Samson Seeks Nod On Executive Bonuses Amid Departures
Samson Resources Corp. sought permission Friday from a Delaware bankruptcy judge to award bonuses to the oil driller’s three most senior officers following the recent departure of its former CEO, saying the incentives are crucial to keep them motivated as the company’s ability to restructure remains uncertain.
The potential bonuses would be paid out to the company’s soon-to-be Chief Executive and General Counsel Andrew Kidd, Chief Operating Officer Sean Woolverton and Chief Financial Officer Philip Cook and are contingent upon Samson hitting quarterly business incentives. The aggregate amount of the bonuses would not exceed $1,147,550 for the first quarter of 2016, according to court documents.
The latest filing highlights some of the troubles Samson has faced in the last several weeks as it navigated Chapter 11. Samson’s current interim CEO and COO Richard Fraley announced last month that he would be resigning from the company effective February 15. The latest shakeup was announced months after Samson’s former chief Randy Limbacher announced his departure from the company.
Samson’s problems have been compounded by low oil prices. The company has said that the restructuring support agreement it came to Chapter 11 with has been in danger of collapsing because of sluggish commodity prices. Samson said Thursday that it was not clear when the company will exit bankruptcy, making the bonuses crucial at this stage in the Chapter 11 process.
“The Performance Award Program is critical to keeping the insiders motivated as they navigate the debtors through these Chapter 11 cases,” Samson said in court papers. “As with the previously approved insider awards, the participants are eligible to earn market-based bonuses if — and only if — the debtors meet objective, value-maximizing performance-based targets.”
Under the proposal, Kidd could earn as much as $487,000, Woolverton $306,750 and Cook $353,800 in the first quarter of 2016. Samson envisions paying aggregate quarterly bonuses of as much as $1.5 million for the remaining three quarters of 2016, court documents say.
Samson said the senior officers would need to meet “difficult-to-attain goals” in order to receive the bonuses.
“While the Debtors began these cases hopeful that they would emerge from bankruptcy in early 2016, they have had to adapt in many ways to the uncertain nature of these cases, including with regard to incentive compensation,” Samson said.
When Samson filed for bankruptcy, the company listed debts that included a $942 million first-lien revolving credit facility, $1 billion in second-lien term notes and more than $2 billion in senior unsecured notes, with much of the liabilities coming from a 2011 leveraged buyout from the founding Schusterman family led by Kohlberg Kravis Roberts & Co. LP affiliates and investors Crestview Partners, Itochu Corp. and Natural Gas Partners.
The reorganization was supposed to allow Samson, which suspended its exploration and drilling in February, to shed more than $3 billion in debt and emerge with $250 million in cash on hand that would allow it to resume the bulk of its business, according to a first-day declaration from Cook.
An attorney representing Samson could not immediately be reached Friday for comment.
Samson is represented by James Sprayregen, Paul Basta, Edward Sassower, Ross Kwasteniet, Brad Weiland, Yosef Riemer and Joshua Sussberg of Kirkland & Ellis LLP and Morton Branzburg of Klehr Harrison Harvey Branzburg LLP.
The case is In re: Samson Resources Corp., case number 1:15-bk-11934, in the U.S. Bankruptcy Court for the District of Delaware.
REPRINTED WITH PERMISSION FROM THE JANUARY 29, 2016 EDITION OF LAW360 © 2016 PORTFOLIO MEDIA INC. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED. WWW.LAW360.COM
