The CEO and CFO of Superior Energy Services have left the company with large severances just six weeks after the company exited Chapter 11 bankruptcy.
Superior, based in downtown Houston, announced back in September 2020 that it intended to file for a pre-packaged bankruptcy. It did not actually file until December. The company converted $1.3 billion of debt into equity as part of the restructuring. At the time of filing, the company had negative shareholders’ equity of $250 million. The stock of the company had previously been delisted because the negative equity breached NYSE listing standards.
The company’s debt problem stems all the way back to October 2011 when it agreed to buy Complete Production Services for $2.9 billion. It paid $553 million in cash and issued stock for the rest. As part of the deal financing, in December 2011, it issued $800 million of unsecured senior notes, due 2021, to repay $650 million of debt that Complete owed. The other $500 million of notes were also, effectively, issued in 2011, though they were refinanced in 2017.
David Dunlap had been CEO since 2010. He leaves with a payment of $3.7 million. This represents two times base salary plus target annual bonus plus pro-rated target annual bonus for 2021.
Westy Ballard, who was appointed the CFO in March 2018, receives $1.7 million on the same terms as Mr. Dunlap.
Cash retention bonuses
Prior to the filing in September 2020, the old Board paid cash retention bonuses (as advances) to Mr. Dunlap ($3.1 million) and Mr. Ballard ($1.1 million). Today’s filing does not make clear whether the severance payments are in addition to the retention bonuses or instead of them. Unfortunately, the company didn’t file the waiver and release agreements that would have cleared this up.
Michael McGovern, the newly-appointed Chairman of the Board, was appointed the interim CEO, while the company conducts a search. James Spexarth, the Chief Accounting Officer, becomes interim CFO.