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| PLLL > SEC Filings for PLLL > Form 8-K on 8-Dec-2008 | All Recent SEC Filings |
8-Dec-2008
Change in Directors or Principal Officers
As we reported in our Current Report on Form 8-K filed with the Securities and
Exchange Commission on June 18, 2008, at its June 12, 2008 meeting, our
Compensation Committee established certain preliminary performance measures to
be applied in connection with future annual awards of cash bonuses to our
executive officers. These preliminary performance measures included profit or
net cash flow growth, production growth, proved developed reserve growth,
finding and development costs, and lease operating expenses.
At a meeting held on December 2, 2008, the Compensation Committee, with the
assistance of its third party compensation consultant, finalized the performance
measures and percentage weights for each measure. The performance measures and
their associated weights are as follows:
Percentage
Performance Measure Weight
Net Cash Provided by Operating Activities, as adjusted for
changes in assets and liabilities 30 %
Production Growth 20 %
Proved Developed Reserve Bookings 20 %
Finding and Development Costs 15 %
Lease Operating Expense 15 %
100 %
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These performance measures provide the foundation for our annual incentive plan,
or "AIP". The objective of the AIP is to provide the recipients with additional
incentives to achieve growth in the areas of specified performance measures.
Under the AIP, an executive will be eligible to receive a cash bonus equivalent
to a pre-determined percentage of base salary that is based on a formula
consisting of the following parts:
• the pre-determined performance measures and percentage weights described
above;
• pre-determined target awards for each executive officer, expressed as a percentage of each officer's base salary;
• a comparative ranking of our performance measure results with our peer group;
• a pre-determined payout percentage for each performance measure (expressed as a percentage of an executive's target award amount);
• a pre-determined target payout award for each executive (expressed as a percentage of the executive's base salary); and
• a discretionary factor of 10% that may be applied by the Compensation Committee.
The annual cash bonuses for each executive officer will vary depending on where Parallel's performance falls within a ranking of our peer group, with potential payments ranging from 0% to 200% of pre-determined individual target payout awards for each executive. After the end of each performance period, we will make a comparative ranking of each performance measure to the same measurement of each company in our peer group. The relative ranking of each performance measure is equated to a pre-determined percentage payout for each measure in accordance with the following payout schedule:
Relative
Ranking Within Payout
Peer Group (as % of target award)
1 200%
2 190%
3 180%
4 170%
5 160% 75th Percentile
6 145%
7 130%
8 115%
9 100%
10 90% Median
11 80%
12 65%
13 50%
14 25%
15 0% 25th Percentile
16 0%
17 0%
18 0%
19 0%
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At the end of a performance period, we will compare the year-over-year absolute values of each performance measure and determine the corresponding percentage change in such performance measures. Then, we will compare and rank our percentage changes in each performance measure to the percentage changes for the same performance measures experienced by each company in our peer group. To illustrate, and as shown above, if at the end of a performance period our Finding and Development Costs decreased 5.0% and this percentage decrease ranked 9th among the percentage changes in Finding and Development Costs of all of our peer companies, the percentage payout for that particular measure would be 100%. In order for any portion of an award to be earned, Parallel must rank higher than fifteenth (15th) in any one category of our five performance measures. Our eighteen company peer group includes Bill Barrett Corporation, Rosetta Resources, Inc., Petroleum Development Corporation, Concho Resources Inc., PetroQuest Energy, Inc., Venoco, Inc., Delta Petroleum Corporation, Edge Petroleum Corporation, Carrizo Oil & Gas, Inc., Legacy Reserves LP, Goodrich Petroleum Corporation, Gulfport Energy Corporation, Arena Resources, Inc., TXCO Resources Inc., GMX Resources Inc., Warren Resources, Inc., Rex Energy Corporation and Abraxas Petroleum Corporation.
Individual target payout awards for each executive officer are based upon a pre-determined percentage of their respective annual base salaries. The 2008 target awards for each executive officer's cash bonuses, expressed as a percentage of base salary as of the date of this Form 8-K Report, are as follows:
Target Payout
Award as a
Name and Title Percent of Base Salary
Larry C. Oldham
President and Chief Executive Officer 70.0 %
Donald E. Tiffin
Chief Operating Officer 65.0 %
Steven D. Foster
Chief Financial Officer 50.0 %
Eric A. Bayley
Vice President of Corporate Engineering 50.0 %
John S. Rutherford
Vice President of Land and Administration 50.0 %
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Using the base salaries of our executives at the date of this Form 8-K Report, the individual target award amounts and maximum cash bonus amounts for each executive officer for the performance period ending December 31, 2008 are as follows:
Target Award Target Maximum
as a Percent of Award Cash Bonus
Base Salary Base Salary Amount Amount(1)
Larry C. Oldham $ 350,000 70 % $ 245,000 $ 490,000
Donald E. Tiffin $ 300,000 65 % $ 195,000 $ 390,000
Steven D. Foster $ 250,000 50 % $ 125,000 $ 250,000
John S. Rutherford $ 190,000 50 % $ 95,000 $ 190,000
Eric A. Bayley $ 190,000 50 % $ 95,000 $ 190,000
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(1) The Compensation Committee maintains discretion, but is not required, to make an individual adjustment to each executive officer's bonus amount by increasing or decreasing the total bonus amount by ten percent (10.0%).
The table set forth below is a hypothetical illustration, for Mr. Oldham, of the calculation of his annual incentive cash bonus award at the end of a performance period, which is the twelve-month period ending on December 31 of each year. The table assumes that Mr. Oldham's target award is $245,000 (his base salary of $350,000 times 70%); and that each performance measure had a relative performance ranking within our peer group as set forth in column (c) of the table.
(c) (e)
Relative (d) Award as (f)
(a) (b) Performance Performance Percent (%) Bonus
Percentage Target (or ranking within vs. of Award
Performance Measure Weight Award(1) our group) Target Target(2) Received(3)
Net Cash Provided by Operating
Activities, as adjusted for
changes in assets and
liabilities 30 % $ 73,500 7th 130 % 39.00 % $ 95,550
Production Growth 20 % $ 49,000 5th 160 % 32.00 % 78,400
Proved Developed Reserve
Bookings 20 % $ 49,000 2nd 190 % 38.00 % 93,100
Finding and Development Costs 15 % $ 36,750 6th 145 % 21.75 % 53,288
Lease Operating Expense 15 % $ 36,750 13th 50 % 7.50 % 18,375
Total Bonus 100 % $ 245,000 - - 138.25 % $ 338,713
Individual Adjustment(4) 10 %(4) $ 33,871 (4)
Final Bonus Award $ 372,584
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(1) Column
(a) times
the target
award of
$245,000.
(2) Column
(a) times
Column (d).
(3) Column
(e) times
target award
of $245,000.
(4) The Compensation Committee maintains discretion, but is not required, to make an individual adjustment to each executive officer's bonus amount by increasing or decreasing the total bonus amount by ten percent (10.0%). This illustration assumes the Committee increased Mr. Oldham's total bonus amount by 10.0%.
Actual annual incentive cash bonuses for 2008 cannot be determined or estimated until the performance measures of Parallel's peer group for the year ending December 31, 2008 have been made publicly available.
In addition to finalizing the performance measures for cash bonuses as described above, the Compensation Committee also increased, effective January 1, 2009, the base salaries of each of the executive officers as follows:
Percentage
Name and Position Base Salary Increase
Larry C. Oldham From $350,000 to $364,000 4.00 %
President and Chief Executive Officer
Donald E. Tiffin From $300,000 to $312,000 4.00 %
Chief Operating Officer
Steve D. Foster From $250,000 to $260,000 4.00 %
Chief Financial Officer
John S. Rutherford From $190,000 to $197,600 4.00 %
Vice President of Land and Administration
Eric A. Bayley From $190,000 to $197,600 4.00 %
Vice President of Corporation Engineering
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