def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule
14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
ULTRA PETROLEUM CORP.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange
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TABLE OF CONTENTS
ULTRA
PETROLEUM CORP.
363 N. Sam Houston Pkwy
E., Suite 1200
Houston, Texas 77060
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 25, 2011
To the Shareholders of Ultra Petroleum Corp.:
You are cordially invited to attend the Annual Meeting of
Shareholders of Ultra Petroleum Corp.
(the Company) which will be held at the
Sheraton Suites Calgary Eau Claire, 255 Barclay Parade SW,
Calgary, Alberta T2P 5C2 on Wednesday, May 25, 2011 at
10:00 a.m. Mountain Daylight Time (MDT), for the
following purposes:
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To elect the Board of Directors to serve until their successors
are duly elected and qualified;
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To appoint Ernst & Young LLP as the independent
auditor of the Company for the fiscal year ending
December 31, 2011;
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To receive the financial statements of the Company for the
fiscal year ended December 31, 2010 together with the
auditors report thereon;
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To hold an advisory vote on executive compensation as set forth
in these materials;
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To hold an advisory vote on the frequency of an advisory vote on
executive compensation;
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If presented, to consider and vote upon a shareholder proposal
which is opposed by the Board of Directors of the
Company; and
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To transact such other business as may properly be brought
before the Annual Meeting or any adjournments or postponements
thereof.
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The specific details of the matters proposed to be put before
the Annual Meeting are set forth in the proxy statement
accompanying and forming part of this notice.
Only shareholders of record at the close of business on
April 11, 2011, the Record Date, are
entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof. Each common share is
entitled to one vote per share. Whether or not you plan to
attend the Annual Meeting, the Company requests that you sign
and date the enclosed proxy card and mail it in the stamped,
pre-addressed envelope provided or deposit it with the transfer
agent, Computershare Investor Services Inc., Proxy Dept., 100
University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1. In
order to be valid and acted upon at the Annual Meeting, forms of
proxy must be received at the aforesaid address by
10:00 a.m. MDT on Monday, May 23, 2011 or, if
your proxy card so indicates, on Friday, May 20, 2011. As
an alternative, you can vote your shares by telephone or over
the internet according to the instructions on the proxy card.
Sincerely,
MICHAEL D. WATFORD
Chairman, President and
Chief Executive Officer
April 28, 2011
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
2011 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 25,
2011:
The Companys Proxy Statement for the 2011 Annual Meeting
of Shareholders and the Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 are available
at www.ultrapetroleum.com.
Proxy
Statement Questions
WHO IS
ENTITLED TO VOTE AT THE ANNUAL MEETING?
Shareholders who own shares of common stock as of April 11,
2011 may vote at the meeting.
WHEN WERE
THE ENCLOSED SOLICITATION MATERIALS FIRST GIVEN TO
SHAREHOLDERS?
This Proxy Statement and accompanying proxy are first being
sent, or given, to shareholders on or about April 28, 2011.
WHAT AM I
VOTING ON, AND WHAT ARE THE BOARDS
RECOMMENDATIONS?
You are voting on the following:
1. The election of five directors to serve until their
successors are duly elected and qualified;
2. The appointment of Ernst & Young LLP as the
independent auditor of the Company for the fiscal year ending
December 31, 2011;
3. An advisory vote on executive compensation as set forth
in these materials;
4. An advisory vote on the frequency of the advisory vote
on executive compensation;
5. If presented, a shareholder proposal which is opposed by
the Board of Directors of the Company; and
6. Such other business as may properly be brought before
the Annual Meeting or any adjournments or postponements thereof.
The Board recommends shareholders vote:
1. FOR the election of five directors
(Proposal 1);
2. FOR the appointment of
Ernst & Young LLP as the independent auditor of the
Company for the fiscal year ending December 31, 2011
(Proposal 2);
3. FOR the proposal regarding an
advisory vote on executive compensation (Proposal 3);
4. THREE YEARS for the proposal
regarding an advisory vote on the frequency of the advisory vote
on executive compensation (Proposal 4); and
5. AGAINST the shareholder proposal
(Proposal 5).
WHAT
CONSTITUTES A QUORUM OF SHAREHOLDERS?
A quorum must be present for the Company to conduct the meeting.
A quorum is the presence at the Annual Meeting in person or by
proxy of one or more shareholders holding 5% of the total common
shares issued and outstanding on the Record Date. For purposes
of determining whether a quorum is present under Yukon law,
broker non-votes and abstentions count towards the establishment
of a quorum.
HOW DO I
VOTE?
You may vote your shares in person at the Annual Meeting or by
proxy. Since many of the Companys shareholders are unable
to attend the meeting in person, the Company sends forms of
proxies and offers electronic and telephone voting to all of its
shareholders to enable them to direct the voting of their
shares. If your shares are held by your broker in street
name, your broker will provide you with materials and
instructions for voting your shares.
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IF MY
SHARES ARE HELD IN STREET NAME BY MY BROKER,
WILL MY BROKER VOTE FOR ME?
Under New York Stock Exchange (NYSE) rules, if your
shares are held by your broker in street name and
you do not vote your shares by following the instructions
provided by your broker, your broker can vote your shares on
Proposal 2 but not with respect to the election of
directors or other non-routine matters, including the advisory
votes on executive compensation and the shareholder proposal, if
presented (Proposals 1, 3, 4, and 5).
If you do not instruct your broker how to vote your shares, and
if your broker is not permitted to vote on the proposals without
instructions from you, then your shares will be counted as
broker non-votes for those proposals. For the
election of directors (Proposal 1), the advisory votes on
executive compensation (Proposals 3 and 4), and the
shareholder proposal (Proposal 5), a broker
non-vote will have the same effect as if you abstained
from voting with respect that item.
WHAT IS A
PROXY?
A proxy is a person you appoint to vote on your behalf. When you
vote by completing and returning the enclosed proxy card, you
will be designating Michael D. Watford and Garrett B. Smith as
your proxies. Management of the Company is soliciting the
proxies so that all common shares may be voted at the Annual
Meeting. You must complete and return the enclosed form of
proxy or vote by phone or internet.
CAN I
APPOINT SOMEONE OTHER THAN THE INDIVIDUALS NAMED IN THE ENCLOSED
PROXY CARD TO VOTE MY SHARES?
Yes, you have the right to appoint another person of your
choice, who need not be a shareholder, to attend and act on your
behalf at the Annual Meeting. If you wish to appoint a person
other than those named in the enclosed proxy card, then draw a
line through the printed names appearing on the proxy card and
insert the name of your chosen proxyholder in the space
provided. This can also be accomplished via the internet.
It is important for you to ensure that any other person you
appoint as your proxyholder will attend the Annual Meeting and
is aware that his or her appointment has been made to vote your
shares. Proxyholders should, on arrival, present themselves to a
representative of the inspector of election.
WHO MAY
SIGN THE PROXY CARD?
For a shareholder who is an individual, the form of proxy may be
signed either by the individual or by his or her authorized
attorney if accompanied by the original power of attorney or a
notarially certified copy. In the case of a shareholder which is
a corporation or an association, the form of proxy must be
signed by a duly authorized officer or by an authorized
attorney. Persons signing as officers, executors, administrators
or trustees should so indicate and must provide a true copy of
the document establishing their authority. An authorized person
of a partnership should sign in the partnership name. The
Chairman of the Annual Meeting has discretionary authority to
accept or reject proxies which do not strictly conform to the
foregoing requirements.
HOW WILL
MY PROXY VOTE MY SHARES?
Your proxies will vote in accordance with your instructions if
duly completed and deposited. If you complete and return your
proxy card but do not provide instructions on how to vote, your
proxies will vote FOR the five director nominees,
the appointment of Ernst & Young LLP as the
independent auditor for the fiscal year ended December 31,
2011, the resolution regarding the advisory vote on executive
compensation, THREE YEARS for the proposal regarding
the frequency of the advisory vote on executive compensation,
and AGAINST the shareholder proposal described in
this proxy statement, if it is presented.
The accompanying form of proxy or a vote by you via phone or
the internet also confers discretionary authority on the persons
named therein to vote shares and otherwise act in the
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proxyholders discretion with respect to any amendments
or variations to matters identified in the Notice of Meeting and
with respect to any other matters that may properly come before
the Annual Meeting or any adjournment thereof.
HOW DO I
VOTE USING MY PROXY CARD?
There are three steps:
Step
1
Election
of five directors to serve until the next Annual Meeting or
until their successors are duly elected and qualified.
Check the box marked FOR opposite the name of a
director, if you wish to vote for the director as the Board
recommends. If you wish to vote against a director, check the
box marked AGAINST opposite the name of the
director. To abstain from voting for or against a director,
check the box marked ABSTAIN opposite the name of
the director. If you wish to withhold a vote from a director,
check the box marked WITHHELD opposite the name of
the director.
Appointment
of Ernst & Young as the independent auditor of the
Company for the fiscal year ended December 31,
2011.
Check the box marked FOR on the proxy card, if you
wish to vote for Proposal 2 as the Board recommends. To
withhold your vote, check the box marked WITHHOLD
opposite the proposal.
Advisory
vote on executive compensation.
Check the box marked FOR opposite the proposal, if
you wish to vote in favor of it as the Board recommends. To vote
against Proposal 3, check the box marked
AGAINST, and to abstain from voting on
Proposal 3, check the box marked ABSTAIN in the
appropriate place on the proxy card.
Advisory
vote on the frequency of the advisory vote on executive
compensation.
To vote for Proposal 4, you must check one of the three
boxes indicating your desired frequency of the advisory vote on
executive compensation on the proxy card.
Check the box marked THREE YEARS if you wish to vote
for holding the advisory vote on executive compensation every
three years, as the Board recommends. Check the box marked
either TWO YEARS or ONE YEAR if you wish
to vote for holding the advisory vote on executive compensation
every two years or every year. To abstain from voting on this
item, check the box marked ABSTAIN in the
appropriate place on the proxy card.
Shareholder
proposal on hydraulic fracturing.
For the shareholder proposal to be considered and voted upon at
the meeting, a representative of the shareholder submitting the
shareholder proposal must appear at the meeting and present
proper credentials to be admitted to the meeting. If the
shareholder representative is not present at the meeting or is
not admitted to the meeting, all votes relating to the proposal
will be discarded.
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Check the box marked AGAINST opposite the proposal
on the proxy card, if you wish to vote against it as the Board
recommends. To vote in favor of the proposal, check the box
marked FOR in the appropriate place on the proxy
card.
Step
2
Sign and date your proxy card.
IF YOU DO NOT SIGN AND DATE YOUR PROXY CARD, YOUR VOTES CANNOT
BE COUNTED. EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN THE
MANNER DIRECTED. EACH PROXY GIVEN WITHOUT INSTRUCTIONS WILL
BE VOTED FOR
PROPOSALS 1-3,
THREE YEARS FOR PROPOSAL 4, AND
AGAINST PROPOSAL 5.
Step
3
Mail your proxy card in the pre-addressed, postage-paid envelope.
WHERE DO
I SEND MY PROXY CARD?
Please return your properly completed proxy card to the
Companys transfer agent in the postage-paid envelope
provided or mail it to Computershare Investor Services Inc.,
Proxy Dept., 100 University Avenue, 9th Floor, Toronto,
Ontario, M5J 2Y1. If you vote by telephone or the internet as
described below, please do not send a proxy card to the
Companys transfer agent.
WHAT IS
THE DEADLINE FOR SUBMITTING MY PROXY CARD?
To be effective, your proxy card must be received by
Computershare Investor Services Inc. at the above address before
10:00 a.m., MDT, on Monday, May 23, 2011 or, if your
proxy card so indicates, on Friday, May 20, 2011.
CAN I
CHANGE MY MIND ONCE I HAVE SUBMITTED MY PROXY CARD TO THE
COMPANY?
Yes, if you complete another proxy card prior to the submission
deadline, the later-dated proxy card will replace the one
submitted earlier. If you are a registered shareholder,
you can revoke your proxy by stating clearly, in writing, that
you want to revoke your proxy. This statement should be
delivered:
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To the Corporate Secretary of the Company by mail at
363 N. Sam Houston Pkwy E., Suite 1200, Houston, Texas
77060, or by fax at
(281) 876-2831
at any time up to and including the last business day preceding
the day of the Annual Meeting or any adjournment thereof,
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To the Chairman of the Annual Meeting prior to the commencement
of the meeting on the day of the meeting or any adjournment
thereof,
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In any other manner permitted by law.
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If you are a non-registered shareholder, you should
contact your nominee for instructions to revoke your proxy.
HOW DO I
VOTE BY TELEPHONE?
Record holders may submit proxies by following the To Vote
Using the Telephone instructions on their proxy cards. To
vote your shares, you must use the control number printed on
your proxy/voting instruction card. Telephone voting is
accessible 24 hours a day, seven days a week until
10:00 a.m. MDT on Monday, May 23, 2011. If you
vote by telephone, please do not return your proxy/voting
instruction card to the Companys transfer agent.
Shareholders who hold shares beneficially in street
name may vote by telephone by calling the number specified
on the voting instruction card provided by their brokers,
trustee or nominees. Please check the voting instruction card
for telephone voting availability.
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HOW DO I
VOTE ON THE INTERNET?
Record holders with internet access may submit proxies by
following the To Vote Using the Internet
instructions on their proxy cards.
Visit the website at
http://www.investorvote.com
and follow the on-screen instructions. To vote your shares, use
the control number printed on your proxy/voting instruction
card. Website voting is available 24 hours a day, seven
days a week, and will be accessible until
10:00 a.m. MDT on Monday, May 23, 2011. If you
vote through the internet, please do not return your
proxy/voting instruction card to the Companys transfer
agent.
Shareholders who hold shares beneficially in street
name may vote by accessing the website specified on the
voting instruction cards provided by their brokers, trustees or
nominees. Please check the voting instruction card for internet
voting availability.
CAN I
VOTE BY PROXY EVEN IF I PLAN TO ATTEND THE ANNUAL
MEETING?
Yes. If you vote by proxy, you do not need to fill out a ballot
at the Annual Meeting unless you want to change your vote.
WHO IS
SOLICITING MY PROXY, HOW IS IT BEING SOLICITED, AND WHO PAYS THE
COSTS?
Ultra Petroleum Corp., on behalf of the Board of Directors,
through its officers and employees, is soliciting proxies
primarily by mail. Solicitations may be supplemented by
telephone or other personal contact without special compensation
by regular officers and employees of the Company. No
solicitation will be made by specifically engaged employees or
soliciting agents.
VOTING
RESULTS
The report of the inspector of elections will be included in a
Current Report on
Form 8-K
and published on the Companys website
(www.ultrapetroleum.com) within four business days following the
Annual Meeting. Copies of the report of the inspector of
elections and the Current Report on
Form 8-K
with respect thereto may be accessed through
www.ultrapetroleum.com or obtained by writing to the Manager of
Investor Relations, Ultra Petroleum Corp., 363 N. Sam
Houston Pkwy E., Suite 1200, Houston, Texas 77060.
BENEFICIAL
OWNERSHIP OF SECURITIES
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of April 11, 2011,
certain information with respect to ownership of the
Companys common shares as to (a) all persons known to
the Company to be the beneficial owners of more than five
percent of the Companys outstanding common shares,
(b) each director (including the nominees), (c) each
of the executive officers named in the Summary Compensation
Table, and (d) all executive officers and directors of the
Company as a group. Unless otherwise indicated, all common
shares are owned directly and each owner has sole voting and
investment power with respect to such shares listed next to
their names in the following table.
The information as to shares beneficially owned has been
obtained from filings made by the named beneficial owners with
the Securities and Exchange Commission and Canadian regulatory
authorities as of
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April 11, 2011, or, in the case of executive officers and
directors of the Company information that has been furnished by
such individuals.
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Number of
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Percent of
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Name of Beneficial Owner
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Common Shares
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Class(a)
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Directors and Executive Officers:
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Michael D. Watford(b)
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3,900,673
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2.6
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%
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W. Charles Helton(c)
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770,518
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0.5
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%
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Robert E. Rigney(d)
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1,132,153
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0.7
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%
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Stephen J. McDaniel
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10,763
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*
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Roger A. Brown
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10,714
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William R. Picquet(e)
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238,433
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*
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Marshall D. Smith(f)
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263,512
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*
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Stuart E. Nance(g)
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29,038
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Common shares all directors and executive officers own as a
group (8 persons)(h)
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6,355,804
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4.16
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Wellington Management Company, LLP(i) 280 Congress Street,
Boston MA 02210
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15,992,892
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10.47
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%
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Morgan Stanley(j) 1585 Broadway, New York, NY 10036
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9,852,849
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6.45
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%
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UBS AG (f/b/o UBS Global Asset Management AG division of UBS
AG)(k) Bahnhofstrasse 45, PO Box CH-8021, Zurich,
Switzerland
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7,679,678
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5.02
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Less than 1% |
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As of April 11, 2011 there were 152,708,891 common shares
outstanding. |
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Includes 189,260 common shares issuable upon exercise of vested
options; 400,000 common shares issuable upon exercise of vested
options owned by Watford Interests Ltd.; and
2,524,087 shares owned by Watford Interests, Ltd. directly.
Watford Interests Ltd. is a family partnership in which
Mr. Watford has a beneficial interest. |
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Includes 83,220 shares owned by the Helton Family
Foundation in which Mr. Helton has shared voting power. |
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Includes 300,000 shares owned by Mr. Rigneys
family limited partnership. |
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Includes 224,424 common shares issuable upon exercise of vested
options. |
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Includes 248,032 common shares issuable upon exercise of vested
options owned by VMS Interests, Ltd. VMS Interests, Ltd. is a
family partnership in which Mr. Smith has a beneficial
interest. |
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Includes 9,409 common shares issuable upon exercise of vested
options. |
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Includes 1,071,125 common shares issuable upon exercise of
vested options. |
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Information is based upon a
Schedule 13G-A
filed with the Securities and Exchange Commission on
February 14, 2011 by Wellington Management Company, LLP.
Wellington Management Company, LLP represents that it has shared
voting power over 11,477,071 shares and shared dispositive
power over 15,992,892 shares of the Companys common
stock. |
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Information is based on a
Schedule 13G-A
filed with the Securities and Exchange Commission on
February 9, 2011 by Morgan Stanley. Morgan Stanley
represents that it has the sole voting power over
9,627,983 shares and sole dispositive power over
9,852,849 shares of the Companys common stock. |
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(k) |
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Information is based upon a
Schedule 13G-A
filed with the Securities and Exchange Commission on
February 4, 2011 by UBS AG (for the benefit and on behalf
of UBS Global Asset Management AG). UBS AG represents that it
has sole voting power over 5,665,126 shares and shared
dispositive power over 7,679,678 shares of the
Companys common stock. |
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SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys directors and executive
officers, and persons who own more than ten percent of a
registered class of the Companys equity securities, to
file with the Securities and Exchange Commission and any
exchange or other system on which such securities are traded or
quoted, initial reports of ownership and reports of changes in
ownership of common shares and other equity securities of the
Company.
To the Companys knowledge, based solely on a review of the
copies of such Section 16(a) reports furnished to the
Company and written representations that no other reports were
required, the Company believes that all reporting obligations of
the Companys officers, directors and greater than ten
percent shareholders under Section 16(a) were satisfied
during the year ended December 31, 2010.
EXECUTIVE
COMPENSATION
Compensation Discussion and Analysis
This section discusses the Companys compensation
objectives, outlines the Companys decisions regarding 2010
compensation for its named executive officers and outlines the
rationales behind those decisions.
Objectives
of the Companys compensation program
The Companys business strategy is to enhance shareholder
value through sustained growth in its reserve base, production
levels and resulting cash flow from operations. The
Companys compensation program is designed to attract,
retain, and motivate employees in order to effectively execute
its business strategy.
What the
Companys compensation program is designed to
reward
The Companys compensation program is designed to reward
performance that contributes to the achievement of its business
strategy on both a short-term and long-term basis. The Company
believes compensation should:
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relate to the value created for shareholders by being directly
tied to the financial performance and condition of the Company
and the particular executive officers contribution thereto;
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reward individuals who help the Company achieve its short-term
and long-term objectives and thereby contribute significantly to
the Companys success;
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help to attract and retain the most qualified individuals in the
oil and gas industry by being competitive with compensation paid
to persons having similar responsibilities and duties in other
companies in the same and closely related industries; and
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reflect the qualifications, skills, experience and
responsibilities of the particular executive officer.
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Elements
of the Companys compensation program and why the Company
pays each element
The Companys compensation program is comprised of four
elements: base salary, cash bonus, long-term equity-based
compensation and benefits.
The Company pays base salary:
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in order to recognize each executive officers unique value
and historical contributions to the Companys success in
light of salary norms in the industry and the general
marketplace;
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to match competitors for executive talent;
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to provide executives with sufficient, regularly-paid
income; and
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to reflect position and level of responsibility.
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The Company includes an annual bonus as part of its compensation
program because the Company believes this element of
compensation helps to motivate management to achieve key
shorter-term corporate objectives and aligns executives
interests with shareholder interests.
Long-term equity-based incentive compensation is an element of
the Companys compensation policy because the Company
believes it:
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aligns executives interests with the interests of the
Companys shareholders;
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rewards long-term performance;
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is required in order for the Company to be competitive from a
total remuneration standpoint;
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encourages executive retention; and
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gives executives the opportunity to share in the long-term
performance of the Company.
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The Company offers benefits such as matching 401(k)
contributions and payment of insurance premiums in order to
provide a competitive remuneration package.
How the
Company determines each element of compensation
The Compensation Committee of the Companys Board of
Directors oversees the Companys compensation programs. The
Compensation Committees primary purpose is to assist the
Board of Directors in the discharge of its fiduciary
responsibilities relating to the fair and competitive
compensation of the Companys executive officers.
Consistent with NYSE listing requirements, the Compensation
Committee is composed entirely of independent members of the
Board.
To assist the Company in evaluating its compensation for 2010,
the Compensation Committee retained Stone Partners to advise it
as to the market and appropriate benchmarks for companies of the
Companys size and industry. The Committee considered the
advice of the consultant as only one factor among the other
items discussed in this Compensation Discussion and Analysis.
Stone Partners prepared an analysis for the Company of the
compensation paid by a peer group composed of the following
companies: Linn Energy LLC, Concho Resources, Continental
Resources, SM Energy, Forest Oil, Quicksilver Resources, Cabot
Oil & Gas, Denbury Resources, Range Resources,
Whiting Petroleum, Cimarex Energy, Petrohawk Energy, Plains
Exploration & Production, Newfield Exploration,
Pioneer Natural Resources, Southwestern Energy, Noble Energy,
EOG Resources, and Chesapeake Energy. These companies were
chosen because they generally reflect companies with which Ultra
competes for executive talent. Stone Partners is independent
and, other than its engagement to review the Companys
compensation practices, has no other business relationship with
the Company.
Generally, as compared to its competitors in the industry, the
Company targets the 50th percentile for base salary and,
based on performance metrics being satisfied, a higher
75th percentile for total compensation. Although the
Company reviewed the Stone Partners analysis as a frame of
reference, ultimately its compensation decisions are
qualitative, not quantitative, and take into consideration in
material part factors such as: the age of the data in the
analysis; the size, geographic focus, nature of operations, and
business complexity of applicable peer group companies; the
particular officers contribution to the financial
performance and condition of the Company; and such
officers qualifications, skills, experience and
responsibilities. Outside factors are also considered, such as
industry shortages of qualified employees for comparable
positions, recent experience in the marketplace, as well as the
time elapsed between the surveys used in the analysis and the
time the Companys compensation decisions are being made.
Therefore, the final base salary of a particular officer may be
greater or less than the 50th percentile and targeted total
compensation may be greater or less than the
75th percentile.
Role of CEO. Through an iterative process,
Mr. Watford along with other members of executive
management develop preliminary recommendations for compensation
actions, including recommendations for performance targets to be
used to determine compensation for the named executive officers,
including Mr. Watford. The Compensation Committee reviews
and considers these preliminary recommendations, accepts
9
or modifies them based on their respective independent business
judgments, and makes final recommendations for Board approval.
Base salary. With respect to base salary, the
Company targets, by position, the 50th percentile of its
peer group. With respect to Mr. Watfords base salary,
historically this has been based on an employment agreement
between the Company and Mr. Watford which was approved by
the Compensation Committee and the Board of Directors. Under the
agreement, Mr. Watfords base salary for 2010 was the
same as his base salary in 2009: $725,000.
Mr. Watfords base salary is reviewed each year by the
Compensation Committee.
Bonus Compensation. The Companys bonus
compensation is divided into two parts: cash bonus under an
Annual Incentive Plan (AIP) and long-term equity
incentives under the Long Term Incentive Plan (LTIP)
and Best in Class programs described below.
AIP. In 2005, the Company adopted the AIP
whereby executive officers, senior management and other
non-management personnel have the potential to receive a
meaningful cash bonus based on annual performance metrics
pre-established by the Compensation Committee as well as
discretionary factors. Historically, at the first
regularly-scheduled board meeting each year, the Compensation
Committee approves the amount to be paid with respect to the
prior years AIP, all of which will be paid out by the
Company after the meeting, and establishes the threshold, target
and maximum performance measures such as net income, EBITDA, and
production for the ensuing year. Threshold levels are set below
those expected to be achieved, target levels are set at levels
that are reasonably possible to be achieved, and maximum levels
are set at levels that are considered difficult to be achieved.
Because unanticipated events, some of which are beyond the
control of the Companys employees, may affect the
Companys attainment of the goals established by the
Committee, the final determination of actual awards under the
AIP is discretionary so that at the end of the performance
period, the Compensation Committee may adjust the targets,
taking into account factors such as commodity prices and
significant corporate transactions, to determine the actual
amount of bonus compensation, if any. For instance, a large
acquisition or divestiture may substantially change the
Companys budget and forecast, thereby affecting the
performance metrics. Also, the Compensation Committee encourages
the Companys executives to pursue long-term goals, even if
these long-term goals may result in a reduction in the
Companys near-term performance. There is no maximum
incentive award amount that may be recommended for any
individual; the total of all individual incentive awards,
however, may not exceed the funded and approved incentive pool.
The Compensation Committee may adjust the initial incentive pool
by 20% to reflect their overall assessment of Company results at
the end of the year. Awards under the AIP are payable in cash,
provided that the Company reserves the right to pay amounts in
its common shares.
In 2010, target levels under the AIP for employee levels were as
follows: Level I (which includes Mr. Watford): from
100% to 200% of base salary; Level II (which includes
Mr. Picquet and Mr. Smith): from 60% to 120% of base
salary; and Level III (which includes Mr. Nance): from
50% to 100% of base salary. These target levels were expected to
contribute to aligning the Companys total compensation
level at the 75th percentile when performance metrics are
satisfied.
In February 2010, for the 2010 AIP, the Compensation Committee
established net income, cash flow from operations and production
metrics, weighted approximately equal, for the ensuing year and
the associated funding. The Compensation Committee awarded
bonuses to the named executive officers based on its evaluation
of the Companys performance in 2010 relative to its
performance in 2009, taking into account the Stone Partners
report and unanticipated events impacting the Companys
performance that were beyond the control of the Companys
employees. For 2010, the Compensation Committee awarded
Mr. Watford a bonus that was $250,000 less than his bonus
in 2009: $1.75 million. Similarly, the Company awarded
Mr. Picquet a bonus for 2010 of $550,000, which is $50,000
less than Mr. Picquets bonus in 2009, and
Mr. Smith a bonus for 2010 of $500,000, which is $50,000
less than Mr. Smiths bonus in 2009. Mr. Nance
was awarded a bonus for 2010 of $50,000.
Long-Term Equity-Based Incentives. In 2010, as
it has in each year since 2005, the Company adopted a Long-Term
Incentive Plan (LTIP) in order to further align the
interests of key employees with shareholders
10
and give key employees the opportunity to share in the long-term
performance of the Company by achieving specific corporate
financial and operational goals. Officers, managers, and other
key employees of the Company who are recommended by the CEO and
approved by the Compensation Committee are eligible to
participate in the LTIPs.
All LTIP awards of contingent restricted stock units
(RSUs) are performance-based and are measured
over a three-year performance period. The performance period for
the 2010 LTIP is January 2010 through December 2012, the
performance period for the 2009 LTIP is January 2009 through
December 2011, and the performance period for the 2008 LTIP
common stock award was January 2008 through December 2010. The
Compensation Committee established the following performance
measures for the 2010 LTIP, the 2009 LTIP and the 2008 LTIP
RSUs: return on equity, reserve replacement ratio, and
production growth.
Under the 2010 LTIP, the Compensation Committee established a
percentage of base salary for each participant, based on the
role performed by such participant for the Company, which
percentage is multiplied by the participants base salary
to derive a Long Term Incentive Value (LTI Value).
The LTI Value is the target value amount which was
awarded to each 2010 LTIP participant in the form of RSUs
and which corresponds to the number of shares of the
Companys common stock such participant is eligible to
receive if the target level for all performance
measures is met. The Compensation Committee also assigned to
each participant in the 2010 LTIP threshold and maximum award
levels for each performance measure in the event that actual
Company performance is below or above the applicable target
level. As with the AIP, threshold levels are set below those
expected to be achieved, target levels are set at levels that
are reasonably possible to be achieved, and maximum levels are
set at levels that are considered difficult to be achieved.
In February 2010, the Compensation Committee approved the award
of an aggregate of 214,554 RSUs to the Companys
officers and eligible employees, representing 0.14% of the
outstanding common shares as of the date of the grant. A total
of 75 employees and no non-employee directors received
RSUs, including all four of the named executive officers,
who received an aggregate of 105,355 RSUs or 40% of the
total RSUs granted in fiscal 2010. All RSUs granted
to the named executive officers in 2010 vest, if at all,
following the three-year performance period.
With respect to all LTIPs adopted, the contingent awards vest at
the time the awards are paid, and participants must be employed
by the Company when the awards are distributed in order to
receive the award. If the participant is not employed on the
distribution date, then
he/she will
not receive the award.
Best in Class Program. In 2008, the
Company established the Best in Class Program
for all permanent, full-time employees. Under the Best in
Class Program, participants are eligible to receive a
number of shares of the Companys common stock based on the
performance of the Company. As with the LTIP, the Best in
Class Program is measured over a three year performance
period.
The Best in Class Program recognizes and financially
rewards the collective efforts of all of the Companys
employees in achieving sustained industry leading performance
and the enhancement of shareholder value. Under the Best in
Class Program, on January 1, 2008 or the employment
date if subsequent to January 1, 2008, eligible employees
received a contingent award of RSUs equal to $60,000 worth
of the Companys common stock based on the average high and
low share price on January 1, 2008 or the first day of
employment if subsequent to January 1, 2008. Employees
joining the Company after January 1, 2008 participate on a
pro rata basis based on their length of employment during the
performance period.
The number of contingent units that will vest and become payable
under the 2008 Best in Class Program is based on the
Companys performance relative to the industry during a
three-year performance period which began January 1, 2008
and ended December 31, 2010, and are set at threshold
(50%), target (100%) and maximum (150%) levels. The RSUs
vest on the date the awards are distributed, and the participant
must be employed on the date the awards are distributed in order
to receive the award. For example, at a conversion price of
$71.61 per share (average high and low stock price per share on
the first day of the performance period), the $60,000 award is
equal to 838 contingent units. If the participant was employed
from the beginning of the performance period and the participant
is employed on the date the award is distributed: 419 (50%
of 838) RSUs will vest and the participant will
receive 419 shares of the Companys common stock
11
if the threshold level for all performance measures
is met; 838 (100% of 838) RSUs will vest and the
participant will receive 838 shares of the Companys
common stock in the target level for all performance
measures is met; and 1,257 (150% of 838) RSUs will
vest and the participant will receive 1,257 shares of the
Companys common stock if the maximum level for
all performance measures is met. The performance measures are:
all sources finding and development costs; and full cycle
economics. Performance results are determined after the end of
the performance period and publication of the applicable
industry reports.
Benefits. The Company provides benefits, or
perquisites, that it believes are standard in the industry to
its permanent, full-time employees. These benefits consist of a
group medical and dental insurance program for employees and
their qualified dependents, group life insurance for employees
and their spouses, accidental death and dismemberment coverage
for employees, a Company sponsored cafeteria plan and a 401(k)
employee savings and protection plan. The costs of these
benefits are paid for largely by the Company. The Company also
matches employee deferral amounts up to a total of 5% of
eligible compensation. The Companys discretionary 401(k)
contribution to each qualified participant was calculated based
on 8% of the employees eligible salary during 2010. The
Company pays all administrative costs to maintain the plan.
How
elements of the Companys compensation program are related
to each other
The Company views the various components of compensation as
related but distinct and believes the components emphasize
pay for performance with a significant portion of
total compensation reflecting a risk aspect tied to the
Companys long- and short-term financial and strategic
goals. The Companys compensation philosophy is designed to
foster entrepreneurship at all levels of the organization by
making long-term equity-based incentives a significant component
of executive compensation. The Company determines the
appropriate level for each compensation component based in part,
but not exclusively, on its view of internal equity and
consistency, and other considerations the Company deems
relevant, such as rewarding extraordinary performance. The
Companys Compensation Committee has not adopted any formal
or informal policies or guidelines for allocating compensation
between long-term and currently paid out compensation, between
cash and non-cash compensation, or among different forms of
non-cash compensation.
Accounting
and tax considerations
The Company has structured its compensation program to comply
with Internal Revenue Code Sections 162(m) and 409A. Under
Section 162(m) of the Internal Revenue Code, a limitation
was placed on tax deductions of any publicly-held corporation
for individual compensation to certain executives of such
corporation exceeding $1,000,000 in any taxable year, unless the
compensation is performance-based. If an executive is entitled
to nonqualified, deferred compensation benefits that are subject
to Section 409A, and such benefits do not comply with
Section 409A, then the benefits are taxable in the first
year they are not subject to a substantial risk of forfeiture.
In such case, the service provider is subject to regular federal
income tax, interest and an additional federal income tax of 20%
of the benefit includible in income. In addition, the Company
reserves the right to use its judgment to authorize compensation
payments that do not comply with the exemptions in
Section 162(m) when the Company believes that such payments
are appropriate and in the best interest of the shareholders,
after taking into consideration changing business conditions or
the executives individual performance
and/or
changes in specific job duties and responsibilities.
All equity awards to the Companys employees, including
executive officers, and to the Companys directors have
been granted and reflected in the Companys consolidated
financial statements, based upon the applicable accounting
guidance, at fair market value on the grant date in accordance
with Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 718,
Compensation Stock Compensation (FASB
ASC 718).
Compensation
Practices and Enterprise Risk
The Company does not believe its compensation policies and
practices create risks that are reasonably likely to have a
material adverse effect on the Company.
12
Stock
Ownership Policy
During 2010, the Company did not have a stock ownership policy
that applied to its employees or its directors.
In February 2011, the Company adopted a stock ownership policy
requiring: Mr. Watford to own stock in the Company valued
at five times (or more) his base salary; its Senior Vice
Presidents to own Company stock valued at three times (or more)
their base salary; its Vice Presidents to own Company stock
valued at two times (or more) their base salary; and each of its
directors to own Company stock valued at three times the value
of their cash retainer. Newly-appointed executives and directors
have five years to come into compliance with the policys
guidelines.
Compensation
Committee Report
The Company has reviewed and discussed with management certain
compensation discussion and analysis provisions to be included
in the Companys year-end 2010 proxy statement filed
pursuant to Section 14(a) of the Securities Exchange Act of
1934. Based on the reviews and discussions referred to above,
the Company recommends to the Board of Directors that the
compensation discussion and analysis referred to above be
included in the Companys proxy statement.
Compensation Committee:
Mr. W. Charles Helton (Chairman)
Mr. Robert E. Rigney
Mr. Stephen J. McDaniel
Summary
Compensation Table
The following table shows compensation information for the
fiscal years ended December 31, 2010, 2009, and 2008, for
the Companys principal executive officer, the
Companys principal financial officer, and two additional
executive officers. The Company refers to these persons as
named executive officers.
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Change in
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Pension
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Non-
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Value and
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Equity
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Nonqualified
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Incentive
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Deferred
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All
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Stock
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Option
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Plan
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Compensation
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Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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(1)($)
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(2)($)
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(3)($)
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($)
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(4)($)
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(5)($)
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($)
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Michael D. Watford,
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2010
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$
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725,000
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$
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1,750,000
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$
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2,900,000
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$
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$
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31,997
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$
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5,406,997
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Chairman, Chief Executive
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2009
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$
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725,000
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$
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2,000,000
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$
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3,800,000
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$
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$
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31,989
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$
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6,556,989
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Officer and President
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2008
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$
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600,000
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$
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1,750,000
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$
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960,000
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$
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900,000
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|
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$
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29,670
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$
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4,239,670
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Marshall D. Smith,
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2010
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$
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320,000
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$
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500,000
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$
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800,000
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$
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$
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35,080
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$
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1,655,080
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Chief Financial Officer
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2009
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$
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275,000
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$
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550,000
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$
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2,417,500
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$
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$
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31,989
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$
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3,274,489
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2008
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$
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230,000
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$
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350,000
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$
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290,000
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$
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230,000
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$
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29,670
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$
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1,129,670
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William R. Picquet,
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2010
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$
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345,000
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$
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550,000
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$
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862,500
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$
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$
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33,814
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$
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1,791,314
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Vice President Operations
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2009
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$
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300,000
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$
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600,000
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$
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2,515,000
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$
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$
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31,989
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$
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3,446,989
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2008
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$
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265,000
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$
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400,000
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$
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325,000
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$
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265,000
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$
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30,070
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$
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1,285,070
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Stuart E. Nance,
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2010
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$
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190,000
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$
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50,000
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$
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237,500
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$
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$
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24,847
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$
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502,347
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Vice President Marketing
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2009
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$
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190,000
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$
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180,000
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$
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450,000
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$
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$
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31,989
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$
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851,989
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2008
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$
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180,000
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$
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144,000
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$
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172,500
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$
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112,500
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$
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23,570
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$
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632,570
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(1) |
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The amounts in this column represent bonuses earned in 2010,
2009 and 2008, respectively, under the AIP. |
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(2) |
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The amounts in this column relate to total estimated payouts
earned during 2010, 2009 and 2008, respectively, under the
Companys LTIP described in Compensation Discussion
and Analysis. Actual awards under the LTIP are not payable
to the named executive officers until after the end of the
three-year performance cycle and adequate time has elapsed to
allow for performance measurement. The dollar amounts stated for
stock awards are based on the probable outcome at the grant date
and reflect the aggregate compensation cost to be recognized
over the service period determined at the grant date in
accordance with FASB ASC 718. The assumptions utilized in
the calculation of these amounts are set forth in Footnote 7 |
13
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to the Companys consolidated financial statements included
in the Annual Report on
Form 10-K
for the year-ended December 31, 2010. |
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The amounts reflected for the years ended December 31,
2010, 2009 and 2008 assume target level performance will be
achieved. If the Company ultimately attains the maximum or
threshold performance objectives, the associated aggregate
compensation, estimated at the grant date, is estimated in the
table below. If the actual performance is below the threshold
performance objectives, the resulting award may be zero. |
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2010 LTIP
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2009 LTIP
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2008 LTIP
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2008 BIC
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($)
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($)
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($)
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($)
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Michael D. Watford
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Threshold
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$
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1,450,000
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$
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1,900,000
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$
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270,000
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$
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30,000
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Maximum
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$
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4,350,000
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$
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5,700,000
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$
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1,350,000
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$
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90,000
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Marshall D. Smith
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Threshold
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$
|
400,000
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|
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$
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1,208,750
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$
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69,000
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$
|
30,000
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Maximum
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$
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1,200,000
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$
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3,626,250
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$
|
345,000
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$
|
90,000
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William R. Picquet
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Threshold
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$
|
431,250
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|
$
|
1,257,500
|
|
|
$
|
79,500
|
|
|
$
|
30,000
|
|
Maximum
|
|
$
|
1,293,750
|
|
|
$
|
3,772,500
|
|
|
$
|
397,500
|
|
|
$
|
90,000
|
|
Stuart E. Nance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
$
|
118,750
|
|
|
$
|
225,000
|
|
|
$
|
33,750
|
|
|
$
|
30,000
|
|
Maximum
|
|
$
|
356,250
|
|
|
$
|
675,000
|
|
|
$
|
168,750
|
|
|
$
|
90,000
|
|
|
|
|
(3) |
|
Represents LTIP stock options granted to the named executive
officers in 2008. No options were granted to the named executive
officers during 2010 or 2009. The dollar amounts stated for
stock awards reflect the aggregate compensation cost to be
recognized over the service period determined at the grant date
in accordance with FASB ASC 718. The fair value of each
share option award is estimated on the date of grant using a
Black Scholes pricing model based on assumptions set forth in
Note 7 to the Companys consolidated financial
statements included in the Annual Report on
Form 10-K
for the year-ended December 31, 2010. The grant date fair
value of the share option awards is $33.90 per share for options
granted on February 18, 2008. |
|
(4) |
|
The named executive officers receive no benefits from the
Company under defined pension or defined contribution plans. |
|
(5) |
|
Unless otherwise indicated, the amounts in this column consist
of matching and discretionary contributions under the
Companys 401(k) plan and the value of certain other
benefits received by the named executive officer. These other
benefits include life insurance premiums paid on behalf of the
named executive officers. |
14
Grants of
Plan-Based Awards
The following table sets forth specific information with respect
to each equity grant made under any Company plan to a named
executive officer in 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise or
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
Base
|
|
Date Fair
|
|
|
|
|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
Value of
|
|
|
|
|
Under Non-Equity Incentive Plan Awards
|
|
Under Equity Incentive Plan Awards(1)
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
Stock and
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards(1)
|
|
Option
|
Name
|
|
Grant Date
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
Awards(1)
|
|
Michael D. Watford
|
|
|
02-10-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,826
|
|
|
|
63,652
|
|
|
|
95,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,900,000
|
|
Marshall D. Smith
|
|
|
02-10-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,780
|
|
|
|
17,559
|
|
|
|
26,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
800,000
|
|
William R. Picquet
|
|
|
02-10-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,466
|
|
|
|
18,931
|
|
|
|
28,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
862,500
|
|
Stuart E. Nance
|
|
|
02-10-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,606
|
|
|
|
5,213
|
|
|
|
7,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
237,500
|
|
|
|
|
(1) |
|
All RSUs granted to the named executive officers in 2010
were awarded under the 2005 Stock Incentive Plan and have an
award price based on the fair market value of the Companys
common stock on the date of grant. The fair market value, as
described in the 2005 Stock Incentive Plan, is the average high
and low price of the Companys stock on the date of grant. |
|
|
|
Represents potential payouts under the Companys 2010 LTIP
common stock awards for the three-year period ending December
2012. Pursuant to the LTIP, the Compensation Committee
determined target payout amounts for each named executive
officer in February 2010. Awards are paid after the end of the
three-year period based on the attainment of pre-established
performance measures. The LTIP is discussed in further detail
under the heading Compensation Discussion and
Analysis. The assumptions utilized in the calculation of
these amounts are set forth in Footnote 7 to the Companys
consolidated financial statements included in the Annual Report
on
Form 10-K
for the year ended December 31, 2010. |
Employment
Agreements
The Company is party to an employment agreement with
Mr. Watford, the Companys Chairman, President and
Chief Executive Officer, which became effective February 1,
2007. The agreement had an initial term of three years, which
automatically extends for successive one-year periods unless the
Company notifies Mr. Watford at least ninety days before
the term ends of its intention not to renew the agreement. For
each one-year extension, the terms of employment are subject to
approval by the Company and Mr. Watford. The Company and
Mr. Watford agreed to terms of employment for a one-year
period starting February 2011.
Under the agreement, Mr. Watfords base salary is
reviewed by the Companys compensation committee annually
for appropriate increases based on Mr. Watfords
performance and the then current market conditions for
comparable positions. Mr. Watford also participates in the
Companys long-term incentive compensation plans. In
addition, the agreement provides that any such plans the Company
adopts in the future will be at least as favorable to
Mr. Watford as the plans in effect when the agreement was
signed. Mr. Watford prepares the applicable performance
targets, goals and rewards under such plans for review and
approval by the Companys Compensation Committee. The
Company provides Mr. Watford an automobile and reimburses
him for reasonable business expenses. Mr. Watford is also
entitled to participate in any life insurance, disability and
health insurance plans maintained by the Company during the term
of the agreement.
The Company may terminate the agreement at any time for any
reason or for just cause. Just cause is defined as a breach of
the agreement by Mr. Watford or the commission by
Mr. Watford of certain illegal acts. Additionally,
Mr. Watford may terminate the agreement within two years
after any of the following: (i) assignment to
Mr. Watford of duties inconsistent with his position at the
Company as of the date of the agreement; (ii) a change of
control of the Company; (iii) the Companys failure to
continue to provide Mr. Watford the level of compensation
to which he is entitled as of the date of the agreement;
(iv) the
15
Company requiring Mr. Watford to relocate outside of
Houston, Texas; or (v) breach of the agreement by the
Company.
If the agreement is terminated other than for just cause, if the
Company fails to extend it at the end of the initial term or any
one-year extension, or if the Company and Mr. Watford are
unable to agree on the terms of employment for any one-year
extension, the Company is required to pay Mr. Watford a
lump sum equal to his most recent annual salary plus his most
recent bonus under the AIP. In addition, all of
Mr. Watfords unvested equity awards will immediately
vest upon such termination (or expiration), and be exercisable
for one year. The Company has also agreed to indemnify
Mr. Watford for liabilities to which he may be subject as a
result of acting as an officer of the Company or any of its
subsidiaries, and to maintain director and officer liability
insurance coverage.
Equity
Incentive Plan Awards
Terms
of Stock Option Grants
The Companys Stock Incentive Plans are administered by the
Compensation Committee of the Board of Directors as the
Plan Administrator. The Plan Administrator may make
awards of stock to employees, directors, officers and
consultants of the Company as long as the aggregate number of
common shares issuable to any one person pursuant to incentives
does not exceed 5% of the number of common shares outstanding at
the time of the award. In addition, no participant may receive
during any fiscal year awards of incentives covering an
aggregate of more than 500,000 common shares. The Plan
Administrator determines the vesting requirements and any
vesting restrictions or forfeitures that occur in certain
circumstances. Incentives may not have an exercise period longer
than 10 years. The exercise price of the stock may not be
less than the fair market value of the common shares at the time
of award, where fair market value means the average
high and low trading price of the common shares on the date of
the award. In the event of a change of control or termination
upon change of control of the Company, all outstanding awards
are paid at maximum levels in cash.
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth specific information with respect
to unexercised options, unvested stock and equity incentive plan
awards for each named executive officer outstanding as of
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
Units or
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Units or
|
|
|
Other
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Other
|
|
|
Rights
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights
|
|
|
That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That
|
|
|
Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Have Not
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
Options (#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Vested (#)
|
|
|
($)
|
|
|
Michael D. Watford
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
$
|
11.68
|
|
|
|
02-06-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
25.68
|
|
|
|
02-07-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,118
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,585
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,557
|
|
|
|
|
|
|
$
|
75.18
|
|
|
|
02-18-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
838
|
(2)
|
|
$
|
60,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,038
|
(3)
|
|
$
|
900,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(4)
|
|
$
|
3,800,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,652
|
(5)
|
|
$
|
2,900,000
|
(5)
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
Units or
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Units or
|
|
|
Other
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Other
|
|
|
Rights
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights
|
|
|
That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That
|
|
|
Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Have Not
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
Options (#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Vested (#)
|
|
|
($)
|
|
|
Marshall D. Smith
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
$
|
33.57
|
|
|
|
07-18-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,895
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,350
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,787
|
|
|
|
|
|
|
$
|
75.18
|
|
|
|
02-18-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
838
|
(2)
|
|
$
|
60,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,332
|
(3)
|
|
$
|
230,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,618
|
(4)
|
|
$
|
2,417,500
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,559
|
(5)
|
|
$
|
800,000
|
(5)
|
William R. Picquet
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
40.34
|
|
|
|
08-16-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,052
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,553
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,819
|
|
|
|
|
|
|
$
|
75.18
|
|
|
|
02-18-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
838
|
(2)
|
|
$
|
60,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,839
|
(3)
|
|
$
|
265,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,184
|
(4)
|
|
$
|
2,515,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,931
|
(5)
|
|
$
|
862,500
|
(5)
|
Stuart E. Nance
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
3.91
|
|
|
|
07-01-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.83
|
|
|
|
04-25-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
$
|
16.97
|
|
|
|
04-26-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200
|
|
|
|
|
|
|
|
|
|
|
$
|
25.68
|
|
|
|
02-07-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,024
|
|
|
|
|
|
|
|
|
|
|
$
|
63.05
|
|
|
|
03-30-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,065
|
|
|
|
|
|
|
|
|
|
|
$
|
51.60
|
|
|
|
02-16-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,320
|
|
|
|
|
|
|
$
|
75.18
|
|
|
|
02-18-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
838
|
(2)
|
|
$
|
60,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,630
|
(3)
|
|
$
|
112,500
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,842
|
(4)
|
|
$
|
450,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,213
|
(5)
|
|
$
|
237,500
|
(5)
|
|
|
|
(1) |
|
LTIP options granted on February 18, 2008 vested on
February 18, 2011. |
|
(2) |
|
As described in further detail under the heading
Compensation Discussion and Analysis, under the Best
In Class program, employees received a contingent award of
RSUs equal to $60,000 worth of the Companys common
stock based on the average high and low share price on the date
of grant (the award was prorated for employees who joined the
Company after January 1, 2008). The number of units that
will vest depends on the Companys performance relative to
the industry during a three-year period ending December 31,
2010, and are set at threshold (50%), target (100%) and maximum
(150%) levels. For each vested unit, the participant will
receive one share of common stock. Currently, the Company
anticipates results will be paid in 2011 at the target level. |
|
(3) |
|
Represents potential payouts under our 2008 LTIP for the
three-year period ending December 31, 2010. Pursuant to the
2008 LTIP, the Compensation Committee determined target payout
amounts for each named executive officer in February 2008.
Awards vest and are paid after the end of the three-year period
based on the attainment of pre-established performance measures.
The LTIP is discussed in further detail under the heading
Compensation Discussion and Analysis. The awards
were paid at the maximum level during March 2011. |
|
(4) |
|
Represents potential payouts under our 2009 LTIP for the
three-year period ending December 31, 2011. Pursuant to the
2009 LTIP, the Compensation Committee determined target payout
amounts for each named executive officer in February 2009.
Awards vest and are paid after the end of the three-year period |
17
|
|
|
|
|
based on the attainment of pre-established performance measures.
The LTIP is discussed in further detail under the heading
Compensation Discussion and Analysis. Currently, we
anticipate awards will be paid at the maximum level. |
|
(5) |
|
Represents potential payouts under our 2010 LTIP for the
three-year period ending December 31, 2012. Pursuant to the
2010 LTIP, the Compensation Committee determined target payout
amounts for each named executive officer in February 2010.
Awards vest and are paid after the end of the three-year period
based on the attainment of pre-established performance measures.
The LTIP is discussed in further detail under the heading
Compensation Discussion and Analysis. Currently, we
anticipate awards will be paid at the maximum level. |
Option
Exercises and Stock Vested
The following table sets forth specific information with respect
to each exercise of stock options and each vesting of stock
during 2010 for each named executive officer on an aggregated
basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards(2)
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value Realized
|
|
Shares
|
|
Value Realized
|
|
|
Acquired
|
|
on Exercise
|
|
Acquired
|
|
on Vesting
|
Name
|
|
on Exercise
|
|
($)(1)
|
|
on Vesting
|
|
($)
|
|
Michael D. Watford
|
|
|
900,000
|
|
|
$
|
39,883,196
|
|
|
|
29,631
|
|
|
$
|
1,350,000
|
|
Marshall D. Smith
|
|
|
|
|
|
$
|
|
|
|
|
7,572
|
|
|
$
|
345,000
|
|
William R. Picquet
|
|
|
|
|
|
$
|
|
|
|
|
7,737
|
|
|
$
|
352,500
|
|
Stuart E. Nance
|
|
|
|
|
|
$
|
|
|
|
|
3,292
|
|
|
$
|
150,000
|
|
|
|
|
(1) |
|
Reflects the difference between the market value of the shares
at the exercise date and the option exercise price multiplied by
the number of shares acquired on exercise, regardless of whether
the shares were held. |
|
(2) |
|
Relates to the payout of the 2007 LTIP in shares of the
Companys stock during the first quarter of 2010. |
Potential
Payouts Upon Change of Control and Termination
The Companys named executive officers are entitled to
severance benefits in the event their employment with the
Company is involuntarily terminated other than for cause or is
voluntarily terminated for good reason within two years of a
change of control. Based on a hypothetical termination date of
December 31, 2010, the change of control payments to the
Companys named executive officers would have been as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Watford(2)
|
|
|
Mr. Smith
|
|
|
Mr. Picquet
|
|
|
Mr. Nance
|
|
|
Base Salary
|
|
$
|
1,812,500
|
|
|
$
|
640,000
|
|
|
$
|
690,000
|
|
|
$
|
380,000
|
|
Bonus
|
|
|
4,375,000
|
|
|
|
1,000,000
|
|
|
|
1,100,000
|
|
|
|
100,000
|
|
Health & Welfare Benefits
|
|
|
11,208
|
|
|
|
12,020
|
|
|
|
8,060
|
|
|
|
6,674
|
|
Additional Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$
|
6,198,708
|
|
|
$
|
1,652,020
|
|
|
$
|
1,798,060
|
|
|
$
|
486,674
|
|
Fair market value of accelerated equity compensation(1)
|
|
|
11,490,000
|
|
|
|
5,261,250
|
|
|
|
5,553,750
|
|
|
|
1,290,000
|
|
Tax gross-up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
17,688,708
|
|
|
$
|
6,913,270
|
|
|
$
|
7,351,810
|
|
|
$
|
1,776,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes the 2008, 2009 and 2010 LTIP amounts and the 2008 Best
in Class estimated at maximum levels. |
|
(2) |
|
The base salary and bonus are calculated based on
Mr. Watfords employment agreement which was in effect
on December 31, 2010. See Employment
Agreements. The health and welfare benefits are assumed to
continue for three years as provided in the employment agreement
and are calculated using 2010 amounts. |
18
For the Companys executive officers (other than the
Companys CEO whose severance benefits are set forth in his
employment agreement) the Company provides for: (i) a lump
sum severance payment equal to two times the executives
base salary plus the maximum bonus opportunity under the AIP;
(ii) continuation of life and health insurance benefits for
two years at existing group rates; (iii) immediate vesting
of all stock options awards which are exercisable for one year
following termination; and (iv) immediate vesting of all
LTIP and Best in Class awards at maximum levels.
A change of control is generally defined as:
|
|
|
|
|
The acquisition by an individual, entity or group of beneficial
ownership of 35% or more of either (x) the then outstanding
shares of common stock of the Company, or (y) the combined
voting power of the then outstanding voting securities of the
Company. An acquisition directly from the Company, by the
Company or by an employee benefit plan sponsored by the Company
would not constitute a change of control.
|
|
|
|
Where individuals who constitute the Board of Directors of the
Company, including new board members approved by the incumbent
Board, cease for any reason to constitute at least a majority of
the Board.
|
|
|
|
The consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the
acquisition of assets of another corporation, unless following
such business combination current beneficial owners own at least
50.1% of the combined voting power of the combined company.
|
|
|
|
Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
|
Good reason includes a reduction in the officers base
salary, diminution of duties or relocation greater than
50 miles without consent.
Director
Compensation
During 2010, non-employee directors were paid an annual retainer
of $75,000 and received common shares equivalent to $175,000
granted under the 2005 Stock Incentive Plan. Directors who are
also officers or employees of the Company do not receive any
compensation for duties performed as directors. The following
table shows compensation paid to each director of the Company
during the fiscal year ended December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
Non-Equity
|
|
Nonqualified
|
|
|
|
|
|
|
Paid in
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
|
|
Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
Earnings
|
|
($)
|
|
($)
|
|
W. Charles Helton
|
|
$
|
75,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,000
|
|
Robert E. Rigney
|
|
$
|
75,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,000
|
|
Roger A. Brown
|
|
$
|
75,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,000
|
|
Stephen J. McDaniel
|
|
$
|
90,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
265,000
|
|
|
|
|
(1) |
|
Represents the grant date fair value of 3,513 shares of
common stock on the grant date of June 14, 2010. |
|
(2) |
|
At December 31, 2010, none of the Companys outside
directors had stock or option awards outstanding. |
19
CORPORATE
GOVERNANCE
Statement
of Corporate Governance Practices
The Company has long believed that good corporate governance is
important to ensure that the Company is managed for the
long-term benefit of the Companys shareholders. The
Company periodically reviews its corporate governance policies
and practices and compares them to those suggested by various
authorities in corporate governance and to the practices of
other public companies. The Company also continuously reviews
the rules and regulations promulgated under the Sarbanes-Oxley
Act of 2002, all new and proposed rules of the Securities and
Exchange Commission and all new and proposed listing and
compliance standards of the NYSE.
Corporate Governance Guidelines. The
Companys Board adopted the Corporate Governance Guidelines
to assist the Board of Directors in the exercise of its
responsibilities. These Guidelines are interpreted in the
context of all applicable laws and the Companys
Certificate of Continuance, Articles of Incorporation,
By-laws and
other corporate governance documents. The Guidelines are
intended to serve as a flexible framework within which the Board
may conduct its business and not as a set of legally binding
obligations. The Guidelines are available free of charge to the
public on the Companys website at
http://www.ultrapetroleum.com.
You may also request a copy of these Guidelines at no cost by
making a written or telephone request for copies to Ultra
Petroleum Corp., Corporate Secretary, 363 N. Sam
Houston Pkwy E., Suite 1200, Houston, TX 77060,
(281) 876-0120.
Code of Business Conduct and Ethics. In
February 2003, the Companys Board adopted a Code of
Business Conduct and Ethics which applies to all of its
directors, officers and employees. In connection with the
listing of the Companys shares on the NYSE, the Code of
Business Conduct and Ethics was amended by the Board in August
2008 to comply with the requirements of the NYSE. The Board has
not granted any waivers to the Code of Business Conduct and
Ethics. The Code of Business Conduct and Ethics is available
free of charge on the Companys website at
http://www.ultrapetroleum.com.
You may also request a copy of the Code of Business Conduct and
Ethics at no cost by making a written or telephone request for
copies to Ultra Petroleum Corp., Corporate Secretary,
363 N. Sam Houston Pkwy E., Suite 1200, Houston,
TX 77060,
(281) 876-0120.
Any amendments to or waivers of the Code of Conduct and Business
Ethics will also be posted on the Companys website.
Mandate
of the Board and Role in Risk Oversight
The Companys Board of Directors has explicitly
acknowledged responsibility for the management of the business
and affairs of, and to act with a view to the best interests of,
the Company. The mandate of the Board includes, among other
matters: (a) the adoption of a strategic planning process;
(b) the assessment of management performance, considering
succession planning, and taking responsibility for appointing,
training and monitoring senior management; (c) establishing
a policy to facilitate communications with shareholders and
others involved with the Company; and (d) addressing the
integrity of the Companys internal control and management
information systems.
While the Companys full board of directors, with input
from each of its committees, oversees the Companys
management of risks, the Companys management team is
responsible for the
day-to-day
risk management process. The audit committee reviews with
management, as well as internal and external auditors, the
Companys business risk management process, including the
adequacy of its overall control environment and controls in
selected areas representing significant financial and business
risk. The audit committee receives reports from management at
least quarterly regarding managements assessment of
various risks and considers the impact of risk on the
Companys financial position and the adequacy of its
risk-related internal controls. In addition, each of the
committees of the Board of Directors as well as senior
management reports regularly to the full Board regarding risks
facing the Company and the steps taken to mitigate those risks.
The Companys Board of Directors met formally five times
during the fiscal year ended December 31, 2010. During that
fiscal year, all directors attended 100% of the total number of
meetings of the Board of Directors, except that Mr. Rigney
was not present at one meeting of the Board of Directors. Each
committee
20
member attended 100% of the total number of meetings held by all
committees on which he served. Two of the Companys
directors attended its annual meeting in 2010. The Company does
not currently have a formal policy regarding directors attending
the annual meeting.
Board
Composition and Independence from Management
The Board has determined that four of the five current
directors, Mr. Helton, Mr. Rigney, Mr. McDaniel
and Mr. Brown, and four of the five nominated directors,
Mr. Helton, Mr. Rigney, Mr. McDaniel and
Mr. Brown, are independent directors pursuant
to the corporate governance standards for companies listed on
the NYSE. It is a policy of the Board of Directors that a
majority of the members of the Board be independent of the
Companys management. For a director to be
independent, the Board affirmatively determines that
the director has no material relationship with the Company that
would interfere with the exercise of independent judgment. The
director may not be an officer or other employee of the Company
or any parent or subsidiary and may not have served in such
capacity during the past three years. In addition, a director
will not be deemed independent if he or she:
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Has accepted or has an immediate family member who has accepted
any payments from the Company or any parent or subsidiary of the
Company in excess of $120,000 during the current or any of the
past three years. Compensation for board service, payments
arising solely from investments in the Companys
securities, compensation paid to an immediate family member who
is a non-executive employee of the Company or of a parent or
subsidiary of the Company, compensation received for former
service as an interim Chairman or CEO, or benefits under a
tax-qualified retirement plan or non-discretionary compensation
are not included in the $120,000.
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Is an employee of, or has an immediate family member who is an
executive officer of, any organization to which the Company
made, or from which the Company received, payments (other than
those arising solely from investments in the Companys
securities or payments under non-discretionary charitable
contribution matching programs) that exceed 2% of the
organizations consolidated gross revenues for that year,
or $1,000,000, whichever is more, in any of the most recent
three fiscal years.
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Is an immediate family member of an individual who is or has
been employed by the Company or any parent or subsidiary of the
Company as an executive officer during any of the past three
years.
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Is an executive officer of another entity where any of the
Companys executive officers serve on the compensation
committee.
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Is or has an immediate family member who is a current partner of
the Companys outside auditor, or was a partner or employee
of the Companys outside auditor who worked on the
Companys audit at any time during any of the past three
years.
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Consistent with NYSE requirements and to promote open discussion
among the Companys non-management directors, the
Companys non-management directors meet in separate
executive (private) sessions following each regularly scheduled
meeting of the Board. The Chairman of such executive sessions,
as elected by the independent directors, is Mr. Helton, and
he presides at executive sessions of the Companys Board.
Board of
Directors Leadership Structure
Michael D. Watford is Chief Executive Officer, and Chairman of
the Board of Directors of the Company. He has served the Company
in those positions since January 1999, during which period the
Company and its shareholders have enjoyed tremendous success.
Mr. Watford is also the Companys largest individual
shareholder, controlling over 3.9 million shares of the
Companys common stock. It is Mr. Watfords
opinion, an opinion shared by the Companys full Board of
Directors, that the Companys largest individual
shareholder and chief executive who is active in the business,
as is currently the case and has been the case with
Mr. Watford for more than the past 12 years, should
hold both roles. In addition, the Board of Directors believes
the Company benefits because the Companys leadership
structure (combined Chairman/CEO position, experienced
independent directors and Board committees, and regular
executive sessions of the
21
non-management
directors) provides a strong, unified leadership for the
Companys management team and the Board. The Board of
Directors has not named a lead independent director.
Communication
with the Board of Directors
In order to provide the Companys shareholders and other
interested parties with a direct and open line of communication
to the Board of Directors, the Board of Directors has adopted
the following procedures for communications to directors.
Shareholders and other interested persons may communicate with
the Chairman of the Companys Audit Committee or with the
non-management directors of the Company as a group by written
communications addressed in care of Corporate Secretary, Ultra
Petroleum Corp., 363 N. Sam Houston Pkwy E.,
Suite 1200, Houston, Texas 77060.
All communications received in accordance with these procedures
will be reviewed initially by senior management of the Company.
Senior management will relay all such communications to the
appropriate director or directors unless it is determined that
the communication (i) does not relate to the business or
affairs of the Company or the functioning or constitution of the
Board of Directors or any of its committees; (ii) relates
to routine or insignificant matters that do not warrant the
attention of the Board of Directors; (iii) is an
advertisement or other commercial solicitation or communication;
(iv) is frivolous or offensive; or (v) is otherwise
not appropriate for delivery to directors.
The director or directors who receive any such communication
will have discretion to determine whether the subject matter of
the communication should be brought to the attention of the full
Board of Directors or one or more of its committees and whether
any response to the person sending the communication is
appropriate. Any such response will be made only in accordance
with applicable law and regulations relating to the disclosure
of information.
The Corporate Secretary will retain copies of all communications
received pursuant to these procedures for a period of at least
one year. The Board of Directors will review the effectiveness
of these procedures from time to time and, if appropriate,
recommend changes.
Board
Committees
The Companys Board of Directors has three committees: the
Audit Committee, the Compensation Committee, and the Nominating
and Corporate Governance Committee. The Board may add new
committees or remove existing committees as it deems advisable
for purposes of fulfilling its primary responsibilities. Each
committee will perform its duties as assigned by the Board of
Directors in compliance with the Companys by-laws. The
committees and their mandates are outlined below.
Audit Committee. The purpose of the Audit
Committee is to oversee (i) the integrity of the
Companys financial statements and disclosures,
(ii) the Companys compliance with legal and
regulatory requirements, (iii) the qualifications,
independence and performance of the Companys independent
auditors, (iv) the performance of the Companys
internal audit function and independent auditors, (v) the
Companys internal control systems, and (vi) the
Companys procedures for monitoring compliance with the
Companys Code of Business Conduct and Ethics.
The principal function of the Audit Committee is to assist the
Board of Directors in the areas of financial reporting and
accounting integrity. As such, it meets periodically with the
independent auditors and management, including each in executive
session. Management is solely responsible for the financial
statements and the financial reporting process, including the
system of internal controls. The Companys independent
auditors are responsible for expressing an opinion on the
conformity of these financial statements, in all material
respects, with accounting principles generally accepted in the
United States of America.
The Audit Committee has sole responsibility for retaining,
dismissing and compensating the Companys independent
auditors. The Audit Committee annually reviews and pre-approves
the audit, review, attest and permitted non-audit services to be
provided during the next audit cycle by the independent auditor.
To the extent practicable, at the same meeting the Audit
Committee also reviews and approves a budget for each of such
services. Services proposed to be provided by the independent
auditor that have not been pre-approved
22
during the annual review and the fees for such proposed services
must be pre-approved by the Audit Committee.
All requests or applications for the independent auditor to
provide services to the Company must be submitted to the Audit
Committee by the independent auditor and management and must
state whether, in the view of the submitting party, the request
or application is consistent with applicable laws, rules and
regulations relating to auditor independence. In the event that
any member of management or the independent auditor becomes
aware that any services are being, or have been, provided by the
independent auditor to the Company without the requisite
pre-approval, such individual must immediately notify the Chief
Financial Officer, who must promptly notify the Chairman of the
Audit Committee and appropriate management so that prompt action
may be taken to the extent deemed necessary or advisable.
The Audit Committee is comprised of Messrs. McDaniel,
Helton and Brown. The Board of Directors has affirmatively
determined that each of the members is financially literate and
is independent for purposes of NYSE rules applicable
to members of the audit committee, meaning that the director has
no relationship to the Company that may interfere with the
exercise of their independence from management and the Company.
Additionally, the Board of Directors has determined that
Mr. McDaniel is an audit committee financial
expert.
The Audit Committee held four meetings during 2010. All members
of the Audit Committee attended the meetings. The Audit
Committee Charter is available free of charge to the public on
the Companys website at
http://www.ultrapetroleum.com.
You may also request a copy of the Audit Committee Charter at no
cost by making a written or telephone request for copies to
Ultra Petroleum Corp., Corporate Secretary, 363 N. Sam
Houston Pkwy E., Suite 1200, Houston, TX 77060,
(281) 876-0120.
Compensation Committee. The purpose of the
Compensation Committee is to (i) assist the Board of
Directors in the discharge of its fiduciary responsibilities
relating to the compensation of the Companys Chief
Executive Officer and other executives, (ii) approve and
administer the Companys long-term incentive compensation
plans, (iii) establish targets and measure performance
against those targets, and (iv) prepare an annual report on
executive compensation. During 2010, the members of this
Committee were Messrs. Helton, McDaniel and Rigney. The
Board of Directors has determined that each of the members is
independent for purposes of New York Stock Exchange rules. The
Compensation Committee held three meetings during 2010. All
members of the Compensation Committee attended the meetings. The
Compensation Committee Charter is available free of charge to
the public on the Companys website at
http://www.ultrapetroleum.com.
You may also request a copy of the Compensation Committee
Charter at no cost by making a written or telephone request for
copies to Ultra Petroleum Corp., Corporate Secretary,
363 N. Sam Houston Pkwy E., Suite 1200, Houston,
TX 77060,
(281) 876-0120.
Nominating and Corporate Governance
Committee. The purpose of the Nominating and
Corporate Governance Committee (Nominating
Committee) is to (i) identify and recommend to the
Board individuals qualified to be nominated for election to the
Board, (ii) recommend to the Board the members and
Chairperson for each Board committee, (iii) periodically
review and assess the Companys Corporate Governance
Principles and the Companys Code of Business Conduct and
Ethics and make recommendations for changes thereto to the
Board. The Board of Directors has determined that each of the
members is independent for purposes of NYSE rules. This
Committee is comprised of Messrs. Brown, McDaniel and
Helton. The Nominating Committee met three times during 2010 and
all members of the committee attended the meetings. In
accordance with the Companys Corporate Governance
Principles and with the Nominating Committees Charter, the
Nominating Committee performs the functions listed above, which
includes an assessment of whether the Board of Directors of the
Company has the necessary diversity of skills, backgrounds, and
experiences to meet the Companys ongoing needs. The
Nominating Committee Charter is available free of charge to the
public in print or on the Companys website at
http://www.ultrapetroleum.com.
You may also request a copy of the Nominating Committee Charter
at no cost by making a written or telephone request for copies
to Ultra Petroleum Corp., Corporate Secretary,
363 N. Sam Houston Pkwy E., Suite 1200, Houston,
TX 77060,
(281) 876-0120.
23
Identifying
and Evaluating Nominees for Directors.
The Board of Directors has established certain criteria that it
and the Nominating Committee use as guidelines in considering
nominations to the Companys Board of Directors. The
criteria include: (i) personal characteristics, including
such matters as integrity, age, education, financial
independence, diversity of background, gender and ethnic
diversity, skills and experience, absence of potential conflicts
of interest with the Company or its operations, willingness to
exercise independent judgment, and the availability and
willingness to devote sufficient time to the duties of a
director of the Company; (ii) experience in corporate
management; (iii) experience as a board member of another
company; (iv) practical and mature business judgment; and
(v) in the case of an incumbent director, such
directors past performance on the Board. The criteria are
not exhaustive and the Board of Directors and the Nominating
Committee may consider other qualifications and attributes which
they believe are appropriate in evaluating the ability of an
individual to serve as a member of the Board of Directors. The
Companys goal is to assemble a Board of Directors that
brings to the Company a variety of perspectives and skills
derived from high quality business and professional experience.
In doing so, the Board of Directors and the Nominating Committee
also consider candidates with appropriate non-business
backgrounds.
The Board of Directors and the Nominating Committee believe
that, based on their knowledge of the Companys corporate
governance principles and the needs and qualifications of the
Board at any given time, the Board, with the help of the
Nominating Committee, is best equipped to select nominees that
will result in a well-qualified and well-rounded board of
directors. Accordingly, it is the policy of the Board not to
accept unsolicited nominations from shareholders. In making its
nominations, the Board and the Nominating Committee identify
nominees by first evaluating the current members of the Board
willing to continue their service. Current members with
qualifications and skills that are consistent with the criteria
for Board service are re-nominated. As to new candidates, the
Board and the Nominating Committee members discuss among
themselves and members of management their respective
recommendations. The Board and the Nominating Committee may also
review the composition and qualification of the boards of
directors of the Companys competitors, seek input from
industry experts or analysts and commission a formal director
search to help identify qualified candidates. The Board and the
Nominating Committee review the qualifications, experience and
background of the candidates. Final candidates are interviewed
by the independent directors and executive management. In making
its determinations, the Board and the Nominating Committee
evaluate each individual in the context of the Board as a whole,
with the objective of assembling a group that can best represent
shareholder interests through the exercise of sound judgment.
After review and deliberation of all feedback and data, the
Board of Directors slates the nominees. The Nominating
Committee, and the Board as a whole, believes each slated
nominee possesses some or all of the desired qualifications and
attributes.
In the section below entitled Proposal 1
Election of Directors, biographical information is
furnished with respect to each of the nominees for election at
the 2010 Annual Meeting, together with a discussion of each
nominees experience, qualifications and attributes or
skills that led the Company to conclude such nominee should
serve the Company as a director.
Compensation
Committee Interlocks and Insider Participation
There were no Compensation Committee interlocks nor insider
(employee) participation during 2010.
Certain
Transactions
In the ordinary course of the Companys business, the
Company purchases products or services from, or engages in other
transactions with, various third parties. Occasionally, these
transactions may involve entities that are affiliated with one
or more members of the Companys Board. When they occur,
these transactions are conducted in the ordinary course and on
an arms-length basis.
Review
and Approval of Related Party Transactions.
The Company reviews all relationships and transactions in which
the Company and its directors and executive officers or their
immediate family members are participants to determine whether
such persons have
24
a direct or indirect material interest. The Company has
developed and implemented processes and controls to obtain
information from its directors and executive officers with
respect to related person transactions and for then determining,
based on the facts and circumstances, whether the Company or a
related person has a direct or indirect material interest in the
transaction. As required under SEC rules, transactions that are
determined to be directly or indirectly material to the Company
or a related person are disclosed in the Companys annual
proxy statement. In addition, the Companys Nominating and
Corporate Governance Committee or the Board (if appropriate)
reviews and approves or ratifies any related person transaction
that is required to be disclosed. In the course of its review
and approval or ratification of a disclosable related person
transaction, consideration is given to:
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the nature of the related persons interest in the
transaction;
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the material terms of the transaction, including, without
limitation, the amount and type of transaction;
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the importance of the transaction to the related person;
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the importance of the transaction to the Company;
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whether the transaction would impair the judgment of a director
or executive officer to act in the best interest of the
Company; and
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any other matters deemed appropriate.
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Any director who is a related person with respect to a
transaction under review may not participate in the
deliberations or vote respecting approval or ratification of the
transaction; provided, however, that such director may be
counted in determining the presence of a quorum at the meeting
where the transaction is considered.
Related
Party Transactions.
Other than as described below, since the beginning of fiscal
year 2010, there have been no transactions in excess of $120,000
between the Company and a related person in which the related
person had a direct or indirect material interest.
Because of the remoteness of the Companys properties and
the lack of timely commercial air flights, in 2008, the
Companys wholly-owned subsidiary, Ultra Resources, Inc.
joined a limited liability company, Falcon Point Aviation, LLC,
formed by one of the Companys directors, Robert E. Rigney,
for the purpose of purchasing an aircraft. As a result of its
investment of $2.65 million, Ultra Resources owns a 50%
interest in Falcon Point. Mr. Rigney owns the remaining 50%
of Falcon Point and is the controlling member. Under the terms
of the limited liability company agreement for Falcon Point,
each member pays a usage fee and a portion of the fixed costs
associated with the ownership of the airplane based on its
respective usage. The usage fee and fixed costs assessed
includes the cost of fuel consumed, state use tax, pilot
expenses, landing fees, maintenance expenses, and any other
miscellaneous expenses incurred by the member incident to its
use of the aircraft. During 2010, the Company paid $382,040 for
these expenses.
PROPOSAL 1
ELECTION
OF DIRECTORS
Each director of the Company is elected annually and holds
office until the next annual meeting of the shareholders unless
that person ceases to be a director before then. In the
absence of instructions to the contrary, the shares represented
by a properly completed and deposited proxy will be voted for
the nominees herein listed. Each incumbent director
identified in the table below was nominated by the Nominating
and Corporate Governance Committee of the Companys Board
of Directors as a nominee for election as director of the
Company. Each of the nominees has consented to be nominated and
have expressed their intention to serve if elected. Management
does not contemplate that any of the nominees set out below will
be unable to serve as a director.
25
Directors
and Executive Officers
The following table provides information with respect to the
directors and nominees for director and present executive
officers of the Company. Please refer to the table under the
heading Beneficial Ownership of Securities
Security Ownership of Certain Beneficial Owners and
Management for a summary of the number of common shares
owned by each of the Companys directors and executive
officers. Each executive officer has been elected to serve until
his successor is duly appointed or elected by the Board of
Directors or his earlier removal or resignation from office.
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Position
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Name
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Age
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Position with the Company
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Since
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Michael D. Watford
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57
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Chairman of the Board, CEO, President and Director (Nominee)
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1999
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W. Charles Helton
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69
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Director (Nominee)
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1994
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Robert E. Rigney
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79
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Director (Nominee)
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2001
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Stephen J. McDaniel
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49
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Director (Nominee)
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2006
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Roger A. Brown
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66
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Director (Nominee)
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2007
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Marshall D. Smith
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51
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Senior Vice President and Chief Financial Officer
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2005
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William R. Picquet
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59
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Senior Vice President, Operations
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2005
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C. Brad Johnson
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39
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Vice President, Reservoir Engineering and Development
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2011
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Stuart E. Nance
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51
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Vice President, Marketing
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2002
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Mr. Michael D. Watford was appointed Chairman,
President and Chief Executive Officer of Ultra Petroleum
Corp. in January 1999. In his twelve year tenure with the
Company, he led a successful restructuring of the Company and
has subsequently grown its reserve asset base from 0.5 Tcfe
to 4.2 Tcfe while the market value of the enterprise has
increased from $50.0 million to over $8.0 billion with
consistent growth in profits. Mr. Watford has enjoyed a
full range of industry experiences while working over his
37 year career for a number of energy companies including
Shell Oil, Superior Oil, Meridian Oil (Burlington Resources),
Torch Energy and Nuevo Energy. Prior to joining Ultra Petroleum,
Mr. Watford was Chief Executive Officer of Nuevo Energy for
three and one-half years where he led the companys growth
in market value from $200 million to over $1 billion.
Previously, Mr. Watford served as a Director on the Boards
of Southern Minerals, Nuevo Energy, and Belwether Exploration.
Mr. Watford attended the University of Florida where he
earned his undergraduate degree in finance in 1975. While
working for Shell Oil, he attended night school at the
University of New Orleans where he earned his MBA in 1978.
Mr. Watford has broad industry experience and is the
largest individual shareholder of Company stock.
Mr. W. Charles Helton has been a director of the
Company since August 1994. Mr. Helton is a medical doctor
and has been the President, Chief Financial Officer and a
director of Enterprise Exploration & Production Inc.,
a private oil and gas exploration and development company, for
more than the past five years. Mr. Helton has extensive
historical knowledge about the Company. The Company values
Mr. Heltons participation on the Board because of the
business skills and insights he has acquired as a result of his
broad and diverse success in a variety of business activities
throughout his career and because of his strong leadership
skills resulting from his serving in many different operational,
management and governance roles in the health care industry.
Mr. Stephen J. McDaniel has been a director of the
Company since July 2006. For more than the past five years,
Mr. McDaniel has been the President and a director of
Midstates Petroleum, a privately held exploration and production
company, after spending seven years with Merrill Lynch in the
oil and gas investment banking group in Houston, Texas. He began
his investment banking career with Gordon Capital Corporation
and Midland Walwyn Capital, Inc., both Canadian firms.
Mr. McDaniel started his career with Conoco, Inc. in 1983
in various engineering, operations and business development
positions in domestic and international operations. Because of
his extensive oil and gas, investment banking, and engineering
experience, including
26
his financial and management expertise, the Company believes
Mr. McDaniel is a valuable member of the Board.
Mr. Robert E. Rigney has been a director of the
Company since June 2001, and was a consultant to the Company
from January 2001 to December 2003. Mr. Rigney is currently
retired. Prior to 2003, Mr. Rigney was the Chief Executive
Officer and Chairman of Pendaries Petroleum Ltd. since its
inception in 1996. The Company believes Mr. Rigney is a
valuable member of the Board because through his long career in
the oil and gas industry, including activities as a diplomat,
oil company executive and consultant in Asia for over
22 years, he provides the Board the benefit of his
leadership skills, international experience, and knowledge of
the Companys business environment.
Mr. Roger A. Brown has been a director of the
Company since October 2007. Prior to his retirement in 2007,
Mr. Brown was Vice President-Strategic Initiatives for
Smith International, Inc. from 2005 to 2007 and President of
Smith Technologies, a division of Smith International, Inc.,
from 1998 to 2005. Before starting his thirty year career in
oilfield services, Mr. Brown was a practicing attorney for
eight years. He holds a Bachelor of Science, Economics, History
and Political Science and a Juris Doctorate all from the
University of Oklahoma. Mr. Brown currently serves on the
board of directors of McDermott International, Inc., where he is
a member of its Compensation Committee and the Chairman of its
Governance Committee, and on the board of directors of Boart
Longyear, where he is a member of its Remuneration and
Nomination Committee and its Environmental, Health &
Safety Committee. The Company values Mr. Browns
directorship because of his legal background and his public
company board and oil and gas services company executive
experience.
Mr. Marshall D. Smith has been Senior Vice President
since January 2011 and Chief Financial Officer since July 2005.
Mr. Smith has over 25 years of progressive experience
in a multitude of disciplines within the energy industry
including operations, strategic planning, corporate finance and
business development. Early in his career, Mr. Smith was a
practicing Petroleum Engineer for both major and independent oil
companies and later focused his career on mergers, acquisitions
and corporate finance advisory assignments in the energy sector.
From 2001 to 2002, Mr. Smith served as the Chief Financial
Officer at Gulf Liquids, Inc. Mr. Smith was the Vice
President of Business Development at J.M. Huber Energy from 2002
to 2004. From 2004 until joining the Company in July 2005,
Mr. Smith served as the Vice President of Upstream Business
Development at Constellation Energy.
Mr. William R. Picquet has been Senior Vice
President of Operations since January 2011 and was Vice
President of Operations from August 2005 to January 2011.
Mr. Picquet has over 30 years of industry experience
in all aspects of operations and engineering in major North
American producing basins. He has worked for various exploration
and production companies serving in engineering and management
capacities. Mr. Picquet served as the President and Chief
Executive Officer of Advantage Energy Services Ltd. from 1997 to
2001 and as the Managing Director of Waterous & Co.
from 2002 to 2003. From 2003 to March 2005, Mr. Picquet
served as the Chief Executive Officer and was on the Board of
Governors of M3 Energy, LLC through 2009. Just prior to joining
the Company, Mr. Picquet was the Senior Vice President of
Operations and Engineering at Mission Resources Company, serving
in that role from March 2005 to August 2005.
C. Brad Johnson joined Ultra in 2008 and in 2011 was
promoted to Vice President of Reservoir Engineering and
Development. Prior to joining Ultra, he was a Subsurface Manager
at Anadarko Petroleum. Other leadership positions at Anadarko
included Planning Manager, North America E&P and
Development Supervisor, Deepwater Gulf of Mexico.
Mr. Johnson has over 13 years of experience that
includes operations, geology, reservoir engineering, reserves
determination, planning and management of assets in many
producing basins of the Rocky Mountain, Mid-Continent, Gulf
Coast, Gulf of Mexico and North Africa. Mr. Johnson
obtained his Bachelor of Science degree in Petroleum Engineering
from Texas A&M University in 1994 and Master of Science
degree in Petroleum Engineering from University of Texas in
2000. Mr. Johnson is a licensed professional engineer in
Texas and Colorado.
Mr. Stuart E. Nance has been employed by Ultra since
July 2002 and has been Vice President, Marketing since 2006.
Mr. Nance has over 25 years of experience in product
marketing and land management. His prior experience includes
positions with MCN Energy Group, Torch Energy Advisors, Inc.,
American Oil & Gas Corp., Meridian Oil, Inc. and Texas
Oil & Gas Corp.
27
All officers and directors of the Company, including the
nominees, are United States citizens.
The Companys Board recommends that shareholders vote
FOR the five nominees for director herein listed. In the absence
of instructions to the contrary, the shares represented by a
properly completed and deposited proxy will be voted for the
nominees herein listed at the Annual Meeting.
PROPOSAL 2
APPOINTMENT
OF INDEPENDENT AUDITORS
On February 16, 2011, the Audit Committee of the Board of
Directors voted to appoint Ernst & Young LLP to serve
as the Companys independent auditor for the fiscal year
ending December 31, 2011. Under Yukon law, the appointment
of the independent auditor is subject to shareholder approval
and, accordingly, the Audit Committees appointment is
subject to the receipt of such approval at the Annual Meeting.
Representatives of Ernst & Young LLP are expected to
attend the Annual Meeting. The representatives will have the
opportunity to make a statement if they so desire and, if they
attend, will be available to respond to appropriate questions of
the shareholders.
The Companys Board recommends that shareholders vote
FOR the appointment of Ernst & Young LLP as the
Companys independent auditor for the fiscal year ending
December 31, 2011. In the absence of instructions to the
contrary, the shares represented by a properly completed and
deposited proxy will be voted for the appointment of
Ernst & Young LLP as the auditors of the Company at
the Annual Meeting.
Principal
Accountants Fees and Services
The following table presents aggregate fees for professional
audit services rendered by Ernst & Young LLP for the
audit of the Companys annual financial statements for each
of the years ended December 31, 2010 and 2009, and fees
billed for other services rendered by Ernst & Young
LLP during those years.
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2010
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2009
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Audit Fees
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$
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1,105,000
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$
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1,067,753
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Audit-Related Fees
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Tax Fees
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All Other Fees
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Audit Fees. Fees paid for professional
services rendered by Ernst & Young LLP related to the
audit of the Companys annual financial statements and
review of the quarterly financial statements, including
out-of-pocket
expenses, as well as the related attestation of internal
controls as required by the Sarbanes-Oxley Act of 2002,
Section 404.
Audit Related Fees. There were no audit
related fees paid to Ernst & Young LLP in 2010 or 2009.
Tax Fees. The Company has elected not to use
its current principal accountant for tax services.
All Other Fees. The fees for products and
services provided by Ernst & Young LLP, other than
those reported above.
All of the services provided by the Companys independent
auditors during 2010 and 2009 were pre-approved by the Audit
Committee. The Audit Committee has adopted a policy that
requires advance approval of all audit, audit-related, tax, and
other services performed by the Companys independent
registered public accounting firm. The policy provides for
pre-approval by the Audit Committee of specifically defined
audit and permitted non-audit services. Unless the specific
service has been previously pre-approved with respect to that
year, the Audit Committee must approve the permitted service
before the Companys independent registered public
accounting firm is engaged to perform it. The Audit Committee
has delegated to the Chair of
28
the Audit Committee authority to approve permitted services
provided that the Chair reports any decisions to the Committee
at its next scheduled meeting.
Audit
Committee Report
Acting pursuant to its Charter, the Audit Committee reviewed and
discussed the Companys audited financial statements at,
and for the year ended, December 31, 2010 with management
and the Companys independent auditors and recommended to
the Companys Board of Directors that the financial
statements be included in the Companys Annual Report on
Form 10-K
for 2010. This recommendation was based on: the Audit
Committees review of the audited financial statements;
discussion of the financial statements with management;
discussion with the Companys independent auditors,
Ernst & Young LLP, of the matters required to be
discussed by auditing standards generally accepted in the United
States of America, including the matters required to be
discussed by SAS 61; receipt from Ernst & Young LLP of
the written disclosures and letter required by Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit Committees); discussions with Ernst & Young
LLP regarding its independence from the Company and its
management; and Ernst & Young LLPs confirmation
that it would issue its opinion that the consolidated financial
statements present fairly, in all material respects, the
financial position of the Company and its consolidated
subsidiaries and the results of their operations and cash flows
for the periods presented in conformity with accounting
principles generally accepted in the United States of America.
Mr. Stephen J. McDaniel, Chairman
Mr. W. Charles Helton
Mr. Roger A. Brown
PROPOSAL 3
ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act
of 1934, the Company is providing its shareholders with an
advisory (non-binding) vote on the compensation of its named
executive officers (sometimes referred to as say on
pay).
The Company encourages shareholders to read the
Compensation Discussion and Analysis section of this
proxy statement for a detailed discussion of its compensation
programs and policies, the compensation and governance-related
actions taken by the Company during 2010 and the compensation
awarded to its named executive officers. The Company is focused
on compensating its named executive officers fairly and in a
manner that promotes its compensation philosophy as described in
the Compensation Discussion and Analysis section of
this proxy statement.
The Board of Directors believes the Companys executive
compensation program satisfies these objectives, properly aligns
the interests of the Companys executive officers with
shareholders interests, and is worthy of shareholder
support.
Accordingly, the Board recommends shareholders vote in favor of
the following resolution:
Resolved, that the shareholders of the Company approve, on an
advisory basis, the compensation paid to the Companys
named executive officers, as disclosed pursuant to Item 402
of
Regulation S-K,
including the Compensation Discussion and Analysis, the
accompanying compensation tables, and the related narrative
discussion, in the Companys most recent proxy
statement.
This is an advisory vote; it is not binding on the Board or the
Company. Although this vote is advisory, the Board and the
Compensation Committee, which is comprised entirely of
independent directors, will review the results of the vote and
take the results of the vote into consideration in future
executive compensation decisions.
29
In the absence of instructions to the contrary, the shares
represented by a properly completed and deposited proxy will be
voted FOR the resolution at the Annual Meeting.
PROPOSAL 4
ADVISORY VOTE REGARDING THE FREQUENCY OF FUTURE
ADVISORY VOTES ON EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act
of 1934, in addition to providing shareholders with the
opportunity to cast an advisory vote on executive compensation,
the Company this year is providing shareholders with an advisory
(non-binding) vote on whether the advisory vote on executive
compensation should be held every three years, every two years,
or every year. Therefore, shareholders are being asked to vote
on the following resolution:
Resolved, that the shareholders of the Company determine, on
an advisory basis, that the frequency with which the
shareholders of the Company shall have an advisory vote on the
compensation of the Companys named executive officers set
forth in the Companys proxy statement is:
Choice 1 every THREE YEARS;
Choice 2 every TWO YEARS; or
Choice 3 every ONE YEAR.
Alternatively, shareholders may abstain from voting on this
proposal.
The Board recommends shareholders vote for holding the advisory
vote on executive compensation every THREE YEARS for
the reasons that follow. As noted in the Compensation Discussion
and Analysis portion of this proxy statement, the Companys
executive compensation programs are designed to reward
performance consistent with the Companys long-term
business strategy over a multi-year performance measurement
cycle. In addition, voting more frequently than every three
years might lead to an undesirable focus on the Companys
short-term financial results at the expense of long-term value
creation for the benefit of shareholders. The Compensation
Committee believes an advisory vote every three years is the
best timeframe for the Company to respond to advisory votes
about the Companys executive compensation arrangements.
Check the box marked THREE YEARS to vote for the
Company holding this advisory vote every three years, as the
Board recommends. Unless otherwise indicated, all properly
executed proxies received by the Company will be voted for
THREE YEARS at the 2011 Annual Meeting.
Although this advisory vote on the frequency of the say on
pay vote is non-binding, the Board and the Compensation
Committee expect to take into account the outcome of the vote
when considering the frequency of future advisory votes on
executive compensation.
PROPOSAL 5
SHAREHOLDER PROPOSAL ON HYDRAULIC FRACTURING
The proponents of the following shareholder proposal have stated
that they intend to present the proposal at the Annual Meeting.
In accordance with applicable proxy regulations, the following
proposal and supporting statement, as submitted by the
proponents, are set forth below verbatim. The Company is not
responsible for the content of the proposal or the supporting
statement.
The Board of Directors has recommended a vote
AGAINST the proposal for the reasons set forth
below. In the absence of instructions to the contrary, if the
shareholder proposal is presented, the shares represented by a
properly completed and delivered proxy will be voted against the
shareholder proposal at the Annual Meeting.
30
Shareholder
Proposal
The following proposal was submitted to the Company by the As
You Sow Foundation, acting on behalf of Mr. Thomas C.
Valens, and Green Century Equity Fund.
Whereas:
Onshore unconventional natural gas production often
requires hydraulic fracturing, which typically injects a mix of
millions of gallons of water, thousands of gallons of chemicals,
and particles deep underground to create fractures through which
gas can flow for collection. According to the American Petroleum
Institute, up to 80 percent of natural gas wells
drilled in the next decade will require hydraulic
fracturing.
The potential impacts of those fracturing operations stem from
activities above and below the earths surface
including actions that are necessarily part of the life cycle of
fracturing and extraction, such as assuring the integrity of
well construction, and moving, storing, and disposing of
significant quantities of water and toxic chemicals.
High profile contamination incidents, especially in
Pennsylvania, have fueled public controversy.
Pennsylvanias Times-Shamrock Newspapers report many
of the largest operators in the Marcellus Shale have been issued
violations for spills that reached waterways, leaking pits that
harmed drinking water, or failed pipes that drained into
farmers fields, killing shrubs and trees.
Pittsburgh banned natural gas drilling and public officials in
Philadelphia and New York City have called for delays or bans on
fracturing. The New York State Assembly approved a temporary
moratorium on natural gas drilling and Pennsylvania, West
Virginia, Colorado, and Wyoming all tightened or are considering
tightening regulations and permitting requirements. The
Environmental Protection Agency is studying the potential
adverse impact that hydraulic fracturing may have on water
quality and public health.
Proponents believe these potential environmental impacts and
increasing regulatory scrutiny could pose threats to Ultra
Petroleums license to operate and enhance vulnerability to
litigation and reputational risks.
The company failed to offer proponents the opportunity to speak
on behalf of last years resolution on this issue at the
2010 annual meeting. Nevertheless, the resolution received 21%
support. In addition, company management had represented to
shareholders in April 2010 that it would publish information
regarding Fracking Fluids, Risk Assessment, Safety, and Current
Job Locations on its website; as of December 2010 the company
had failed to publish that information needed by shareholders.
Therefore
be it resolved,
Shareholders request that the Board of Directors prepare a
report by October 2011, at reasonable cost and omitting
proprietary information such as proprietary or legally
prejudicial data, summarizing: 1) Known and potential
environmental impacts of Ultra Petroleums fracturing
operations; and 2) Policy options for our company to adopt,
above and beyond regulatory requirements and our companys
existing efforts, to reduce or eliminate hazards to air, water,
and soil quality from fracturing operations.
Supporting
statement:
Proponents believe policies explored should include, for
example, additional efforts to reduce toxicity of fracturing
chemicals, recycle waste water, monitor water quality prior to
drilling, cement bond logging, and other structural or
procedural strategies to reduce environmental hazards and
financial risks. Potential includes occurrences that
are reasonably foreseeable and worst case scenarios.
Impacts of fracturing operations encompass the life
cycle of activities related to fracturing and associated gas
extraction.
END OF
SHAREHOLDER PROPOSAL
* * * * *
31
Board of
Directors Statement in Opposition
THE BOARD
OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS
PROPOSAL
Hydraulic fracturing is important to finding and producing
natural gas, and natural gas is important to America. Natural
gas is an abundant, efficient, clean and versatile American
energy source that improves Americas economic
competiveness and promotes American job growth. Millions of
Americans work good-paying jobs helping to find and produce
natural gas in America. Hydraulic fracturing has been used
safely over one million times in the decades since its first
commercial use in the oil and gas industry. Estimates of
recoverable American natural gas have significantly increased in
recent years, in no small part due to hydraulic fracturing
technology.
Hydraulic fracturing is also important to the Company. The
Company plans to employ hydraulic fracturing on most of its
future natural gas wells. Accordingly, the Company accounts for
the environmental, compliance, litigation and reputational
impacts of hydraulic fracturing as a part of its ordinary
business activities.
In addition, the Company believes its hydraulic fracturing
operations are safe, non-threatening and pose little or no risk
to underground sources of drinking water. Other studies by
respected authorities, including the U.S. Environmental
Protection Agency, the Ground Water Protection Council, and the
Interstate Oil and Gas Compact Commission, are in accord. The
Groundwater Protection Council concluded in May 2009 that most
additives contained in fracturing fluids pose low to very low
risks to human health and the environment. In December 2009,
three officials from the U.S. Environmental Protection
Agency testified before the U.S. Senate that they were not
aware of any verifiable instances of groundwater contamination
caused by hydraulic fracturing.
Hydraulic fracturing is also subject to numerous and extensive
regulations. State agencies charged with protecting public and
private water supplies have, for decades, regulated oil and gas
activities, including hydraulic fracturing. Moreover, federal
agencies control any adverse impacts of hydraulic fracturing
through the Clean Water Act (protects groundwater from
environmentally-harmful activities), the Safe Drinking Water Act
(prohibits pollution of drinking water, though it does not
authorize regulation of injection of fracturing fluids), and
CERCLA.
The Company is committed to safeguarding the environment and
conducts its business in a manner designed to comply with all
applicable environmental laws and regulations. The
Companys well casing and well cementing programs minimize
pollution risks, and its water handling programs conserve
resources and energy and reduce waste. More information about
the Companys hydraulic fracturing activities is available
at its website: www.ultrapetroleum.com.
For the foregoing reasons, the Board unanimously recommends you
vote AGAINST the proposal.
SHAREHOLDER
PROPOSALS FOR 2012 ANNUAL MEETING
Any shareholder who intends to present a proposal at the 2012
Annual Meeting of Shareholders for inclusion in the proxy
statement and proxy card relating to that meeting is advised
that the proposal must be received by the Company at its
principal executive offices not later than December 16,
2011. The Company will not be required to include in its proxy
statement or proxy card a shareholder proposal which is received
after that date or which otherwise fails to meet requirements
for shareholder proposals established by regulations of the
Securities and Exchange Commission. If the date of the 2012
Annual Meeting is changed by more than 30 days from the
first anniversary of the date of the 2011 Annual Meeting, the
deadline for submitting proposals to be included in
managements year-end 2011 proxy statement is a reasonable
time before the Company begins to print and mail its proxy
materials for its 2012 Annual Meeting.
The persons named in the Companys proxy card for the 2012
Annual Meeting of Shareholders will have discretionary authority
to vote any proxies they hold at such meeting on any matter for
which the Company does not receive notice by March 2, 2012.
If the Company changes the date of its 2012 Annual Meeting by
32
more than 30 days from the first anniversary of the date of
the 2011 Annual Meeting, the persons named in the Companys
2012 proxy statement will be able to exercise discretionary
authority if notice of the matter has not been received in a
reasonable time before the Company mails its proxy materials for
the 2012 Annual Meeting of Shareholders.
If the date of the 2012 Annual Meeting is advanced or delayed by
more than 30 calendar days from the first anniversary of the
date of the 2011 Annual Meeting, the Company shall, in a timely
manner, inform shareholders of such change, by including a
notice, under Item 5, in its earliest possible quarterly
report on
Form 10-Q.
The notice will include the new deadline for submitting
proposals to be included in the Companys year-end 2011
proxy statement and the new date for determining whether the
Company may exercise discretionary voting authority because it
has not received timely notice of a matter.
In order to avoid controversy as to the date on which the
Company receives any such proposal, it is suggested that
shareholders submit their proposals by certified mail, return
receipt requested, or other means that permit them to prove the
date of delivery.
DELIVERY
OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
In some cases, only one copy of this proxy statement or annual
report is being delivered to multiple shareholders sharing an
address. The Company will deliver promptly, upon written or oral
request, a separate copy of this proxy statement or annual
report to a shareholder at a shared address to which a single
copy of the document was delivered. To request separate or
multiple delivery of these materials now or in the future, a
shareholder may submit a written request to the Corporate
Secretary, Ultra Petroleum Corp., 363 N. Sam Houston
Pkwy E., Suite 1200, Houston, Texas 77060 or an oral
request by calling the Corporate Secretary at
(281) 876-0120.
OTHER
MATTERS
At the 2011 Annual Meeting, shareholders will receive and
consider the consolidated financial statements of the Company
for the year ended December 31, 2010 and the auditors
report thereon, but no vote by the shareholders with respect
thereto is required or proposed to be taken.
Management knows of no amendment or other matters to come before
the Annual Meeting other than the matters referred to in the
Notice of Annual Meeting. However, if any other matter properly
comes before the Annual Meeting, the accompanying proxy will be
voted on such matter at the discretion of the person or persons
voting the proxy.
All information contained in this proxy statement relating to
the occupations, affiliations and securities holdings of
directors and officers of the Company and their relationship and
transactions with the Company is based upon information received
from the individual directors and officers.
By Order of the Board of Directors
Chairman, President and Chief Executive Officer
Houston, Texas
April 28, 2011
33
VOTING INSTRUCTION FORM
ULTRA PETROLEUM CORP. (THE COMPANY)
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MEETING TYPE:
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ANNUAL MEETING |
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MEETING DATE: |
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WEDNESDAY, MAY 25, 2011 AT 10:00 AM MDT |
RECORD DATE:
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APRIL 11, 2011 |
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CONTROL NO:
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999999999999
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CUID: 01234 C73 |
ACCOUNT NO:
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PROXY DEPOSIT DATE:
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MAY 20, 2011
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CUSIP: 234567TES |
WE NEED TO RECEIVE YOUR VOTING INSTRUCTIONS AT
LEAST ONE BUSINESS DAY BEFORE THE PROXY DEPOSIT
DATE.
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R3
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VOTE BY INTERNET:
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GO TO: WWW.PROXYVOTE.COM |
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Your 12-digit control number is located above. |
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VOTE BY TELEPHONE:
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You may enter your voting instructions by telephone at: |
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English: 1-800-474-7493 or French: 1-800-474-7501
Your 12-digit control number is located above. |
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VOTE BY MAIL:
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This voting instruction form may be returned by
mail in the envelope provided. |
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VOTE BY FACSIMILE:
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905-507-7793 or 514-281-8911. |
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1234567890123456789012345678
APPOINTEE(S)
MICHAEL D. WATFORD, OR FAILING HIM, GARRETT B. SMITH
IF YOU WISH TO ATTEND THE MEETING OR DESIGNATE ANOTHER
PERSON TO ATTEND, VOTE AND ACT ON YOUR BEHALF AT THE MEETING, OR
ANY ADJOURNMENT THEREOF, OTHER THAN THE PERSON(S) SPECIFIED
ABOVE, PRINT YOUR NAME OR THE NAME OF THE PERSON ATTENDING THE
MEETING ON THE APPOINTEE LINE BELOW.
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PLEASE PRINT APPOINTEE NAME
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*SEE VOTING INSTRUCTIONS ON REVERSE*
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ITEM(S) (FILL IN ONLY ONE BOX
n PER ITEM IN BLACK OR BLUE INK) |
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ITEM(S)
(FILL IN ONLY ONE BOX
n PER ITEM IN BLACK OR BLUE INK) |
VOTING RECOMMENDATIONS ARE INDICATED BY
HIGHLIGHTED TEXT OVER THE BOXES |
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VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES |
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01 ELECTION OF DIRECTORS: |
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1A ELECTION OF MICHAEL D. WATFORD AS DIRECTOR.
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1B ELECTION OF W. CHARLES HELTON AS DIRECTOR.
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1C ELECTION OF ROBERT E. RIGNEY AS DIRECTOR.
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1D ELECTION OF STEPHEN J. MCDANIEL AS DIRECTOR.
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1E ELECTION OF ROGER A. BROWN AS DIRECTOR.
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02 APPOINTMENT OF ERNST & YOUNG, LLP, AS AUDITORS OF THE COMPANY FOR THE
ENSUING YEAR AND AUTHORIZING THE DIRECTORS TO FIX THEIR REMUNERATION.
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03 NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION.
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04 NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON
EXECUTIVE COMPENSATION.
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3 YRS
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2 YRS 1 YR
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05 IF PRESENTED, A SHAREHOLDER PROPOSAL REGARDING HYDRAULIC FRACTURING
WHICH IS OPPOSED BY THE BOARD.
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FOR
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AGAINST
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ABSTAIN |
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UNDER SECURITIES REGULATIONS, SECURITYHOLDERS MAY ELECT ANNUALLY TO RECEIVE
THE ANNUAL, INTERIM FINANCIAL STATEMENTS OR BOTH INCLUDING RELEVANT MD&A BY
MAIL. INDICATE YOUR PREFERENCE IN THE APPROPRIATE BOX PROVIDED.
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ANNUAL INTERIM NONE
o
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*NOTE* THIS VOTING INSTRUCTION FORM CONFERS DISCRETIONARY AUTHORITY TO VOTE ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
*NOTE* THIS VOTING INSTRUCTION FORM SHOULD BE READ IN CONJUNCTION WITH THE ACCOMPANYING
MANAGEMENT PROXY CIRCULAR. |
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DATE (DD/MM/YY)
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n |
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SIGNATURE(S)
*INVALID
IF NOT SIGNED* |
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FORMULAIRE DINSTRUCTIONS DE VOTE
ULTRA PETROLEUM CORP. (THE COMPANY)
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TYPE DASSEMBLÉE : |
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ASSEMBLÉE ANNUELLE |
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DATE DE LASSEMBLÉE : |
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MERCREDI 25 MAI 2011 À 10 H HAR |
DATE DE RÉFÉRENCE : |
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11 AVRIL 2011 |
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N° DE CONTRÔLE : |
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999999999999 |
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N° CUID : 01234 C73 |
N° DE COMPTE : |
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0123456789 |
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DATE DE DÉPÔT : |
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20 MAI 2011 |
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N° CUSIP : 234567TES |
NOUS DEVONS RECEVOIR VOS INSTRUCTIONS DE VOTE AU MOINS UN
JOUR OUVRABLE AVANT LA DATE DE DÉPÔT DE LA
PROCURATION.
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R3 |
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VOTE PAR INTERNET : |
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ALLEZ À WWW.PROXYVOTE.COM |
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Votre numéro de contrôle à 12 chiffres est indiqué ci-dessus. |
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VOTE PAR TÉLÉPHONE : |
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Veuillez transmettre
vos instructions au 1 800 474-7501 (en français) ou
au 1 800 474-7493 (en anglais). Votre numéro de
contrôle à 12 chiffres est indiqué ci-dessus. |
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VOTE PAR LA POSTE : |
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Veuillez retourner ce
formulaire dinstructions de vote dans lenveloppe
fournie. |
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VOTE PAR TÉLÉCOPIEUR : |
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(514)
281-8911 ou au (905) 507-7793. |
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1234567890123456789012345678
FONDÉ(S) DE POUVOIR
MICHAEL D. WATFORD OU, À DÉFAUT, GARRETT B. SMITH
SI VOUS VOULEZ ASSISTER À LASSEMBLÉE, OU À TOUT AJOURNEMENT
DE CELLE-CI, OU ENCORE DÉSIGNER UNE PERSONNE AUTRE QUE LES
PERSONNES INDIQUÉES CI-DESSUS POUR Y ASSISTER, VOTER ET AGIR EN
VOTRE NOM, INDIQUEZ VOTRE NOM OU LE NOM DE LA PERSONNE QUI
ASSISTERA À LASSEMBLÉE SUR LA LIGNE FONDÉ DE POUVOIR
CI-DESSOUS.
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No DE CONTRÔLE :
à |
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999999999999 |
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999999999 |
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VEUILLEZ INDIQUER LE NOM DU FONDÉ DE POUVOIR EN LETTRES MOULÉES
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*VOIR LES INSTRUCTIONS DE VOTE AU VERSO*
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POINT(S)
(REMPLISSEZ UNE SEULE CASE « n » PAR ÉLÉMENT, À LENCRE NOIRE OU BLEUE)
LES RECOMMANDATIONS DE VOTE SONT INDIQUÉES AU MOYEN DU
TEXTE SURLIGNÉ AU-DESSUS DES CASES |
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POINT(S)
(REMPLISSEZ UNE SEULE CASE « n » PAR ÉLÉMENT, À LENCRE NOIRE OU BLEUE)
LES RECOMMANDATIONS DE VOTE SONT INDIQUÉES AU MOYEN DU
TEXTE
SURLIGNÉ AU-DESSUS DES CASES |
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01 ELECTION OF DIRECTORS: |
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1A ELECTION OF MICHAEL D. WATFORD AS
DIRECTOR. |
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POUR |
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CONTRE |
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ABSTENTION |
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1B ELECTION OF W. CHARLES HELTON
AS DIRECTOR. |
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POUR |
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CONTRE |
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ABSTENTION |
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1C ELECTION OF ROBERT E. RIGNEY
AS DIRECTOR. |
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POUR |
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CONTRE |
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ABSTENTION |
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1D ELECTION OF STEPHEN J.
MCDANIEL AS DIRECTOR. |
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POUR |
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CONTRE |
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ABSTENTION |
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1E ELECTION OF ROGER A. BROWN AS
DIRECTOR. |
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POUR |
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CONTRE |
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ABSTENTION |
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02 APPOINTMENT OF ERNST & YOUNG, LLP, AS AUDITORS OF THE COMPANY
FOR THE ENSUING YEAR AND AUTHORIZING THE DIRECTORS TO FIX THEIR REMUNERATION. |
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POUR |
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ABSTENTION |
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o |
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03 NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION. |
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POUR |
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CONTRE |
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ABSTENTION |
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04
NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION. |
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3 ANS |
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2 ANS 1 AN |
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SABSTENIR |
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o |
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05 IF PRESENTED, A SHAREHOLDER PROPOSAL REGARDING HYDRAULIC FRACTURING
WHICH IS OPPOSED BY THE BOARD. |
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POUR |
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CONTRE |
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SABSTENIR |
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o |
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SELON LA RÉGLEMENTATION, LES PORTEURS DE TITRES PEUVENT CHAQUE
ANNÉE CHOISIR DE RECEVOIR LES ÉTATS FINANCIERS ANNUELS OU
INTERMÉDIAIRES, OU LES DEUX, PAR LA POSTE. INDIQUEZ VOTRE PRÉFÉRENCE EN COCHANT LA CASE APPROPRIÉE. |
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ANNUEL INTÉRIM AUCUN
o
o
o |
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*NOTE*
LE PRÉSENT
FORMULAIRE CONFÈRE
LE POUVOIR
DISCRÉTIONNAIRE DE
VOTER SUR DAUTRES QUESTIONS SUSCEPTIBLES DÊTRE SOULEVÉES À LASSEMBLÉE OU À TOUTE REPRISE DE CELLE-CI.
*NOTE* LE PRÉSENT
FORMULAIRE
DINSTRUCTIONS DE
VOTE DEVRAIT ÊTRE
LU CONJOINTEMENT AVEC LA CIRCULAIRE DE SOLLICITATION DE PROCURATIONS QUI
LACCOMPAGNE.
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n
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SIGNATURE(S)
*INVALIDE EN
LABSENCE DE SIGNATURE* |
n
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MEETING TYPE:
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ANNUAL MEETING |
MEETING DATE:
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WEDNESDAY, MAY 25, 2011 AT 10:00 AM MDT |
RECORD DATE:
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APRIL 11, 2011 |
PROXY DEPOSIT DATE:
|
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MAY 20, 2011 |
VOTING INSTRUCTION FORM
ULTRA PETROLEUM CORP. (THE COMPANY)
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T2-240406 |
|
R3 |
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VOTE BY INTERNET: |
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GO
TO: WWW.PROXYVOTE.COM |
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VOTE BY TELEPHONE: |
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You may enter your voting instructions by telephone at: |
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VOTE BY MAIL: |
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This voting instruction form may be returned by mail in the envelope provided. |
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WE NEED TO RECEIVE YOUR VOTING INSTRUCTIONS AT LEAST ONE
BUSINESS DAY BEFORE THE PROXY DEPOSIT DATE.
SEE VOTING INSTRUCTION NO. ON REVERSE
n
A/C
è
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ITEM(S) (FILL IN ONLY ONE BOX n PER ITEM IN BLACK OR BLUE INK) |
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VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES |
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01 ELECTION OF DIRECTORS: |
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1A ELECTION OF MICHAEL D. WATFORD AS DIRECTOR.
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FOR
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AGAINST
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WITHHOLD |
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o
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1B ELECTION OF W. CHARLES HELTON AS DIRECTOR.
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FOR
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AGAINST
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WITHHOLD |
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1C ELECTION OF ROBERT E. RIGNEY AS DIRECTOR.
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FOR
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AGAINST
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WITHHOLD |
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o
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1D ELECTION OF STEPHEN J. MCDANIEL AS DIRECTOR.
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FOR
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AGAINST
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WITHHOLD |
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o
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1E ELECTION OF ROGER A. BROWN AS DIRECTOR.
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FOR
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AGAINST
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WITHHOLD |
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o
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o
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o |
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02 APPOINTMENT OF ERNST & YOUNG, LLP, AS AUDITORS OF THE COMPANY FOR THE
ENSUING YEAR AND AUTHORIZING THE DIRECTORS TO FIX THEIR REMUNERATION.
|
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FOR
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|
|
WITHHOLD |
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o
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o |
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03 NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION.
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FOR
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AGAINST
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WITHHOLD |
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o
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o
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o |
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04 NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON
EXECUTIVE COMPENSATION.
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3 YRS
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2 YRS 1 YR
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ABSTAIN |
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o
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o o
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o |
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05 IF PRESENTED, A SHAREHOLDER PROPOSAL REGARDING HYDRAULIC FRACTURING
WHICH IS OPPOSED BY THE BOARD.
|
|
FOR
|
|
AGAINST
|
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ABSTAIN |
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o
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o
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o |
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UNDER SECURITIES REGULATIONS, SECURITYHOLDERS MAY ELECT ANNUALLY TO RECEIVE
THE ANNUAL, INTERIM FINANCIAL STATEMENTS OR BOTH INCLUDING RELEVANT MD&A BY
MAIL. INDICATE YOUR PREFERENCE IN THE APPROPRIATE BOX PROVIDED.
|
|
ANNUAL INTERIM NONE
o o o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*NOTE* THIS VOTING INSTRUCTION FORM CONFERS DISCRETIONARY AUTHORITY TO VOTE ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
*NOTE* THIS VOTING INSTRUCTION FORM SHOULD BE READ IN CONJUNCTION WITH THE ACCOMPANYING
MANAGEMENT PROXY CIRCULAR. |
|
|
|
|
|
|
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FILL IN THE BOX n TO THE RIGHT IF YOU PLAN TO ATTEND THE MEETING AND
VOTE THESE SHARES IN PERSON.
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è o |
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DATE (DD/MM/YY)
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n
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SIGNATURE(S) [SIGN WITHIN THE BOX] |
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