Tag Archives: CEO

Houston companies reduce salaries for senior executives

In recent days, a few public companies in the Houston have announced salary reductions for senior executives as they battle with the economic downturn. The changes are temporary though most haven’t set a timetable for when they will be restored. A summary of the changes announced for the CEO and CFO officers is set out in the table below.

A shout-out to Cactus, an oilfield services company, who were the first to announce changes.

A couple of other comments

Occidental : All Executives had their salaries capped at $250,000. Furthermore, it appears that Oxy cut the salaries of all US employees making over $76,000 by 30%. It appears those making less got cut by 20%. Legacy Anadarko employees appear to have only got cut 4.9% to avoid breaching contracts in last year’s disastrous merger. That’s really going to help mesh the company cultures!

Group 1 Automotive : 3,000 US employees are furloughed for a 30-day period, with an option for a second 30-day period. 2,800 UK employees are furloughed for an initial period of 21 days. That’s about 40% of their workforce.

SEC filing – Group 1 Automotive

https://www.thelayoff.com/occidental-petroleum

 

CompanyPositionNameOld salary $000New salary $000% reduction
CactusCEOScott Bender30015050%
CactusCFOStephen Tadlock33526820%
Group 1 AutomotiveCEOEarl Hesterberg1,15057550%
Group 1 AutomotiveCFOJohn Rickel63050420%
Luby'sCFOScott Gray34217150%
Nabors IndustriesCEOTony Petrello1,7501,40020%
Nabors IndustriesCFOWilliam Restrepo65052020%
Occidental PetroleumCEOVicki Hollub1,25025080%
Occidental PetroleumCFOCedric Burgher72525066%
Superior Energy ServicesCEODavid Dunlap85068020%
Superior Energy ServicesCFOWesty Ballard44037415%
US Physical TherapyCEOChris Reading80048040%
US Physical TherapyCFOLarry McAfee51033235%

CEO out at Houston retail energy company

Spark Energy stock price

Nathan Kroeker is out as the CEO of Spark Energy. He is replaced, on an interim basis, by founder and chairman, Keith Maxwell, who still owns approximately 66.5% of the stock.

The company was founded in 1999 and is headquartered in west Houston. It supplies energy to residential and commercial customers operating in 19 states.



It’s not clear what prompted the change. EBITDA rose in 2019 to $71 million and the company has net debt of only $66 million. Its share price is currently $6.20, down from $10 earlier in the year.

Mr Kroeker had been the CEO since April 2014. Prior to that. he was the CFO of Spark between 2010-2012. He had a base salary of $450,000. The SEC filing doesn’t mention any details of his severance package. However, the annual proxy for 2018, filed in April last year, stated that Mr Kroeker was entitled to severance of one year’s salary, payable in twelve monthly installments.

He will also get his 2019 earned bonus (the 2018 figure was $250,000) and a pro-rated 2020 target bonus. Mr Kroeker’s unvested stock awards will also vest. As the annual proxy statement for 2019 has not been filed, I can’t quantify their specific worth, but it is likely to be over $2 million.

Mr Maxwell will receive a salary of $1 for his interim CEO role, though he is paid $250,000 in fees for his non-Executive chairman position.

Spark appointed Jim Jones as its new CFO in June 2019. He replaced Rob Lane, who stepped down to become the CFO at Sunnova Energy, which went public in July.

SEC filing – Spark Energy CEO

Centerpoint Energy CEO steps down

Scott Prochazka, CEO of Centerpoint Energy, has resigned from his position with immediate effect.  John Somerhalder, a director of the company, has been appointed interim CEO while the Board conducts a search for a new CEO. The Board determined that ‘now is the right time for a new leader with a fresh strategic perspective.’



Centerpoint Energy has a market capitalization of $13.7 billion.  It has nearly $35 billion in assets and serves 7 million customers in 8 states.

Mr Prochazka has been with the company since 2001 and had been CEO since January 2014. He had a base salary of $1.323 million. According to the 2018 proxy statement, technically there are no formal severance payments due to Mr Prochazka, unless it is a change of control.

[UPDATE 03-09-20 The company has filed a separation agreement and it’s a whopper. Mr Prochazka will get a lump sum cash payment of $7,348,584. His 2016-2018 stock awards will also vest. It’s hard to tell, but they are probably worth about the same again]

When CFO Bill Rogers retired in March 2019, the Compensation Committee gave him a special lump-sum cash payment of $360,000 (about 60% of his base salary). He also had joined the company in 2001.

Xia Liu was appointed as the new CFO in April 2019.

SEC filing – Centerpoint CEO resigns

SEC Filing – Separation Agreement

Houston retailer appoints new CEO

Francesca’s Holdings has appointed Andrew Clarke as its new CEO, effective March 9, 2020. He replaces Michael Prendergast, who has been serving as interim CEO since February 2019.

Former CEO Michael Lawrence left to become the Chief Merchandising Officer at Academy Sports & Outdoors, based in Katy. However it was only in December that the company announced it had hired a retained search firm to find a new CEO.



Francesca has a market capitalization of $22 million and has its head office in west Houston. It operates approximately 700 boutiques in 47 states. Like many retailers, it has been struggling with tough market conditions.

Mr Clarke has plenty of retail experience and was previously the President at Loft and Chief Merchandising Officer at Justice. He will receive a base salary of $700,000 and a restricted stock grant of $500,000 that will vest over three years. As he is moving from New York, he will also receive a lump-sum payment of $200,000 to cover relocation costs.

Mr Prendergast is actually employed by consultants Alvarez & Marsal. The company had been paying A&M approximately $100,000 a month for the services of Mr Prendergast. With the appointment of Mr Clarke, the company has amended the agreement and will now be paying A&M $120,000 a month while Mr Prendergast is still the interim CEO. A&M may also receive incentive compensation of $500,000 subject to the achievement of certain targets.

In July 2019, CFO Kelly Dilts resigned to become the Senior VP Finance at Dollar General, based in Tennessee. Cindy Thomasee was promoted from Chief Accounting Officer to take her place.

SEC filing – Francesca CEO appointment

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