Tag Archives: CEO

Sysco CEO leaves with $6 million cash severance

Sysco Corporation has replaced CEO of two years, Tom Bene with Kevin Hourican, who joins from CVS.

Sysco, a food distributor, is one of the largest companies headquartered in Houston. It has a market capitalization of $42 billion, revenues of $60 billion and 69,000 employees.

Tom Bene had been the CEO since January 2018 and Chair of the Board since November 2018. His promotion to the top job was announced in July 2017. Mr Bene had joined Sysco in 2013 as Chief Merchandising Officer before becoming COO in January 2016. Prior to that he spent 24 years at Pepsi-Cola.

Although the stock is near its all-time high, clearly matters are not going well inside the company. In announcing the switch, the board stated that the change will allow the company to ‘accelerate performance, fully capitalize on its scale advantages and drive meaningful operating improvements’.

Severance payment

Mr Bene had a base salary of $1.2 million and his target annual bonus was 150%. He will receive a severance of $6 million, in cash. This represents two times base and target bonus.  For the year ended 30 June 2019, Mr Bene received a cash bonus of just over $1.5 million, representing 85% of target.

Mr Bene will also get two years’ worth of health insurance premiums. Other than that, he didn’t get any additional payments. All his unvested stock has been forfeited. Like all officers of Sysco, Mr Bene didn’t have a severance or employment agreement that provided for guaranteed severance or other compensation upon termination.

New CEO compensation

Mr Hourican was the Executive VP of CVS Health and president of CVS Pharmacy. He will receive an annual base salary of $1.3 million. He will also receive a one-time sign-on bonus of $1.45 million to compensate him for the bonus foregone at CVS. Mr Hourican will also receive an annual equity award with a fair value equal to $8.5 million. 40% will vest over 3 years, the rest is performance-based.

New Chairman

Edward Shirley, currently Lead Independent Director of the Board, has been appointed Chair of the Board.

SEC filing – Sysco CEO change


Almost bankrupt Oilfield Services company gives CEO $2.5m severance

Key Energy Services has announced the departure of CEO Robert Saltiel and the appointment of CFO Marshall Dodson as the interim CEO.

Back in November, Key missed an interest payment on its $250 million term loan as it considered strategic alternatives. Its shares were delisted on November 27 at 27 cents per share, giving it a market capitalization of $2.64 million.

Mr Saltiel only joined Key in August 2018. He had a base salary of $800,000 and will receive a cash severance of $2.5 million. This is due to be paid on January 10, 2020. The $2.5 million is actually less than he was entitled to under his employment agreement ($3.4 million). That stipulated he would receive 2x base salary plus target bonus (1x salary). In February 2019, the board also granted him a $1 million long-term cash incentive award that would have started vesting in February 2020. Upon termination, the award vests immediately.

It appears that the company is trying to renegotiate a debt restructuring outside of Chapter 11. However, if the company does file for bankruptcy before January 10, the payment likely won’t be made. Even if Key files after January 10, the payment could be clawed back from Mr Saltiel if it is deemed a preferential payment under the bankruptcy code.

Mr Dodson will receive an increase in his base salary from $425,000 to $575,000 while being the interim CEO. If Mr Dodson is not appointed CEO, he will be entitled to receive an acceleration of his retention bonus that was granted in July 2018. Currently, the remaining 75% or $478,125 will vest in July 2020.

SEC filing – Key Energy CEO departure

Oilfield Services company appoints new CEO

Flotek Industries, based in NW Houston, has appointed John Gibson as its new CEO. He replaces John Chisholm who steps down after seven years as the CEO. Mr Chisholm is also stepping down from the Board.

Mr Gibson joins from investment bank Tudor Pickering Holt where he was Chairman of Energy Technology. Between July 2010 and May 2015, Mr Gibson was the CEO of Tervita Corporation, a Canadian environmental and oilfield services company.

Flotek supplies chemicals for use in drilling and completion of oil wells.  It currently has a market capitalization of $115 million. That’s about the same as the amount of net cash on the balance sheet ($107 million at 30 September).  The cash position arose from the sale of its consumer and industrial chemistry technologies for $175 million in January 2019. The company hasn’t made an operating profit since 2015.

Gibson compensation

Mr Gibson will receive a base salary of $500,000. He will also be granted 570,000 restricted stock units that will vest over the next five years. Mr Gibson is also granted an option to purchase up to 1 million shares at $1.93 per share. This option also vests over the next five years. An option to buy a further 2 million shares at $1.93 per share will vest in stages, according to the stock price. If the stock remains above $7.20 for 20 consecutive trading days, 100% will vest.

Severance payment

Neither the press release nor the SEC filing mentions what severance payments are owed to Mr Chisholm, if any. According to the annual proxy statement filed earlier in 2019, Mr Chisholm is entitled to a payment of $3.6 million (two times base salary and target bonus) if he is terminated without cause. The company filed an amended employment agreement with Mr Chisholm in October 2019. This agreement states that any severance will be paid over 24 months.

SEC filing – Flotek CEO appointment

Small E&P company moves to Houston while another leaves

US Energy Corp (market cap $4 million) has moved its head office from Denver to the Galleria area. The company has revenues of $6 million, primarily from producing assets in North Dakota and Texas.

The company has had a rough couple of years. During 2018, the board of directors consisted of only four directors, including Chairman & CEO David Veltri. As a result the board often ended up deadlocked on important votes.

43% of the company is owned by APEG II, an Austin-based investment firm. They sent a letter to the board on February 2019, urging the company to create a seven-person independent board, establish a business plan and reduce general and administrative expenses. They also happened to be the company’s secured lender at the time.

Two weeks later, APEG withdrew access to the bank accounts and the board (excluding Mr Veltri) voted to fire the CEO for cause for using company funds in excess of authority granted by the board. The CEO and APEG then sued each other on various issues. The litigation takes up three pages of the recent quarterly report!

In May 2019, the Colorado Federal Court issued an order, appointing Randel Lewis as Custodian of the company and interim CEO.

CFO becomes CEO

On December 10, the company appointed CFO Ryan Smith to be its new CEO. Mr Smith will continue to be the CFO, a role he has held for the past three years.

The company currently has a share price of 31 cents. Back in June it was notified by Nasdaq that it was not in compliance with the $1 minimum share price. It was granted 180 days to comply. That expires on December 16, 2019.

Lilis Energy

While US Energy was moving its head office to Bering Drive, another small E&P company, Lilis Energy, was moving its head office from Bering Drive to Fort Worth. Lilis also has a troubled history.

The company only moved to Houston from San Antonio in June 2018. The company has a market cap of $12 million. It, too, has a delisting notice from NYSE for having a share price below $1.

Joe Daches was recently appointed CEO, having served in an interim capacity since June 2019. Like Ryan Smith at US Energy, he is also the CFO of the company as well.

You can see the complete list of Houston-area public companies on my blog here.

SEC filing – US Energy Corp – new CEO

Marine vessel fabricator appoints new CEO

Gulf Island Fabrication

Richard Heo has been appointed the new CEO of Gulf Island Fabricators. He replaces Kirk Meche who stepped down in October.

The company is a fabricator of marine vessels with facilities in Houma and Lake Charles, Louisiana. It has its head office in west Houston and a market capitalization of $68 million.

The company has struggled in recent years as the market for offshore vessels has shrunk. The company is trying to diversify into onshore fabrication and other areas where project management skills are needed (such as offshore wind).

Prior to joining, Mr Heo was the Senior VP of North, Central and South America for McDermott International. He had previously served as VP of Fabrication Services for CB&I.

Mr Heo will receive a base salary of $487,000. He also receive an initial grant of 100,000 restricted stock units that will vest over 3 years (current price $4.47).

SEC filing – HEO appointment


Schlumberger CEO gets $2 million a year consulting deal

Photo by Nestor Galina

Paal Kibsgaard, 52, the Chairman and CEO of Schlumberger, is stepping down effective August 1, 2019. He joined the company in 2007 and has spent 8 years as CEO and 4 years at the Chairman of the Board.

Schlumberger has a market cap of $54 billion and has executive offices in Paris, Houston, London and The Hague.  Its Houston offices are near the Galleria.

New CEO and Chairman

Replacing Mr Kibsgaard as CEO is Olivier Le Peuch. He joined the company in 1987 and has served as COO since February 2019. Mr Le Peuch will receive a base salary of $1.4 million. He will also receive a performance share unit grant worth $10.5 million that will vest over 3 years. The amount vested will depend on total shareholder return and free cash flow generation.

Current director, Mark Papa, is appointed non-Exec Chairman of the Board. He is a well-respected, seasoned E&P executive and a former CEO of EOG. He joined the board in October 2018.

On the earnings call held after the issue of second quarter results, Mr Kibsgaard said that he asked the Board to start the succession process in July 2018.

CFO to depart?

Also on the earnings call, an analyst asked about the future of Simon Ayat, CFO since 2007. (There was a report published in Reuters in July 2018 that Mr Ayat, now 64, intended to retire by the end of 2018). Mr Kibsgaard responded that the date for any retirement would be decided by new CEO, CFO and the Board.

Severance contract

Unusually among public companies, Schlumberger doesn’t have employment contracts with its executives and payments to departing executives are made on a case-by-case basis.

Mr Kibsgaard will enter into a three-year consulting agreement that pays him his annual base salary of $2 million. He will also receive a cash incentive award for 2019 to be paid in early 2020. (By comparison, the cash bonus for 2018 that he received was $1.1 million). His restricted stock units will continue to vest.

The market cap of Schlumberger is about half what it was when Mr Kibsgaard took over. Depressing as that may be, it has performed better than the oilfield services sector as a whole. The Philadelphia Oil Service Sector index is down by about 66% in the same time period.

SEC filing – Schlumberger CEO


CEO leaves with large severance after leading company into bankruptcy

Gary Rich, CEO of Parker Drilling, is leaving the company with a large severance package just months after the company emerged from bankruptcy proceedings. He will leave by December 31 at the latest, while the company searches for his successor.

Parker Drilling (market cap $270 million) has its head office in Greenway Plaza. The company is an international provider of contract drilling and drilling-related services. It has operations in 20 countries.

The business entered into pre-packaged bankruptcy proceedings in December 2018 and emerged at the end of March. It reduced its debt from $585 million to $210 million and raised an additional $95 million through an equity rights issue.

Severance package

As part of his severance, Mr Rich will get;

  • payment of $1.5 million representing 1 years’ salary and 2019 target bonus
  • if he leaves before Dec 31, he will get a pro-rata portion of his salary ($745,000) for the remainder of the year
  • Health care premiums for 12 months
  • vesting of one third of his restricted stock units (49,407) and stock options (74,111)
  • If there is an agreement to sell Parker Drilling within six months of Mr Rich’s termination date, he will also get a $1.5 million cash payment.

The current stock price is $18.38. That means the stock units are worth $908,000. The exercise price for the options is $23, so they are currently out-of-the-money.

New Employment contract

Here’s what must be galling to the old shareholders. Mr Rich only entered into a new employment contract on March 26, 2019. Mr Rich’s salary was increased from $650,000 to $745,000. The restricted stock units were also granted at that time.

2018 Cash bonuses

To add insult to injury, in July 2018, because of the low share price, the company switched to quarterly cash incentives in lieu of equity awards. Mr Rich received cash payments of $2 million for 2018 bonuses. He also received a cash payment of $532,000 in March 2019 relating to the vesting of a 2016 performance cash unit grant.

Just in case, Mr Rich wasn’t feeling rich enough, he also benefited from the cashing out of the old restricted stock units that were issued in the years prior to bankruptcy. That amounted to another $300,000.

Mr Rich has been the CEO since October 2012. At that time the stock price was around $65 (adjusted for stock splits). The business hasn’t made an operating profit since 2014.

SEC filing – Parker Drilling


Houston E&P company hires new CEO after year-long search

Evolution Petroleum Corporation has hired Jason Brown as its new CEO after the previous CEO, Randy Keys, stepped down in May 2018.

Robert Herlin, the founder of the company, who had been serving as the interim CEO, will remain Chairman of the Board. He had been the CEO for 12 years before Mr Keys was appointed in December 2015.

Mr Brown is the founder of LongBow Energy, a private E&P company. He was previously a co-founder of Halcon Resources, where he was VP of Corporate Development between Sept 2011 and July 2014.

Mr Brown will receive a base salary of $325,000. He also received $325,000 of restricted stock that will vest over 3 years.

Evolution (market cap $218 million) has its head office in west Houston. The company has revenues of $41 million, which primarily comes from a 23.9% stake in the Delhi field of Northeast Louisiana, where Denbury Resources is the operator.

Unusually the company has only four employees as it has chosen to outsource its property accounting, human resources and administrative functions.

Evolution Petroleum – SEC filing


Struggling E&P company hires new CEO

Halcon Resources (market cap $31 million), based in downtown Houston, has hired Richard Little as its new CEO. He replaces Floyd Wilson who left in February in a mass purge. Search firm, Heidrick & Struggles, was retained by the company to assist in the search.

Mr Little was previously the CEO of Ajax Resources before it was sold to Diamondback Energy in October 2018. Prior to that, he spent 10 years at EP Energy.


Considering the stock price is 17 cents, Mr Little will be well paid. He will receive a base salary of $625,000 (lower than Mr Wilson who was paid $800,000 a year). His target bonus is 100% of annual base. For 2019, he will receive a pro-rated bonus to be paid on a monthly basis. It’s not clear whether the 2019 bonus is guaranteed.

Mr Little was also receive a cash-based long-term incentive award of approximately $1.2 million that will vest annually over 3 years.

If Mr Little is terminated without cause, he will receive

  • Lump sum equivalent to 100% of base salary and target bonus.
  • if termination occurs within the last 6 months of the fiscal year, a pro-rated portion of the annual bonus, based on achievement of applicable performance targets.
  • Long-term incentives would vest in full.

Halcon operates properties in the Delaware Basin in west Texas. Halcon had entered into a pre-packaged bankruptcy agreement in 2016. Creditors wrote off $1.8 billion in debt in return for the 96% of the common stock post-reorganization. The company still has $720 million of debt.

Activist Investor

Fir Tree Capital, an activist investor who has been seeking the sale of the company, reached a settlement with Halcon in April. Fir Tree supported the company’s three independent director nominees and, in return, got to add their own director to the board.

De-Listing notice

At the end of May, the company received notice from the NYSE that it was in danger of being delisted unless the stock price rises above $1 for 30 consecutive trading days. The company has 6 months to regain compliance.

SEC filing

Small Houston E&P company replaces CEO

Lilis Energy (market cap $64 million) has announced the immediate ‘retirement’ of Chairman & CEO Ron Ormand. Existing Director David Wood becomes Chairman and current CFO, Joe Daches, becomes interim CEO. A search for a new CEO has begun.

The company operates in the Delaware Basin in West Texas and New Mexico. The company moved its head office from San Antonio to the Galleria area in June 2018.

Revolving door of Senior Executives

Mr Ormand became Executive Chairman in July 2016 and was appointed CEO in April 2018. In that time, he went through two CEO’s and two COO’s. His first CEO, Avi Mirman resigned in August 2017 after being charged by the SEC in an unrelated $17 million penny stock fraud. His second CEO, James Linville, lasted seven months. Both received lucrative severance payments.

Severance package

Mr Ormand had a base salary of $500,000 and received a $1.25 million cash bonus for 2018. He will receive a severance payment of 12 months of base salary. He will also receive an additional separation payment of $500,000 in consideration for extending his non-competition term from six months in his original employment agreement. The new non-compete term was not disclosed.

In addition, 693,000 shares of restricted stock will vest immediately. At the current share price of 69 cents, these are worth $478,000. 75% of these shares were only granted in February. Also, the exercise date for 250,000 options was extended for an additional two years. The option price is $2.98.

Growth fueled by debt

Through acquisitions and capital spending, average daily production increased from 350 Barrels of Oil Equivalent in 2016 to 6,058 BOE in the first quarter of 2019. However the growth was fueled by debt and the company remains cash flow negative.

The share price rose from $2 (market cap $32 million) in July 2016 to $5.52 (market cap $333 million) in September 2018 before dropping to its current price of 69 cents.

In March 2019, the company agreed to convert $133 million of convertible debt issued in 2017 by Varde Partners to common and preferred stock. This meant that Varde, a Minneapolis investment firm, effectively controls 41.9% of the outstanding shares. Varde has been a long-time investor and owned about 20% when Mr Ormand became Executive Chairman in 2016. It’s not clear what prompted the change in CEO now.

SEC filing