Coterra Energy 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. 


Pursuant to the Merger Agreement, the Board of Directors of Coterra (the "Board") immediately following the Effective Time is composed of (A) five persons who were members of the Board of Directors of Cabot (the "Cabot Board") prior to the Effective Time and (B) five persons who were members of the Board of Directors of Cimarex (the "Cimarex Board") prior to the Effective Time.


Director Resignations


In accordance with the director selection process provided for in the Merger Agreement, on September 28, 2021, Messrs. Rhys J. Best, Peter B. Delaney and W. Matt Ralls submitted their resignations from the Cabot Board, effective as of the closing of the Merger and, as of the Effective Time, ceased to be directors of the Company. Such resignations were not the result, in whole or in part, of any disagreement with the Company or the Company's management.


Director Appointments


Upon the Effective Time, in accordance with the director selection process provided for in the Merger Agreement, the Board appointed Mr. Thomas E. Jorden, Ms. Frances M. Vallejo, Ms. Lisa A. Stewart, Mr. Hans Helmerich and Mr. Paul N. Eckley to the Board. Each of the new directors was a member of the Cimarex Board immediately prior to the Effective Time. In addition, on the Closing Date, in accordance with the provisions governing post-closing corporate governance set forth in the Company's Amended and Restated Bylaws, Mr. Dan O. Dinges was appointed as Executive Chairman of the Board and Ms. Stewart was appointed as Lead Independent Director. Mr. Dinges will serve as Executive Chairman of the Board until the earlier of (1) December 31, 2022 or (2) any date on which Mr. Dinges ceases to serve as a member of the Board for any reason. Each other person will serve as a director of the Company until such person's successor shall be appointed or such person's earlier death, resignation or removal in accordance with the Company's organizational documents.


Each of Messrs. Boswell, Watts, Eckley, Helmerich, and Mses. Ables, Brock, Stewart and Vallejo may receive compensation for his or her services on the Board as determined by the Board following the Effective Time.


Additional information relating to the former Cimarex directors who were added to the Board is set forth below (ages are as of October 1, 2021):


Thomas E. Jorden, 63, was named Chief Executive Officer and President of Cimarex in September 2011 and Chairman of the Cimarex Board in August 2012 and served in those positions until the Effective Time. Mr. Jorden previously served as Executive Vice President of Exploration since the formation of Cimarex in September 2002 and held that same position at Key Production Company, Inc. ("Key"), Cimarex's predecessor. He joined Key in November 1993 as Chief Geophysicist and later as Vice President of Exploration (October 1999 to September 2002). Prior to joining Key, Mr. Jorden was with Union Pacific Resources and Superior Oil Company. He is a graduate of the Colorado School of Mines where he earned B.S. and M.S. degrees in Geophysics. Mr. Jorden serves as Chairman of the Board of Trustees for the Colorado School of Mines.


Frances M. Vallejo, 56, served on the Cimarex Board from May 2017 until the Effective Time. She is a former executive officer of ConocoPhillips where she began her career in 1987. She served as Vice President Corporate Planning and Development from April 2015 until December 2016 and as Vice President and Treasurer from October 2008 until March 2015. Prior to October 2008, she served as General Manager Corporate Planning and Budgets, Vice President Upstream Planning & Portfolio Management, Assistant Treasurer, Manager Strategic Transactions, and in other geophysical, commercial, and finance roles. Ms. Vallejo served as a member of the Board of Trustees of Colorado School of Mines from 2010 until 2016 and is a member of Colorado School of Mines Foundation Board of Governors since 2017. Ms. Vallejo currently serves on the Board of Directors of Crestwood Equity GP LLC.


Lisa A. Stewart, 64, served on the Cimarex Board from October 2015 until the Effective Time. Ms. Stewart serves as Executive Chairman of Sheridan Production Partners, a privately-owned oil and gas operating company she founded in 2006. Before her appointment to the Cimarex Board, Ms. Stewart served as President and Chief Executive Officer of Sheridan from December 2016 to April 2020. Ms. Stewart served as Chairman and Chief Investment Officer of Sheridan from its founding in 2006. Prior to 2006, Ms. Stewart served as Executive Vice President of El Paso Corporation and President of El Paso E&P from 2004 to 2006. From 1984 to 2004, Ms. Stewart was with Apache Corporation where she most recently served as Executive Vice President with responsibility for reservoir engineering, business development, land, environmental, health and safety, and corporate purchasing. Ms. Stewart served as a director at Talisman Energy Inc. from 2009 until its acquisition in May 2015, including as the Chair of the Reserves Committee and a member of the Human Resources Committee. Ms. Stewart currently serves on the Board of Directors of Jadestone Energy and Western Midstream Partners, LP.


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Hans Helmerich, 63, served on the Cimarex Board from 2002 until the Effective Time. Mr. Helmerich has been the Chairman of the Board of Helmerich & Payne since 2012 and has served as President and Chief Executive Officer of Helmerich & Payne from 1989 to 2014. Mr. Helmerich also serves as a director of Atwood Oceanics, Inc.


Paul N. Eckley, 66, served on the Cimarex Board from May 2019 until the Effective Time. Mr. Eckley retired from State Farm® Corporate Headquarters, where he most recently served as Senior Vice President - Investments, a position he held since 1998. He joined State Farm in 1977 as an investment analyst, was promoted to Investment Officer in 1990, and became Vice President - Common Stocks in 1995. Mr. Eckley was a director of the Emerging Markets Growth Fund owned by the Capital Group from 2005 until November 2016 and served as Chairman of the Board for the fund from January 2014 through November 2016. Mr. Eckley earned a B.S. degree in economics and history from Northwestern University and an MBA from the University of Chicago.


Committee Appointments


On the Closing Date, in accordance with the provisions governing post-closing corporate governance set forth in the Company's Amended and Restated Bylaws, the Executive Committee of the Board was formed and constituted and the Audit Committee, the Compensation Committee, the Governance and Social Responsibility Committee and the Environment, Health and Safety Committee of the Board were reconstituted as described below:


Executive Committee


Dan O. Dinges (Chair)

Thomas E. Jorden

Lisa A. Stewart

Robert S. Boswell


Audit Committee


Dorothy M. Ables (Chair)

Robert S. Boswell

Lisa A. Stewart

Frances M. Vallejo


Compensation Committee


Paul N. Eckley (Chair)

Amanda M. Brock

Marcus A. Watts

Hans Helmerich


Governance and Social Responsibility Committee


Marcus A. Watts (Joint Chair)

Frances M. Vallejo (Joint Chair)

Dorothy M. Ables

Paul N. Eckley


Environment, Health and Safety Committee


Lisa A. Stewart (Chair)

Amanda M. Brock

Robert S. Boswell

Hans Helmerich


Officer Departures and Appointments


As of the Effective Time, Mr. Dinges was appointed as Executive Chairman of the Board and ceased to serve as President and Chief Executive Officer of the Company.


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In addition, on the Closing Date, in accordance with the officer selection process set forth in the Merger Agreement, the Board appointed the following executive officers of the Company:


· Thomas E. Jorden, former Chief Executive Officer and President of Cimarex, as Chief Executive Officer and President 


· Scott C. Schroeder, continuing as Executive Vice President and Chief Financial Officer 


· Stephen P. Bell, former Executive Vice President of Business Development of Cimarex, as Executive Vice President - Business Development 


· Francis B. Barron, former Senior Vice President-General Counsel of Cimarex, as Senior Vice President and General Counsel 


· Christopher H. Clason, former Senior Vice President and Chief Human Resources Officer of Cimarex, as Senior Vice President and Chief Human Resources Officer 


· Phil L. Stalnaker, former Senior Vice President, Operations of Cabot, as Senior Vice President - Marcellus Business Unit 


· Steven W. Lindeman, former Senior Vice President, EHS and Engineering of Cabot, as Senior Vice President - Production and Operations 


· Michael D. DeShazer, former Vice President-Permian Business Unit of Cimarex, as Vice President of Business Units 


· Todd M. Roemer, continuing as Vice President and Chief Accounting Officer 


Additional information relating to the new executive officers (other than Mr. Jorden, whose information is set forth above) is set forth below (ages are as of October 1, 2021):


Stephen P. Bell, 66, served as Executive Vice President, Business Development of Cimarex from September 13, 2012 until the Effective Time. Mr. Bell also served as Senior Vice President of Business Development and Land of Cimarex from September 2002 until the Effective Time. Mr. Bell was previously with Key Production Company, Inc. from February 1994 until its merger with Cimarex. In September 1999, he was appointed Senior Vice President, Business Development and Land. From February 1994 to September 1999, he served as Vice President, Land.


Francis B. Barron, 59, served as Senior Vice President⸺General Counsel of Cimarex from July 2013 until the Effective Time. From February 2004 until July 2013, Mr. Barron served in various capacities at Bill Barrett Corporation, a publicly traded, Denver-based oil and gas exploration and development company, including as Executive Vice President, General Counsel, and Secretary. He also served as Chief Financial Officer from November 2006 until March 2007. Prior to February 2004, Mr. Barron was a partner at the Denver, Colorado office of the law firm of Patton Boggs LLP as well as a partner at Bearman Talesnick & Clowdus Professional Corporation. Mr. Barron's practice included corporate, securities, and business law for publicly traded oil and gas companies.


Christopher H. Clason, 55 served as Senior Vice President and Chief Human Resources Officer of Cimarex from February 2020 until the Effective Time. Mr. Clason joined Cimarex as Vice President and Chief Human Resources Officer in April 2019. From February 2016 until April 2019, Mr. Clason was Director of MBA Career Management and Employer Relations at the Marriott School of Business at Brigham Young University. Prior to his work in higher education, he was Senior Vice President and Chief Human Resources Officer at ProBuild LLC, a Devonshire Investors company. From 2001 until 2014, Mr. Clason held various global HR executive leadership roles at Honeywell International, including Vice President Human Resources and Communications at Honeywell Aerospace. His background includes extensive international experience at Citigroup and early career work at Chevron.


Michael D. DeShazer, 36, served as Vice President of the Permian Business Unit of Cimarex from September 2019 until the Effective Time. He previously served as Asset Evaluation Team Manager of Cimarex from June 2018 to August 2019, Technology Group Manager from August 2016 to June 2018, and in various engineering and reservoir manager positions since joining Cimarex in 2007. Mr. DeShazer is a licensed Professional Engineer and holds a Bachelor's in Chemical Engineering and a Master's of Energy Business from the University of Tulsa.


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Mr. Helmerich is the non-executive Chairman of the Board, and until March 5, 2014 was the CEO, of Helmerich & Payne, Inc. ("H&P"), a company with which Cimarex engages in the ordinary course of business transactions. As non-executive Chairman, Mr. Helmerich currently is not an employee of H&P. During H&P's fiscal year ended September 30, 2020, Cimarex paid H&P $36 million for drilling rigs services in arms' length transactions and as part of its ordinary course of business and in the same manner as Cimarex obtains services from other companies that provide similar services. The aggregate amount of the payments represented 2.0% of H&P's revenue during that period. Cimarex's Nominating and Corporate Governance Committee had previously reviewed these transactions and concluded: (1) the transactions are proper and not material when compared to Cimarex's total drilling and completions costs and H&P's total revenues; (2) the transactions occurred in the ordinary course of business and at arms' length; (3) the Cimarex Board did not review or approve drilling service contracts or arrangements; (4) Mr. Helmerich ceased being an employee of H&P in 2014; and (5) Mr. Helmerich's relationship with H&P did not interfere with his independent judgment as a director of Cimarex. In addition, the Company contracted for drilling services from H&P in 2019 and through March, 2020. In those years, the Company paid H&P $9.2 million and $2.6 million, respectively. The Company has not received services from H&P in 2021 and does not expect to receive any services from H&P for the remainder of 2021. The preceding amounts represent less than 2% of H&P's consolidated gross revenues for 2019 and less than 2% of H&P's consolidated gross revenues for 2020. 


Other than as described above, there are no family relationships among any of the Company's directors and executive officers and no other transactions requiring disclosure under Item 404(a) of Regulation S-K. Other than the Merger Agreement, and in the case of Messrs. Dinges and Jorden, the employment letter agreements previously disclosed and entered into on May 23, 2021, there are no arrangements between the Company's directors and any other person pursuant to which such individuals were selected as directors.


Entry into Deferred Compensation Arrangements 


As previously disclosed in the Joint Proxy Statement/Prospectus, each of Messrs. Scott C. Schroeder, Jeffrey W. Hutton, Phillip L. Stalnaker and Steven W. Lindeman was party to a change-in-control agreement with Cabot, which provided that, upon a termination by Cabot without Cause or by the executive officer due to a "Constructive Termination Without Cause" in connection with a change in control, the executive officer would have been entitled to receive: (1) a payment equal to three times the sum of (a) the executive officer's base salary and the (b) greater of (i) the executive officer's target bonus for the year of the change in control or the year of termination (whichever is greater) and (ii) the executive officer's actual bonus paid with respect to any of the three fiscal years immediately preceding the change in control or, if termination of employment occurs prior to the change in control, termination of employment; (2) immediate vesting of the executive officer's outstanding equity awards (provided that performance-based awards remain subject to the terms of the applicable award agreements for purposes of calculating the amount and timing of benefits thereunder); (3) continued medical, dental and life insurance coverage (or reimbursement for the premiums for such coverage or reimbursement for covered expenses, at Cabot's election) in each case for three years following the date of termination; (4) reimbursement of expenses for outplacement assistance; and (5) the executive officer's target bonus for the year of termination, prorated for the actual days elapsed during the fiscal year prior to such termination.


On September 30, 2021, in connection with and in furtherance of integration planning related to the Merger, each of Messrs. Schroeder, Hutton, Stalnaker and Lindeman entered into a letter agreement with Cabot (collectively, the "Letter Agreements") whereby, in exchange for the cancellation of his rights under his change-in-control agreement (other than provisions that relate to Internal Revenue Code Sections 280G and 4999, if applicable, and dispute resolution, which continue to apply with respect to the new arrangements described herein) and the non-competition and non-solicitation covenants contained therein, effective as of the Effective Time, each of Messrs. Schroeder, Hutton and Lindeman received a contribution by Cabot to his deferred compensation account under Cabot's deferred compensation plan and Mr. Stalnaker entered into a deferred compensation agreement with Cabot (the "Deferred Compensation Agreement"). The amount of the deferred compensation contributions to Messrs. Schroeder's, Hutton's and Lindeman's deferred compensation accounts are $5,243,700, $3,131,700 and $3,131,700, respectively, and the amount subject to Mr. Stalnaker's Deferred Compensation Agreement is $3,131,700. All of such contributions and amounts are fully vested.


The foregoing description of the Letter Agreements and Deferred Compensation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter Agreements, a form of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and the terms of which are incorporated into this Item 5.02 by reference, and the Deferred Compensation Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and the terms of which are incorporated into this Item 5.02 by reference. 


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Entry into Indemnification Agreements


The officers and directors of the Company are entering into customary indemnification agreements with the Company in connection with their appointments as officers and directors of the Company. The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Form of Indemnification Agreement, which is filed as Exhibit 10.4 to this Current Report on Form 8-K and the terms of which are incorporated into this Item 5.02 by reference.