Tag Archives: Severance

CEO and CFO of Superior Energy leave with large severances

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.

Overpriced Acquisition

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.

SEC filing – Superior Energy CEO CFO exit



E&P CEO leaves with a large severance weeks after bankruptcy

Tommy Nusz, the CEO of Oasis Petroleum, has retired. He has been replaced, on an interim basis, by Chairman Douglas Brooks, the former CEO of Energy XXI and Yates Petroleum.

Mr. Nusz founded Oasis in 2007 and the company went public in 2010. Most of the company’s operations are in the Williston Basin of North Dakota and Montana It also has operations in Delaware Basin in Texas. The company has its head office in downtown Houston. At its peak in 2014, its market capitalization was almost $6 billion.

Oasis filed for a pre-packaged bankruptcy on September 30, 2020. Unsecured loan note holders swapped $1.8 billion of debt for 92.5% of the equity in the newly-reorganized company. Existing shareholders were diluted down to 7.5%.

Mr. Nusz was Chairman and CEO prior to bankruptcy. After the company exited from Chapter 11 in early November, he remained on the Board of Directors. However, because he was no longer Chairman, it was deemed a termination for good reason following a change of control, under the terms of his 2018 employment contract.

That means Mr. Nusz gets a change of control payment of 2.99 times base salary of $881,250 plus 2.99 times average bonus paid in the previous two years. In the 2019 proxy statement that total came to $5.4 million. He will also receive a target bonus for 2020 which is probably another $984,000 (based on the 2019 target bonus) .

Mr. Nusz has also stepped down as a director of Oasis Midstream Partners, the publicly-traded MLP controlled by Oasis Petroleum. The midstream entity was not part of the bankruptcy proceedings.

SEC filing – Oasis Petroleum CEO change



Weatherford CEO departs suddenly

Weatherford CEO Mark McCollum ‘left the company’ on Sunday June 7, just five days before the (virtual) annual shareholding meeting. Mr McCollum was up for re-election as a director. His candidacy has now been withdrawn.

The timing of the departure and the curt press release issued by the company suggests there is a back story that’s not public yet.

According to the company, Mr McCollum’s departure was not the result of any dispute or disagreement with the company on any matter relating to the Company’s accounting practices or financial statements.

Search for new CEO

Mr McCollum was appointed CEO in April 2017. He was previously the CFO at Halliburton.  Current CFO Christian Garcia, who joined the company in January (and who also happens to be a former CFO at Halliburton) and COO Karl Blanchard will lead the company on an interim basis, while the Board conducts a search for new CEO.

Severance package

The company did not disclose the amount of the severance package for Mr McCollum and it’s not easy to figure out. The company did say that he was terminated ‘without cause’ and that he would be entitled to benefits and compensation under pre-existing compensation plans.

When the company emerged from bankruptcy in December 2019, that was considered a change of control. Therefore Mr McCollum is entitled to 3x base salary plus average annual cash bonus of the last three years. Mr McCollum’s base salary is $1 million, so that’s a $3 million severance payment. That’s the easy part.

For cash bonuses, Mr McCollum received $279,167 in 2017 and $579,600 in 2018. For 2019, he received a $2 million cash retention bonus in April 2019 and $3.368 million paid in cash instead of restricted stock awards (because the stock price was so low). An amendment filed after the company emerged from bankruptcy stated that the 2019 cash bonuses are excluded in calculating the average annual bonus.

Averaging the $279k (grossed up for a full year) and the $580k, amounts to approximately $476,000. So it appears that severance relating to the bonus will be $1.4 million. Of course, Mr McCollum gets to keep his $2 million retention bonus.

But wait, there’s more! Mr McCollum will also be entitled to a pro-rated target annual bonus for 2020. According to the proxy, the Board hasn‘t yet determined what the target is yet due to the uncertainty in the oil and gas markets. 

So the severance for Mr McCollum appears to be at least $4.4 million.

Also leaving the company is Christina Ibrahim, Executive VP and General Counsel.  Ms Ibrahim will also get 3x base salary and annual bonus. That amounts to at least $2.9 million.

Chapter 22?

There are rumors that Weatherford could be forced into bankruptcy again. The company entered Chapter 11 in July 2019 and exited in December, having reduced debt by $6.7 million. Unfortunately they still have $2.7 billion in debt and the recent downturn may mean a breach of covenants soon. The company has apparently hired restructuring law firm Paul Weiss.

SEC filing – Weatherford CEO departure

Former Oilfield Services CFO leaves with a $6 million cash payment

Greg Powell, Chief Integration Officer with Nextier Oilfield Services, will be leaving the company in May. Mr Powell was the CFO of Keane Group, prior to its all stock merger with C&J Services in October 2019.

Under the terms of the merger, Mr Powell was to leave at the earlier of (i) 18 months or (ii) the date at which the company achieves $100 million in annualized savings. He will receive a performance bonus of $2.6 million.

Mr Powell will also receive a cash severance payment of $3 million, to be paid over the next two years. In addition he will also get a pro-rated cash bonus for 2020 of approximately $300,000. Just over 200,000 restricted stock units will also vest. At the current share price of $2.40, these are worth $0.5 million.

Mr Powell spent 10 years in various divisions of General Electric. He then joined PE firm Cerebus Capital Management before coming the CFO at Keane Group, a portfolio company, in March 2011.

Annualized savings

At the time the deal was announced, the target cost savings were $100 million. This was soon increased to $125 million. On the Q4 2019 earnings call held on March 11, Mr Powell stated that $3 million of savings were achieved in Q4 2019, $20 million would be achieved in the first half of 2020 and $63 million in the second half of 2020.

Declining Market capitalization

Keane went public in early 2017 with a market capitalization of $2 billion. It announced its merger with C&J Services in June 2019 (combined market cap $1.5 billion). By the time the deal closed in October, the combined market cap had fallen to $1 billion. It’s now just over $500 million.

CFO of Nextier got $4.1m severance 

At the time of the merger, Jans Kees van Gaalen, the CFO of C&J, became the CFO of the combined group. He left in December 2019, just 15 months after joining C&J, with a cash severance of $4.1 million.

Kenny Puchei, the former VP of Finance for Keane, was appointed as the new CFO.

The remaining executive officers are reducing salaries by 20% for 2020 due to the uncertainties caused by COVID-19.

SEC filings – Powell departure

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


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


CFO out at Houston Building Products Company

Quanex Building Products has let go CFO Brent Korb with immediate effect. Scott Zuehlke, VP of Investor Relations and Treasury has been appointed interim CFO while the company conducts an executive search.

Quanex has a market cap of $558 million and is based in the Galleria area. The company designs and produces energy-efficient windows and doors fenestration products in addition to kitchen and bath cabinet components.

Mr Korb joined the company in 2001 and had been the CFO since August 2008. He will receive 18 months of severance ($627,000) and a pro-rated target bonus for 2019 (approx $160,000). He will also receive 18 months of benefit premiums ($29,000). Unlike most companies, upon termination, unvested stock options and restricted stock are forfeited and do not vest.

Mr Zuehlke has been with the company since 2016. Prior to that, he was VP, Investor Relations at Halcon Resources.

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

Houston Oilfield Services CEO leaves with large severance

Brian Hanson, the CEO of ION Geophysical has ‘retired’, effective June 1, to be replaced by Chris Usher, VP of Operations Optimization.

ION (market cap $103 million) has its head office in west Houston and provides products and services related to seismic data acquisition and processing.

Mr Hanson joined ION as its CFO in 2006 and became the CEO in 2011. He had a base salary of $600,000. Mr Hanson has signed a separation agreement that gives him:

  • severance payment of $2.4 million, payable over a 2-year period.
  • $250,000 representing pro-rata share of Mr Hanson’s 2019 target annual bonus payment
  • continuing healthcare coverage for 48 months
  • 120,000 restricted shares that become fully vested (worth almost $1.1 million).
  • 25,000 stock options that become fully vested.  The options are in the money and are currently worth about $142,000

When Mr Hanson was appointed CEO, the company had a market capitalization of $557 million. For 2018, the company had revenue of $180 million, EBITDA of $43 million and a net loss of $71 million.

Mr Usher started his career at WesternGeco and has worked at a number of seismic companies.

As an aside, in June, ION lost a case at the Supreme Court. WesternGeco had filed a lawsuit in 2009, alleging infringement of various patents. The Supreme Court ruled that a patent owner may recover lost foreign profits for infringement. A lower court had originally awarded WesternGeco $94 million in lost profits. Subsequently 4 of the 5 patents have been invalidated by the Patent Office, so the damages that ION may have to pay are likely to be much lower.

WesternGeco was owned by Schlumberger until it was sold in August 2018 to Shearwater GeoServices, a Norwegian company, for $600 million.

SEC filing


CEO of Midstream company leaves with large payout

Lynn Bourdon, Chairman and CEO of American Midstream, has resigned from all his positions ahead of its $285 million deal to go private. That transaction was engineered by ArcLight Capital Partners who currently owns 51%.

Mr Bourdon has been CEO since December 2015. One of his first acts was to move the head office from Denver to the Westchase area of Houston. Mr Bourdon made several acquisitions after he was appointed, in a bid for growth. In early 2017 ArcLight also effectively merged American Midstream with another larger affiliated company, JP Energy.

Annual report filed late

The rapid growth from a series of smaller deals and the head office relocation taxed the controls and systems of the company, the big deal effectively broke the company.

The company recently filed its 10-K late. The audited financials raised going concern issues due to a $515 million credit agreement expiring in September 2019 and material weaknesses in internal controls.

Cash payouts

Mr Bourdon will receive the following compensation

  • Cash payment of $1.2 million, being 1 x base salary + 1 x target bonus
  • Cash payment of $1.74 million for unvested phantom stock units
  • Cash payment equivalent to 12 months of COBRA

The unvested phantom stock units were only granted in April 2018. The $1.74 million is on top of approximately $0.8 million of units that vested earlier this year. Note that the transaction to go private is not considered a change-of-control as ArcLight already owns 51%. Otherwise, the payments to Mr Bourdon would have been greater.

In 2018 Mr Bourdon also received a cash bonus of $500,000 and a cash retention award payment of $1.2 million.

When Mr Bourdon was appointed in December 2015, the stock price was $7 per unit. It is being taken private at $5.25 per unit. The company was paying a quarterly dividend of 41.25 cents until it was slashed to 10 cents in July 2018.

SEC filing