GULFPORT ENERGY CORP appointed Timothy Cutt as new CEO

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


Departure of Directors


In accordance with the Plan, Alvin Bledsoe, David M. Wood, Deborah G. Adams, Valerie Jochen, Samatha Holroyd, C. Doug Johnson, Ben T. Morris and John W. Somerhalder II resigned from the Predecessor's board of directors on the Effective Date. There were no known disagreements between such directors and the Predecessor which led to their respective resignations.


Appointment of Directors


Gulfport's board of directors (the "Board") will consist of no less than five and no more than eleven members, the exact number to be set from time to time by the Board, selected in accordance with the Plan. As of the Effective Date, in accordance with the Plan, the following individuals were appointed to the Board: Timothy Cutt, David Wolf, Guillermo Martinez, Jason Martinez and David Reganato (the "Gulfport Directors" and each, a "Gulfport Director"). The Board consists of a single class of directors with the initial term of office to expire at the 2022 annual meeting of shareholders or upon such office being vacated in accordance with the Amended and Restated Bylaws of Gulfport (the "Bylaws"). David Wolf will serve as the lead independent director.


The current expected committees of the Board and directors appointed to each committee are as follows:


- Audit Committee: David Wolf (Chair), David Reganato, Guillermo Martinez, and Jason Martinez 


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- Compensation Committee: Jason Martinez (Chair), David Reganato, David Wolf, and Guillermo Martinez 


- Nominating, Environmental, Social and Governance Committee: Guillermo Martinez (Chair), David Reganato, David Wolf, and Jason Martinez 


In connection with their appointment, each Gulfport Director is expected to enter into an indemnification agreement with Gulfport providing for indemnification and advancement of litigation and other expenses to the fullest extent permitted by law for claims relating to their service to Gulfport or its subsidiaries.


There is no other arrangement or understanding between the Gulfport Directors and any other persons pursuant to which they were appointed as a member of the Board. None of the Gulfport Directors have any family relationship with any director or executive officer of Gulfport. There is no relationship between Timothy Cutt, David Wolf, Guillermo Martinez, Jason Martinez and David Reganato that would require disclosure pursuant to Item 404(a) of Regulation S-K.


Chief Executive Officer and Chief Financial Officer Separations


On May 17, 2021, the Board reached agreements with David M. Wood and Quentin R. Hicks that Messrs. Wood and Hicks would no longer serve as Chief Executive Officer and a member of the Board, in the case of Mr. Wood, and Chief Financial Officer, in the case of Mr. Hicks. The terminations of Messrs. Wood and Hicks from Gulfport were without "cause" during a "change of control" period under the employment agreement, effective as of August 1, 2019, between Gulfport and Mr. Wood (the "Wood Employment Agreement") and the employment agreement, effective as of August 26, 2019, between Gulfport and Mr. Hicks (the "Hicks Employment Agreement"). Subject to the execution and non-revocation of the release substantially in the form attached to the Wood Employment Agreement and Hicks Employment Agreement by Messers. Wood and Hicks, Messrs. Wood and Hicks will receive the severance payments set forth in Section 6.1.2(c) of the Wood Employment Agreement and Hicks Employment Agreement. The foregoing description of the terms and conditions of the severance payments under the Wood Employment Agreement and Hicks Employment Agreement does not purport to be complete and is qualified in its entirety by the full text of the Wood Employment Agreement, a copy of which is attached as Exhibit 10.9 to Gulfport's 10-Q filed on August 2, 2019 and is incorporated herein by reference, and the Hicks Employment Agreement, a copy of which is attached as Exhibit 10.1 to Gulfport's 8-K filed on August 12, 2019 and is incorporated herein by reference.


Appointment of Interim Chief Executive Officer


On May 17, 2021, the Board appointed Timothy Cutt as Interim Chief Executive Officer and Chair of the Board and entered into a letter agreement (the "Interim CEO Agreement"), each effective as of May 17, 2021. There are no transactions between Gulfport and Mr. Cutt that would require disclosure under Item 404(a) of Regulation S-K. There are no arrangements or understandings between Mr. Cutt and any other persons pursuant to which he was appointed as a director of Gulfport.


Under the Interim CEO Agreement, Mr. Cutt is generally expected to serve as Interim Chief Executive Officer until December 31, 2021 (the "Term"). During the Term, Mr. Cutt will receive an annualized base salary of $750,000 and is eligible for an annual target bonus of $750,000 (prorated for Mr. Cutt's period of service as Interim Chief Executive Officer). Following the Term, Mr. Cutt will be paid an annual cash retainer of $150,000. In the event of a "change of control" (as defined in the Incentive Plan (defined below)) on or prior to May 17, 2022, Mr. Cutt will be entitled to receive payments equal to (i) $750,000 less the base salary actually paid to Mr. Cutt prior to the change of control and (ii) $750,000 less the prorated target amount Mr. Cutt was eligible to earn during the Term, in each case, subject to Mr. Cutt's continued employment through the change of control and his execution and non-revocation of a release of claims in favor of Gulfport. In addition, Mr. Cutt will receive a signing bonus of $75,000 and an equity award covering a number of shares with a value equal to $3,000,000 based on the volume-weighted average price of Gulfport's common stock during the 30 days following emergence, and consisting of 50% of time-based restricted stock units with a four-year bi-annual vesting schedule and 50% of performance-based units with performance thresholds to be determined by the compensation committee of the Board, each subject to accelerated vesting in the event of a change of control. Mr. Cutt will be subject to covenants with respect to non-solicitation of employees and customers during the Term and for 12 months following the Term, and a perpetual confidentiality covenant. The foregoing description of the Interim CEO Agreement is qualified in its entirety by reference to the full text of the Interim CEO Agreement, a copy of which is attached hereto as Exhibit 10.4 and is incorporated herein by reference.


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Appointment of Chief Financial Officer


On May 17, 2021, the Board appointed William Buese as Chief Financial Officer and entered into a employment agreement (the "Employment Agreement"), effective as of May 17, 2021. There are no transactions between Gulfport and Mr. Buese that would require disclosure under Item 404(a) of Regulation S-K.


The Employment Agreement provides for an initial term that extends through December 31, 2024; provided that the agreement will automatically renew for successive one-year terms unless Gulfport or Mr. Buese provides written notice not to renew at least 90 days before the end of the initial term or any renewal term (the initial term, together with any renewal term, the "Employment Term"). If a change of control (as defined in the Employment Agreement) occurs during the Employment Term, the Employment Term will be extended to the later of the original expiration date of the Employment Term or the date that is 24 months after the effective date of the change of control. During the Employment Term, Mr. Buese will receive an annualized base salary of $450,000 and is eligible for an annual target bonus of 90% of his base salary. In addition, Mr. Buese will receive a signing bonus of $75,000 and an equity award covering a number of shares with a value equal to $1,650,000 based on the volume-weighted average price of Gulfport's common stock during the 30 days following emergence, and consisting of 50% of time-based restricted stock units and 50% of performance-based units with performance thresholds to be determined by the compensation committee of the Board. Mr. Buese will be subject to covenants with respect to non-solicitation of employees and customers during the Employment Term and for 12 months following the Employment Term, and a perpetual confidentiality covenant


Under the Employment Agreement, if Mr. Buese's termination of employment is terminated without "cause" by Gulfport or by Mr. Buese for "good reason" during such time that is not within the 24 month period following a "change of control" (as such terms are defined in the Employment Agreement), Mr. Buese will be entitled to the following severance benefits: (i) a lump sum payment equal to one times the sum of his of annual base salary and target annual bonus; (ii) a pro-rata target annual bonus, payable in a lump sum; (iii) unless otherwise provided in the applicable award agreement, pro-rata vesting of his unvested equity awards (with performance award vesting based on performance through the termination date); (iv) a lump sum payment of any accrued but unused paid time off through the termination date; and (v) a lump sum payment equal to his monthly COBRA premium for a 12-month period. If, however, Mr. Buese's employment is terminated without cause by Gulfport or by Mr. Buese for good reason, in each case, within 24 months following a change of control, Mr. Buese will be entitled to the following severance benefits: (a) a lump sum payment equal to two times the sum of his annual base salary and target annual bonus; (b) pro-rata target annual bonus, payable in a lump sum; (c) unless otherwise provided in the applicable award agreement, immediate vesting of his unvested equity awards (with performance award vesting based on performance through the termination date); (d) a lump sum payment of any accrued but unused paid time off through the termination date; and (e) a lump sum payment equal to the his monthly COBRA premium for an 18-month period. Severance benefits payable under the Employment Agreements are generally conditioned on timely execution of a waiver and release of claims. "Good reason" is generally defined as (i) the elimination of Mr. Buese's position, a material reduction in the duties and/or reassignment of Mr. Buese to a new position of materially less authority; or (ii) a material reduction in Mr. Buese's base salary, in either case, subject to a cure period of 30 days. "Cause" is generally defined as (i) Mr. Buese's willful and continued failure to perform substantially his duties with Gulfport (other than any such failure resulting from incapacity due to physical or mental illness) or (ii) Mr. Buese's willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to Gulfport.


The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.


Incentive Plan


In accordance with the Plan, Gulfport adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan (the "Incentive Plan") as of the Effective Date and is authorizing and reserving 2,828,123 shares of Common Stock for issuance to the Gulfport's employees and non-employee directors pursuant to equity incentive awards to be granted under the Incentive Plan, which may be in the form of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalents and performance awards or any combination of the foregoing. The foregoing description of the Incentive Plan is qualified in its entirety by reference to the full text of the Incentive Plan, a copy of which is attached hereto as Exhibit 10.6 and is incorporated herein by reference.


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