Alta Mesa, the struggling E&P company with its head office in west Houston, has given another large severance package to a senior Executive. This time it is Craig Collins, the COO of the Midstream division.
The Alta Mesa share price is currently $0.28 (market cap $50 million). When the company went public in February 2018, its market capitalization was $3.3 billion.
[Update 04-08-19 Company has drawn all its remaining capacity on its credit facility. It has hired Perella Weinberg Partners and Tudor Pickering Holt to assist with analyzing and considering financial alternatives].
[Update 04-12-19 Mr Collins has landed on his feet. He has been appointed COO of Altus Midstream, the company that was spun out of Apache in 2018. It has its head office in the Galleria area].
[Update 05-31-19 Mr Collins has resigned from Altus after 6 weeks. He has accepted a position with a large E&P company].
Mr Collins joined the company almost exactly one year ago. He had a base salary of $450,000 and received a cash sign-on bonus of $90,000. He will receive;
- severance of 18 months base salary ($675,000)
- 1.5 x 2019 target bonus ($641,250)
- pro-rated target bonus for 2019 ($108,925)
- $24,000 for outplacement services
- Nine months of company-funded COBRA coverage
That’s $2 million dollars for one year’s work!
In his original offer letter, the target bonus in the event of termination was listed at 1 x target bonus. This has been increased in the severance package as Mr Collins has agreed to forfeit his rights to outstanding equity awards. The company acknowledges that the 2019 equity award would have had a minimum market value of $1.5 million.
Mr Collins took over from Jim Hackett, the former CEO of Anadarko Petroleum. Mr Hackett had the role of COO of the Midstream division as well as being Chairman of Alta Mesa.
Senior management replaced in December
Just before Christmas, Mr Hackett took over as interim CEO after the resignations of the CEO, COO and the Chief Technology Officer. The combined cash severance was approx $6.5 million.
At the same time, Mr Hackett employed the services of three consulting executives from Meridian Energy for a monthly fee of $245,771. The consulting firm can also earn a quarterly bonus of $872,950 and a semi-annual bonus of $2.1 million, assuming certain performance metrics are met.
A new CFO, John Regan, was hired in January 2019.
Annual report will be late
In February, the company disclosed it would be late in filing its annual report. It expects to report a non-cash impairment of $3.1 billion. The company is also in breach of its covenants with its lenders. It also expects to report a material weakness in internal controls over financial reporting.
The company let go 58 employees from its head office in February.