CIVITAS RESOURCES, INC. appointed new CEO

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 


Appointment of T. Hodge Walker as Chief Operating Officer


On April 3, 2023, Civitas Resources, Inc. (the "Company") announced T. Hodge Walker as the new Chief Operating Officer of the Company, effective April 5, 2023, reporting to the Company's President and Chief Executive Officer. He will succeed Matthew R. Owens, who has served as the Company's Chief Operating Officer since November 1, 2021.


Mr. Walker, age 52, joins the Company from Chevron Corporation (NYSE: CVX) ("Chevron"), a Delaware corporation, where he served as vice president of Chevron's Rockies Business Unit since October 2020 when Chevron acquired Noble Energy, Inc. ("Noble"). Prior to joining Chevron, Mr. Walker served as Senior Vice President responsible for Noble's U.S. onshore operations. He also served as a director of Noble Midstream GP since July 2018 and Noble's Vice President of West Africa and the U.S. Gulf of Mexico since 2014. Additionally, he served as Director of Strategic Planning, Environmental Analysis and Reserves; managed Noble's operated West Africa assets, non-operated international assets and frontier business ventures; and was a member of the Noble business development team since 2007. Prior to joining Noble in 2007, Mr. Walker held various positions at Amoco Corporation and BP America. Inc. Mr. Walker earned a Bachelor of Science and Masters in Geology from Louisiana State University and completed the Harvard Advanced Management Program in 2018.


Employment Letter with T. Hodge Walker


In connection with his appointment, the Company and Mr. Walker have entered into an employment letter (the "Employment Letter") providing the following compensation terms: (i) an annualized base salary of $765,000 per year; (ii) eligibility to participate in the Company's long term incentive program with a target award equal to $2,295,000 per year, with the number of shares of the Company's common stock subject to Mr. Walker's 2023 long term incentive awards equal to the quotient of (a) $2,295,000 divided by (b) the volume-weighted average price of the Company's common stock for the 30 trading days immediately preceding April 5, 2023 (the "Grant Date"), which will consist of: (1) 30% of the total target value in Restricted Stock Units ("RSUs"), subject to three-year ratable time vesting from the Grant Date; and (2) 70% of the total target value in Performance Share Units ("PSUs") based on the Company's absolute total shareholder return relative to pre-established goals during a measurement period of January 1, 2023 to December 31, 2025; (iii) a one-time grant of RSUs equal in number to the quotient of (a) $1,500,000 divided by (b) the volume-weighted average price of the Company's common stock for the 30 trading days immediately preceding the Grant Date, subject to three-year ratable time vesting from the Grant Date; and (iv) participation in the Company's Executive Change in Control and Severance Plan (the "Severance Plan") as a Tier 2 Executive (as such term is defined in the Severance Plan). The RSUs and PSUs described above will be subject to the terms and conditions of award agreements that are substantially consistent with the award agreements issued to the other executive officers of the Company in respect of the RSUs and PSUs issued in 2023.


As a Tier 2 Executive under the Severance Plan, upon the termination of Mr. Walker's employment without Cause (as defined in the Severance Plan) or due to his resignation for Good Reason (as defined in the Severance Plan) (a "Qualifying Termination"), he will be eligible to receive (i) a cash severance payment equal to 1.5x his then-current base salary, paid in equal monthly installments over a 18-month period following his termination and (ii) reimbursement for the cost of any COBRA premiums incurred by him during the 12-month period following his termination. If a Qualifying Termination occurs within 12 months following a Change in Control (as defined in the Severance Plan), he will be eligible to receive (i) a lump sum cash severance payment equal to 2.5x his then current base salary and (ii) reimbursement for the cost of any COBRA premiums incurred by him during the 18 months following his termination.


The description of the Employment Letter is qualified in its entirety by the terms of the Employment Letter, a copy of which is attached as Exhibit 10.1 and incorporated by reference herein. Additionally, the description of the Severance Plan is qualified in its entirety by the terms of the Severance Plan, a copy of which was previously filed with the Securities & Exchange Commission on January 25, 2022 as Exhibit 10.1 to the Company's Current Report on Form 8-K and is incorporated by reference herein.


In connection with his appointment, the Company will enter into its standard form of indemnity agreement with Mr. Walker, a copy of which is attached as Exhibit 10.2 and incorporated by reference herein.


Matthew R. Owens Departure


In connection with the leadership transition, on April 3, 2023, Mr. Owens' employment with the Company terminated effective immediately.