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SEMG > SEC Filings for SEMG > Form 8-K on 12-Mar-2014All Recent SEC Filings

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Form 8-K for SEMGROUP CORP


12-Mar-2014

Change in Directors or Principal Officers, Regulation FD Disclosure, Financial Stat


Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b), (c), (d) and (e)

Appointment of New President and Chief Executive Officer

On March 6, 2014, the Board of Directors of SemGroup Corporation (the "Company") appointed Carlin G. Conner, age 46, as President and Chief Executive Officer of the Company, effective April 1, 2014, to serve until his successor is chosen and qualifies, unless he sooner dies, resigns or is removed. As previously reported, in August 2013, Norman J. Szydlowski notified the Company of his intention to retire as President and Chief Executive Officer of the Company upon the appointment of his successor. Mr. Szydlowski will retire as President and Chief Executive Officer of the Company, effective April 1, 2014.

Resignation of Director and Election of New Director

On March 6, 2014, Mr. Szydlowski notified the Company that he is retiring from the Board of Directors of the Company, effective April 1, 2014. On March 6, 2014, the Board of Directors of the Company, upon the recommendation of the Nominating and Corporate Governance Committee of the Board of Directors, appointed Carlin G. Conner to serve as a director of the Board of Directors, effective April 1, 2014, to fill the vacancy created by Mr. Szydlowski's retirement, effective April 1, 2014, for a term expiring at the next Annual Meeting of Stockholders and until his successor is duly elected or chosen and qualifies, unless he sooner dies, resigns or is removed.

Business Experience of Carlin G. Conner

Mr. Conner has served as managing director of Oiltanking GmbH, an independent worldwide storage provider of crude oil, refined petroleum products, liquid chemicals and gases, since 2012. He has served as a member of the board of directors of the general partner of Oiltanking Partners, L.P., a publicly traded master limited partnership engaged in independent terminaling, storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas ("Oiltanking Partners"), since March 2011 and was elected chairman in July 2011 in connection with the completion of the IPO of Oiltanking Partners. Mr. Conner also served as president and chief executive officer of Oiltanking Partner's general partner from March 2011 to November 2012, and as president and chief executive officer of Oiltanking Holding Americas, Inc., a wholly owned subsidiary of Oiltanking GmbH, from July 2006 to November 2012. Previously, from 2003 to 2006, he worked at Oiltanking GmbH corporate headquarters in Hamburg, Germany, where he was responsible for international business development and sat on the boards of several Oiltanking GmbH ventures. He joined Oiltanking Houston, L.P. in 2000. He began his career at GATX Terminals Corporation in various roles including operations and commercial management. Mr. Conner has more than 23 years of experience in the midstream industry.

Termination of Szydlowski Employment Agreement

SemManagement, L.L.C. ("SemManagement"), the Company and Mr. Szydlowski are parties to that certain employment agreement dated as of November 30, 2009, as amended (the "Szydlowski Employment Agreement"). In conjunction with Mr. Szydlowski's retirement from the position of President and Chief Executive Office of the Company, SemManagement, the Company and Mr. Szydlowski entered into an Agreement of Termination of Employment Agreement dated as of March 6, 2014 (the "Termination Agreement") to terminate the Szydlowski Employment Agreement, effective April 1, 2014, subject to certain exceptions.

Notwithstanding the termination of the Szydlowski Employment Agreement, in order to facilitate a smooth transition of leadership responsibilities, following such termination Mr. Szydlowski will continue his employment as an at-will employee of SemManagement until such time as either SemManagement elects to terminate Mr. Szydlowski's employment or Mr. Szydlowski resigns (the "End Date"). Following such termination and through the End Date, SemManagement shall continue to pay Mr. Szydlowski at his current base salary and continue to provide Mr. Szydlowski with certain insurance and medical benefits.


The Termination Agreement provides that Sections 8(a) and 11 of the Szydlowski Employment Agreement shall survive termination. Section 8(a) of the Szydlowski Employment Agreement entitles Mr. Szydlowski to certain payments in the event his employment with SemManagement terminates for any reason, including any
(i) unpaid base salary accrued up to the effective date of termination; (ii) pay for accrued but unused vacation in accordance with SemManagement's policy;
(iii) insurance, medical and other benefits contemplated by the Szydlowski Employment Agreement and provided under the terms of any applicable employee benefit plans; (iv) unreimbursed business expenses required to be reimbursed to him in accordance with the Szydlowski Employment Agreement; and (v) rights to indemnification. Section 11 of the Szydlowski Employment Agreement contains confidentiality, non-competition, non-solicitation and other covenants that survive Mr. Szydlowski's termination of employment with SemManagement. The Termination Agreement does not affect any rights to indemnification to which Mr. Szydlowski is entitled in his capacity as a former officer and director of the Company and other related entities, including subsidiaries.

A copy of the Termination Agreement is filed herewith as Exhibit 10.1 and is incorporated by reference into this Item 5.02 as though fully set forth herein. The foregoing description of the Termination Agreement is qualified in its entirety by reference to the full text of the Termination Agreement.

Conner Employment Agreement

In conjunction with Carlin G. Conner's service as President and Chief Executive Officer of the Company, SemManagement, the Company, Rose Rock Midstream GP, LLC and Mr. Conner entered into an employment agreement (the "Employment Agreement") dated as of March 6, 2014 (the "Effective Date"). It is expected that Mr. Conner will commence his employment on April 1, 2014 (the "Employment Date"). The initial term of the Employment Agreement is three years, commencing on the Effective Date and ending on the third anniversary of the Effective Date; provided, however, that commencing on the one-year anniversary of the Effective Date and each annual anniversary of such date (the "Renewal Date"), the term shall be automatically extended so as to terminate three years from such Renewal Date (the "Agreement Term"). If on or before the Renewal Date SemManagement gives Mr. Conner notice that the Agreement Term will not be so extended, the Employment Agreement will continue for the remainder of the then-current term and expire. Notwithstanding the Agreement Term, the Employment Agreement will automatically terminate upon his Separation from Service (as defined in the Employment Agreement).

Pursuant to the Employment Agreement, Mr. Conner will earn a base salary of $550,000 per year (with respect to each calendar year, the "Base Salary"). For each calendar year during his employment commencing on the Employment Date, Mr. Conner will be eligible to receive a target annual bonus determined in a manner consistent with that established under the Short-Term Incentive Program adopted by the Board of Directors (the "Annual Bonus"). In addition, Mr. Conner will participate in the Long-Term Incentive Program adopted by the Board of Directors. The Employment Agreement provides that SemManagement will reimburse Mr. Conner's reasonable out-of-pocket relocation expenses and traveling expenses until relocation. In addition, SemManagement will reimburse Mr. Conner for
(i) reasonable business expenses and (ii) annual income tax return preparation and financial planning expenses up to $15,000 per year.

Mr. Conner will receive a sign-on bonus in the amount of $600,000 within 30 days of the Employment Date. If Mr. Conner voluntarily terminates his employment without Good Reason (as defined in the Employment Agreement) prior to the first anniversary of the Employment Date, he will be required to repay SemManagement a fraction of such sign-on bonus prorated by the number of weeks remaining until the anniversary of the Employment Date.

The Employment Agreement provides that, within 30 days of the Employment Date, Mr. Conner will receive additional signing compensation in the form of a one-time award of (i) restricted shares of Class A Common Stock of the Company (the "Restricted Stock") under the SemGroup Corporation Equity Incentive Plan (the "SemGroup Plan") in such amount having a Fair Market Value (as defined in the SemGroup Plan) as of the grant date of the award equal to the aggregate sum of $4,250,000, with such shares vesting in five equal annual installments; and
(ii) restricted units of Rose Rock Midstream, L.P. under the Rose Rock Midstream Equity Incentive Plan (the "Rose Rock Plan") in such amount having a Fair Market Value (as defined in the Rose Rock Plan) as of the grant date of the award equal to the aggregate sum of $750,000, with such common units vesting in five equal annual installments. The foregoing award of equity is subject to the terms of . . .



Item 7.01. Regulation FD Disclosure.

On March 6, 2014, the Company issued a press release naming Carlin G. Conner as President and Chief Executive Officer of the Company. A copy of the press release is being furnished and is attached as Exhibit 99.1 hereto and is incorporated into this Item 7.01 by reference. In accordance with General Instruction B.2 of Form 8-K of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the press release shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall such information and such exhibit be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.



Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are filed or furnished herewith:

Exhibit No.                                  Description

10.1              Agreement of Termination of Employment Agreement dated as of
                  March 6, 2014, by and among SemManagement, L.L.C., SemGroup
                  Corporation and Norman J. Szydlowski.

10.2              Employment Agreement dated as of March 6, 2014, by and among
                  SemManagement, L.L.C., SemGroup Corporation, Rose Rock Midstream
                  GP, LLC and Carlin G. Conner.

99.1              Press release issued by SemGroup Corporation and Rose Rock
                  Midstream, L.P. dated March 6, 2014.


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