
above, performed at the request of the Compensation
Committee, and an analysis of the Companys
board of directors compensation, prepared at the request of the Corporate Governance/Nominating Committee of the
Board, Longnecker provided no other services for the Company. Longnecker had not provided services to the Company prior to 2010.
23
Prior to the 2010 compensation review, the Committee had occasionally used a compensation
consultant to review and analyze peer group information, but did not do so in 2009. In prior
years, the Committee has used a combination of a broad-based industry survey and data obtained from
a review of proxy materials from a selected group of our peer companies. Management uses what we
believe to be one of the more complete compensation surveys for our industry, which is prepared by
Effective Compensation, Incorporated (ECI), selected primarily because of its extensive listing
of both employee positions and industry entities. Due to the comprehensive nature of the ECI
survey, we primarily use it to compare the base salaries, bonuses and long-term
compensation of our employees, as the survey includes almost all types of positions for an oil and
natural gas exploration and production company. In the 2009 executive compensation review and in
prior years, when the Committee reviewed overall compensation for our
executive officers, it
reviewed the data furnished by ECI, although it would typically rely more heavily on compensation
data extracted from peer proxy materials, as the proxy materials include more data regarding stock
and long-term compensation, the primary focus and emphasis of our executive compensation program.
Peer Survey Group Selection
For our 2010 executive compensation review (conducted in the
fall of 2010), the Compensation Committee requested Longnecker to prepare a peer group selection
analysis. The selection of peer companies was made from independent publicly traded oil and gas
companies with similar operations using several criteria, such as market capitalization, revenues,
assets, enterprise value, EBITDA and production volumes. Our peer group was comprised of 14
companies in 2010 and 15 companies in both 2009 and 2008. The following lists contain our peer
group companies for our 2010 and 2009 executive compensation reviews with changes noted below. Our
peer group was the same in both 2009 and 2008, but was adjusted in 2010, based on recommendation
from Longnecker as Denburys operations and size changed significantly following the acquisition of
Encore in early 2010.
|
|
|
2010 Peer Group |
|
2009 Peer Group |
Cabot Oil and Gas
|
|
Berry Petroleum (b) |
Cimarex Energy
|
|
Cabot Oil and Gas |
Continental Resources (a)
|
|
Cimarex Energy |
EQT Corporation (a)
|
|
Comstock Resources (b) |
Forest Oil
|
|
Encore Acquisition (c) |
Newfield Exploration
|
|
Forest Oil |
Noble Energy (a)
|
|
Newfield Exploration |
Petrohawk Energy (a)
|
|
Pioneer Natural Resources |
Pioneer Natural Resources
|
|
Plains Exploration and Production |
Plains Exploration & Production
|
|
Quicksilver Resources (b) |
Range Resources
|
|
Range Resources |
Southwestern Energy
|
|
Southwestern Energy |
Ultra Petroleum (a)
|
|
St. Mary Land (b) |
Whiting Petroleum
|
|
Swift Energy (b) |
|
|
Whiting Petroleum |
(a) |
|
Added to peer group in 2010. |
|
(b) |
|
Removed from peer group in 2010. |
|
(c) |
|
Acquired by Denbury in 2010. |
Targeted
Compensation
Our 2010 peer group review included an analysis of the following major
components:
|
|
|
base salary; |
|
|
|
|
target and actual total cash; |
|
|
|
|
long-term incentives; and |
|
|
|
|
target and actual total direct compensation. |
Based on the Committees review and consultation with Longnecker, it determined that
compensation of our executive officers should approximate the 60th percentile of total
compensation of the peer group, with the primary focus on long-term incentives. Longnecker
recommended that the Company target a level higher than the median primarily because Denbury is one
of the larger companies among the recommended 14 peer group companies. This is a change from the
2009 review in which the Committee had targeted pay toward the median amounts for base salary and
total compensation.
24
Consistent with the Companys overall emphasis on team work, our senior management generally
functions as an executive committee, which we refer to as our Investment Committee. Our
Investment Committee currently consists of Phil Rykhoek, Chief Executive Officer; Ronald Evans,
President and Chief Operating Officer; Mark Allen, Senior Vice President and Chief Financial
Officer; and Robert Cornelius, Senior Vice President of Operations. This group reviews and approves
almost all significant corporate decisions as a group. Thus, we operate on a less pyramidal basis
than do most of our peers. Consistent with this approach, compensation of our senior management is
more tightly bunched and more consistent among our senior management than at most of our peers, and
there is less variance between our CEOs salary and that of other members of our senior management.
When we compare our senior managements compensation to that of our peer group, we compare it
mostly on an aggregate basis rather than on an individual basis. In practice, this means that we
compare the total aggregate compensation for our named executive officers to the aggregate
compensation for the top five executives of each company in our peer group, rather than comparing
individual positions. For the latest compensation review in late 2010, in light of the Companys
consideration of another operational senior executive who will likely be added to the Companys
Investment Committee, we primarily focused on the aggregate compensation of the Investment
Committee, which includes the top four executives of the Company, and for comparison purposes,
included an additional senior executive with assumed compensation similar to the other senior vice
presidents. To allocate the compensation among our named executive officers, we compared the
compensation of our Chief Executive Officer and our
President and Chief Operating Officer
to the survey 60th percentile compensation of the top two highest paid executives (with
slightly higher compensation for our Chief Executive Officer), and
the compensation of our two senior
vice presidents, plus an assumed third senior vice president, to the survey 60th
percentile compensation of the third highest paid executive of our peers. As a result of this
approach, our named executive officers tend to have more equal compensation among the group than
most of our peers and the compensation of our Chief Executive Officer tends to be lower than the
CEOs of our peers.
Generally, we target our base salaries to be less than one-quarter of our executives total
compensation, with the remainder to be paid either through bonuses or long-term equity awards. This
means that all compensation components other than executives base salaries will be based, to a
significant degree, on Company performance. Our compensation program also provides a mix of
short-term and long-term incentives, with a heavier weighting towards long-term incentives.
Peer Comparison Results. The results of the compensation review, wherein we compared the 2010
target compensation of our Investment Committee (four of the five named executive officers), plus
an assumed fifth Investment Committee member, to the aggregate 2009 compensation of the top five
reporting officers of our 14 member peer group, is summarized below, with each aspect of
compensation discussed in more detail under the respective categories of compensation. The Denbury
officers included in the comparisons below are Messrs. Rykhoek, Evans, Allen, and Cornelius, plus
an assumed fifth Investment Committee member assumed to be compensated at the same level as Messrs.
Allen and Cornelius. Note that the value of the equity represents the grant-date fair value of
awards granted during the year.
2010 Denbury Target Compensation vs. Aged 2009 Peer Group Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonuses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity |
|
|
Total |
|
|
Total |
|
|
All |
|
|
|
|
|
|
Base |
|
|
Incentive |
|
|
Cash |
|
|
Equity |
|
|
Other |
|
|
Total |
|
($ in thousands) |
|
Salary |
|
|
Comp |
|
|
Comp |
|
|
Comp |
|
|
Comp |
|
|
Comp |
|
60th percentile |
|
$ |
2,429 |
|
|
$ |
3,967 |
|
|
$ |
6,396 |
|
|
$ |
8,405 |
|
|
$ |
418 |
|
|
$ |
15,219 |
|
Denbury totals |
|
$ |
2,100 |
|
|
$ |
4,150 |
|
|
$ |
6,250 |
|
|
$ |
7,349 |
|
|
$ |
246 |
|
|
$ |
13,845 |
|
Denbury % to peers |
|
|
86 |
% |
|
|
105 |
% |
|
|
98 |
% |
|
|
87 |
% |
|
|
59 |
% |
|
|
91 |
% |
As shown above, the estimated 2010 target compensation of the executive officers included in
our analysis equals approximately 91% of the 60th percentile of the top five officers in
our peer group. As discussed above, the Committee determined that targeted total compensation for
the Companys executive officers should be targeted at the 60th percentile. In setting increases
for these four executives, the Committee based its evaluation on the assumption that the Company
would add an additional Sr. Vice President level position in 2011, who would be compensated at
approximately the same level as Messrs. Allen and Cornelius. As such, when factoring in this
information, and adding that anticipated compensation level to that of the four current executives,
the aggregate compensation would be in the range of the targeted 60th percentile of total
compensation of the peer group of $15.2 million.
25
While the above peer group data was used as a guideline in determining various aspects of
our executives compensation as discussed below, you should note that this is 2009 data, which has
been aged by our compensation consultants to take into account estimated peer compensation
adjustments for 2010, and therefore may not be completely representative of actual information. It
is not possible to determine how compensation changed in 2010 or will change thereafter at the
companies in our peer group and therefore, it is impractical for us to match the 60th
percentile of our peer group, as the compensation of our peers is constantly changing.
Compensation Components
Base Salaries. We strive to provide our senior management with a level of assured cash
compensation in the form of base salaries that are appropriate given their professional status and
accomplishments. We believe that base salaries should generally target the 60th
percentile of the salaries of our peer companies. Because of our emphasis on team work, as
discussed under Targeted Compensation, we review and set base salaries for our senior management
largely on a group basis rather than on an individual basis. We do this to further emphasize our
team approach and as such, seldom make distinctions for individual performance, experience or
expertise among those individuals in the same levels within our executive group.
To align the base salaries of the Investment Committee to that of our peers (see Peer
Comparison Results above), in December 2010 the Committee granted an average base salary increase
for these officers of 13.2%. Effective January 1, 2011, the salary of Mr. Rykhoek increased from
$495,000 to $600,000, the salary of Mr. Evans increased from $495,000 to $544,500, and the salaries
for Mr. Allen and Mr. Cornelius were increased from $370,000 to $407,000. This base salary
increase for these executives resulted in a base salary for the named executive officers that was
approximately equal to the anticipated 60th percentile of the base salaries of our
peers, adjusting for anticipated increases during 2010, as evidenced in the peer comparison
referenced above. Also, these base salaries represent approximately 15% of the targeted
compensation for each of these individuals. The base salary for Mr. Dubuisson was increased from
$257,400 to $265,120, an increase of approximately 3%, with the base salary for Mr. Dubuisson
representing approximately 25% of his targeted compensation.
Cash Bonus Plan. Since 1995, we have had a practice of paying cash bonuses to all of our
employees each year (except in 1998 the only year in which we had a significant net loss, when no
bonuses were paid to employees). There is no formal bonus plan, nor any formal written formulas for
determining bonus amounts. The decision to pay bonuses and in what amounts is determined by our
Committee on a Company-wide basis, and executive officers receive bonuses only if all other
employees receive bonuses.
Our practice used for 2010 bonuses, which is subject to review and change each year by our
senior management and our Committee, includes various levels of bonus compensation depending on an
employees job tier. Bonus levels for our non-officer employees range from 10% of base salary to
45% of base salary. The following two levels of bonus compensation reflect the target bonus levels
for our corporate officers:
Officer I non-Investment Committee officers (70% of base salary)
Officer II Investment Committee members (100% of base salary)
All cash bonuses are paid at the same level within each respective targeted range such that
bonuses paid to all employees, including the officers, is consistent within their targeted range
(i.e. if bonuses are paid at the middle of the range for one group, all other groups including the
named executive officers also receive bonuses at the middle of the targeted range). Additionally,
we have historically paid a Christmas bonus to all employees each year that is equivalent to one
week of each employees base salary.
Bonus determinations are made by our Committee subjectively, instead of being based on
arithmetic methods, formulas or specific targets, based on an overall retrospective evaluation of
our corporate results, taking into account a wide range of both non-numeric measures and financial
and operational results, which measures and results are not determined until the year has
concluded. Any measure that might be
26
considered to determine whether or not an oil and natural gas
company had a good year (or other measures of success or failure) is a possible consideration by the Committee. These measures have
historically included an evaluation of production levels, stock performance, achievement of
acquisition or disposition goals, completion of significant transactions, completion of significant
projects (such as software systems or significant construction projects), operating and
administrative expense levels, capital expenditures relative to budgeted levels, and the
changes in our proved, probable and possible reserves for that period as compared to costs
incurred. In addition, our Committee recognized that there would be significant incremental work
related to the Encore acquisition and, at the end of 2009, put in place for 2010 a Company-wide
incentive under which each employee could earn an incremental 25% of their targeted bonus for the
successful integration of Encore. As our Committees decisions are subjective evaluations made on
an overall basis, it is not possible to determine precisely how these measures are weighted or
evaluated by the Committee.
Based on our Committees evaluation of 2010 performance, the Committee concluded that 2010
cash bonuses for all employees should be awarded at the 125% level of the various bonus ranges.
This decision was based upon their assessment that the Company successfully completed its merger
with and integration of Encore, had positive overall performance during 2010
with regard to tertiary and overall production, operating costs, and health, safety and environment
factors, coupled with significantly beneficial acquisitions, dispositions and other events during
the year. As such, cash bonuses for 2010 were paid in early 2011, at 125% of the targeted bonus
percentages for all employees. This translates, for example, to a total of 87.5% of base salary for
the non Investment Committee officers (including Mr. Dubuisson) and 125% of base salaries for the
four named executive officers that are on the Investment Committee.
Stock Purchase Plan. To encourage stock ownership in the Company by all of our employees and
to better align our employees interests with those of our stockholders, we have a stock purchase
plan which allows all employees to contribute up to 10% of their base compensation in exchange for
Company stock, with the Company matching 75% of such contributions, which is more generous with
regard to company matching or stock discounts than the more typical plan that qualifies under
Section 423 of the Internal Revenue Code. The combined funds are used at the end of each quarter to
purchase common stock at the then current market price. In addition, we pay the income tax on the
matching portion for front-line and entry-level employees. The stock purchase plan requires each
employee to hold these shares for a minimum of one year before disposition. Of the total stock
purchase plan matching contributions made by the Company during 2010, the named executive officers
received approximately 4%. The named executive officers have the same limitations and rights under
the plans as do our other employees and their benefits are the same as those for all other
employees relative to their respective base salaries.
Long-term Awards Overall Program. Long-term compensation is a significant focus of our
total compensation program for all employees, and is at an even higher level for our executives.
Our overall long-term program consists of deferred cash bonuses (excluding the Investment
Committee), SARs payable only in stock, restricted stock, and for our officers, performance-based
stock, and for members of the Investment Committee, performance-based cash awards. For our most
recent awards, all executives were given some level of cash awards along with the equity in order
to help the executive cover the income taxes incurred on the vesting date since the tax withholding
is often not sufficient to cover the total tax obligation. For the Investment Committee, this was
in the form of a performance-based cash award (see Performance-based Shares and Cash below), and
for the remaining officers, a deferred cash bonus.
For our executives, our primary long-term compensation and retention awards have been in the
form of equity, consisting of time-vesting restricted stock, SARs and performance-based stock. In
our most recent compensation reviews, we split the stock awards to our Investment Committee into
three equal pieces: one-third cliff-vesting restricted stock,
one-third cliff-vesting SARs (based
on the Black-Scholes option pricing model), and one-third performance-based stock (based on the
targeted level). We believe equity awards for our executives align the interests of our executive
officers (and all other employees) with those of our stockholders. All equity-based awards granted
under our Stock Plan are designed to motivate the employee to increase the value of the Company,
and hopefully help achieve a commensurate increase in the market price of our shares, which
benefits not only the employee but the Companys stockholders. Because stock price is the primary
measure that stockholders use to measure our performance, we believe that it is an important way to
measure our executives performance.
Beginning in 2009, the Committee changed the period that all employees have to exercise their
SAR awards (i.e. the termination date) from ten years to seven years. This change is beneficial for
both our stockholders and the Company, as it decreases our compensation expense under the
Black-Scholes option pricing model and results in SARs being exercised sooner, which will result in
shares not utilized in the net settlement of SARs being returned to the pool for future awards.
27
In the 2010 compensation review, we reviewed all aspects of our executives compensation and
compared them to the peer group compensation data, valuing the
long-term awards using grant-date
fair values as presented in the Summary Compensation Table. We then adjusted each individuals
compensation package to achieve the targeted compensation levels for these individuals. Based on
all the data, we determined that we would allocate our long-term award grants to our officers using
the following allocations:
|
|
|
Officer I non-Investment Committee Members
|
|
15% deferred cash / 25% SARs
/ 60% stock, of which 50% is
cliff-vested restricted
stock and 50% is cliff-vested performance-based
restricted stock |
|
|
|
Officer II Investment Committee Members
|
|
Equity awards consisting of
33% SARs / 67% stock, of
which 50% is cliff-vested
restricted stock and 50% is
cliff-vested
performance-based restricted
stock, plus
performance-based cash as
discussed below. |
Long-term Equity Awards. In keeping with the concept of maintaining a regular schedule of
long-term awards that vest each year (our key retention feature), the Committee reviewed the
executives compensation again in late 2010 to determine the appropriate amount of long-term equity
awards to issue. The primary tool used in the analysis was a comparison of our executives
compensation to that of our peers, using the required public disclosures of total compensation (see
summary table under Peer Comparison Results above). As the comparison
indicates, the executives total compensation was 91% of the 60th percentile of our
peers, well below the targeted amount. Even with the salary increases and the increased cash
bonuses, the Committee determined that our executive compensation was still approximately $1.4
million below the 60th percentile total compensation of the peer group. The Committee
concluded that it would grant an equity package similar to prior grants, with a total value (based
on the 100% performance target amount) of $7.0 million allocated among the Investment Committee as
noted below under Awards Granted in January 2011, approximately the same as last year and relatively
close to the equity compensation of our peer comparison above. The dollar value and shares granted
to each officer are disclosed below under Awards Granted in January 2011.
Performance-based Shares and Cash. In order to create additional performance incentives,
one-third of our long-term stock awards for Investment Committee members are in the form of
performance-based stock. Our goal is to select performance objectives which would not be
significantly affected by commodity prices, or if so influenced, we chose as our measurement
criteria comparisons to our peer group who theoretically would be subject to the same market
influences on their performance. Further, we have employed four different performance objectives,
as discussed below, so as to minimize any motivation for manipulation of the targets by our
executives.
In order to create additional performance-based compensation and to bring total targeted cash
compensation more in line with that of our peers, during the 2009 compensation review, our
Committee elected to add an award of performance-based cash to the compensation of our Investment
Committee. The performance measures used for these awards are the same as those for the equity
performance shares. If earned at the 100% targeted level, these awards, granted January 7, 2011,
would be $550,000 for Messr. Rykhoek, $500,000 for Messr. Evans and $350,000 for Messrs. Allen and
Cornelius. As with the performance shares, these awards will vest on March 31, 2012. The 100%
target levels for the cash performance awards granted in 2010 were $500,000 for both Messrs.
Rykhoek and Evans, and $350,000 for Messrs. Allen and Cornelius. See the Summary Compensation
Table and related footnotes.
The granted performance-based cash and stock will be earned (and eligible to vest) during the
performance period depending upon the Companys level of success in achieving four
specifically-identified performance targets. Generally, one-half of the shares or cash eligible to
be earned under the performance-based awards will be earned for performance at the designated
target levels (100% target vesting levels) or upon any earlier change of control (for certain
officers see Change of Control and Severance Benefits below), and twice that number of shares or
cash will be earned if the higher maximum target levels are met. If performance is below designated
minimum levels for all performance targets, no performance-based shares or cash will be earned. The
targets chosen by our Committee are generally intended to be based upon controllable Company
performance factors, which for the most part are intended to exclude the effect of changes in
commodity prices. The Committee is authorized to change any of the terms or conditions of the award
in order to take into account any material unanticipated change in the Companys operations,
corporate structure, assets, or similar changes, but only to the extent such action carries out the
original purpose, intent and objectives of the award, but not to discretionarily increase an
individual award.
The performance targets consist of (1) comparisons of actual results to budgeted or targeted
amounts or (2) a relative comparison of our actual results to that of our peers. The targets cover
four primary areas: (1) tertiary oil production (2) total corporate production, (3) total operating
costs (excluding the cost of CO2), and (4) reserve replacement percentages.
Performance awards granted prior to 2009 included a comparison of the total finding and development
costs, general and administrative costs and operating expenses on a per unit basis as compared to
the same total costs of our peer group, in lieu of the operating cost comparison used in the latest
awards. The Committee changed this parameter beginning with the 2009 performance awards, as they
believed that (i) it was difficult to accurately determine the comparable total
28
costs of our peers
due to the variability in industry accounting methods and reporting,
and (ii) the lack of any peer companies with significant Enhanced Oil Recovery operations makes a
comparison of total costs difficult due to the different nature of our operations. Also beginning
with the 2009 performance awards, the Committee changed the measurement period for the performance
awards from a three-year period to a one-year period. Also, each year the Committee reviews the
various performance percentages and weighting allocations to account for growth in the Company and
consistency at the different earned levels. The revised weighting and targets are outlined below.
The performance target calculation is performed by reviewing each measure, determining the
appropriate number of points for each measure based on the actual results as indicated in each
table below, and calculating the sum. In the aggregate, the potential points earned range from zero
to 200, which corresponds to a vesting percentage from zero percent to 200% of the targeted shares.
As noted above, the measurement period was a three-year period for awards granted in January 2007
and 2008, and a one-year measurement period for the Awards granted in January 2009, 2010, and 2011.
As such, two sets of performance share awards vested in each of March 2010 and 2011.
The tertiary oil production performance measure compares our actual tertiary production to the
targeted amounts over the one- or three-year measurement periods. The computation is measured as a
percentage, computed by dividing the actual tertiary production by the targeted amounts. This award
is intended to be approximately 35% of the total weighting. Points are earned as follows for the
most recent awards granted in January 2011:
|
|
|
|
|
|
|
|
|
|
|
Performance |
|
|
|
Tertiary Production Percentage |
|
Percentage Points |
|
A. |
|
106.2% or more |
|
|
70 |
|
B. |
|
103.1% to 106.1% |
|
|
56 |
|
C. |
|
100% to 103.0% |
|
|
42 |
|
D. |
|
96.9% to 99.9% |
|
|
28 |
|
E. |
|
Less than 96.9% |
|
|
0 |
|
The total corporate production measurement is very similar to the tertiary production measure
in that it compares our actual total corporate production to targeted amounts over the one- or
three-year measurement periods. Because this measure is based on a larger number, with a one
percent variance representing a larger absolute amount, the range of percentages used in this
comparison is tighter. The computation is measured as a percentage, computed by dividing the actual
corporate production by the targeted amounts. This award is intended to be approximately 20% of the
total weighting. Points are earned as follows for this measure for the most recent awards granted
in January 2011:
|
|
|
|
|
|
|
Average Annual Corporate |
|
Performance |
|
|
Production Percentage |
|
Percentage Points |
A. |
|
105.9% or more |
|
40 |
B. |
|
103.0% to 105.8% |
|
32 |
C. |
|
100% to 102.9% |
|
24 |
D. |
|
97.0% to 99.9% |
|
16 |
E. |
|
Less than 97.0% |
|
0 |
29
The third measure compares our total operating costs to our budgeted amounts, both of which
exclude the cost of CO2. CO2 costs are excluded because (i)
they generally track oil prices and therefore a portion of that cost would not be controllable, and
(ii) we generally want to inject or use more CO2 rather than less. As such, we
do not want to include these costs in our budget. This award is intended to be approximately 25% of
the total weighting. For this measure, points are earned as follows for the most recent awards
granted in January 2011:
|
|
|
|
|
|
|
|
|
Performance |
|
|
LOE Target Per BOE |
|
Percentage Points |
A. |
|
Less than $16.88 |
|
50 |
B. |
|
$16.88 to
$17.37 |
|
40 |
C. |
|
$17.38 to
$17.89 |
|
30 |
D. |
|
$17.90 to
$18.43 |
|
20 |
E. |
|
Greater
than $18.43 |
|
0 |
The final measure compares our actual reserve replacement percentages to targeted amounts.
This award is intended to be approximately 20% of the total weighting. For this measure, points are
earned as follows for the most recent awards granted in January 2011:
|
|
|
|
|
|
|
|
|
Performance |
|
|
Reserve Replacement Percentage |
|
Percentage Points |
A. |
|
300% or more |
|
40 |
B. |
|
200% to 299% |
|
32 |
C. |
|
150% to 199% |
|
24 |
D. |
|
100% to 149% |
|
16 |
E. |
|
Less than 100% |
|
0 |
We believe that it will be difficult to significantly exceed the targeted amounts of these
performance measures, as to do so would require us to perform at or above 100% of our budgets or
targets in every area. This would be difficult to achieve, as our forecasts assume a high level of
efficiency. Since the performance measures cover the three primary focal points of our business,
those being production, reserves and cost, exceeding our targets in all three of these areas
becomes even more difficult. Our budgets or targets are not designed to be an easy goal. These
targets are achievable, but require that work be completed on schedule and within targeted amounts,
and significantly exceeding those targets is not considered likely, particularly in our current
industry operating environment where goods, services, and personnel are in limited supply. Even if
we are able to exceed our targets, there could be an error in our projections, as certain things
like production are difficult to predict with absolute certainty. However in this case, we believe
that our projections could be inaccurate in either direction with approximately the same
probability.
In addition to the specific performance measures described above, our Committee has the
discretion to reduce the number of performance-based shares otherwise earned by up to 25% based on
other factors, which include its review of our corporate governance, environmental and safety
compliance, debt levels, and other discretionary factors. The Committee does not have the ability
to discretionally increase the awards.
Each of the target levels will be determined and defined by our Committee, based upon year-end
targets or levels (for example, year-end 2010 reserves will serve as the baseline for the reserves
replacement target for the awards granted in January 2011). Achievement of discretionary factors
and confirmation of performance levels will be determined by our Committee. Any portion of the
performance shares which are not earned by the end of the one- or three-year measurement period
will be forfeited. In certain change of control events, the target level amount of the
performance-based shares would vest.
30
Results of Performance Based Awards Vesting in 2011
In March 2011, two different sets of performance-based incentive grants vested, those granted
in 2008 and in 2010. The 2008 long-term
incentive grants were awarded on January 7, 2008, and the
number of performance-based shares of common stock earned by the executive officers was based upon
Company performance for the three-year period ended December 31, 2010. The 2010 incentive grants
were awarded on January 4, 2010, and the number of performance-based shares of common stock earned
was based upon Company performance solely for the calendar year 2010. Both sets of shares earned
under these awards vested on March 31, 2011. All other performance metrics upon which the
performance-based incentive grants are based were similar to those discussed above, except that
these awards granted in 2008 included a comparison of our total cost for finding and development,
general and administrative and operating expenses as compared to those costs of our peers, rather
than operating costs compared to our budget, as evidenced in the most recent award.
The number of performance-based shares earned during the performance period depended upon the
Companys level of success in achieving the four specifically-identified performance targets
discussed above. Generally, one-half of the shares earnable under the performance-based shares
could be earned for performance at the designated target levels (100% target vesting levels), and
all of the shares could be earned if the higher maximum target levels were met. The following is a
summary of the performance points earned for each of the awards based on the Companys performance
for the four targets, with the number of points equal to the percentage of the maximum number of
shares eligible to be earned under these awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 Award |
|
|
2008 Award |
|
|
2010 Award |
|
|
2010 Award |
|
|
|
Potential Points at |
|
|
Performance Points |
|
|
Potential Points at |
|
|
Performance Points |
|
Performance Target Metric |
|
Maximum Target |
|
|
Earned |
|
|
Maximum Target |
|
|
Earned |
|
Actual tertiary oil production versus forecasted tertiary
oil production |
|
|
60 |
|
|
|
30 |
|
|
|
70 |
|
|
|
70 |
|
Actual total corporate production versus forecasted
corporate production |
|
|
45 |
|
|
|
25 |
|
|
|
40 |
|
|
|
32 |
|
Peer Group Efficiency Percentage - Finding cost, plus
operating expenses, plus G&A expense per BOE versus
peer group |
|
|
50 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
Lease Operating Expense Target per BOE |
|
|
|
|
|
|
|
|
|
|
50 |
|
|
|
20 |
|
Reserve Replacement Percentage |
|
|
45 |
|
|
|
45 |
|
|
|
40 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Points Earned |
|
|
200 |
|
|
|
120 |
|
|
|
200 |
|
|
|
162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On March 9, 2011, the Committee certified the performance results for the periods covered
by both sets of the awards, which were also reviewed by the
Companys Internal Audit Department. The awards vested on March 31, 2011 at the 120% level for the
2008 Awards and at the 162% level for the 2010 Awards.
31
Awards Granted in January 2011
During December 2010, the Committee decided to grant the named executive officers equity
awards on January 7, 2011, valued at the dollar values shown below on the date of grant, with the
determination of the number of shares granted computed by dividing the total dollar value of the
award by the closing price of the Companys stock on Friday, January 7, 2011, as quoted on the
NYSE, rounded to the nearest whole number of shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of |
|
|
|
|
|
|
|
|
|
|
Shares of Time |
|
|
Performance - Based |
|
|
|
|
|
|
Total |
|
|
Vesting Restricted |
|
|
Stock (Target |
|
|
|
|
Name |
|
Dollar Value (1) |
|
|
Stock |
|
|
Amount) |
|
|
SARs |
|
Phil Rykhoek |
|
$ |
2,274,873 |
|
|
|
40,530 |
|
|
|
40,530 |
|
|
|
76,137 |
|
Ronald T. Evans |
|
|
2,070,623 |
|
|
|
36,891 |
|
|
|
36,891 |
|
|
|
69,301 |
|
Mark C. Allen |
|
|
1,349,769 |
|
|
|
24,048 |
|
|
|
24,048 |
|
|
|
45,175 |
|
Robert L. Cornelius |
|
|
1,349,769 |
|
|
|
24,048 |
|
|
|
24,048 |
|
|
|
45,175 |
|
H. Raymond Dubuisson |
|
|
509,961 |
|
|
|
9,620 |
|
|
|
9,620 |
|
|
|
15,060 |
|
|
|
|
(1) |
|
The grant date fair value of the restricted stock was $18.71 per share and the value of the SARs was calculated
at a Black-Scholes value of $9.96 per share. |
The above described time-vesting restricted stock and SAR equity awards will cliff vest on
March 31, 2014, and the above described performance shares will cliff vest on March 31, 2012, with
all of the equity awards subject to an earlier vesting as a result of a change in control or a
holders death or disability or retirement as defined in the Stock Plan.
In addition, on January 7, 2011, our Committee granted cash performance awards to members of
our Investment Committee. The performance measures used for these awards are the same as those for
the equity performance shares. If earned at the 100% targeted level, these awards, granted January
7, 2011, would be $550,000 for Mr. Rykhoek, $500,000 for Mr. Evans and $350,000 for Messrs. Allen
and Cornelius. As with the performance shares, these awards will vest on March 31, 2012. In
addition, our Committee granted Mr. Dubuisson a $90,000 deferred cash award which cliff vests March
31, 2014.
The Committee made the additional following determinations with regard to the grants of equity
awards:
|
|
|
that time-vesting restricted shares be considered issued and outstanding upon issue but held by the Companys
transfer agent until vesting has occurred; |
|
|
|
|
that performance shares not be considered issued and outstanding until vesting has occurred; and |
|
|
|
|
that the SARs will expire seven years from the date of grant. Any increase in the stock price between the exercise
price and the stock price on the exercise date will be paid solely in shares of Company stock. |
Change
of Control and Severance Benefits
Our senior management and other employees have built Denbury into the successful enterprise
that it is today, and we believe that it is important to protect them in the event of a change of
control. Further, it is our belief that the interests of stockholders will be best served if the
interests of our senior management are aligned with theirs, and providing change of control
benefits should eliminate, or at least reduce, possible reluctance of senior management to pursue
potential change of control transactions that may be in the best interests of stockholders. This
desire was part of the reason that we issued significant amounts of restricted stock to senior
management in 2004 with long-term vesting provisions, including 35% of such awards that
would not vest until retirement, or upon a change of control, death or disability.
As a result of the strong performance in our stock price subsequent to the granting of
restricted stock in 2004, the value of the shares issued to the named executive officers had
increased significantly since the date of grant, causing the potential change of control amount to
increase more than originally intended. As such, the change of control provision related to equity
awards granted in January 2008, 2009, and 2010 to those executives that also had restricted stock
from the 2004 grants was eliminated. The Committee noted that the current payments in the event of
a change of control were comparable to the median for the peer group, and therefore it was
inappropriate to include additional change-of-control provisions for those executives. For the
named executive officers, only Mr. Cornelius retained the
change-of-control provision in his
January 2008, 2009 or 2010 grants, as Mr. Cornelius was not employed by Denbury in 2004. In
addition, to further diminish this problem over time, the Committee changed the vesting provisions
of these retirement shares so that they would vest over time.
32
As noted above, the Compensation Committee in its 2010 review engaged Longnecker
to perform a change-in-control value analysis for our executive officers. This analysis concluded
that the change-in-control value for the executive officers had decreased to a point where it was
significantly below the median for the peer group. This difference was due to the fact that much
of the restricted stock granted in 2004 had since vested, and that for the last several years the
long-term equity awarded to Messrs. Rykhoek, Evans and Allen would not vest upon a
change in control. Based on this analysis, beginning with the 2011 compensation awards, the
Committee determined that those awards would be subject to change-in-control provisions for all
executive officers.
We do not have any pre-defined severance benefits for our executive officers, except in the
case of a change of control. In the case of a change-of-control event, we have two benefits for our
employees and management: (1) our cash severance protection plan that was adopted in December 2000,
and (2) immediate vesting of all long-term awards (excluding the January 2008, 2009 and 2010 awards
for certain officers see discussion above). Under the terms of our severance plan, an employee
is entitled to receive a severance payment if a change of control occurs and the employee is
terminated within two years of that change (i.e. a double trigger award). The severance plan will
not apply to any employee who is terminated for cause or by an employees own decision for other
than good reason as defined in the severance plan. If entitled
to severance payments under the terms of the severance plan, the Chief Executive Officer and other
members of our Investment Committee (three Senior Vice Presidents and one Vice President) will
receive three times their annual salary and bonus, all of our other officers will receive two and
one-half times their annual salary and bonus, certain other members of management will receive two
times their annual salary and bonus, and all other employees will receive between one-third to one
and one-half times their annual salary and bonus depending on their salary level and length of
service with us. All employees will also receive medical and dental benefits for one-half the
number of months for which they receive severance benefits.
The severance plan also provides that if our officers are subject to the parachute payment
excise tax, then the Company will pay the employee under the severance plan an additional amount to
gross up the severance payment so that the employee will receive the full amount due under the
terms of the severance plan after payment of the excise tax.
In addition to the severance plan, many of our long-term incentives and equity awards have
change-of-control protection. Therefore, upon a change of control, equity awards would immediately
vest. In the case of our recently issued performance awards, they would vest at the target or 100%
level in the event of a change of control.
33
The following table shows, as of December 31, 2010, the estimated potential payments and
benefits that would be received by our named executive officers based upon a hypothetical
termination of employment in each of the circumstances indicated in the table. The fair market
value of accelerated equity awards includes only those awards that were not currently vested as of
December 31, 2010, using the closing stock price of $19.09 per share on that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare and |
|
|
Fair Market Value of |
|
|
Accelerated |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Insurance |
|
|
Accelerated Equity |
|
|
Deferred Cash |
|
|
|
|
|
|
|
Name |
|
Severance Plan Payment |
|
|
Benefits |
|
|
Compensation(1) |
|
|
Awards(1) |
|
|
Tax Gross-Up |
|
|
Total Value |
|
Phil Rykhoek |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control |
|
$ |
2,533,297 |
|
|
$ |
60,877 |
|
|
$ |
3,637,714 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
6,231,888 |
|
Death or Disability |
|
|
|
|
|
|
|
|
|
|
7,183,460 |
|
|
|
500,000 |
|
|
|
|
|
|
|
7,683,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald T. Evans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control |
|
|
2,533,297 |
|
|
|
60,877 |
|
|
|
4,053,456 |
|
|
|
|
|
|
|
|
|
|
|
6,647,630 |
|
Death or Disability |
|
|
|
|
|
|
|
|
|
|
7,599,202 |
|
|
|
500,000 |
|
|
|
|
|
|
|
8,099,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark C. Allen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control |
|
|
1,923,174 |
|
|
|
61,067 |
|
|
|
2,055,344 |
|
|
|
|
|
|
|
|
|
|
|
4,039,585 |
|
Death or Disability |
|
|
|
|
|
|
|
|
|
|
4,640,959 |
|
|
|
350,000 |
|
|
|
|
|
|
|
4,990,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L.
Cornelius (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control |
|
|
1,992,835 |
|
|
|
61,441 |
|
|
|
2,834,857 |
|
|
|
350,000 |
|
|
|
1,208,972 |
|
|
|
6,448,105 |
|
Death or Disability |
|
|
|
|
|
|
|
|
|
|
2,834,857 |
|
|
|
350,000 |
|
|
|
|
|
|
|
3,184,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Raymond Dubuisson |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control |
|
|
1,006,153 |
|
|
|
36,777 |
|
|
|
1,135,855 |
|
|
|
|
|
|
|
|
|
|
|
2,178,785 |
|
Death or Disability |
|
|
|
|
|
|
|
|
|
|
2,622,165 |
|
|
|
|
|
|
|
|
|
|
|
2,622,165 |
|
|
|
|
(1) |
|
These columns only include awards unvested as of December 31, 2010. They do not
include awards granted in 2008, 2009 and 2010 (except for Mr. Cornelius awards)
which do not accelerate upon a Change in Control. |
|
(2) |
|
All equity granted to Mr. Cornelius has accelerated vesting upon a Change in Control. |
Perquisites and Other Benefits
Our senior management participates in our benefit plans on the same terms as our other
employees. These plans include medical, dental, disability and life insurance, partial matching
contributions to our 401(k) plan, and partial matching contributions to our employee stock purchase
plan described above. In addition, our directors participate in our medical, dental, vision and
life insurance plans.
Denbury historically paid the monthly membership dues at golf clubs for certain of our
executives, provided that they pay all or a portion of the upfront initiation fees. We provided the
monthly golf club membership fees so that our executives have an appropriate entertainment forum
for business associates. The cost to Denbury of these benefits aggregated less than $10,000 in 2010
for each of the named executive officers except for Mr. Rykhoek, whose golf club membership
aggregated $11,947. Beginning in 2011, the Committee decided to discontinue paying for
memberships, whether or not considered perquisites, on an individual basis and instead added a cash
compensation component for each executive officer. The amount paid to cover such items will be
$25,000 per year to Messrs. Rykhoek, Evans, Allen and Cornelius and $15,000 per year to Mr.
Dubuisson. Our only retirement benefits are our 401(k) plan and a retirement vesting provision
included in most of our equity awards. We do not have any pensions or post-retirement medical
benefits.
Board Process
During the fourth quarter of each year, management reviews the entire Companys compensation,
based on recommendations from their subordinates, and makes a proposal to the Committee. Final
review of this recommendation is made by the Committee at our regularly-recurring December
Committee and Board meetings, although depending on the magnitude of the anticipated changes, there
may be several Committee meetings and discussions with management in advance of the December
meeting. The Committee approves all compensation and long-term awards for all executive officers,
considering the recommendation of the CEO with regard to compensation for the other executives. Our
Committee also reviews and approves our overall compensation programs for all employees or any
significant changes to these programs.
34
This Committee is the administrator of all of our
compensation plans (other than our 401(k) plan, healthcare plan and other fringe benefit plans),
including our Stock Plan under which all of our long-term equity awards are granted. The Board of
Directors reviews and ratifies the compensation package based upon a recommendation from the
Committee. Following approval of the entire compensation program, at least for the last
several years, salary increases have been made effective January 1st, bonuses
are paid in early January, and the annual recurring long-term compensation awards are made
effective in early January.
Stockholder Input on Executive Compensation
Our Board and Compensation Committee believe that our executive compensation policies and
procedures are centered on a pay-for-performance culture and are strongly aligned with the
long-term interests of our stockholders. They also believe that both the Company and stockholders
benefit from responsive corporate governance and policies and constructive and consistent dialogue.
Thus, the Board and Compensation Committee would welcome any comments you may have on our executive
compensation policies and procedures. Please send any correspondence on our executive compensation
policies and procedures to:
Denbury Resources Inc.
Attn: Chairman of the Compensation Committee of the Board of Directors
5320 Legacy Drive
Plano, TX 75024
In addition, you may e-mail your correspondence regarding executive compensation policies and
procedures to compensationcommittee@denbury.com. Your correspondence will be received by
the Chairman of the Compensation Committee of the Board of Directors with a copy to our Chief
Executive Officer and Chief Financial Officer.
Compensation Committee Report
The Compensation Committee of the Board is responsible for making recommendations to the Board
regarding the general compensation policies of the Company, the compensation plans and specific
compensation levels for officers and certain other managers. The independent board members of the
Compensation Committee also administer our stock option and stock purchase plans for all employees.
The Compensation Committee met with management to review and discuss the Compensation
Discussion and Analysis disclosures included in this proxy statement. Based on such review and
discussion, the Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in this proxy statement and incorporated by reference in the Companys
Form 10-K for the year ended December 31, 2010, and the Board approved that recommendation.
The Compensation Committee
Gregory L. McMichael, Chairman
Michael B. Decker
Wieland F. Wettstein
35
Summary Compensation Table
The following table sets out a summary of executive compensation for our Named Executive
Officers for the years indicated below. Mr. Dubuissons data for 2008 is not included because he
was not a named executive officer until 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
Name and Principal |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
Incentive Plan |
|
|
All Other |
|
|
|
|
Position |
|
Year |
|
|
Salary |
|
|
Bonus (1) |
|
|
Awards (2) |
|
|
SARs (3) |
|
|
Compensation (4) |
|
|
Compensation (5) |
|
|
Total |
|
Phil Rykhoek |
|
|
2010 |
|
|
$ |
495,000 |
|
|
$ |
677,396 |
|
|
|
$1,199,978 |
|
|
|
$599,761 |
|
|
$ |
810,000 |
|
|
$ |
67,840 |
|
|
$ |
3,849,975 |
|
Chief Executive
Officer |
|
|
2009 |
|
|
|
415,000 |
|
|
|
436,635 |
|
|
|
1,056,248 |
|
|
|
649,485 |
|
|
|
|
|
|
|
61,837 |
|
|
|
2,619,205 |
|
|
|
|
2008 |
|
|
|
328,746 |
|
|
|
262,230 |
|
|
|
795,845 |
|
|
|
|
|
|
|
|
|
|
|
53,921 |
|
|
|
1,440,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald T. Evans
|
|
|
2010 |
|
|
$ |
495,000 |
|
|
$ |
677,396 |
|
|
|
$1,199,978 |
|
|
|
$599,761 |
|
|
$ |
810,000 |
|
|
$ |
55,893 |
|
|
$ |
3,838,028 |
|
President & Chief |
|
|
2009 |
|
|
|
415,000 |
|
|
|
436,635 |
|
|
|
1,056,248 |
|
|
|
649,485 |
|
|
|
|
|
|
|
49,890 |
|
|
|
2,607,258 |
|
Operating Officer |
|
|
2008 |
|
|
|
328,746 |
|
|
|
262,230 |
|
|
|
795,845 |
|
|
|
|
|
|
|
|
|
|
|
42,521 |
|
|
|
1,429,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark C. Allen |
|
|
2010 |
|
|
$ |
370,000 |
|
|
$ |
504,303 |
|
|
$ |
833,329 |
|
|
|
$416,501 |
|
|
$ |
567,000 |
|
|
$ |
46,518 |
|
|
$ |
2,737,651 |
|
Senior Vice President, |
|
|
2009 |
|
|
|
327,500 |
|
|
|
326,327 |
|
|
|
820,839 |
|
|
|
477,087 |
|
|
|
|
|
|
|
43,327 |
|
|
|
1,995,080 |
|
Chief Financial Officer |
|
|
2008 |
|
|
|
270,524 |
|
|
|
215,789 |
|
|
|
568,600 |
|
|
|
|
|
|
|
|
|
|
|
37,726 |
|
|
|
1,092,639 |
|
Treasurer & Assistant
Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L.
Cornelius |
|
|
2010 |
|
|
$ |
370,000 |
|
|
$ |
469,615 |
|
|
$ |
833,329 |
|
|
|
$416,501 |
|
|
$ |
567,000 |
|
|
$ |
46,518 |
|
|
$ |
2,702,963 |
|
Senior Vice President
- |
|
|
2009 |
|
|
|
355,000 |
|
|
|
326,327 |
|
|
|
906,253 |
|
|
|
499,464 |
|
|
|
|
|
|
|
45,390 |
|
|
|
2,132,434 |
|
Operations & Assistant
Secretary |
|
|
2008 |
|
|
|
328,746 |
|
|
|
262,230 |
|
|
|
795,845 |
|
|
|
|
|
|
|
|
|
|
|
42,521 |
|
|
|
1,429,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Raymond
Dubuisson(6) |
|
|
2010 |
|
|
$ |
257,400 |
|
|
$ |
263,889 |
|
|
$ |
399,972 |
|
|
|
$199,915 |
|
|
$ |
|
|
|
$ |
34,212 |
|
|
$ |
1,155,388 |
|
Vice President Legal
and Secretary
|
|
|
2009 |
|
|
|
247,500 |
|
|
|
160,685 |
|
|
|
498,852 |
|
|
|
274,931 |
|
|
|
|
|
|
|
32,933 |
|
|
|
1,214,901 |
|
|
|
|
(1) |
|
Represents the amounts earned based on our performance for the year indicated, even
though they are actually paid early in January of the subsequent year. Bonuses also
include a Christmas bonus that is equivalent to one weeks salary and which is paid to
all employees. During 2010, bonuses also include cash paid under deferred cash awards
granted on January 3, 2006, which vested in 2010 in the following amounts: $49,127 to
Mr. Rykhoek and Mr. Evans, $34,688 to Mr. Allen and $33,714 to Mr. Dubuisson. |
|
(2) |
|
Represents the grant-date fair value of restricted stock and performance-based stock
awards (at the target level of 100%) granted during the year indicated.
Performance-based awards granted during 2008 and 2010 vested at 120% and 162% of target,
respectively, on March 31, 2011 and had a maximum payout of 200%. The grant-date fair
value of named executive officer performance-based awards that vested on March 31, 2011
pursuant to the 2008 and 2010 grants aggregated $2,046,431 and $3,617,934, respectively.
Further discussion regarding the underlying awards is included in Note 8 to the Companys
audited financial statements for the year ended December 31, 2010, included in the
Companys Annual Report on Form 10-K filed with the SEC on March 1, 2011. |
|
(3) |
|
Represents the fair value of stock-settled SARs granted during the year indicated using
the Black Scholes option pricing model as of the date of grant. These awards were
made pursuant to our 2004 Plan. Further
discussion
regarding the underlying awards, including assumptions, is included in Note 8 to the
Companys audited financial statements for the year ended December 31, 2010, included in
the Companys 2010 Annual Report on Form 10-K filed with the SEC on March 1, 2011. |
36
|
|
|
(4) |
|
Represents the dollar value of performance-based cash awards earned during the year
ended December 31, 2010. These awards, which were granted in 2010, vested at 162% on
March 31, 2011. The presentation of performance-based cash awards in the above table
differs from the presentation of performance-based stock awards in that
performance-based cash awards are presented at the value of awards earned and
performance-based stock awards are presented at the grant-date fair value of the awards
at the 100% target level. |
|
(5) |
|
Amounts in this column include (a) matching contributions by the Company to the
Employee Stock Purchase Plan on each named executive officers behalf, (b) matching
contributions to the 401(k) Plan on each named executive officers behalf, and (c) life
and disability insurance premiums paid by the Company on each named executive officers
behalf as shown in the following table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
Insurance |
|
Name |
|
Year |
|
|
Purchase Plan (a) |
|
|
401(k) Plan (b) |
|
|
Premiums (c) |
|
Phil Rykhoek |
|
|
2010 |
|
|
$ |
37,125 |
|
|
$ |
14,700 |
|
|
$ |
4,068 |
|
|
|
|
2009 |
|
|
|
31,125 |
|
|
|
14,700 |
|
|
|
4,065 |
|
|
|
|
2008 |
|
|
|
24,656 |
|
|
|
13,800 |
|
|
|
4,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald T. Evans |
|
|
2010 |
|
|
|
37,125 |
|
|
|
14,700 |
|
|
|
4,068 |
|
|
|
|
2009 |
|
|
|
31,125 |
|
|
|
14,700 |
|
|
|
4,065 |
|
|
|
|
2008 |
|
|
|
24,656 |
|
|
|
13,800 |
|
|
|
4,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark C. Allen |
|
|
2010 |
|
|
|
27,750 |
|
|
|
14,700 |
|
|
|
4,068 |
|
|
|
|
2009 |
|
|
|
24,562 |
|
|
|
14,700 |
|
|
|
4,065 |
|
|
|
|
2008 |
|
|
|
20,289 |
|
|
|
13,800 |
|
|
|
3,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Cornelius |
|
|
2010 |
|
|
|
27,750 |
|
|
|
14,700 |
|
|
|
4,068 |
|
|
|
|
2009 |
|
|
|
26,625 |
|
|
|
14,700 |
|
|
|
4,065 |
|
|
|
|
2008 |
|
|
|
24,656 |
|
|
|
13,800 |
|
|
|
4,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Raymond Dubuisson |
|
|
2010 |
|
|
|
15,444 |
|
|
|
14,700 |
|
|
|
4,068 |
|
|
|
|
2009 |
|
|
|
14,850 |
|
|
|
14,700 |
|
|
|
3,383 |
|
The amount in All Other Compensation for both 2009 and 2010 includes $11,947 in country club
dues for Mr. Rykhoek. In 2008, all other compensation or perquisites for each named executive
officer was less than $10,000 in the aggregate.
(6) Compensation information for Mr. Dubuisson is not provided for 2008 because he was not a
named executive officer until 2009.
37
2010 Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
|
Name |
|
Grant Date |
|
Threshold |
|
Target |
|
|
Maximum |
|
Phil Rykhoek
|
|
1/4/2010
|
|
|
|
$ |
500,000
|
(1) |
|
$ |
1,000,000 |
|
Ronald T. Evans
|
|
1/4/2010
|
|
|
|
|
500,000
|
(1) |
|
|
1,000,000 |
|
Mark C. Allen
|
|
1/4/2010
|
|
|
|
|
350,000
|
(1) |
|
|
700,000 |
|
Robert L. Cornelius
|
|
1/4/2010
|
|
|
|
|
350,000 |
(1) |
|
|
700,000 |
|
|
|
|
(1) |
|
These are performance-based cash awards (target amount) that cliff vested on March
31, 2011 upon satisfaction of the performance criteria of the grant. The actual award
earned was 162% of the targeted shares but could have ranged from zero to 200% of the
targeted shares based upon the Companys level of success in achieving four
specifically-identified performance targets. |
38
2010 Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards; |
|
|
All Other |
|
|
|
|
|
|
Date Fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Option |
|
|
Exercise |
|
|
Value of |
|
|
|
|
|
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards |
|
|
of Shares |
|
|
Awards; |
|
|
or Base |
|
|
Stock and |
|
|
|
|
|
|
|
|
|
|
of Stock |
|
|
Number of Securities |
|
|
Price of |
|
|
SAR |
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
or Units |
|
|
Underlying |
|
|
SARs |
|
|
Awards (1) |
|
Name |
|
Date |
|
|
Threshold (#) |
|
|
Target (#) |
|
|
Maximum (#) |
|
|
(#) |
|
|
SARs (#) |
|
|
($/Share) |
|
|
($) |
|
Phil Rykhoek |
|
|
1/4/2010 |
|
|
|
|
|
|
|
38,387 |
(2) |
|
|
76,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
599,989 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,387 |
(3) |
|
|
|
|
|
|
|
|
|
|
599,989 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,992 |
(4) |
|
$ |
15.63 |
|
|
|
599,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald T. Evans |
|
|
1/4/2010 |
|
|
|
|
|
|
|
38,387 |
(2) |
|
|
76,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
599,989 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,387 |
(3) |
|
|
|
|
|
|
|
|
|
|
599,989 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,992 |
(4) |
|
|
15.63 |
|
|
|
599,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark C. Allen |
|
|
1/4/2010 |
|
|
|
|
|
|
|
26,658 |
(2) |
|
|
53,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
416,664 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,658 |
(3) |
|
|
|
|
|
|
|
|
|
|
416,665 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,689 |
(4) |
|
|
15.63 |
|
|
|
416,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L.
Cornelius |
|
|
1/4/2010 |
|
|
|
|
|
|
|
26,658 |
(2) |
|
|
53,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
416,664 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,658 |
(3) |
|
|
|
|
|
|
|
|
|
|
416,665 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,689 |
(4) |
|
|
15.63 |
|
|
|
416,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Raymond Dubuisson |
|
|
|
|
|
|
|
|
|
|
12,795 |
(2) |
|
|
25,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,986 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,795 |
(3) |
|
|
|
|
|
|
|
|
|
|
199,986 |
|
|
|
|
1/4/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,330 |
(4) |
|
|
15.63 |
|
|
|
199,915 |
|
|
|
|
(1) |
|
Represents the fair value of stock and stock-settled SAR awards as of the grant date.
The fair value of stock awards is the fair market value of the stock on the date of
grant. The fair value of SARs is fair value using the Black-Scholes option pricing
model as of the date of grant. Further discussion regarding the underlying awards,
including assumptions, is included in Note 8 of the Companys audited financial
statements for the year ended December 31, 2010, included in the Companys Annual Report
on Form 10-K filed with the SEC on March 1, 2011. |
|
(2) |
|
These shares are performance-based stock awards (target amount) that cliff vested on
March 31, 2011 upon satisfaction of the performance criteria of the grant. The actual
award issued upon vesting was 162% of the targeted shares but could have ranged from
zero to 200% of the targeted shares based upon the Companys level of success in
achieving four specifically-identified performance targets. |
|
(3) |
|
These shares of restricted stock cliff vest on March 31, 2013. In addition to the
foregoing vesting provisions, all of these shares vest upon a holders death, disability
or retirement. Mr. Cornelius shares also vest upon a change of control of the Company. |
|
(4) |
|
These stock-settled SARs cliff vest on March 31, 2013, more than three years after the
date of grant. In addition to the foregoing vesting provisions, all of these SARs vest
upon a holders death, disability or retirement. Mr. Cornelius shares also vest upon a
change of control of the Company. |
39
2010 Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Market Value |
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
of Shares or |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
Option |
|
|
Units of Stock |
|
|
Units of Stock |
|
|
|
Options (#) |
|
|
Options (#) |
|
|
Exercise |
|
|
Expiration |
|
|
That Have |
|
|
That Have |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
Price ($) |
|
|
Date |
|
|
Not Vested (#) |
|
|
Not Vested ($) |
|
Phil Rykhoek |
|
|
4,048 |
|
|
|
|
|
|
$ |
3.4125 |
|
|
|
1/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
42,868 |
|
|
|
|
|
|
|
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
12,100 |
|
|
|
|
|
|
|
12.1900 |
|
|
|
1/3/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,385 |
(1) |
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
6,456 |
|
|
|
12,914 |
(2) |
|
|
14.7300 |
|
|
|
6/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,992 |
(3) |
|
|
15.6300 |
|
|
|
1/4/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,556 |
(4) |
|
$ |
3,637,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,789 |
(5) |
|
|
129,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,387 |
(6) |
|
|
732,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,644 |
(7) |
|
|
241,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,937 |
(8) |
|
|
666,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald T. Evans |
|
|
26,384 |
|
|
|
|
|
|
$ |
3.4125 |
|
|
|
1/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
42,868 |
|
|
|
|
|
|
|
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
11,478 |
|
|
|
|
|
|
|
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
12,100 |
|
|
|
|
|
|
|
12.1900 |
|
|
|
1/3/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,385 |
(1) |
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
6,456 |
|
|
|
12,914 |
(2) |
|
|
14.7300 |
|
|
|
6/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,992 |
(3) |
|
|
15.6300 |
|
|
|
1/4/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212,334 |
(4) |
|
$ |
4,053,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,789 |
(5) |
|
|
129,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,387 |
(6) |
|
|
732,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,644 |
(7) |
|
|
241,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,937 |
(8) |
|
|
666,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark C. Allen |
|
|
7,376 |
|
|
|
|
|
|
$ |
1.7725 |
|
|
|
1/14/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
35,492 |
|
|
|
|
|
|
|
2.8175 |
|
|
|
1/2/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
29,304 |
|
|
|
|
|
|
|
3.4125 |
|
|
|
1/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
25,708 |
|
|
|
|
|
|
|
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
14,432 |
|
|
|
|
|
|
|
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
8,544 |
|
|
|
|
|
|
|
12.1900 |
|
|
|
1/3/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,931 |
(1) |
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
2,367 |
|
|
|
4,735 |
(2) |
|
|
14.7300 |
|
|
|
6/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,689 |
(3) |
|
|
15.6300 |
|
|
|
1/4/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,666 |
(4) |
|
$ |
2,055,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,489 |
(5) |
|
|
47,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,658 |
(6) |
|
|
508,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,034 |
(7) |
|
|
172,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,524 |
(8) |
|
|
563,613 |
|
40
2010 Outstanding Equity Awards at Fiscal Year-End (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Market Value of |
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
Shares or |
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Units of |
|
|
Units of |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
Option |
|
|
Stock That |
|
|
Stock That |
|
|
|
Options (#) |
|
|
Options (#) |
|
|
Exercise |
|
|
Expiration |
|
|
Have Not |
|
|
Have Not |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
Price ($) |
|
|
Date |
|
|
Vested (#) |
|
|
Vested ($) |
|
Robert L. Cornelius |
|
|
|
|
|
|
80,385 |
(1) |
|
$ |
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,689 |
(3) |
|
|
15.6300 |
|
|
|
1/4/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,658 |
(6) |
|
$ |
508,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,644 |
(7) |
|
|
241,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,937 |
(8) |
|
|
666,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Raymond Dubuisson |
|
|
90,000 |
|
|
|
|
|
|
$ |
2.5000 |
|
|
|
7/1/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
22,164 |
|
|
|
|
|
|
|
2.8175 |
|
|
|
1/2/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
29,304 |
|
|
|
|
|
|
|
3.4125 |
|
|
|
1/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
14,724 |
|
|
|
|
|
|
|
3.4125 |
|
|
|
1/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
24,892 |
|
|
|
|
|
|
|
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
14,432 |
|
|
|
|
|
|
|
6.9275 |
|
|
|
1/3/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
8,304 |
|
|
|
|
|
|
|
12.1900 |
|
|
|
1/3/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,248 |
(1) |
|
|
12.9700 |
|
|
|
1/2/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,330 |
(3) |
|
|
15.6300 |
|
|
|
1/4/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,500 |
(4) |
|
$ |
1,135,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,795 |
(6) |
|
|
244,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,221 |
(7) |
|
|
137,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,231 |
(8) |
|
|
367,120 |
|
|
|
|
(1) |
|
These stock-settled SARs cliff vest 100% on March 31, 2012, more than three years after
the date of grant. In addition to the foregoing vesting provisions, all of these SARs vest
upon a holders death, disability or retirement. Mr. Cornelius shares also vest upon a
change of control of the Company. |
|
(2) |
|
These stock-settled SARs vest ratably on June 30, 2011 and 2012. In addition to the
foregoing vesting provisions, all of these SARs vest upon a holders death, disability, or
retirement. |
|
(3) |
|
These stock-settled SARs cliff vest 100% on March 31, 2013, more than three years after the
date of grant. In addition to the foregoing vesting provisions, all of these SARs vest upon a
holders death, disability or retirement. Mr. Cornelius shares also vest upon a change of
control of the Company. |
|
(4) |
|
These shares of restricted stock vest ratably each January 31st until the final
vesting upon reaching a retirement age between 60 and 65, depending on length of service, and
the officers separation from the Company. In addition to the foregoing vesting provisions,
all of these shares will vest upon a holders death or disability or a change of control of
the Company. |
|
(5) |
|
These shares of restricted stock vest ratably on June 30, 2011 and 2012. In addition to the
foregoing vesting provisions, all of these shares vest upon a holders death, disability or
retirement. |
|
(6) |
|
These shares of restricted stock cliff vest 100% on March 31, 2013, more than three years
after the date of grant. In addition to the foregoing vesting provisions, all of these shares
vest upon a holders death, disability or retirement. Mr. Cornelius shares also vest upon a
change of control of the Company. |
41
|
|
|
(7) |
|
These shares of restricted stock cliff vested 100% on March 31, 2011, more than three years
after the date of grant. In addition to the foregoing vesting provisions, all of these shares
vest upon a holders death, disability or retirement. Mr. Cornelius shares also vest upon a
change of control of the Company. |
|
(8) |
|
These shares of restricted stock cliff vest 100% on March 31, 2012, more than three years
after the date of grant. In addition to the foregoing vesting provisions, all of these shares
vest upon a holders death, disability or retirement. Mr. Cornelius shares also vest upon a
change of control of the Company. |
Option Exercises and Stock Vested During 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
Shares Acquired |
|
|
Value Realized on |
|
|
Acquired on |
|
|
Value Realized on |
|
Name |
|
on Exercise (#) |
|
|
Exercise ($) |
|
|
Vesting (#) |
|
|
Vesting ($) |
|
Phil Rykhoek |
|
|
|
|
|
$ |
|
|
|
|
51,142 |
|
|
$ |
758,556 |
|
Ronald T. Evans |
|
|
|
|
|
|
|
|
|
|
40,253 |
|
|
|
611,010 |
|
Mark C. Allen |
|
|
30,000 |
(1) |
|
|
523,350 |
(1) |
|
|
21,547 |
|
|
|
337,488 |
|
Robert L. Cornelius |
|
|
|
|
|
|
|
|
|
|
30,562 |
|
|
|
487,831 |
|
H. Raymond Dubuisson |
|
|
|
|
|
|
|
|
|
|
41,826 |
|
|
|
602,537 |
|
|
|
|
(1) |
|
Includes 20,000 shares acquired on exercise that were held and not sold, with an
indicated value realized of $352,550. |
Severance Protection Plan
In December 2000, the Board approved a severance protection plan for all of our employees.
Under the terms of the severance plan, an employee is entitled to receive a severance payment if a
change of control of the Company occurs and the employee is terminated within two years of the
change of control. The severance plan will not apply to any employee who is terminated for cause or
by an employees own decision for other than good reason as
defined in the severance plan. If entitled to severance payments under the terms of the severance
plan, our Chief Executive Officer, our President and our two senior vice presidents will receive
three times their annual salary and bonus, all of our other officers will receive two and one-half
times their annual salary and bonus, certain other members of management will receive two times
their annual salary and bonus, and all other employees will receive from one-third to one and
one-half times their annual salary and bonus depending on their salary level and length of service
with us. All employees will also receive medical and dental benefits for one-half the number of
months for which they receive severance benefits.
The severance plan also provides that if our officers are subject to the parachute payment
excise tax, then the Company will pay the employee under the severance plan an additional amount to
gross up the payment so that the employee will receive the full amount due under the terms of the
severance plan after payment of the excise tax.
42
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information about Denburys equity compensation plans as of
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of securities |
|
|
|
securities to |
|
|
|
|
|
|
remaining available for |
|
|
|
be issued upon |
|
|
|
|
|
|
future issuance under |
|
|
|
exercise |
|
|
Weighted average |
|
|
equity compensation |
|
|
|
of outstanding |
|
|
exercise price of |
|
|
plans (excluding |
|
|
|
options, |
|
|
outstanding options, |
|
|
securities reflected in |
|
|
|
warrants and rights |
|
|
warrants and rights |
|
|
column a) |
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans
approved by security holders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1995 Stock Option Plan(1) |
|
|
3,675,449 |
|
|
$ |
4.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 Omnibus Stock and Incentive Plan (1) |
|
|
8,593,891 |
|
|
|
15.62 |
|
|
|
11,857,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan (2) |
|
|
|
|
|
|
|
|
|
|
955,713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans
not approved by security holders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director Compensation Plan(3) |
|
|
|
|
|
|
|
|
|
|
210,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,269,340 |
|
|
|
12.28 |
|
|
|
13,023,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
A description of each of the 1995 Stock Option Plan and the 2004 Omnibus Stock and
Incentive Plan is included in Note 8 to the Companys audited financial statements for the
year ended December 31, 2010, included in the Companys Annual Report on Form 10-K filed
with the SEC on March 1, 2011. |
|
(2) |
|
A description of the Employee Stock Purchase Plan is included in this Proxy Statement
under the heading Proposal Four: Increase the Number of Shares Reserved for Use Under our
Employee Stock Purchase Plan. |
|
(3) |
|
A description of the Director Compensation Plan is included in this Proxy Statement
under the heading Compensation of Directors. |
43
SHARE PERFORMANCE GRAPH
The following graph illustrates changes over the five-year period ended December 31, 2010, in
cumulative total stockholder return on our common stock as measured against the cumulative total
return of the S&P 500 Index and the Dow Jones U.S. Exploration and Production Index. The graph
tracks the performance of a $100 investment in our common stock and in each index (with the
reinvestment of all dividends) from December 31, 2005 to December 31, 2010.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2005 |
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
Denbury Resources Inc. |
|
$ |
100.00 |
|
|
$ |
121.99 |
|
|
$ |
261.19 |
|
|
$ |
95.87 |
|
|
$ |
129.94 |
|
|
$ |
167.60 |
|
S&P 500 |
|
|
100.00 |
|
|
|
115.80 |
|
|
|
122.16 |
|
|
|
76.96 |
|
|
|
97.33 |
|
|
|
111.99 |
|
Dow Jones US Exploration & Production |
|
|
100.00 |
|
|
|
105.37 |
|
|
|
151.39 |
|
|
|
90.65 |
|
|
|
127.42 |
|
|
|
148.74 |
|
Copyright© 2010 S&P, a division of The McGraw-Hill Companies
Inc. All rights reserved. Copyright© 2010 Dow Jones & Co. All rights reserved.
44
STOCKHOLDER PROPOSALS
Pursuant to SEC Rule 14a-8, in order for a stockholder proposal to be included in the proxy
materials for the 2012 annual meeting of stockholders, the proposal must be received by the Company
no later than December 20, 2011, unless the date of our 2012 annual meeting is more than 30 days
before or after May 18, 2012, in which case the proposal must be received a reasonable time before
we begin to print our proxy materials. The proposals must also meet other SEC requirements to be
eligible for inclusion. All future stockholder proposals must be submitted in writing to Mark C.
Allen, Senior Vice President, Chief Financial Officer, Treasurer and Assistant Secretary, 5320
Legacy Drive, Plano, Texas 75024.
The form of proxy for the annual meeting of stockholders grants authority to the persons
designated therein as proxies to vote in their discretion on any other matters that come before the
meeting, or any adjournment thereof, that are not set forth in our proxy statement, except for
those matters as to which adequate notice is received. In order for a notice to be deemed timely
for purposes of the 2012 annual meeting of stockholders, it must be received prior to March 8,
2012.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP was first appointed by the Audit Committee in May 2004 to audit the
Companys books for 2004 and has been re-appointed each year since. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the annual meeting and will have an
opportunity to make a statement and/or to respond to appropriate questions. The Audit Committee has
recommended that PricewaterhouseCoopers LLP be re-appointed as our independent registered public
accounting firm for 2011, subject to ratification by the stockholders.
Independent Auditor Fees
The following table presents fees for professional services rendered by PricewaterhouseCoopers
LLP for the years ended December 31, 2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Audit Fees(1) |
|
$ |
2,647,645 |
|
|
$ |
1,779,643 |
|
Audit-Related Fees |
|
|
|
|
|
|
|
|
Tax Fees(2) |
|
|
79,339 |
|
|
|
|
|
All Other Fees(3) |
|
|
3,665 |
|
|
|
1,599 |
|
|
|
|
|
|
|
|
Total |
|
$ |
2,730,649 |
|
|
$ |
1,781,242 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees consist of fees associated with the audit of the Companys
consolidated financial statements, including the audit of the effectiveness of the
Companys internal controls over financial reporting, required quarterly reviews and
consultations, as well as work only the independent registered public accounting firm
can reasonably be expected to provide, such as comfort letters, consents and review
of documents filed with the SEC. |
|
(2) |
|
Tax fees consist of tax-related consultation services. |
|
(3) |
|
Fees associated with a license for accounting research software. |
The Audit Committee Charter stipulates that the Audit Committee approve the fees to be paid to
the independent registered public accounting firm prior to the annual audit. Additionally, all
engagements for non-audit services by the independent registered public accounting firm must be
approved prior to the commencement of services. All fees paid to the Companys independent
registered public accounting firm were approved by the Audit Committee prior to the commencement of
services.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder require our
executive officers and directors, and persons who own more than ten percent (10%) of our common
stock, to file reports of ownership and changes in ownership with the SEC and stock exchanges and
to furnish us with copies. Based solely on our review of the copies of such forms received by us,
or representations made by the officers and directors to us, we are not aware of any late filings
of their forms during 2010.
45
OTHER MATTERS
We know of no other matter to come before the annual meeting other than the matters referred
to in the Notice of Annual Meeting. However, if any other matter properly comes before the meeting,
the accompanying proxy will be voted on such matter at the discretion of the person or persons
voting the proxy.
All information contained in this proxy statement relating to the occupations, affiliations
and securities holdings of our directors and officers and their relationship and transactions with
us is based upon information received from the individual directors and officers. All information
relating to any beneficial owner of more than 5% of our common stock is based upon information
contained in reports filed by such owner with the SEC. The information contained in this proxy
statement in the sections entitled Compensation Committee
Report, Share Performance Graph and
Audit Committee Report shall not be deemed incorporated by reference by any general statement
incorporating by reference any information contained in this proxy statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates by reference the information contained in such sections, and
shall not otherwise be deemed filed under the Securities Act or the Exchange Act.
We have provided to each person whose proxy is solicited hereby a copy of our 2010 Annual
Report to stockholders for the year ended December 31, 2010, which includes the Annual Report on
Form 10-K except for certain exhibits. The Annual Report to stockholders does not constitute a
part of the proxy soliciting material. A copy of our Annual Report to stockholders or our Annual
Report on Form 10-K filed with the SEC may be obtained without charge by writing to Denbury
Resources Inc., ATTN: Laurie Burkes, Investor Relations, 5320 Legacy Drive, Plano, Texas 75024, or
by e-mail to ir@denbury.com.
|
|
|
|
|
|
By order of the Board of Directors
|
|
|
/s/
Mark C. Allen
|
|
|
Mark C. Allen Senior Vice President, Chief Financial Officer, |
|
|
Treasurer and Assistant Secretary |
|
|
46
DENBURY RESOURCES INC. ATTN: INVESTOR RELATIONS 5320 LEGACY DRIVE PLANO, TX 75024 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 on Tuesday, May 17, 2011. 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
on Tuesday, May 17, 2011. 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. 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 To withhold authority to vote for any All All Except individual
nominee(s), mark For All Except and write the number(s) of the The Board of Directors recommends
you vote nominee(s) on the line below. FOR all the nominees listed:0 0 0 1.Election of Directors
Nominees 01Wieland F. Wettstein02 Michael L. Beatty03 Michael B. Decker04 Ronald G. Greene 05 David
I. Heather 06Gregory L. McMichael07 Gareth Roberts 08 Phil Rykhoek09 Randy Stein The Board of
Directors recommends you voteFOR the following proposal:For Against Abstain 2Proposal to approve
the Companys advisory, non-binding resolution on executive compensation.0 0 0 The Board of
Directors recommends you vote 1 YEAR on the following proposal:1 year 2 years 3 years Abstain
3Proposal to vote on the frequency of the advisory vote on executive compensation prospectively. 0
0 0 0 The Board of Directors recommends you voteFOR proposals 4 and 5.For Against Abstain 4Proposal
to increase the number of shares reserved for use under our Employee Stock Purchase Plan.0 0 0
5Proposal to ratify the appointment by the Audit Committee of PricewaterhouseCoopers LLP as
Denburys independent auditor for0 0 0 2011. NOTE: The proxy holders are authorized to vote upon
such other business as may properly come before the meeting or any adjournment thereof.
R1.0.0.11699 _1 0000105877 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]DateSignature (Joint Owners)Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The
Notice &Proxy Statement and Annual Report is/are available at www.proxyvote.com . DENBURY RESOURCES
INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD MAY 18, 2011 By signing this proxy, I appoint Wieland F. Wettstein,
Chairman of the Board of Denbury Resources Inc. (Denbury) and Phil Rykhoek, Chief Executive
Officer and Director of Denbury, and each of them acting singly, my attorney and proxy, with full
power of substitution, to vote on my behalf all of the shares of Denbury common stock that I am
entitled to vote at the Annual Meeting of Stockholders to be held on May 18, 2011, and at any
adjournments of the meeting. This proxy revokes any earlier proxy I have signed with respect to
these shares. If this proxy is properly executed, the shares of Denbury common stock represented by
this proxy will be voted in the manner you specify. If no specification is made, the shares of
Denbury stock will be voted FOR each of the nine nominees for director; FOR the advisory,
non-binding resolution approving executive compensation; FOR an annual advisory vote on executive
compensation; FOR the increase in the number of shares reserved for use under our Employee Stock
Purchase Plan; and FOR the appointment of PricewaterhouseCoopers LLP as Denburys independent
auditor for 2011. The proxies are authorized to vote my shares, in their discretion, on any other
matter that is properly brought before the meeting. This proxy statement, along with Denburys
Annual Report to Stockholders, which includes Denburys Annual Report on Form 10-K for the fiscal
year ending in December 31, 2010, are available free of charge at www.proxyvote.com. 11699 R1.0.0.
_2 0000105877 Continued and to be signed on reverse side |