UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
(Amendment No.
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Filed by the Registrant
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Filed by a Party other than the Registrant
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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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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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Gran Tierra Energy Inc.
(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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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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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 Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Date Filed:
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GRAN TIERRA ENERGY INC.
900, 520-3 Avenue S.W.
Calgary, Alberta, Canada T2P 0R3
(403) 265-3221
NOTICE OF MEETING
ANNUAL MEETING OF THE STOCKHOLDERS OF GRAN TIERRA ENERGY
INC.
Date:
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Wednesday, May 2, 2018
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Time:
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11:00 a.m. (Mountain Time)
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Place:
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Centennial Place, 3rd Floor, West Tower, 250 - 5 Street SW, Calgary, Alberta, Canada T2P 0R4
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The business of the meeting is
to:
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1.
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Elect the eight nominees specified in the accompanying
proxy statement to serve as directors.
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2.
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Ratify the appointment of KPMG LLP as Gran Tierra’s
independent registered public accounting firm for 2018.
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3.
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Approve, on an advisory basis, the compensation of Gran
Tierra’s named executive officers as disclosed in the accompanying proxy statement.
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4.
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Conduct any other business properly brought before the
meeting.
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These items of business are more
fully described in the proxy statement accompanying this notice.
This notice and the attached proxy
statement are first being mailed to our stockholders beginning on March 21, 2018. The record date for the annual meeting is March
12, 2018. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.
This year, we are using the “Notice
and Access” method of providing proxy materials to our stockholders. We believe this process will provide our stockholders
with a convenient way to access the proxy materials and vote, while allowing us to lower the costs of printing and distributing
the proxy materials and reduce the environmental impact of our meeting. We will mail to most of our stockholders a Notice of Internet
Availability of Proxy Materials (the “Notice”) in lieu of a paper copy of our proxy materials. Stockholders receiving
the Notice may review the proxy materials online or request a paper copy by following the instructions set forth in the Notice.
Please submit your proxy or voting
instructions on the Internet or by telephone promptly by following the instructions about how to view the proxy materials on your
Notice of Internet Availability of Proxy Materials so that your shares can be voted, regardless of whether you expect to attend
the annual meeting. If you received your proxy materials by mail, you may submit your proxy or voting instructions on the Internet
or by telephone, or you may submit your proxy by marking, dating, signing and returning the enclosed proxy/confidential voting
instruction card. If you attend the annual meeting, you may withdraw your proxy and vote in person.
By order of the Board of Directors
/s/ Gary S. Guidry
Gary S. Guidry
President and Chief Executive Officer
Calgary, Alberta, Canada
March 21, 2018
PROXY STATEMENT TABLE OF CONTENTS
TO OUR STOCKHOLDERS,
We invite you to attend the Annual
Meeting of Gran Tierra Energy Inc., (“Gran Tierra” or the “Company”) which will be held at Centennial Place,
3rd Floor, West Tower, 250 - 5 Street SW, Calgary, Alberta, Canada T2P 0R4 on May 2, 2018 at 11:00 a.m. Mountain Time.
The attached Notice of Annual Meeting
of Stockholders and Proxy Statement describes the business to be conducted at the Annual Meeting. Whether or not you plan to attend
the Annual Meeting of Stockholders, we urge you to submit your vote via the internet, telephone or mail.
After successfully transforming
our portfolio and the Company in 2015 and 2016, our focus on execution in 2017 delivered strong financial performance. With our
high netback production, low base production declines, an expanded drilling inventory and a large resource base, we demonstrated
in 2017 that Gran Tierra has created a sustainable business model which we expect to be fully funded by forecasted cash from operating
activities in 2018.
During 2017, our robust portfolio
delivered:
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Increased average Colombia only production in the fourth
quarter of 2017 to 34,477 BOEPD, 14% higher than 30,258 BOEPD in the fourth quarter of 2016 and 53% higher than the second quarter
of 2015, when the current senior management team started at Gran Tierra;
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Growth of 18% in Proved plus Probable reserves in Colombia, 20% in reserves per share, 27% in total
net present value to $2.5 billion and 30% in net asset value per share to $5.69 per share;
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Increased Colombia unrisked mean prospective resources to 1,462 MMBOE, with 822 MMBOE primarily
in the Putumayo regional carbonate play;
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With our large resource base, we plan to drill 30 to 35 exploration wells over the next three years,
which are all expected to be funded by cash from operating activities.
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I encourage you to read our 2017
Annual Report for additional information. Following the formal portion of the Annual Meeting, management will review Gran Tierra’s
operational and financial performance during 2017 and provide an outlook on priorities for 2018 and beyond. You will also have
an opportunity to ask questions and to meet the directors and executives.
On behalf of our Board of Directors
and the team at Gran Tierra, I want to thank all of our stakeholders for their continued support. We believe that our focused strategy
is delivering results on several fronts and that Gran Tierra is well positioned for an exciting year of growth in 2018 and beyond
as we continue to efficiently create value in the multi-horizon, proven hydrocarbon producing basins of Colombia.
Sincerely,
/s/ Gary S. Guidry
Gary S. Guidry
President and Chief Executive Officer
March 21, 2018
PROXY STATEMENT SUMMARY
This summary highlights information
contained elsewhere within this proxy statement. You should read the entire proxy statement carefully and consider all information
before voting. Page references are supplied to help you find further information in this proxy statement. This summary does not
contain all of the information you should consider, and we encourage you to read the entire proxy statement before voting.
References to “we”,
“us”, “our”, “Gran Tierra” or the “Company” are to Gran Tierra Energy Inc.
Important
Notice Regarding the Availability of Materials for the 2018 Annual Meeting of Shareholders to be Held on May 2, 2018:
The proxy statement and our Annual Report for the fiscal year ended December 31, 2017 are available free of charge at http://www.edocumentview.com/GTE
2018 Annual Meeting of Stockholders
Date:
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May 2, 2018
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Time:
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11:00 a.m. (Mountain Time)
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Place:
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Centennial Place, 3rd Floor, West Tower, 250 - 5 Street SW, Calgary, Alberta, Canada T2P 0R4
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Record Date:
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March 12, 2018
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Voting Matters And Board Recommendations
Voting Matter
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Board Vote Recommendation
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Proposal 1: Election of Directors (page 11)
The Board and the Nominating and Corporate Governance
Committee believe that each of the director nominees possesses the necessary qualifications and skills to provide effective oversight
of the business and quality advice and counsel to our management team.
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FOR EACH NOMINEE
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Proposal 2: Ratification of Selection of Independent
Auditors (page 34)
The Board and the Audit Committee believe that the retention
of KPMG LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2018 is in the
best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify
the Audit Committee’s selection of the independent registered public accounting firm.
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FOR
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Proposal 3: Advisory Vote to Approve Named Executive
Officer Compensation (page 38)
The Company seeks a non-binding advisory vote from its
stockholders to approve the compensation of its named executive officers as described in the Compensation Discussion and Analysis
section beginning on page 43 and the Compensation Tables section beginning on page 55. Our executive compensation program reflects
our philosophy of aligning executive compensation with the interests of our stockholders and a commitment to pay for performance.
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FOR
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Director Nominees
The following table provides summary information about
each director nominee. See pages 12 to 19 for more information.
Director Nominee
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Director Since
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Age
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Committees
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Peter J. Dey
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2015
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77
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Nominating and Corporate Governance Committee
Compensation Committee
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Gary S. Guidry President and CEO
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2015
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62
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Evan Hazell
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2015
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59
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Health, Safety & Environment Committee
Reserves Committee
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Robert B. Hodgins
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2015
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66
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Board Chairman
Audit Committee
Compensation Committee
Nominating and Corporate Governance Committee
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Ronald W. Royal
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2015
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69
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Audit Committee
Health, Safety & Environment Committee
Reserves
Committee
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Sondra Scott
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2017
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51
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Nominating and Corporate Governance Committee
Health,
Safety & Environment Committee
Reserves Committee
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David P. Smith
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2015
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59
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Audit Committee
Health, Safety & Environment Committee
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Brooke Wade
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2015
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64
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Compensation Committee
Nominating and Corporate Governance Committee
Reserves
Committee
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Corporate Governance
We are committed to good corporate governance practices,
which promote the long-term interests of our stockholders and strengthens our Board and management accountability.
Highlights of our corporate governance practices include
the following:
Independent Chairman of the Board
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Policy prohibiting speculative trading of the Company’s stock
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Annual elections of the entire Board
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Clawback policy
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Majority voting for directors with resignation policy
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Stockholders may call special meetings of stockholders
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100% independent Committee members
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No stockholder rights (“poison pill”) or similar plan
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Annual self-evaluation of the Board
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Regular executive sessions of independent directors
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Stock ownership guidelines for directors and officers
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Stockholders have the right to fill director vacancies caused by director removal
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No Tax Gross-Up provisions in any new executive agreements (currently only applies to Chief Executive Officer in order to be equalized to Canadian colleagues)
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Executive compensation highlights
Our compensation philosophy and
programs are based on the following core principles:
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attract and retain highly capable individuals and offer competitive compensation opportunities,
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pay for performance, and
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align the interests of management with our stockholders.
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Our equity compensation program
is designed to be aligned with the interests of our stockholders and focus on pay-for-performance. The majority of 2017 executive
compensation is considered to be “at risk” because its value is based on specific performance criteria and payout is
not guaranteed. In 2017, 80% of the value of equity awards granted to the Named Executive Officers (“NEOs”) consisted
of performance share units (“PSUs”) and 20% consisted of stock options. Base salaries for NEOs remained unchanged
in 2017 from 2016 levels.
The following shows the breakdown
of 2017 target total direct compensation opportunity for our Chief Executive Officer and Chief Financial Officer consisting of
long-term equity awards, annual cash bonus and fixed base salary.
Further discussion of how our Company performance in
2017 impacted our Short-Term Incentive (“STIP”) and Long-Term Incentive Plan (“LTIP”) payouts can be found
on pages 48 and 51 respectively.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND 2018 ANNUAL MEETING
Why am I receiving these materials?
We are sending you these proxy
materials because the Board of Directors (the “Board”) of Gran Tierra Energy Inc., a Delaware corporation (“Gran
Tierra” or the “Company”), is soliciting your proxy to vote at the 2018 annual meeting of stockholders, including
at any adjournments or postponements of the annual meeting. You are invited to attend the annual meeting to vote on the proposals
described in this proxy statement. However, you do not need to attend the annual meeting to vote your shares. Instead, if you are
a stockholder of record of our common stock, you may simply complete, sign and return the proxy card, or follow the instructions
below to submit your proxy over the telephone or through the internet. See “How do I vote” below for further information
on how to vote, including if you hold our common stock through a broker in “street name” or hold exchangeable shares.
Pursuant to rules adopted by the
Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the internet.
We are sending to our stockholders of record the proxy materials, including this proxy statement and an annual report, or a Notice
Regarding the Availability of Proxy Materials (the “Notice”). We intend that our stockholders who hold their stock
in “street name” will receive a Notice from their broker, bank or other agent in which they hold the stock in “street
name,” unless they have specified otherwise. All stockholders will have the ability to access the proxy materials on the
website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the
proxy materials over the internet or to request a printed copy may be found in the Notice.
We intend to mail the proxy materials
and Notice beginning on March 21, 2018, to all stockholders of record entitled to vote at the annual meeting. We expect that the
Notice will be sent to stockholders who hold their stock in “street name” on or about this same date.
How do I attend the annual meeting?
The meeting will be held on Wednesday,
May 2, 2018, at 11:00 a.m. (Mountain time) at Centennial Place, 3rd Floor, West Tower, 250 - 5 Street SW, Calgary, Alberta, Canada
T2P 0R4. Directions to the annual meeting may be found at http://www.grantierra.com/investor- relations/2018-annual-meeting.html.
Information on how to vote in person at the annual meeting is discussed below.
Who can vote at the annual meeting?
Only stockholders of record at
the close of business on March 12, 2018, will be entitled to vote at the annual meeting. On this record date, there were 385,394,642
shares of common stock outstanding and entitled to vote, one share of Special A Voting Stock, and one share of Special B Voting
Stock. On the record date, the one share of Special A Voting Stock was entitled to 1,688,889 votes, which equals the number of
shares of common stock issuable upon exchange of exchangeable shares of Gran Tierra Goldstrike Inc. that were issued in connection
with the transaction between the former stockholders of Gran Tierra Energy Inc., an Alberta corporation, and Goldstrike, Inc. (the
“Goldstrike Exchangeable Shares”). On the record date, the one share of Special B Voting Stock was entitled to 4,219,176
votes, which equals the number of shares of common stock issuable upon exchange of exchangeable shares of Gran Tierra Exchangeco
Inc. that were issued in connection with the transaction between the former stockholders of Solana Resources Limited, an Alberta
corporation (“Solana”), and Gran Tierra (the “Solana Exchangeable Shares,” and together with the Goldstrike
Exchangeable Shares, the “Exchangeable Shares”).
Stockholders of Record:
Shares Registered in Your Name
If at the close of business on
March 12, 2018, your shares were registered directly in your name with Gran Tierra’s transfer agent, Computershare Investor
Services, then you are a stockholder of record. As a stockholder of record, you may vote in person at the annual meeting or vote
by proxy. Whether or not you plan to attend the annual meeting, we urge you to fill out and return the proxy or vote by proxy
by telephone or on the internet as instructed below to ensure your vote is counted.
Beneficial Owner: Shares
Registered in the Name of a Broker or Bank
If at the close of business on
March 12, 2018, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar
organization, then you are the beneficial owner of shares held in “street name” and the Notice, and/or these proxy
materials if you have received them, are being forwarded to you by that organization. The organization holding your account is
considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right
to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the annual
meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the annual meeting unless
you request and obtain a valid proxy from your broker or other agent.
Stockholders Holding
Exchangeable Shares
Holders of Goldstrike Exchangeable
Shares are receiving these proxy materials which relate solely to the annual meeting of Gran Tierra and are being delivered in
accordance with the provisions of the Goldstrike Exchangeable Shares and the Voting Exchange and Support Agreement dated November
10, 2005, (the “Goldstrike Voting Exchange Agreement”) among Goldstrike Inc., 1203647 Alberta Inc., Gran Tierra Goldstrike
Inc. and Olympia Trust Company (the “Goldstrike Trustee”). The Goldstrike Exchangeable Shares are the economic equivalent
to the shares of common stock of Gran Tierra. In accordance with the Goldstrike Voting Exchange Agreement, holders of Goldstrike
Exchangeable Shares are entitled to instruct the Goldstrike Trustee as to how to vote their Goldstrike Exchangeable Shares. The
Goldstrike Trustee holds the one outstanding share of our Special A Voting Stock, which is entitled to as many votes as there are
outstanding Goldstrike Exchangeable Shares on the record date, and may only vote the one share of Special A Voting Stock as directed
by the holders of Goldstrike Exchangeable Shares. Holders of Goldstrike Exchangeable Shares who do not hold their Goldstrike Exchangeable
Shares in their own name are not entitled to instruct the Goldstrike Trustee as to how to exercise voting rights at the annual
meeting. Only holders of Goldstrike Exchangeable Shares whose names appear on the records of Gran Tierra Goldstrike Inc. as the
registered holders of Goldstrike Exchangeable Shares are entitled to instruct the Goldstrike Trustee as to how to exercise voting
rights in respect of their Goldstrike Exchangeable Shares at the annual meeting. Holders of Goldstrike Exchangeable Shares may
also obtain a proxy from the Goldstrike Trustee to vote their Goldstrike Exchangeable Shares at the annual meeting. Holders of
Goldstrike Exchangeable Shares should follow the instructions sent to them by the Goldstrike Trustee in order to exercise their
voting rights.
Holders of Solana Exchangeable
Shares are receiving these proxy materials which relate solely to the annual meeting of Gran Tierra and are being delivered in
accordance with the provisions of the Solana Exchangeable Shares and the Voting and Exchange Trust Agreement dated November 14,
2008, (the “Solana Voting Exchange Agreement”) among Gran Tierra, Gran Tierra Exchangeco Inc. and Computershare Trust
Company of Canada (the “Solana Trustee”). The Solana Exchangeable Shares are the economic equivalent to the shares
of common stock of Gran Tierra. In accordance with the Solana Voting Exchange Agreement, holders of Solana Exchangeable Shares
are entitled to instruct the Solana Trustee as to how to vote their Solana Exchangeable Shares. The Solana Trustee holds the one
outstanding share of our Special B Voting Stock, which is entitled to as many votes as there are outstanding Solana Exchangeable
Shares on the record date, and may only vote the one share of Special B Voting Stock as directed by the holders of Solana Exchangeable
Shares. Holders of Solana Exchangeable Shares who do not hold their Solana Exchangeable Shares in their own name are not entitled
to instruct the Solana Trustee as to how to exercise voting rights at the annual meeting. Only holders of Solana Exchangeable Shares
whose names appear on the records of Gran Tierra Exchangeco Inc. as the registered holders of Solana Exchangeable Shares are entitled
to instruct the Solana Trustee as to how to exercise voting rights in respect of their Solana Exchangeable Shares at the annual
meeting. Holders of Solana Exchangeable Shares may also obtain a proxy from the Solana Trustee to vote their Solana Exchangeable
Shares at the annual meeting. Holders of Solana Exchangeable Shares should follow the instructions sent to them by the Solana Trustee
in order to exercise their voting rights.
If at the close of business on
March 12, 2018, your Exchangeable Shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer,
or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice, and
these proxy materials if you have received them, are being forwarded to you by that organization. The organization holding your
account is considered to be the stockholder of record for purposes of instructing your trustee as to how to vote your Exchangeable
Shares. As a beneficial owner, you have the right to direct your broker or other agent regarding how to instruct your trustee
as to how to vote your Exchangeable Shares.
What am I voting on?
There are three matters scheduled
for a vote:
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Election of eight nominees named in the proxy statement
to serve on the Board until the next annual meeting and until their respective successors are duly elected and qualified;
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2.
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Ratification of the appointment of KPMG LLP as the independent
registered public accounting firm for 2018; and
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3.
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Approval, on an advisory basis, of the compensation of
Gran Tierra’s named executive officers, as disclosed in this proxy statement.
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What if another matter is properly
brought before the annual meeting?
The Board knows of no other matters
that will be presented for consideration at the annual meeting. If any other matters are properly brought before the annual meeting,
it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
How do I vote?
You may either vote “For”
or “Against” or abstain from voting with respect to each nominee to the Board and each of the other matters to be voted
on.
Stockholders of Record:
Shares Registered in Your Name
If you are a stockholder of record,
you may vote in person at the annual meeting, vote by proxy on the internet or by telephone, or vote by proxy using a proxy card
that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the annual meeting, we
urge you to vote by proxy to ensure your vote is counted. You may still attend the annual meeting and vote in person even if you
have already voted by proxy.
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To vote in person, come to the annual meeting and we
will give you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered
and return it promptly in the envelope provided. If you return your signed proxy card to us by 11:00 a.m. (Mountain time) on April
30, 2018, we will vote your shares as you direct.
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To vote over the telephone, dial 1-800-652-VOTE (8683) using a touch-tone phone and follow the
recorded instructions. You will be asked to provide the company number and control number from the Notice or proxy card. Your telephone
vote must be received by 11:00 a.m. (Mountain time) on April 30, 2018, to be counted.
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To vote on the internet, go to http://www.investorvote.com/GTE to complete an electronic proxy
card. You will be asked to provide the company number and control number from the Notice or proxy card. Your internet vote must
be received by 11:00 a.m. (Mountain time) on April 30,
2018, to be counted.
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Beneficial Owner: Shares
Registered in the Name of Broker or Bank
If you are a beneficial owner of
shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting instructions,
or these proxy materials and an annual report and form of proxy, from that organization rather than from Gran Tierra. Simply follow
the voting instructions you receive from your broker, bank, or other agent to ensure that your vote is counted. If you have received
these proxy materials and voting instructions therein, simply complete and mail the voting instructions to ensure that your vote
is counted. Alternatively, if permitted by your broker or bank, you may vote by telephone or on the internet as instructed by your
broker, bank or other agent. To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank, or
other agent. Follow the instructions from your broker, bank, or other agent included with these proxy materials, or contact your
broker, bank, or other agent to request a proxy form.
Beneficial Owner: Exchangeable
Shares
If you are a holder of Goldstrike
Exchangeable Shares, you should have received a voting instruction form with these proxy materials from the Goldstrike Trustee,
which is the holder of the one share of Special A Voting Stock. Follow the instructions from the Goldstrike Trustee, or contact
the Goldstrike Trustee for further information. Instruments of proxy must be received by Computershare Trust Company of Canada,
Attention: Manager, Corporate Trust, 600, 530 - 8th Avenue S.W., Calgary, Alberta, Canada T2P 3S8, by 11:00 a.m. (Mountain Time)
on April 30, 2018, or not less than 48 hours before the time of any adjournment(s) of the annual meeting. Follow the directions
on the voting instruction form, which includes how voting instructions may be sent by facsimile transmission.
If you are a holder of record of
Solana Exchangeable Shares, you should have received a voting instruction form with these proxy materials from the Solana Trustee,
which is the holder of the one share of Special B Voting Stock. Follow the instructions from the Solana Trustee, or contact the
Solana Trustee for further information. Instruments of proxy must be received by Computershare Trust Company of Canada, Attention:
Manager, Corporate Trust, 600, 530 - 8th Avenue S.W., Calgary, Alberta, Canada T2P 3S8 by 11:00 a.m. (Mountain Time) on April 30,
2018, or not less than 48 hours before the time of any adjournment(s) of the annual meeting. Follow the directions on the voting
instruction form.
If you are a beneficial owner of
Exchangeable Shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting
instructions from that organization rather than from Gran Tierra. Simply follow the voting instructions in the Notice to ensure
that your vote is counted.
We provide telephone and internet proxy voting to allow you to vote your shares, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your telephone or internet access, such as usage charges from internet access providers and telephone companies.
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How many votes do I have?
On each matter to be voted upon,
you have one vote for each share of common stock you own as of March 12, 2018. In addition, you have one vote for each Exchangeable
Share held as of March 12, 2018, which are represented by the one share of Special A Voting Stock and one share of Special B Voting
Stock of Gran Tierra, as applicable. Holders of Goldstrike Exchangeable Shares should follow the instructions sent to them by the
Goldstrike Trustee and holders of Solana Exchangeable Shares should follow the instructions sent to them by the Solana Trustee
in order to exercise their respective voting rights. Cumulative voting is not permitted.
What if I return a proxy card
or otherwise vote but do not make specific choices?
Stockholder of Record;
Shares Registered in Your Name
If you are a holder of record and
return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable,
“For” the election of all eight nominees for director, “For” the ratification of the selection of KPMG
LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2018, and “For” the
advisory vote to approve named executive officer compensation. If any other matter is properly presented at the annual meeting,
your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
Beneficial Owner; Shares
Registered in the Name of a Broker or Bank
If you are a beneficial owner
of shares registered in the name of your broker, bank or other nominee, and you do not provide the broker or other nominee that
holds your shares with voting instructions, your broker or other nominee may not vote your shares on any proposal other than the
ratification of the selection of KPMG LLP as our independent registered public accounting firm at the annual meeting. See “What
are ‘broker non-votes’?” below. We encourage you to provide voting instructions to the organization that holds
your shares to ensure that your vote is counted on all three proposals.
Holder of Exchangeable
Shares
If you are a holder of Exchangeable
Shares and you do not return a properly filled out voting election, or if you return a signed and dated voting election without
marking voting selections, your shares will not be voted.
What happens if I do not vote?
Stockholder of Record;
Shares Registered in Your Name
If you are a stockholder of record
and do not vote by completing your proxy card, by telephone, over the internet or in person at the annual meeting, your shares
will not be voted.
Beneficial Owner; Shares
Registered in the Name of a Broker or Bank
If you hold your shares in “street
name,” you will receive instructions from your broker, bank or other nominee describing how to vote your shares. If you do
not instruct your broker, bank or other nominee how to vote your shares, they may vote your shares as they decide as to each matter
for which they have discretionary authority under the rules of the NYSE American. This year, the only matter with respect to which
they may vote your shares without voting instructions is the proposal to ratify the selection of KPMG LLP as our independent registered
public accounting firm (Proposal 2).
There are also non-discretionary
matters for which brokers, banks and other nominees do not have discretionary authority to vote unless they receive timely instructions
from you. When a broker, bank or other nominee does not have discretion to vote on a particular matter and you have not given timely
instructions on how the broker, bank or other nominee should vote your shares, a “broker non-vote” results. Although
any broker non-vote would be counted as present at the meeting for purposes of determining a quorum, it would be treated as not
entitled to vote with respect to non-discretionary matters.
If your shares are held in “street
name” and you do not give voting instructions, pursuant to NYSE American Company Guide Section 723, the record holder will
not be permitted to vote your shares with respect to Proposals 1 or 3. If your shares are held in “street name” and
you do not give voting instructions, the record holder will nevertheless be entitled to vote your shares with respect to Proposal
2.
Abstentions occur when stockholders
are present at the annual meeting but voluntarily abstain on any of the matters upon which the stockholders are voting.
Holder of Exchangeable
Shares
If you are a holder of Exchangeable
Shares and you do not return a properly filled out voting election, or if you return a signed and dated voting election without
marking voting selections, your shares will not be voted.
Who is paying for this proxy
solicitation?
We will pay for the entire cost
of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by
telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting
proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial
owners.
What does it mean if I receive
more than one Notice or more than one set of proxy materials?
If you receive more than one Notice
or more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please
follow the voting instructions on the Notices or the instructions on the proxy cards in the proxy materials to ensure that all
of your shares are voted.
Can I change my vote after submitting
my proxy?
Stockholder of Record;
Shares Registered in Your Name
Yes. You can revoke your proxy
at any time before the final vote at the annual meeting. If you are the record holder of your shares, you may revoke your proxy
in any one of the following ways:
|
●
|
You may submit another properly completed proxy card
with a later date, or vote again by telephone or on the internet;
|
|
●
|
You may send a timely written notice that you are revoking your proxy to Gran Tierra’s Corporate Secretary at 900, 520
- 3rd Avenue S.W., Calgary, Alberta, Canada T2P 0R3; or
|
|
●
|
You may attend the annual meeting and vote in person. Simply attending the annual meeting will not, by itself, revoke your
proxy.
|
Your most current proxy card or
telephone or internet proxy is the one that is counted.
Beneficial Owner; Shares
Registered in the Name of a Broker or Bank
If your shares are held by your
broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
Holder of Exchangeable
Shares
If you are a holder of Goldstrike
Exchangeable Shares, you should follow the instructions provided by the Goldstrike Trustee with respect to the Goldstrike Exchangeable
Shares you hold, and if you are a holder of Solana Exchangeable Shares, you should follow the instructions provided by the Solana
Trustee with respect to the Solana Exchangeable Shares you hold.
When are stockholder proposals
due for next year’s annual meeting?
Stockholders who desire to present
proposals at the 2019 annual meeting of stockholders and to have proposals included in our proxy materials pursuant to Rule 14a-8
under the Exchange Act must submit their proposals to us at our principal executive offices (to the Corporate Secretary at 900,
520 - 3rd Avenue S.W., Calgary, Alberta, Canada T2P 0R3), not later than the close of business on November 21, 2018. If the date
of the 2019 annual meeting is changed by more than 30 days from the date of the 2018 annual meeting, the deadline for submitting
proposals is a reasonable time before we begin to print and mail the proxy materials for our 2019 annual meeting.
Our Bylaws provide that stockholders
may nominate persons for election to the Board of Directors or bring any other business before the stockholders at the 2019 annual
meeting only by sending to our Corporate Secretary a notice containing the information required by our Bylaws. Notice to us must
be made not less than 30 or more than 65 days prior to the date of the annual meeting; provided, however, that if the annual meeting
is to be held on a date that is less than 50 days after the date on which the public announcement of the date of the annual meeting
was made by Gran Tierra, notice may be made not later than the close of business on the 10th day following the day on which public
announcement of the date of the annual meeting is first made by Gran Tierra. Detailed information about how to make stockholder
proposals or nominations for our annual meetings of stockholders can be found in our Bylaws.
How are votes counted?
Votes will be counted by the inspector
of election appointed for the annual meeting, who will separately count, for the proposal to elect directors and the other proposals,
votes “For,” “Against,” abstentions and, if applicable, broker non-votes. Broker non-votes have no effect
and will not be counted towards the vote total for any proposal.
What are “broker non-votes”?
As discussed above, when a beneficial
owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to
how to vote on matters deemed by the NYSE American to be “non-routine,” the broker or nominee cannot vote the shares.
These unvoted shares are counted as “broker non-votes.”
How many votes are needed to
approve each proposal?
|
●
|
Proposal No. 1, the election of directors: our bylaws
provide for a majority voting standard for the election of directors in uncontested elections, which is generally defined as an
election in which the number of nominees does not exceed the number of directors to be elected at the meeting. Because this is
an uncontested election, each director shall be elected by the vote of a majority of the votes cast at a meeting of stockholders
at which a quorum is present. A “majority of the votes cast” means that the number of shares voted “For”
a director nominee must exceed the number of votes cast “Against” that director nominee. For these purposes, abstentions
and broker non-votes will not count as a vote “For” or “Against” a nominee’s election and will
have no effect in determining whether a director nominee has received a majority of the votes cast. If an incumbent director is
not elected by a majority of the votes cast, the incumbent director must promptly tender his or her resignation to the Board.
The Nominating and Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the director’s
resignation or whether other action should be taken. The Board will act on the Nominating and Corporate Governance Committee’s
recommendation and publicly disclose its decision within 90 days from the date of the certification of the election results.
|
|
●
|
Proposal No. 2, the ratification of the appointment of KPMG LLP as Gran Tierra’s independent
registered public accounting firm for 2018, will be approved if it receives the affirmative vote of shares representing a majority
of the votes present in person or represented by proxy at the meeting and entitled to vote on the matter. Abstentions will have
the same effect as a vote “Against.” We do not expect that there will be any broker non-votes, as this is a routine
matter.
|
|
●
|
Proposal No. 3, the advisory vote to approve named executive officer compensation, as disclosed
in this proxy statement, will be approved if it receives the affirmative vote of shares representing a majority of the votes present
in person or represented by proxy at the meeting and entitled to vote on the matter. Abstentions will have the same effect as a
vote “Against.” Broker non-votes will have no effect.
|
A quorum of stockholders is necessary
to hold a valid meeting. A quorum will be present if stockholders holding outstanding shares of Gran Tierra’s capital stock
representing at least a majority of the total number of votes that may be cast at the annual meeting are present at the annual
meeting in person or represented by proxy. On the record date, there were 391,302,707 votes that could be cast. Those votes were
represented by 385,394,642 shares of common stock outstanding and entitled to vote and 5,908,065 shares of common stock issuable
upon exchange of the Exchangeable Shares and therefore entitled to vote through the one share of Special A Voting Stock and one
share of Special B Voting Stock. Thus, holders of outstanding shares representing at least 195,651,354 votes must be present in
person or represented by proxy at the annual meeting to have a quorum.
Your shares will be counted towards
the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you
vote in person at the annual meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there
is no quorum, the Chairman of the annual meeting or the holders of a majority of shares present at the annual meeting in person
or represented by proxy must adjourn the annual meeting to another date.
How can I find out the results
of the voting at the annual meeting?
Preliminary voting results will
be announced at the annual meeting. In addition, final voting results will be published in a current report on Form 8-K that we
expect to file within four business days after the annual meeting.
What proxy materials are available
on the internet?
The notice of meeting, proxy
statement and annual report to stockholders are available to view at:
http://www.edocumentview.com/GTE
or
on Gran Tierra’s website at: http://www.grantierra.com
See “How do I vote?” above for voting instructions.
CORPORATE GOVERNANCE AND BOARD MATTERS
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board of Directors is nominating
the eight individuals identified below for election as directors. Unless you specify differently, proxies received will be voted
FOR Robert B. Hodgins, Peter J. Dey, Gary S. Guidry, Evan Hazell, Ronald W. Royal, Sondra Scott, David P. Smith and Brooke Wade.
Each director to be elected and qualified will hold office until the next annual meeting of stockholders and until his or her successor
is elected, or, if sooner, until the director’s death, resignation or removal. Each of the nominees listed below is currently
a director of Gran Tierra. Sondra Scott was appointed to the Board on September 19, 2017 based on the recommendation of the Chief
Executive Officer and Nominating and Corporate Governance Committee. It is Gran Tierra’s policy to invite nominees for directors
to attend the annual meeting; all of the directors then in office attended the 2017 annual meeting of stockholders.
Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election of the eight nominees named below. If any nominee
becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will
instead be voted for the election of a substitute nominee proposed by Gran Tierra.
THE BOARD RECOMMENDS
A VOTE “FOR” EACH OF THE NOMINEES NAMED BELOW.
NOMINEES FOR DIRECTOR
|
ROBERT B. HODGINS
Age: 66
Calgary, Alberta, Canada
Director since May
2015
Independent Director
Shareholder approval rating at the 2017 Gran Tierra
annual meeting – 76.8%
|
Mr. Hodgins has been an independent
businessman since November 2004. Prior thereto, Mr. Hodgins served as the Chief Financial Officer of Pengrowth Energy Trust (a
TSX and NYSE-listed energy trust) from 2002 to 2004. Prior to that, Mr. Hodgins held the position of Vice President and Treasurer
of Canadian Pacific Limited (a a Toronto Stock Exchange (“TSX”) and NYSE-listed diversified energy, transportation
and hotels company) from 1998 to 2002 and was Chief Financial Officer of TransCanada PipeLines Limited (a TSX and NYSE-listed energy
transportation company) from 1993 to 1998. Mr. Hodgins received an Honours Bachelor of Arts in Business from the Richard Ivey School
of Business at the University of Western Ontario and received a Chartered Accountant designation and was admitted as a member of
the Institute of Chartered Accountants of Ontario in 1977 and Alberta in 1991. Mr. Hodgins is a member of the Institute of Corporate
Directors.
Qualifications: Mr. Hodgins’
30-plus years in the oil and gas industry as an executive and director and his strong reputation in the Canadian business community
brings valuable industry and leadership experience to the Board. As a Chartered Accountant and experienced executive in senior
financial roles with several Canadian companies, Mr. Hodgins qualifies as one of Gran Tierra’s Audit Committee financial
experts.
Board and Committee Participation
|
Position
|
Meetings
|
Attendance
|
Board of Directors
|
Chair
|
9/9
|
100%
|
Audit Committee
|
Member
|
4/4
|
100%
|
Compensation Committee
|
Member
|
3/3
|
100%
|
Nominating and Corporate Governance Committee
|
Member
|
2/2
|
100%
|
Year
|
Common Shares
|
DSUs
|
Stock Options
|
2017
|
10,000
|
77,899
|
85,000
|
2016
|
10,000
|
38,045
|
85,000
|
Other Public Board Directorships
|
Committee
Position(s)
(1)
|
AltaGas Ltd. (TSX)
|
Audit Committee (Chairman)
Governance Committee
|
EnerPlus Corporation
|
Audit & Risk Management Committee (Chair)
Corporate Governance & Nominating Committee
|
MEG Energy Corp. (TSX)
|
Audit Committee (Chairman)
Compensation Committee
|
|
(1)
|
The Board of Directors has determined that Mr. Hodgins’
ability to effectively serve on the Company’s Audit Committee is not impaired by his membership on the Audit Committee of
the other public boards listed above.
|
|
PETER J. DEY
Age: 77
Toronto, Ontario, Canada
Director since May
2015
Independent Director
Shareholder approval rating at the 2017 Gran Tierra
annual meeting – 96.7%
|
Board and Committee Participation
|
Position
|
Meetings
|
Attendance
|
Board of Directors
|
Member
|
9/9
|
100%
|
Nominating and Corporate Governance Committee
|
Chair
|
2/2
|
100%
|
Compensation Committee
|
Member
|
3/3
|
100%
|
Mr. Dey has been the Chairman of
Paradigm Capital Inc., an investment dealer, since November 2005. Mr. Dey was a Partner of the Toronto law firm Osler, Hoskin &
Harcourt LLP, where he specialized in corporate board issues and mergers and acquisitions, from 2001 to 2005, and prior to that
from 1985 to 1994 and from 1973 to 1983. From 1994 to 2001, Mr. Dey was Chairman of Morgan Stanley Canada Limited. From 1993 to
1995, Mr. Dey chaired The Toronto Stock Exchange Committee on Corporate Governance in Canada that released the December 1994 report
entitled “Where Were the Directors?”, known as the Dey Report. Mr. Dey has also served as Chairman of the Ontario Securities
Commission and was Canada’s representative to the Organisation for Economic Co-operation and Development (“OECD”)
Task Force that developed the OECD Principles of Corporate Governance released in May of 1999. Mr. Dey attended Queen’s University,
where he earned his Bachelor of Science in 1963 and Dalhousie University, where he earned his Bachelor of Laws degree in 1966.
He received his Master of Laws degree from Harvard University in 1967.
Qualifications: With more than
40 years of experience dealing with issues of corporate governance ranging from serving on public boards to private practice as
a lawyer, Mr. Dey provides significant value to Gran Tierra. His experience as a former director with other public company boards
provides significant value to Gran Tierra.
Year
|
Common Shares
|
DSUs
|
Stock Options
|
2017
|
20,000
|
71,120
|
108,184
|
2016
|
20,000
|
24,253
|
96,048
|
Other Public Board Directorships
|
Committee Position(s)
|
None
|
|
|
GARY S. GUIDRY
Age: 62
Calgary, Alberta, Canada
Director since May
2015
Non-Independent Director - President and Chief Executive Officer
Shareholder approval rating at the 2017 Gran Tierra annual meeting – 81.1%
|
Board and Committee Participation
|
Position
|
Meetings
|
Attendance
|
Board of Directors
|
Member
|
9/9
|
100%
|
Mr. Guidry is a professional engineer
and has more than 35 years of experience developing and maximizing assets in the international oil and gas industry. Mr. Guidry
has direct experience managing large, international projects, including assets in Latin America, Africa, the Middle-East and Asia.
Prior to joining Gran Tierra, Mr. Guidry was the President and Chief Executive Officer of Caracal Energy, a London Stock Exchange
listed oil and gas company with operations in Chad, Africa. He held that position from mid-2011 until the company was acquired
by Glencore plc for $1.8 billion in mid-2014. In 2014, Mr. Guidry was awarded the Oil Council Executive of the Year award for his
leadership role with Caracal. Prior to Caracal, Mr. Guidry was the President and Chief Executive Officer of Orion Oil and Gas (TSX
listed), which operated in western Canada from mid-2009 until mid-2011 when it was sold. From May 2005 until December 2008, he
was the President and Chief Executive Officer of Tanganyika Oil Company (TSX listed) which operated in Syria and Egypt. Prior to
Tanganyika, Mr. Guidry was Chief Executive Officer of Calpine Natural Gas Trust. Mr. Guidry is an Alberta-registered Professional
Engineer and a member of the Association of Professional Engineers and Geoscientists. He received a Bachelor of Science in Petroleum
Engineering from Texas A&M University in 1980.
Qualifications: Mr. Guidry, as
Chief Executive Officer, is responsible for the operations, financial management and implementation of the Company’s strategy.
Mr. Guidry’s extensive experience in the oil and gas industry and international operations developed through his experience
as a senior executive at several publicly traded companies brings valuable expertise and perspective to the Board.
Year
|
Common Shares
|
RSUs
|
PSUs
|
Stock Options
|
2017
|
2,527,000
|
31,667
|
638,400
|
974,700
|
2016
|
2,482,000
|
63,334
|
312,800
|
790,500
|
Other Public Board Directorships
|
Committee Position(s)
|
Africa Oil Corp.
|
Audit Committee
|
ShaMaran
Petroleum Corp.
(1)
(until May 2018)
|
Audit Committee
|
Sterling
Resources Ltd.
(2)
(related company)
|
|
|
(1)
|
Mr. Guidry has informed ShaMaran Petroleum Corp. that
he will not be standing for re-election at the 2018 annual meeting of ShaMaran Petroleum Corp.
|
|
(2)
|
Sterling Resources Ltd. purchased all of Gran Tierra’s
assets in Peru effective December 18, 2017. The Company retains approximately 45.8% of Sterling’s common shares, and has
entered into an investor rights agreement whereby the Company has the right, among other things, to nominate two directors to
the board of Sterling.
|
|
EVAN HAZELL
Age: 59
Calgary, Alberta, Canada
Director since June
2015
Independent Director
Shareholder approval rating at the 2017 Gran
Tierra annual meeting – 99.4%
|
Board and Committee Participation
|
Position
|
Meetings
|
Attendance
|
Board of Directors
|
Member
|
9/9
|
100%
|
Health, Safety and Environment Committee
|
Chair
|
4/4
|
100%
|
Reserves Committee
|
Member
|
3/3
|
100%
|
Mr. Hazell has been involved in
the global oil and gas industry for over 30 years, initially as a petroleum engineer and then as an investment banker. From 1998
to 2011, Mr. Hazell acted as a managing director at several financial institutions including HSBC Global Investment Bank and RBC
Capital Markets. At present he serves as a director of Primavera Resources Corp., Black Swan Energy and Kaisen Energy Corp. Mr.
Hazell also serves as a director of a number of non-profit and community organizations including Calgary Municipal Land Corporation,
Social Venture Partners Calgary, Opera America, and Pacific Opera Victoria. Mr. Hazell holds a Bachelor of Applied Science degree
from Queen’s University, a Master of Engineering degree from the University of Calgary, and a Master of Business Administration
degree from the University of Michigan, and is licensed as a Professional Engineer in Alberta.
Qualifications: Mr. Hazell possesses
specific attributes that qualify him to serve as a director, including his extensive experience in the global energy industry as
well as in the financial sector. Mr. Hazell also has significant experience at nonprofit organizations. His education in business
and engineering provides significant value to Gran Tierra.
Year
|
Common Shares
|
DSUs
|
Stock Options
|
2017
|
55,000
|
66,887
|
108,184
|
2016
|
55,000
|
32,667
|
96,408
|
Other Public Board Directorships
|
Committee Position(s)
|
None
|
|
|
RONALD W. ROYAL
Age: 69
Abbotsford, British Columbia, Canada
Director
since May 2015
Independent Director
Shareholder approval rating at the 2017 Gran
Tierra annual meeting – 99.4%
|
Board and Committee Participation
|
Position
|
Meetings
|
Attendance
|
Board of Directors
|
Member
|
9/9
|
100%
|
Audit Committee
|
Member
|
4/4
|
100%
|
Health, Safety & Environment Committee
|
Member
|
4/4
|
100%
|
Reserves Committee
|
Chair
|
3/3
|
100%
|
Mr. Royal has been a private businessman
since April 2007. Mr. Royal has more than 35 years of experience with Imperial Oil Ltd. and ExxonMobil’s international upstream
affiliates. From 2011 to 2014, he served on the board of directors of Caracal Energy Inc., and prior to 2010, several other boards
of private oil companies. Prior to retiring in 2007, Mr. Royal was President and Production Manager of Esso Exploration and Production
Chad Inc. and resided in N’Djamena, Chad from 2002 to 2007. In 2003, he was awarded the title “Chevalier de l’Ordre
National du Chad” for his contribution to the economic development of Chad. Mr. Royal received his Bachelor of Applied Science
from the University of British Columbia in 1972 and completed the Executive Development Program at Cornell University in 1986.
He has been a member of the Association of Professional Engineers and Geoscientists of Alberta since 1972.
Qualifications: Mr. Royal brings
to the Board over 35 years of experience in the oil and gas industry, having previously held a variety of management positions
both domestically and internationally.
Year
|
Common Shares
|
DSUs
|
Stock Options
|
2017
|
254,667
|
100,595
|
108,184
|
2016
|
254,667
|
49,130
|
96,408
|
Other Public Board Directorships
|
Committee Position(s)
|
Valeura Energy Inc.
|
Audit Committee
Reserves & Health, Safety and Environment Committee
|
|
SONDRA SCOTT
Age: 51
New York, New York
Director since September 2017
Independent Director
Shareholder approval rating at the 2017 Gran
Tierra annual meeting – n/a
|
Board and Committee Participation
|
Position
|
Meetings
|
Attendance
|
Board of Directors
|
Member
|
3/3
|
100%
|
Health, Safety & Environment Committee
|
Member
|
1/1
|
100%
|
Nominating and Corporate Governance Committee
|
Member
|
n/a
|
n/a
|
Reserves Committee
|
Member
|
n/a
|
n/a
|
Ms. Scott is currently president
of Verisk Maplecroft, a data analytics and risk assessment company, where she is responsible for leading the company’s globalization
and growth effort in the political, economic, human rights and environmental risk analytics market. Before joining Verisk Maplecroft
in 2015, Ms. Scott filled a number of roles at Wood Mackenzie, a global energy, chemicals, renewables, metals and mining research
and consultancy company, over a 13-year period. Her most recent position was head of Global Markets where she led a team focusing
on macro energy economics and risk. Previously, Ms. Scott led Wood Mackenzie’s energy consultancy practice. Ms. Scott holds
a Master of Science, Petroleum Engineering and Economics degree from a joint program with the University of Pennsylvania and the
Institut Francais du Petrole (IFP) and received a Bachelor of Arts, Economics and Earth Sciences degree from Wesleyan University.
Qualifications: Ms. Scott has more
than 25 years of experience as an energy and risk analytics business leader. She has significant leadership experience having
led multi-sized global research and consultancy teams. Ms. Scott has worked in the United States, the United Kingdom, and Latin
America, globalising businesses and building local practices.
Year
|
Common Shares
|
DSUs
|
Stock Options
|
2017
|
0
|
6,990
|
85,000
|
Other Public Board Directorships
|
Committee Position(s)
|
None
|
|
|
DAVID P. SMITH
Age: 59
Toronto, Ontario, Canada
Director since May
2015
Independent Director
Shareholder approval rating at the 2017 Gran
Tierra annual meeting – 99.4%
|
Mr. Smith is a corporate director
with extensive experience in the investment banking, investment research and management industry. He has been the Chairman of the
Board of Directors of Superior Plus Corp., a diversified energy and specialty chemicals company, since August 2014. From March
2004 to August 2015, Mr. Smith served as Chair of the Audit Committee of Superior Plus Corp. Previously, Mr. Smith was Managing
Partner of Enterprise Capital Management Inc. Mr. Smith is a Chartered Financial Analyst and graduated with honors from the University
of Western Ontario with a degree in Business Administration in 1981.
Qualifications: Mr. Smith brings
to the Board significant financial expertise, having spent his professional career in investment banking, investment research and
management. His experience as the Chairman at Superior Plus Corp. and his previous experience as a director and member of the audit
committee of other public companies provide valuable perspective to Gran Tierra’s Board. Mr. Smith’s education and
experience qualifies him as one of Gran Tierra’s Audit Committee financial experts.
Board and Committee Participation
|
Position
|
Meetings
|
Attendance
|
Board of Directors
|
Member
|
9/9
|
100%
|
Audit Committee
|
Chair
|
4/4
|
100%
|
Health, Safety & Environment Committee
|
Member
|
4/4
|
100%
|
Year
|
Common Shares
|
DSUs
|
Stock Options
|
2017
|
187,500
|
31,682
|
108,184
|
2016
|
130,000
|
15,473
|
96,408
|
Other Public Board Directorships
|
Committee Position(s)
|
Superior Plus Corp.
|
Chairman
|
|
BROOKE WADE
Age: 64
Vancouver, British Columbia, Canada
Director
since June 2015
Independent Director
Shareholder approval rating at the 2017 Gran
Tierra annual meeting – 97.9%
|
Mr. Wade is the President of Wade
Capital Corporation, a private investment company active in private equity, oil and gas, real estate and industrial businesses.
From 1994 until 2005, Mr. Wade was the co-founder and Chairman and Chief Executive Officer of Acetex Corporation, a publicly traded
chemical company specializing in acetyls, specialty polymers, and films. In July 2005, Acetex was acquired by Blackstone. Prior
to founding Acetex Corporation, Mr. Wade was founding President and Chief Executive Officer of Methanex Corporation. In 1991, Ocelot
Industries spun out its oil and gas assets and began a plan of growth through acquisition into what is today Methanex Corporation
— the world’s largest methanol producer. Prior to joining Ocelot, he was involved in a number of independent business
ventures. Mr. Wade serves on the board of Kinder Morgan Canada Limited and also serves on the boards of several private companies
including Novinium, Inc., Belkin Enterprises Ltd., and is a member of the Advisory Board of Northbridge Capital Partners and is
a participant of AEA Investors groups of funds. In addition, Mr. Wade is a member of the Dean’s Advisory Council of the John
F. Kennedy School of Government at Harvard University and the Buck Advisory Council of The Buck Institute for Research on Aging.
Mr. Wade earned a Bachelor of Commerce Degree from the University of Calgary in 1974 and received his Chartered Accountant designation
in 1977. In 2012, Mr. Wade became a Fellow of the Institute of Chartered Accountants of British Columbia.
Qualifications: Mr. Wade’s
extensive executive experience provides the Board with strong leadership and decision-making capabilities. Having served as chief
executive officer of two public companies, Mr. Wade has deep knowledge of key business issues, including finance and capital markets.
Board and Committee Participation
|
Position
|
Meetings
|
Attendance
|
Board of Directors
|
Member
|
9/9
|
100%
|
Compensation Committee
|
Chair
|
3/3
|
100%
|
Nominating and Corporate Governance Committee
|
Member
|
2/2
|
100%
|
Reserves Committee
|
Member
|
3/3
|
100%
|
Year
|
Common Shares
|
DSUs
|
Stock Options
|
2017
|
492,600
|
100,595
|
108,184
|
2016
|
350,000
|
49,130
|
96,408
|
Other Public Board Directorships
|
Committee Position(s)
|
Kinder Morgan Canada Limited
|
Compensation Committee (Chair)
Audit Committee
Nominating and Governance Committee
Health and Safety
Committee
|
Majority Voting Standard
Our Bylaws provide for a majority
voting standard for the election of directors in uncontested elections, which is generally defined as an election in which the
number of nominees does not exceed the number of directors to be elected at the meeting. Because this is an uncontested election,
each director shall be elected by the vote of a majority of the votes cast at a meeting of stockholders at which a quorum is present.
A “majority of the votes cast” means that the number of shares voted “For” a director nominee must exceed
the number of votes cast “Against” that director nominee. For these purposes, abstentions and broker non-votes will
not count as a vote “For” or “Against” a nominee’s election and will have no effect in determining
whether a director nominee has received a majority of the votes cast. If an incumbent director is not elected by a majority of
the votes cast, the incumbent director must promptly tender his or her or her resignation to the Board. The Nominating and Corporate
Governance Committee will make a recommendation to the Board on whether to accept or reject the director’s resignation or
whether other action should be taken. The Nominating and Corporate Governance Committee shall recommend, and the Board of Directors’
decision shall be, to accept the resignation absent exceptional circumstances. The Board will act on the Nominating and Corporate
Governance Committee’s recommendation within 90 days from the date of the meeting of stockholders and publicly disclose its
decision If the Board of Directors determines not to accept a resignation, the public disclosure shall fully state the reasons
for such decision. A director who tenders his or her or her resignation after failing to receive a majority of the votes cast will
not participate in the Nominating and Corporate Governance Committee’s or the Board’s recommendation or decision or
any deliberations related thereto.
Other Information Regarding
Our Directors
Our above-listed directors have
neither been convicted in any criminal proceeding during the past ten years nor been parties to any judicial or administrative
proceeding during the past ten years that resulted in a judgment, decree or final order enjoining them from future violations
of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities
law or commodities law. Similarly, no bankruptcy petitions have been filed by or against any business or property of any of our
directors or officers, nor has any bankruptcy petition been filed against a partnership or business association in which these
persons were general partners or executive officers.
Skills Matrix
Below is a listing of each director’s
key skills, together with a description of those key skills and experience desirable to support the strategic direction of Gran
Tierra. Not every director is expected to be skilled in every area, however, we aim for the Board to have a balance of skills and
experience.
Skills
and
Experience
|
Peter
J.
Dey
|
Gary
S.
Guidry
(President
&
CEO)
|
Evan
Hazell
|
Robert
B.
Hodgins
(Chair)
|
Ronald
W.
Royal
|
Sondra
Scott
|
David
P.
Smith
|
Brooke
Wade
|
Relevant Industry Skills
|
Energy Industry Executive Experience
|
●
|
●
|
●
|
●
|
●
|
●
|
|
●
|
Health, Safety and Environment Issues
|
●
|
●
|
●
|
|
●
|
●
|
●
|
|
Engineering / Geology / Geophysics
|
|
●
|
●
|
|
●
|
●
|
|
|
Hydrocarbon Transportation and Marketing
|
|
●
|
|
●
|
●
|
●
|
|
●
|
General Business Skills
|
Leadership
|
●
|
●
|
●
|
●
|
●
|
●
|
|
●
|
Board Experience
|
●
|
●
|
●
|
●
|
●
|
|
●
|
●
|
Finance / Capital Markets
|
●
|
●
|
●
|
●
|
|
|
●
|
●
|
Mergers and Acquisitions
|
●
|
●
|
●
|
●
|
●
|
●
|
●
|
●
|
Legal and Governance
|
●
|
●
|
|
●
|
|
●
|
●
|
●
|
Government and Public Affairs
|
●
|
●
|
●
|
●
|
●
|
●
|
|
|
International Experience
|
●
|
●
|
●
|
●
|
●
|
●
|
|
●
|
Human Resources and Compensation
|
●
|
●
|
|
●
|
|
●
|
●
|
●
|
Information Technology
|
|
●
|
|
●
|
|
●
|
|
|
Risk Management
|
●
|
●
|
|
●
|
●
|
●
|
●
|
|
Strategic Planning
|
●
|
●
|
●
|
●
|
●
|
●
|
●
|
●
|
Accounting /Audit
|
●
|
|
|
●
|
●
|
|
●
|
●
|
Independence of the Board of
Directors
Gran Tierra follows the listing
standards of the NYSE American. As required under the NYSE American listing standards, a majority of the members of a listed company’s
board of directors must qualify as “independent,” as affirmatively determined by the Board.
The Board conducts an annual review
regarding the independence from the Company’s management of each of its members. After review of all relevant identified
transactions or relationships between each director, or any of his or her family members, and Gran Tierra, its senior management
and its independent auditors, the Board has affirmatively determined that, other than Mr. Guidry, each of our directors and nominees
for director (Peter J. Dey, Evan Hazell, Robert B. Hodgins, Ronald W. Royal, Sondra Scott, David P. Smith and Brooke Wade), are
independent directors within the meaning of the applicable NYSE American listing standards. In making this determination, the
Board found that none of these directors or nominees for director had a material or other disqualifying relationship with Gran
Tierra. Mr. Guidry, Gran Tierra’s President and Chief Executive Officer, is not an independent director by virtue of his
employment with Gran Tierra.
In connection with its assessment
of the independence of each non-employee director, the Board of Directors also determined that (i) Messrs. Smith, Hodgins and Royal,
are independent as defined in Section 10A of the Exchange Act and under the standards set forth by the NYSE American applicable
to members of the Audit Committee (ii) Messrs. Wade, Dey and Hodgins, are independent under the standards set forth by the NYSE
American applicable to members of the Compensation Committee and (iii) Ms. Scott and Messrs. Dey, Hodgins and Wade, are independent
under the standards set forth by the NYSE American applicable to members of the Nominating and Corporate Governance Committee.
Stockholder Recommendations
and Nominations to the Board
The Nominating and Corporate Governance
Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does
not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth on page 24 in the section
Considerations in Evaluating Director Nominees based on whether or not the candidate was recommended by a stockholder. Stockholders
who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for
election to the Board may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at
the following address: Gran Tierra Energy Inc., 900, 520 - 3 Avenue S.W., Calgary, Alberta, Canada T2P 0R3, Attention: Director
Nominations. This written recommendation must be delivered at least 120 days prior to the anniversary of the mailing of Gran Tierra’s
proxy statement for the last annual meeting of stockholders. Submissions must include the full name of the proposed nominee, a
description of the proposed nominee’s business experience for at least the previous five years, complete biographical information,
a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder
is a beneficial or record holder of Gran Tierra’s stock. Any such submission must be accompanied by the written consent of
the proposed nominee to be named as a nominee and to serve as a director if elected.
Code of Ethics
Gran Tierra has adopted a Code
of Business Conduct and Ethics which is available in English and Spanish and applies to every employee, officer and director. Employees,
officers and directors are expected to understand the Code and its application to the performance of his or her business responsibilities.
The Code of Business Conduct and Ethics is available on the Company’s website at www.grantierra.com/governance. If Gran
Tierra makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the
Code of Business Conduct and Ethics to any executive officer or director, Gran Tierra will promptly disclose the nature of the
amendment or waiver on its website. The Board did not grant any waiver of the Code in favor of a director or executive officer
in 2017.
Diversity
Gran Tierra believes in the importance
of diversity at all levels throughout the Company. In addition to the traditional concepts of diversity (i.e., gender, culture
and geographic region), we believe it is important for the Board to achieve a diversity of knowledge, experience and capabilities
that support the Company’s strategic direction. Currently, Gran Tierra does not have a formal policy concerning the diversity
of director nominees as it is ultimately the skills and experience that are most important in determining the value that an individual
brings to the Board.
THE BOARD’S ROLE AND
RESPONSIBILITIES
Role of the Board of Directors
The Board is selected by the stockholders
to provide oversight of and strategic guidance to senior management. The core responsibility of a Board member is to fulfill
his or her or her fiduciary duties of care and loyalty and otherwise to exercise his or her business judgment in the best interests
of the Company and its stockholders. The Board has responsibilities to review, approve and monitor fundamental financial and business
strategies and major corporate actions, assess major risks facing the Company and consider ways to address those risks, select
and oversee management and determine its composition and oversee the establishment and maintenance of processes and conditions
to maintain the integrity of the Company. Directors must act with integrity and are expected to demonstrate a commitment to the
company, its values and its business and to long-term stockholder value. The duties and responsibilities of the Board and significant
issues of corporate governance are set out in the Company’s Corporate Governance Guidelines which are regularly reviewed
by the Nominating and Corporate Governance Committee. The guidelines are available on the Company’s website at www.grantierra.com/governance.
Succession Planning
As part of its mandate and annual
workplan, the Nominating and Corporate Governance Committee reviews the succession plan for each senior officer, including the
President and Chief Executive Officer. The Nominating and Corporate Governance Committee is responsible for ensuring that there
is an orderly succession plan for the position of the President and Chief Executive Officer and other members of senior management.
To meet this obligation, the President and Chief Executive Officer meets with the Nominating and Corporate Governance Committee
and reviews each position, the status of the incumbent, a review of our talent pool and the succession plan for each role.
Board Role in Risk Oversight
The full Board is entrusted with
the responsibility for overseeing the significant risks to which our business is exposed and ensuring there are processes in place
to effectively identify, monitor and manage them. A significant risk is one that, if it were to occur, could materially impact
our ability to meet or support our business objectives. The Board delegates responsibility for the execution of certain elements
of risk oversight to the committees in order to ensure appropriate expertise, attention and diligence. The committees oversee the
relevant risk areas and report to the Board regularly. Each committee operates according to a Board-approved written mandate outlining
its duties and responsibilities. They also oversee the procedures and programs put in place by management to mitigate the risks
and the allocation of adequate resources to address the risks. Management is responsible for ensuring that the Board and its committees
are kept well informed of changing risks. The risk oversight responsibilities of the committees include the following:
The Audit Committee is responsible
for overseeing the integrity of the Company’s financial statements, the independent auditor’s qualifications and independence,
the performance of the Company’s internal audit function and independent auditor, compliance with legal and regulatory requirements,
and the Company’s accounting and financing reporting processes.
The Compensation Committee is responsible
for oversight of compensation-related risks, including reviewing management’s assessment of risks related to employee compensation
programs.
The Health, Safety and Environment
Committee assists in overseeing the development, monitoring and effective implementation of systems, programs and initiatives to
promote the management of health, safety and security at Gran Tierra and to address environmental, safety and operational risks.
Additional information can be found in our Corporate Responsibility Report which is available on the Company’s website at
http://www.grantierra.com/corporate-responsibility.
The Nominating and Corporate Governance
Committee assists in overseeing governance related risks, including regulatory, reputation and other risks.
Communications With The Board
Of Directors
The Board has adopted a formal
process by which stockholders and other interested persons may communicate with the Board or any of its directors. This information
is available on Gran Tierra’s website at www.grantierra.com/governance.
BOARD STRUCTURE AND PROCESSES
Board Leadership Structure
Robert B. Hodgins currently serves
as non-executive Chairman of our Board. The Board believes that the current board leadership structure, coupled with a strong
emphasis on board independence, effectively allocates authority, responsibility, and oversight between management and the independent
members of our Board. We believe separation of the roles of Chairman and Chief Executive Officer helps preserve our Board’s
independence and objectivity and provides an appropriate division of labor between our Chairman and Chief Executive Officer. The
Chairman of our Board presides over meetings of the Board, presides over meetings of stockholders, consults and advises the Board
and its committees on the business and affairs of the Company, and performs additional duties as the Board may otherwise determine
and delegate.
Board Effectiveness and Director
Assessment
The Board performs an annual self-assessment,
led by the Chair of the Nominations and Corporate Governance Committee, to evaluate its effectiveness in fulfilling its obligations.
Directors complete a written questionnaire covering performance of the Board and its committees. The Chair of the Nominations
and Corporate Governance Committee then interviews each director to obtain an assessment of the effectiveness of the Board and
committees, as well as director performance and Board dynamics, summarizes these individual assessments for discussion with the
Board and committees, and then leads a discussion with the Nominating and Corporate Governance Committee and the Board.
Considerations in Evaluating
Director Nominees
The Nominating and Corporate Governance
Committee is responsible for identifying and recruiting new candidates for nomination to the Board. The Nominating and Corporate
Governance Committee considers recommendations for nominees for directorships submitted by stockholders. The Company will evaluate
director nominees proposed by stockholders on the same basis as recommendations received from any other source. Please see “Stockholder
Proposals” in this Proxy Statement and our Bylaws for procedures to submit director nominees to the Nominating and Corporate
Governance Committee.
In developing recommendations for
the Board, the Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating nominees
for directors. Candidates for director nominees are reviewed in the context of the current composition of the Board, the operating
requirements of Gran Tierra and the long-term interests of stockholders. Some of the qualifications that the Nominating and Corporate
Governance Committee considers include:
|
●
|
independence (as per applicable NYSE American listing
standards and applicable SEC rules and regulations)
|
|
●
|
relevant industry experience
|
|
●
|
excellence in his or her field
|
|
●
|
potential conflicts of interest and other commitments
|
|
●
|
diversity of experience
|
In conducting this assessment,
the Nominating and Corporate Governance Committee considers diversity, age, skills, and such other factors as it deems appropriate
given the current needs of the Board and Gran Tierra, to maintain a balance of knowledge, experience and capability.
The Nominating and Corporate Governance
Committee believes that candidates should have certain minimum qualifications including:
|
●
|
the highest personal and professional ethics and integrity
|
|
●
|
skills that are complementary to those of the existing Board
|
|
●
|
sound business judgment
|
|
●
|
commitment to represent the long-term interests of Gran Tierra’s stockholders
|
To identify, recruit and evaluate
qualified candidates for the Board, the Nominating and Corporate Governance Committee may use the services of professional search
firms. In some cases, nominees have been individuals known to Board members or others through business or other relationships.
In the case of Sondra Scott, a third-party professional search firm identified her as a potential director nominee.
Director Tenure
Gran Tierra does not have a retirement
policy or term limit for directors. We review our Board composition annually to ensure our board has the right skills to ensure
the Company’s long-term success. The Company added one new director in 2017, and in the last three years, the refreshment
rate for Gran Tierra’s board has been 100%.
Orientation and Education
The purpose of the Director Orientation
and Education Program is to ensure there is an orientation program for new directors and an ongoing education program for existing
directors. The program includes materials and resources that will inform and educate directors on the Company’s corporate
governance framework, its business, operations and current issues and strategies. New directors are provided with a copy of the
Company’s director’s manual which includes the Board and Committee mandates, corporate governance guidelines and other
company policies. New directors attend an orientation session at which senior management review the Company’s business, strategic
plans, its significant financial, accounting and risk management issues, its compliance programs, its Code of Business Conduct
and Ethics, its principal officers, and its internal and independent auditors.
Each director is expected to maintain
the necessary level of expertise to perform his or her responsibilities as a director. Continuing education is provided through
a number of methods, including an annual dedicated strategy session, presentations from senior management, employees, and outside
experts to the Board and its Committees on topics of interest and developing issues, as well as the ongoing distribution of relevant
information. These presentations, meetings and discussions serve to increase the Board’s knowledge of the Company and its
business, and assist the Board in the execution of its duties.
Director Meetings and Attendance
Directors are expected to attend, in person or by telephone,
all meetings of the Board and all meetings of each committee of which they are a member. All of the directors who were nominated
attended the 2017 annual meeting.
|
Meetings
Attended
/
Meetings
Held
(2)
|
|
Name
|
Board
|
Audit
Committee
|
Compensation
Committee
|
Health,
Safety
and
Environment
Committee
|
Nominating
and
Corporate
Governance
Committee
|
Reserves
Committee
|
Overall
Attendance
|
Peter J. Dey
|
9/9
|
—
|
3/3
|
—
|
2/2
|
—
|
100%
|
Gary
S. Guidry
(1)
|
9/9
|
—
|
—
|
—
|
—
|
—
|
100%
|
Evan Hazell
|
9/9
|
—
|
—
|
4/4
|
—
|
3/3
|
100%
|
Robert B. Hodgins
|
9/9
|
4/4
|
3/3
|
—
|
2/2
|
—
|
100%
|
Ronald W. Royal
|
9/9
|
4/4
|
—
|
4/4
|
—
|
3/3
|
100%
|
Sondra
Scott
(3)
|
2/2
|
—
|
—
|
1/1
|
—
|
—
|
100%
|
David P. Smith
|
9/9
|
4/4
|
—
|
4/4
|
—
|
—
|
100%
|
Brooke Wade
|
9/9
|
—
|
3/3
|
—
|
2/2
|
3/3
|
100%
|
|
(1)
|
Mr. Guidry is not a member of any committee of the Board
as he is not considered to be an independent director. Mr. Guidry participates in various committee meetings; however, each committee
holds executive sessions without Mr. Guidry present.
|
|
(2)
|
Directors who are not members of the committee attended
certain of these meetings by invitation.
|
|
(3)
|
Ms. Scott was appointed to the Board, Nominating and
Corporate Governance Committee, Reserves Committee and Health, Safety and Environment Committees effective September 19, 2017.
|
Executive Sessions
As part of each regularly scheduled
Board meeting, the independent directors meet without our management team. The Chairman leads such discussions.
INFORMATION REGARDING COMMITTEES
OF THE BOARD OF DIRECTORS
The Board has five standing committees:
an Audit Committee, a Compensation Committee, a Health, Safety and Environment Committee, a Nominating and Corporate Governance
Committee, and a Reserves Committee. The composition and responsibilities are described below. Members serve on these committees
until their resignation or until otherwise determined by the Board.
The committees regularly report
their activities and actions to the full Board, generally at the next Board meeting following the committee meeting. Each of
the committees operates under a charter approved by the Board. Current copies of the charters of the committees are available on
the Company’s website at www.grantierra.com/governance.
Audit Committee
|
Members:
David P. Smith (Chair), Robert B. Hodgins and Ronald W. Royal
|
The Board has determined that each of the members of the Audit Committee satisfies the requirements for audit committee independence and financial literacy under the rules and regulations of the NYSE American and the SEC. The Board has determined that Messrs. Hodgins and Smith are financial experts as per Item 407(d)(5) of Regulation S-K established by the SEC. The Audit Committee held four meetings during the fiscal year ended December 31, 2017.
|
The Audit Committee oversees the accounting and financial
reporting process and the audit of the Company’s financial statements, and assists the Board in monitoring the financial
systems and Gran Tierra’s legal and regulatory compliance. The Audit Committee met four times in 2017 and at each meeting
met with our independent auditors and the internal auditor, both privately and in the presence of management. The Audit Committee
is responsible for, among other things:
● Evaluation
and retention of Auditors
● Approval
of audit engagements
● Approval
of non-audit services
● Review
of audited financial statements and management’s discussion and analysis
● Review
of quarterly financial statements
● Review
of earnings press releases
● Review
of accounting principles and policies
● Review
of guidelines and policies with respect to risk assessment and risk management
● Review
of the scope, adequacy and effectiveness of internal control over financial reporting
● Review
and oversee the internal audit function
● Approval
of the Company’s hedging policies and procedures
The Audit Committee operates under
a written charter that was adopted by the Board and satisfies the applicable standards of the SEC and the NYSE American. A copy
of the Audit Committee Charter is available on Gran Tierra’s website at www.grantierra.com/governance.
|
Compensation Committee
|
Members:
Brooke Wade (Chair), Peter J. Dey and Robert B. Hodgins
|
The Board has determined that each of the members of the Compensation Committee satisfies the requirements for compensation committee independence under the rules and regulations of the NYSE American and the SEC. The Compensation Committee held three meetings during the fiscal year ended December 31, 2017.
|
The Compensation Committee acts on behalf of the Board
to review, recommend for adoption and oversee Gran Tierra’s compensation strategy, policies, plans and programs. The Compensation
Committee is responsible for, among other things:
● Review
and approve the components of compensation for the Chief Executive Officer and other executive officers
● Review
and approve the corporate goals and objectives relevant to the compensation for the Chief Executive Officer and other executive
officers
● Evaluate
the performance of the Chief Executive Officer and other executive officers in light of established goals and objectives
● Establish
policies with respect to equity compensation arrangements
● Review
the risks arising from our compensation policies and practices
● Review
and approve the compensation and other terms of employment or service, including severance and change-in-control arrangements,
of Gran Tierra’s Chief Executive Officer and the other executive officers
● Oversee
Gran Tierra’s equity compensation plans for employees and directors
● Evaluate
and make recommendations regarding director compensation
● Select
compensation consultants and other advisors
● Review
the Compensation Discussion and Analysis
The Compensation Committee operates under a written
charter that was adopted by the Board and satisfies the applicable standards of the SEC and the NYSE American. A copy of the Compensation
Committee Charter is available on Gran Tierra’s website at www.grantierra.com/governance.
|
Health, Safety and Environment Committee
|
Members:
Evan Hazell (Chair), Ronald W. Royal, Sondra Scott and David P. Smith
|
The Board has determined that each of the members of the Health, Safety and Environment Committee satisfies the requirements for independence under the rules and regulations of the NYSE American. The Health, Safety and Environment Committee held four meetings during the fiscal year ended December 31, 2017.
|
The Health, Safety and Environment Committee acts on
behalf of the Board and assists the Board in fulfilling its responsibilities in relation to environmental, health and safety matters,
including monitoring and overseeing the Company’s policies and procedures for ensuring compliance by the Company with environmental
regulatory requirements and ensuring that employees are provided with a safe environment in which to perform their duties. The
Health, Safety and Environment Committee is responsible for, among other things:
● Develop
and approve the environmental, health and safety goals and objectives of the Company
● Review
and monitor the environmental policies and activities of the Company to ensure that the Company is in compliance with environmental
laws and legislation and that the Company conforms with industry standards
● Review
and monitor the health and safety policies and activities of the Company
● Review
environmental, health and safety compliance issues and incidents of non-compliance to determine that the Company is taking all
necessary action in respect of those matters and that the Company has been diligent in carrying out its responsibilities and activities
in that regard
● Review
significant external or internal audit or consultants’ reports relating to environmental, health or safety matters;
● Review
significant legislative and regulatory changes including policy proposals and modifications that could impact the Company
The Health, Safety and Environment Committee operates
under a written charter that was adopted by the Board, a copy of which is available on Gran Tierra’s website at www.grantierra.com/governance.
|
Reserves Committee
|
Members:
Ronald W. Royal (Chair), Evan Hazell, Sondra Scott and Brooke Wade
|
The Board has determined that each of the members of the Reserves Committee satisfies the requirements for independence under the rules and regulations of the NYSE American. The Reserves Committee held three meetings during the fiscal year ended December 31, 2017.
|
The Reserves Committee acts on behalf of the Board and
assists the Board in fulfilling its oversight responsibilities with respect to evaluating and reporting on the Company’s
oil and gas reserves. The Reserves Committee is responsible for, among other things:
● Approve
the engagement of the independent reserves evaluators and their compensation
● Review
disclosure procedures with respect to the oil and gas activities of the Company
● Review
the Company’s procedures for providing information to the independent reserves evaluator
● Meet
in-camera with the independent reserves evaluators
● Make
recommendations to the Board regarding the approval of the Company’s year-end reserves evaluations
The Reserves Committee operates under a written charter
that was adopted by the Board, a copy of which is available on Gran Tierra’s website at www.grantierra.com/governance.
|
Nominating and Corporate Governance Committee
|
Members:
Peter J. Dey (Chair), Robert B. Hodgins, Sondra Scott and Brooke Wade
|
The Board has determined that each of the members of the Nominating and Corporate Governance Committee satisfies the requirements for independence under the rules and regulations of the NYSE American. The Nominating and Corporate Governance Committee held two meetings during the fiscal year ended December 31, 2017.
|
The Nominating and Corporate
Governance Committee acts on behalf of the Board to identify, review and evaluate candidates to serve as directors of Gran Tierra,
making recommendations to the Board regarding corporate governance issues, assessing the performance of the Board and management,
and developing a set of corporate governance principles for Gran Tierra. The Nominating and Corporate Governance Committee is
responsible for, among other things:
● Identify
and review director nominees
● Consider
recommendations for Board nominees and proposals submitted by the Company’s stockholders
● Assess
the performance of the Board
● Recommend
chair and membership of board committees
● Review
director independence
● Consider
and review continuing education for directors
● Review
and assess our Corporate Governance Guidelines
● Review
succession planning for our Chief Executive Officer and other executive officers
● Review
insurance coverage for the directors and executive officers
The Nominating and Corporate Governance Committee operates
under a written charter that was adopted by the Board and satisfies the applicable standards of the SEC and the NYSE American.
A copy of the Compensation Committee Charter is available on Gran Tierra’s website at www.grantierra.com/governance.
|
Compensation Committee Interlocks
And Insider Participation
None of the members of the Compensation
Committee has at any time been an officer or employee of Gran Tierra. No member of the Board or of the Compensation Committee
served as an executive officer of another entity that had one or more of our executive officers serving as a member of that entity’s
board or compensation committee.
DIRECTOR COMPENSATION
The objective of Gran Tierra’s
compensation program for non-executive directors is to attract and retain directors of a quality and nature that will enhance our
long-term sustainable profitability and growth. Director compensation is intended to provide an appropriate level of remuneration
considering the experience, responsibilities, time commitment and accountability of their roles. Any director who is also an employee
of the Company does not receive additional compensation for serving as a director.
Non-executive director compensation
is reviewed annually by the Nominating and Corporate Governance Committee to ensure that it is reasonable in light of the time
required from directors and aligns directors’ interests with those of our stockholders.
In addition, we align the interests
of our directors with our stockholders by requiring that Directors own a minimum number of shares or Deferred Stock Units (“DSUs”
and each a “DSU”). Each non-executive director must hold shares or DSUs with a value equal to three times the annual
cash retainer. The shareholdings of each non-executive director are valued using either the closing price of our shares on December
31 each year or the value at the time they were acquired, whichever is greater. Directors have five years to meet the share ownership
requirement.
Directors’ DSU Plan
The Board introduced a DSU program
in 2016 as a vehicle through which directors may elect to defer receipt of their fees and invest such deferred amounts in notional
shares of Gran Tierra. Directors who have elected to be paid all or a portion of the annual retainer in DSUs receive their awards
on a quarterly basis effective the first day of each quarter. The number of DSUs credited to each director is calculated by dividing
the dollar value of the portion of the director’s retainer that he or she has elected to be paid in the form of DSUs by the
fair market value on the day of determination. The DSUs vest immediately but are not paid out until the director ceases to be a
director of Gran Tierra. The Board has discretion to settle the DSUs in common shares or in a cash amount equal to the market value
of common shares at the time of settlement. DSUs are not shares and do not carry voting rights. DSUs received by directors in lieu
of cash compensation and held by them represent an at-risk investment in Gran Tierra. The value of DSUs is based on the value of
the common shares of Gran Tierra, and therefore is not guaranteed.
Fees and Retainers for 2017
The director compensation structure
for non-executive directors consists of an all-inclusive Board retainer and consists of both a cash component and an equity component.
Each of these components is described below in more detail.
|
|
2017
Annual
Equity Retainer
|
|
2017 Annual Cash Retainer and Travel Fees
(1)
|
|
(DSUs, RSUs, Stock Options)
(1)
|
Chairman of the Board
|
|
$
|
73,735
|
|
|
$
|
103,627
|
|
Director
|
|
$
|
43,842
|
|
|
$
|
56,198
|
|
Audit Committee Chair
|
|
$
|
35,871
|
|
|
|
|
|
Other Committee Chairs
|
|
$
|
23,914
|
|
|
|
|
|
Committee Members
|
|
$
|
11,957
|
|
|
|
|
|
Travel Fee (over three hours) per meeting
|
|
$
|
1,196
|
|
|
|
|
|
|
(1)
|
All compensation to non-employee directors is paid in
Canadian dollars and converted into U.S. dollars for the purposes of the above table.
|
The cash retainer portion of
the director’s fees can be taken in the form of cash, restricted stock Units (“RSUs”), DSUs or any
combination thereof, as elected by each non-employee director. The equity portion must be taken in the form of equity until
the stock ownership guideline is achieved. A maximum of 25% of the equity retainer can be taken as stock options which vest
immediately and expire after five years. DSUs vest immediately but are not paid out until the director ceases to be a
director of Gran Tierra. The number of DSUs, RSUs or stock options credited to each director is calculated by dividing the
dollar value of the portion of the director’s retainer to be paid in the form of DSUs, RSUs or stock options by the
fair market value on the day of determination. A travel fee is paid to each director for travel over three hours to a Board
meeting.
Director Compensation Table
The following table shows for the fiscal year ended
December 31, 2017, the value of amounts paid or granted to all non-employee directors of Gran Tierra:
|
Fees
Earned or
Paid in Cash ($)
(1)
|
Option Awards
($)
|
All
Other
Compensation ($)
(4)
|
Total
($)
|
Peter J. Dey
|
130,752
|
|
5,381
|
136,133
|
Evan Hazell
|
131,999
|
|
1,196
|
133,195
|
Robert B. Hodgins
|
209,297
|
|
5,978
|
215,275
|
Ronald W. Royal
|
142,254
|
|
4,783
|
147,037
|
Sondra Scott
|
38,465
|
81,919
|
2,391
|
122,775
|
David P. Smith
|
145,735
|
|
5,978
|
151,713
|
Brooke Wade
|
142,254
|
|
1,196
|
143,450
|
|
(1)
|
Amounts reported in this column represent Board and committee
retainers. Cash fees that were deferred by an election of a director and received in the form of DSUs (Stock Awards) or Option
Awards are reported in the table below. All compensation to non-employee directors is paid in Canadian dollars and converted into
U.S. dollars for the purposes of the above table. For 2017 compensation amounts, the exchange rate at December 29, 2017 of one
U.S. dollar to Canadian $1.2545 is used.
|
|
|
Stock Awards
|
Option Awards
|
|
Cash ($)
|
($)
(2)
|
($)
(3)
|
Peter J. Dey
|
—
|
117,233
|
13,519
|
Evan Hazell
|
32,881
|
85,599
|
13,519
|
Robert B. Hodgins
|
109,606
|
99,691
|
—
|
Ronald W. Royal
|
—
|
128,735
|
13,519
|
Sondra Scott
|
22,528
|
15,937
|
—
|
David P. Smith
|
91,670
|
40,546
|
13,519
|
Brooke Wade
|
—
|
128,735
|
13,519
|
|
(2)
|
Amounts in the Stock Awards column reflect the aggregate
grant date fair value of DSUs computed in accordance with GAAP. The Company currently intends to settle the DSUs outstanding as
of December 31, 2017 in cash, and, therefore, DSUs are accounted for as liability instruments. The amounts in this column include
DSUs which were issued as a result of an election by the directors to be paid a portion of their retainer in the form of DSUs.
The value ultimately realized by each director may or may not be equal to this determined value. As of December 31, 2017, each
of the non-employee directors had aggregate outstanding DSUs as follows, all of which were fully vested: Mr. Dey – 71,120;
Mr. Hazell – 66,887; Mr. Hodgins – 77,899; Mr. Royal – 100,595; Ms. Scott – 6,990; Mr. Smith – 31,682;
and Mr. Wade – 100,595. None of the directors hold RSUs.
|
|
(3)
|
Amounts in the Options Awards column reflect the aggregate
grant date fair value computed in accordance with ASC 718. Assumptions made in the valuation of stock options granted are discussed
in Note 7 to Gran Tierra’s 2017 Consolidated Financial Statements, which can be found in Item 8 of the Form 10-K filed with
the SEC on February 27, 2018. The amounts in this column include stock options which were issued as a result of an election by
the directors to be paid a portion of the equity retainer in the form of stock options. As of December 31, 2017, each of the non-employee
directors had aggregate outstanding stock options as follows: Mr. Dey – 108,184; Mr. Hazell – 108,184; Mr. Hodgins
- 85,000; Mr. Royal – 108,184; Ms. Scott – 85,000; Mr. Smith – 108,184 and Mr. Wade – 108,184.
|
|
(4)
|
Amounts reported in this column represent fees paid for
travel to or from a meeting of the Board in excess of three hours per meeting.
|
Director Share Ownership Requirements
Gran Tierra has introduced a policy
requiring directors to acquire common shares and/or DSUs equivalent in value to three times their annual cash retainer within five
years from the date of first election to the Board. The following table sets out the non-executive director share ownership requirements
for 2017.
|
Ownership Requirement 2017
|
Chairman of the Board
|
3x annual Board cash retainer fees in Common Shares
and DSUs
$73,735 x 3 = $221,204
|
Non-Executive Directors
|
3x annual Board cash retainer fees in Common Shares
and DSUs
$43,842 x 3 = $131,527
|
All of the current Directors have met or have additional
time to achieve their share ownership requirements as at December 31, 2017.
Name
|
Common
Shares
(#)
|
DSUs
(#)
|
Total
Value
of
Common
Shares
and
DSUs
(1)
($)
|
Share
Ownership
Requirement
($)
|
Share
Ownership
Achievement
|
Share
Ownership
Requirement
Date
|
Peter J. Dey
|
20,000
|
71,120
|
246,024
|
131,527
|
Achieved
|
Feb. 2021
|
Evan Hazell
|
55,000
|
66,887
|
329,095
|
131,527
|
Achieved
|
Feb. 2021
|
Robert B. Hodgins
|
10,000
|
77,899
|
237,327
|
221,204
|
Achieved
|
Feb. 2021
|
Ronald W. Royal
|
254,667
|
100,595
|
959,207
|
131,527
|
Achieved
|
Feb. 2021
|
Sondra Scott
|
–
|
6,990
|
18,873
|
131,527
|
In Progress
|
Sept. 2022
|
David P. Smith
|
187,500
|
31,682
|
591,791
|
131,527
|
Achieved
|
Feb. 2021
|
Brooke Wade
|
492,600
|
100,595
|
1,601,627
|
131,527
|
Achieved
|
Feb. 2021
|
|
(1)
|
Based on the closing market price of the Company’s
shares on December 29, 2017 of $2.70.
|
Directors’ and Officers’
Insurance
We maintain an insurance policy
for directors’ and officers’ liability. It provides coverage for costs incurred to defend and settle claims against
directors or officers up to an annual limit of $100 million. The cost of coverage for 2017 was approximately $390,000. Directors
and officers do not pay any portion of the premiums. No claims were made or became payable in 2017.
AUDIT- RELATED MATTERS
PROPOSAL 2:
RATIFICATION OF SELECTION OF INDEPENDENT
AUDITORS
The Audit Committee of the Board
has selected KPMG LLP as Gran Tierra’s independent registered public accounting firm for the fiscal year ending December
31, 2018, and has further directed that management submit the selection of independent registered public accounting firm for ratification
by the stockholders at the annual meeting.
Neither Gran Tierra’s Bylaws
nor other governing documents or law require stockholder ratification of the selection of KPMG LLP as Gran Tierra’s independent
registered public accounting firm. However, the Audit Committee of the Board is submitting the selection of KPMG LLP to the stockholders
for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee
of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the
Board in its discretion may direct the appointment of different independent auditors at any time during the year if it determines
that such a change would be in the best interests of Gran Tierra and its stockholders.
Representatives of KPMG LLP are
expected to be present at the annual meeting and will have an opportunity to make a statement and respond to appropriate questions
from stockholders raised at the meeting.
THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
RECENT CHANGE IN INDEPENDENT
AUDITORS
As previously reported in a Current
Report on Form 8-K, on March 12, 2018, the Audit Committee of the Board of Directors of the Company approved the dismissal of Deloitte
LLP (“Deloitte”) as the Company’s independent registered public accounting firm. On March 12, 2018, the Company
notified Deloitte of its dismissal effective immediately. Also, on March 12, 2018, the Committee approved the engagement of KPMG
LLP (“KPMG”) as the Company’s independent registered public accounting firm. KPMG was formally engaged on March
12, 2018.
Deloitte’s reports on the
Company’s consolidated financial statements for the fiscal years ended December 31, 2017 and 2016 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
During the two most recent fiscal years ended December 31, 2017 and 2016 and in the subsequent interim period through the Dismissal
Date, there were (i) no disagreements between the Company and Deloitte on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Deloitte, would
have caused Deloitte to make reference to the subject matter of the disagreement in its reports on the consolidated financial statements
for such years and (ii) no “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K). The
Company provided Deloitte with a copy of the disclosure from its Current Report on Form 8-K, and requested that Deloitte furnish
the Company with a letter addressed to the U.S. Securities and Exchange Commission stating whether Deloitte agrees with the disclosures
contained in this Current Report on Form 8-K, and, if not, stating the respects in which it does not agree. The Company received
the requested letter from Deloitte and a copy of Deloitte’s letter was filed as Exhibit 16.1 to its Current Report on Form
8-K.
Furthermore, during the Company’s
two most recent fiscal years ended December 31, 2017 and 2016 and the subsequent interim period through the Dismissal Date, neither
the Company nor anyone on its behalf has consulted with KPMG regarding (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial
statements, and neither a written report nor oral advice was provided to the Company that KPMG concluded was an important factor
considered by the Company in reaching a decision as to the accounting, auditing, or financial reporting issue or (ii) any matter
that was either the subject of a “disagreement” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and
the related instructions to Item 304 of Regulation S-K) or a “reportable event” (as that term is defined in Item 304(a)(1)(v)
of Regulation S-K).
AUDIT COMMITTEE REPORT
The Audit Committee is a committee
of the Board comprised solely of independent directors as required by the listing standards of the NYSE American and rules of the
SEC. In accordance with the written Audit Committee Charter, the Audit Committee assists the Board in fulfilling its responsibility
for oversight of the quality and integrity of the accounting, auditing and financial reporting practices or the Company.
The Audit Committee has reviewed
and discussed the audited financial statements for the fiscal year ended December 31, 2017, with management of Gran Tierra and
the independent registered public accounting firm. Management has the responsibility for the preparation of the Company’s
financial statements, and the independent registered public accounting firm has the responsibility for the audit of those statements.
The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by
applicable standards of the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received
the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements
of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and
has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing,
the Audit Committee has recommended to the Board that the audited financial statements be included in Gran Tierra’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2017, for filing with the Securities and Exchange Commission.
Respectfully submitted by the
Audit Committee of the Board of Directors,
David P. Smith, Chair
Robert B. Hodgins
Ronald W. Royal
PRINCIPAL ACCOUNTANT FEES
AND SERVICES
Set forth below is a summary of
fees paid to Deloitte for services in the years ended December 31, 2017 and 2016. In determining the independence of Deloitte,
the Audit Committee considered whether the provision of non-audit services is compatible with maintaining Deloitte’s independence.
|
|
Year Ended December 31,
|
|
(Thousands of U.S. Dollars)
|
|
2017
|
|
|
2016
|
|
Audit Fees
|
|
$
|
824
|
|
|
$
|
994
|
|
Audit-related Fees
|
|
|
109
|
|
|
|
466
|
|
Tax Fees
|
|
|
—
|
|
|
|
51
|
|
All Other Fees
|
|
|
42
|
|
|
|
—
|
|
Total Fees
|
|
$
|
975
|
|
|
$
|
1,511
|
|
Audit Fees
Audit Fees are primarily for the
annual audit of the Company’s consolidated financial statements included in the Form 10-K, including the audit of the effectiveness
of the Company’s internal controls over financial reporting, the reviews of the Company’s financial statements included
in the Forms 10-Qs, statutory audits, and other procedures required to be performed by the independent auditor to be able to form
an opinion on the Company’s consolidated financial statements.
Audit-Related Fees
Audit-Related Fees include fees
billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s
financial statements or that are traditionally performed by the independent auditor. Audit-Related Fees paid to Deloitte in 2017
were in connection with the Company’s notes offering, dispositions of Brazil and Peru operations, working interest and Block
assignments in Colombia, branch wind-ups in Colombia and Mexican bid round. Audit-Related Fees paid to Deloitte in 2016 were in
connection with the Company’s equity and convertible notes offerings, acquisitions of Petroamerica and PetroLatina, and working
interest and Block assignments in Colombia.
Tax Fees
Tax Fees in 2016 included fees
billed for tax services related to potential acquisitions.
All Other Fees
Other fees in 2017 related to French translation work
and tax consulting performed by Deloitte.
All services described above were approved by the Audit Committee.
Pre-Approval Policies and Procedures
Our Audit Committee is responsible
for the engagement of the independent auditors and for approving, in advance, all auditing services and permitted non-audit services
to be provided by the independent auditors. The Audit Committee maintains a policy for the engagement of independent auditors that
is intended to maintain the independence from Gran Tierra of the independent auditors. In adopting this policy, our Audit Committee
considered the various services that independent auditors have historically performed or may be needed to perform in the future
for Gran Tierra. Under this policy:
|
●
|
the Audit Committee approves the performance by the independent
auditors of audit or permitted non-audit services, subject to restrictions in certain cases, based on the Audit Committee’s
determination that such services would not be likely to impair the independence of the independent auditors from Gran Tierra;
|
|
●
|
Gran Tierra’s management must obtain the specific prior approval of our Audit Committee for
each engagement of the independent auditors to perform any audit or permitted non-audit services; and
|
|
●
|
the performance by the independent auditors of certain types of services (bookkeeping or other
services related to the accounting records or financial statements of Gran Tierra; financial information systems design and implementation;
appraisal or valuation services, fairness opinions or contribution-in-kind reports; actuarial services; internal audit outsourcing
services; management functions or human resources; broker or dealer, or investment adviser or investment banking services; legal
services and expert services unrelated to the audit; and any other service that the applicable federal oversight regulatory authority
determines, by regulation, is impermissible) is prohibited due to the likelihood that their independence would be impaired.
|
In its review of all non-audit
service fees, our Audit Committee considers, among other things, the possible effect of these services on the independence of our
independent auditors. Relevant considerations include, but are not limited to, whether the services are prohibited pursuant to
SEC rules, whether the auditors are best positioned to provide the services, and the percentage of total services the non-audit
services will comprise.
Any approval required under this
policy must be given by our Audit Committee or by the chairperson of the Audit Committee in office at the time, provided that
any pre-approval decisions made by the chairperson must be reported to the Audit Committee at its next scheduled meeting. Gran
Tierra’s Audit Committee will not delegate its responsibilities to approve services performed by the independent auditors
to any member of management. All services rendered by Deloitte in 2017 were subject to our pre-approval policy.
PROPOSAL
3:
ADVISORY
VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
Under
the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Section 14A of the Exchange Act, Gran Tierra’s stockholders
are entitled to vote to approve, on an advisory basis, the compensation of Gran Tierra’s named executive officers as disclosed
in this proxy statement in accordance with SEC rules. At the 2017 annual meeting of stockholders, the stockholders indicated their
preference that Gran Tierra solicit a non-binding advisory vote on the compensation of the named executive officers every year.
Unless the Board modifies its policy on the frequency of holding such advisory votes on compensation, the next such vote will
occur in 2019. This vote is not intended to address any specific item of compensation, but rather the overall compensation of
Gran Tierra’s named executive officers for the last completed fiscal year and the philosophy, policies and practices described
in this proxy statement.
The
compensation of Gran Tierra’s named executive officers subject to the vote is disclosed in the Compensation Discussion and
Analysis, the compensation tables that follow, and the related narrative disclosure contained in this proxy statement. As discussed
in those disclosures, Gran Tierra believes that its compensation policies and decisions are consistent with current market practices
and are focused on pay-for-performance principles that strongly align the interests of our named executive officers with those
of our stockholders. Compensation of Gran Tierra’s named executive officers is designed to enable Gran Tierra to attract
and retain talented and experienced executives to lead Gran Tierra successfully in a competitive environment.
Accordingly,
the Board is asking the stockholders to indicate their support for the compensation of Gran Tierra’s named executive officers
as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED,
that the compensation paid to Gran Tierra’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K,
including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this proxy statement, is hereby
APPROVED.”
Because
the vote is advisory, it is not binding on the Board or Gran Tierra. Nevertheless, the views expressed by the stockholders, whether
through this vote or otherwise, are important to management and the Board and, accordingly, the Board and the Compensation Committee
intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.
THE
BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
SECURITY
OWNERSHIP OF
CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security
Ownership Of Certain Beneficial Owners And Management
The
following table sets forth certain information regarding the beneficial ownership of Gran Tierra common stock as of March 12,
2018 (unless otherwise indicated) by each person known by the Company to own beneficially more than 5% of the outstanding shares
of the Company’s common stock.
|
|
Amount and
|
|
|
|
|
|
|
Nature of Beneficial
|
|
|
Percentage
|
|
Name of Person or Identity of Group
|
|
Ownership
|
|
|
of Class
(1)
|
|
Entities affiliated with GMT Capital Corp.
(2)
|
|
|
57,259,706
|
|
|
|
14.86%
|
|
Luminus Management, LLC
(3)
|
|
|
32,908,586
|
|
|
|
8.54%
|
|
|
(1)
|
Based
on 385,394,642 shares of common stock outstanding (excluding Exchangeable Shares).
|
|
(2)
|
Based
upon information filed on The System for Electronic Disclosure by Insiders (www.sedi.ca) on January 30, 2018, reporting beneficial
ownership as of that date. The address of GMT Capital Corp. is 2300 Windy Ridge Parkway, Suite 550, South Atlanta, GA 30339.
|
|
(3)
|
Based
upon a Schedule 13G/A (Amendment No. 2) filed with the SEC on February 16, 2018 reporting beneficial ownership as of December
31, 2017. The Schedule 13G reports that Luminus Management, LLC has shared voting and dispositive authority with respect to these
shares with Luminus Energy Partners Master Fund, Ltd. and Jonathan Barrett. The address of Luminus Management, LLC is 1700 Broadway,
38th Floor, New York, New York 10019.
|
Beneficial
Ownership of Directors and Named Executive Officers
The
following table sets forth certain information regarding the beneficial ownership of Gran Tierra common stock as of March 12,
2018 by (i) each executive officer of Gran Tierra named in the Summary Compensation Table on page 43, (ii) each current director
of Gran Tierra (including director nominees) and (iii) all of Gran Tierra’s named executive officers and directors as a
group as of March 12, 2018. All ownership percentage calculations below assume that all Exchangeable Shares have been converted
on a one-for-one basis into corresponding shares of our common stock, as such shares vote together with our common stock on all
matters as if shares of our common stock. Except as otherwise noted, the persons named in the table have sole voting and investment
power with respect to all shares beneficially owned by them.
Name
of Person
|
|
Common
Stock
|
|
|
Shares
Which May
Be Acquired
Within 60 Days
(1)
|
|
|
Total
Shares
Beneficially
Owned
(2)
|
|
|
Percent
of
Outstanding
Common Stock
(3)
|
|
Adrian Coral
|
|
|
0
|
|
|
|
148,809
|
|
|
|
148,809
|
|
|
|
*
|
|
Peter J. Dey
|
|
|
20,000
|
|
|
|
165,049
|
|
|
|
185,049
|
|
|
|
*
|
|
Ryan
Ellson
(4)
|
|
|
266,030
|
|
|
|
279,333
|
|
|
|
545,363
|
|
|
|
*
|
|
Jim
Evans
(5)
|
|
|
251,405
|
|
|
|
160,533
|
|
|
|
411,938
|
|
|
|
*
|
|
Gary S. Guidry
|
|
|
2,527,000
|
|
|
|
463,500
|
|
|
|
2,990,500
|
|
|
|
*
|
|
David
Hardy
(6)
|
|
|
78,527
|
|
|
|
699,100
|
|
|
|
777,627
|
|
|
|
*
|
|
Evan Hazell
|
|
|
55,000
|
|
|
|
157,774
|
|
|
|
212,774
|
|
|
|
*
|
|
Robert B. Hodgins
|
|
|
10,000
|
|
|
|
146,930
|
|
|
|
156,930
|
|
|
|
*
|
|
Ronald W. Royal
|
|
|
254,667
|
|
|
|
195,631
|
|
|
|
450,298
|
|
|
|
*
|
|
Sondra Scott
|
|
|
—
|
|
|
|
19,563
|
|
|
|
19,563
|
|
|
|
*
|
|
David
P. Smith
(7)
|
|
|
187,500
|
|
|
|
118,237
|
|
|
|
305,737
|
|
|
|
*
|
|
Brooke
Wade
(8)
|
|
|
642,600
|
|
|
|
195,631
|
|
|
|
838,231
|
|
|
|
*
|
|
Lawrence West
|
|
|
245,030
|
|
|
|
160,533
|
|
|
|
405,563
|
|
|
|
*
|
|
Directors
and named executive officers as a group (total of 13 persons)
|
|
|
4,537,759
|
|
|
|
2,910,623
|
|
|
|
7,448,382
|
|
|
|
1.9%
|
|
|
(1)
|
Includes
shares which may be acquired as of or within 60 days after January 12, 2018, upon the exercise of stock options and stock awards
held by executive officers and directors.
|
|
(2)
|
Represents
the total shares listed under the columns “Common Stock” and “Shares Which May Be Acquired Within 60 Days.”
Under SEC rules, beneficial ownership as of any date includes any shares as to which a person, directly or indirectly, has or
shares, voting power or dispositive power and also any shares as to which a person has the right to acquire such voting or dispositive
power as of or within 60 days after such date through the exercise of any stock option or other right.
|
|
(3)
|
Based
on 391,302,707 shares of common stock issued and outstanding as of March 12, 2018, which, for purposes of this table includes
5,908,065 Exchangeable Shares issued and outstanding as of March 12, 2018, as such shares are immediately exchangeable for shares
of our common stock and vote together with our common stock on all matters as if shares of our common stock.
|
|
(4)
|
The
number of common stock includes 30,000 shares owned by Mr. Ellson’s spouse.
|
|
(5)
|
The
number of common stock includes 61,000 shares owned by Mr. Evans’ spouse.
|
|
(6)
|
Mr.
Hardy ceased to be an employee or officer of Gran Tierra on August 30, 2017. Share ownership is based on last known information
provided to the Company. The number of common stock includes 54,527 Exchangeable Shares and common stock owned by Mr. Hardy’s
spouse.
|
|
(7)
|
The
number of common stock includes 122,500 shares owned by Mr. Smith’s spouse.
|
|
(8)
|
The
number of common stock includes 400,000 shares owned by Wade Capital Corporation, a corporation owned by Mr. Wade.
|
Section
16(A) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires Gran Tierra’s directors and executive officers, and persons who own more than ten percent
of a registered class of Gran Tierra’s equity securities, to file with the SEC initial reports disclosing the amount and
nature of their beneficial ownership and reports of changes of their beneficial ownership of common stock and other equity securities
of Gran Tierra.
To
Gran Tierra’s knowledge, based solely on a review of these reports and written representations from these individuals that
no other reports were required, Gran Tierra believes that all required filings were timely made in 2017 except for one late Form
4 that was filed on behalf of Susan Mawdsley with respect to the vesting of an RSU.
Executive
Officers
Our
executive officers as of March 12, 2018, are as follows:
Name
|
Age
|
Title
|
Gary
S. Guidry
|
62
|
President
and Chief Executive Officer
|
Ryan
Ellson
|
42
|
Chief
Financial Officer
|
Ed
Caldwell
|
68
|
Vice
President, Health, Safety and Environment & Corporate Social Responsibility
|
Adrian
Coral
|
44
|
President,
Gran Tierra Energy Colombia
|
James
Evans
|
52
|
Vice
President, Corporate Services
|
Alan
Johnson
|
47
|
Vice
President, Asset Management
|
Glen
Mah
|
61
|
Vice
President, Business Development
|
Susan
Mawdsley
|
51
|
Vice
President, Finance and Corporate Controller
|
Rodger
Trimble
|
56
|
Vice
President, Investor Relations
|
Lawrence
West
|
61
|
Vice
President, Exploration
|
Gary S. Guidry
.
For the biography of Mr. Guidry, see “Proposal 1, Election of Directors.”
Ryan Ellson
has been our Chief Financial Officer since May 2015. Mr. Ellson has 17 years of experience in a broad range of international corporate
finance and accounting roles. Mr. Ellson was Chief Financial Officer of Onza Energy Inc. from January 2015 to May 2015. From July
2014 until December 2014, Mr. Ellson was Head of Finance for Glencore E&P (Canada), an oil and gas company, and prior thereto
Vice President, Finance at Caracal Energy, an international oil and gas company listed on the London Stock Exchange with operations
in Chad, Africa. He held that position from August 2011 until the company was acquired by Glencore plc for $1.8 billion in July
2014. Prior
to Caracal,
Mr. Ellson was Vice President of Finance at Sea Dragon Energy from April 2010 until August 2011. In these positions, Mr. Ellson
oversaw financial and accounting functions, implemented and oversaw internal financial controls, secured a reserve based lending
facility and was involved in multiple capital raises. Mr. Ellson has held management and executive positions with companies operating
in Chad, Egypt, India and Canada. Mr. Ellson is a Chartered Accountant and holds a Bachelor of Commerce and a Master of Professional
Accounting from the University of Saskatchewan.
Ed Caldwell
has been our Vice President, Health, Safety and Environment & Corporate Social Responsibility since June 2016. Mr. Caldwell
had a distinguished 27-year career with ExxonMobil and Imperial Oil, and most recently worked with Caracal Energy Inc. in Caracal’s
efforts and achievement in Chad. Mr. Caldwell has extensive experience in senior Regulatory Approvals and HSE Management roles
in Canada, Asia, Russia, and Africa. He has also worked with the Government of Canada and, in that capacity, represented Canada
at the OECD Energy/Environment Committee as well as at the Intergovernmental Panel on Climate Change. Mr. Caldwell graduated in
Chemical Engineering (Distinction) from Dalhousie University.
Adrian Coral
has been President, Gran Tierra Energy Colombia, Ltd., a subsidiary of the Company, since August 2014. Mr. Coral joined Gran Tierra
in August 2006 as an operations engineer in Gran Tierra Energy Colombia, Ltd. and served in that capacity until February 2007.
Mr. Coral rejoined Gran Tierra in August 2008 as Operations Director of Gran Tierra Energy Colombia, Ltd. He served in that capacity
until September 2011, when he was promoted to Production Manager of Gran Tierra Energy Colombia, Ltd. Mr. Coral was promoted to
Senior Operations Manager of Gran Tierra Energy Colombia, Ltd. in April 2013. On August 1, 2014, Mr. Coral was promoted to President,
Gran Tierra Energy Colombia, Ltd. Mr. Coral has a total of 20 years of experience as an engineer or manager in the oil and gas
industry. Mr. Coral graduated from the Universidad de América – Bogotá D.C. with a degree as a Petroleum Engineer
and from the School of Business Management – Bogotá D.C with degree in Project Management.
James
Evans
has been our Vice President, Corporate Services since May 2015. Mr. Evans has over 28 years of experience
including working the last 12 years in the international oil and gas industry. Most recently, Mr. Evans was the Head of
Compliance & Corporate Services for Glencore E&P (Canada), an oil and gas company, from July 2014 to December 2014,
and prior thereto Vice President of Compliance & Corporate Services at Caracal Energy, an international oil and gas
company, from July 2011 to June 2014, in each case where he oversaw the execution of corporate strategy and goals, developed
and implemented a robust corporate compliance program, and managed all aspects of information technology, document control,
security and administration. Mr. Evans also managed the recruitment, training and retention of staff in both Calgary and
Chad. He oversaw the growth of Caracal Energy from seven employees to in excess of 400 as Caracal Energy exceeded 20,000
barrels of oil per day at the time of sale to Glencore. Prior to Caracal, Mr. Evans held senior management and executive
positions at Orion Oil and Gas and Tanganyika Oil, with operating experience in Egypt, Syria and Canada. Mr. Evans is a
Certified General Accountant and holds a Bachelor of Commerce degree from the University of Calgary.
Alan Johnson
has been our Vice President, Asset Management since May 2015. Mr. Johnson is a professional engineer with more than 20 years of
experience working internationally in the oil and gas industry. His experience includes varied technical, managerial and executive
roles in drilling, production, reservoir, reserves, corporate planning and asset management. Most recently Mr. Johnson was Head
of Asset Management for Glencore E&P (Canada), an oil and gas company, from April 2014 to April 2015, where he was responsible
for all development activities in Chad and prior thereto Director of Asset Management at Caracal Energy, an international oil and
gas company, from August 2011 to March 2014, where he was responsible for development activities in the Doba basin in Chad, Africa.
Mr. Johnson was instrumental in developing oil and gas assets in remote areas of southern Chad, achieving first production in less
than 18 months. Mr. Johnson started his exploration and production career with Shell International in the Dutch North Sea. He then
held positions of increasing responsibility with Shell Canada, APF Energy, Rockyview Energy, Delphi Energy and BG Australia. Mr.
Johnson graduated with a 1st Class B.Eng (Hons) from Heriot Watt University in Scotland. Mr. Johnson is a Chartered Engineer in
the UK and a Professional Engineer in Alberta.
Susan Mawdsley
has been our Vice President, Finance and Corporate Controller since June 2016. Ms. Mawdsley is a Chartered Accountant with 25 years
of experience in the oil and gas industry. She has been the Corporate Controller of Gran Tierra Energy since 2012 and has direct
responsibility for the finance departments in all business units, as well as internal audit. Prior to joining Gran Tierra in 2011,
she was an independent consultant providing contract controller, Chief Financial Officer, and other finance related services to
publicly
traded domestic
and international oil and gas companies. Ms. Mawdsley is a Chartered Accountant and holds a Bachelor of Music in Performance degree
from the University of Toronto.
Glen Mah
has been our Vice President, Business Development since June 2016. Mr. Mah is a Petroleum Geologist with extensive management
experience covering the execution of exploration programs, field development and asset management for conventional and unconventional
hydrocarbons. He has worked with onshore and offshore projects in various petroleum basins in the Americas, Africa, Middle East
and Asia. From 2005 until 2008, Mr. Mah was the Chief Geologist with the highly successful Tanganyika Oil Company Ltd. Mr. Mah
has Alberta-registered Professional designation with APEGA and holds a Bachelor of Science degree Specialization in Geology from
the University of Alberta.
Rodger Trimble
has been our Vice President, Investor Relations since June 2016. Mr. Trimble is a Professional Engineer with 30+ years of experience
in domestic and international basins in various management positions. Prior to joining Gran Tierra, Mr. Trimble was Head of Corporate
Planning, Budgeting & Finance with Glencore E&P (Canada) Inc., an oil and gas company. In January 2013, Mr. Trimble became
Director Corporate Planning, Budget & Business Development with Caracal Energy Inc., an international oil and gas company,
which was acquired by Glencore E&P (Canada) in July 2014. He has held several senior management positions ranging from Country
Manager in Argentina with Canadian Hunter Exploration, Vice President, Exploitation with Esprit Energy Trust, Manager, Reservoir
Engineering with Apache Canada Inc. and Manager, Upstream Evaluations - Frontiers & International with Husky Energy. Mr. Trimble
is an Alberta-registered Professional Engineer and a member of APEGA. He received a Bachelor of Science in Petroleum Engineering
(with Distinction) from Stanford University.
Lawrence
West
has been our Vice President, Exploration since May 2015. Mr. West has 35 years of experience as an executive, explorationist, and geologist. Most recently, Mr. West was Vice President, Exploration at Caracal Energy, an international oil and gas
company, from July 2011 to June 2014. Mr. West built a multi-disciplinary team to assess resources and grow reserves in the interior
rift basins within Chad and led a successful exploration program. During his tenure he successfully executed two large 2D/3D seismic
shoots in remote frontier basins, on time and on budget. Prior to Caracal he has been involved in starting and growing several
public and private companies, including Reserve Royalty Corp., Chariot Energy, Auriga Energy and Orion Oil and Gas. Lawrence worked
at Alberta Energy Company (“AEC”), where he was on the team that merged with Conwest. He built and led the AEC East
team to the Rocky Mountain USA basins. His career began with Imperial Oil working on prospect and reservoir characterization, in
multi-disciplinary teams, and as a technical mentor to exploration teams. Mr. West has an Honours Bachelor of Science in Geology
from McMaster University and an MBA, specializing in economics, from the University of Calgary.
COMPENSATION
DISCUSSION AND ANALYSIS
The
following discussion provides details regarding our executive compensation program and 2017 compensation arrangements for each
of our Named Executive Officers (“NEOs”) who, in 2017 were:
Name
|
Title
at December 31, 2017
|
Gary
S. Guidry
|
President
and Chief Executive Officer
|
Ryan
Ellson
|
Chief
Financial Officer
|
Adrian
Coral
|
President,
Gran Tierra Energy Colombia
|
Jim
Evans
|
Vice
President, Corporate Services
|
Lawrence
West
|
Vice
President, Exploration
|
David
Hardy
|
Former
Vice President, Legal and General Counsel
|
Philosophy
and Objectives of our Executive Compensation Program
Our
compensation philosophy is to provide an attractive, flexible, and market-based total compensation program that is tied to performance
and aligns the interests of our NEOs with those of our stockholders. The Company’s objective is to recruit and retain the
caliber of executive officers and other key employees necessary to deliver sustained high performance to our stockholders as well
as economic growth and respect for the communities in which we have a strong presence. Our compensation philosophy also serves
as a means of communicating our goals and standards of conduct and performance, and for motivating and rewarding our NEOs in relation
to their achievements. Our compensation philosophy includes the principles described below:
|
·
|
Hire
and retain top caliber and highly capable executives: Executive officers should have a total compensation package that is market
competitive and permits us to hire and retain high-caliber individuals at all levels.
|
|
·
|
Pay
for performance: A significant portion of the annual compensation opportunity for our executive officers should be directly tied
to the achievement of key operational and financial measures aligned with our strategy, relative TSR and our share price performance.
Directly linking pay with our performance is essential to delivering long-term value to our stockholders.
|
|
·
|
Create
Stockholder Alignment: A significant portion of compensation should be variable (at risk) and equity-based. Executives are also
required to meet significant share-ownership guidelines.
|
Responsibilities
for Executive Compensation
Compensation
decisions for our executive officers are made by the Compensation Committee, with input from our independent compensation consultants
as well as from our Chief Executive Officer. The specific roles are summarized below:
Compensation Committee
|
|
·
|
Oversees compensation policies, plans and programs, reviews and determines the compensation to be paid to our executive officers and directors annually.
|
|
|
|
|
|
|
·
|
Oversees our annual and long-term incentive plans and programs and periodically assesses our non-employee director compensation program.
|
|
|
|
|
|
|
·
|
Approves the goals of our Chief Executive Officer, evaluates our Chief Executive Officer’s performance in light of those goals and objectives and recommends to the Board the approval of the Chief Executive Officer’s annual compensation.
|
|
|
|
|
|
|
·
|
Together with our Chief Executive Officer, reviews and approves the corporate performance goals and objectives of our other NEOs and recommends to the Board the approval of the annual compensation package for the other NEOs.
|
|
|
|
|
|
|
·
|
Holds executive sessions with no management present.
|
|
|
|
|
|
|
|
|
Board
|
|
·
|
Reviews Chief Executive Officer’s performance.
|
|
|
|
|
|
|
·
|
Approves Chief Executive Officer and NEO compensation.
|
|
|
|
|
|
|
|
|
Independent Compensation Consultants
|
|
·
|
Provides the Compensation Committee with independent advice concerning the types and levels of compensation to be paid to our Chief Executive Officer and the other NEOs.
|
|
|
|
|
|
|
·
|
Provides market compensation data (e.g., industry compensation surveys and benchmarking data) on base salary, annual incentives and long-term incentives and industry trends.
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
·
|
Reviews performance of other NEOs with the Compensation Committee.
|
|
|
|
|
|
|
·
|
Makes recommendations on base salary, annual bonus and long-term incentives awards for the other NEOs.
|
The
Board and the Compensation Committee hold regular executive sessions at the end of each meeting with no representatives of the
management team present. Our Chief Executive Officer does not attend any portion of the Compensation Committee or Board meeting
at which his compensation is deliberated or approved. Except as described in the table above, our Chief Executive Officer does
not play any role with respect to any matter affecting his own compensation.
The
agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with the Chief Executive
Officer. However, from time to time, various members of management and other employees as well as outside advisors or consultants
may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice
or to otherwise participate in Compensation Committee meetings. The charter of the Compensation Committee grants the Compensation
Committee full access to all books, records, facilities and personnel of Gran Tierra. In addition, under the charter, the Compensation
Committee has the authority to obtain, at the expense of Gran Tierra, advice and assistance from compensation consultants, internal
and external legal, accounting or other advisors and other external resources that the Compensation Committee considers necessary
or appropriate in the performance of its duties. The Compensation Committee has direct responsibility for the oversight of the
work of any advisers engaged for the purpose of advising the Compensation Committee and may amend the engagement with or terminate
any such advisor as it deems necessary or appropriate. Under its charter, the Compensation Committee may form, and delegate authority
to, subcommittees, as appropriate. In 2017, the Compensation Committee did not form any subcommittees.
The
Compensation Committee and the Board make their compensation decisions for the upcoming year, and review performance for the prior
year, generally in the first quarter of the year. For example, annual bonuses in respect of 2017 performance, as well as the consideration
of salary increases for 2018, were recommended by the Compensation Committee and approved by the Board in January of 2018.
Assessment
of Company Performance
The
Compensation Committee uses Company performance measures to establish total compensation ranges relative to our performance and
the performance of our comparator groups as outlined on the following page. In addition, the Compensation Committee establishes
specific performance measures that determine payouts under cash and equity-based incentive programs.
Role
of the Independent Compensation Consultant
When
making determinations regarding executive compensation, the Compensation Committee considers advice from external advisors and
third-party compensation surveys as well as the advice of Compensation Committee members and other members of the Board based
on their knowledge and experience to set competitive, results driven levels of salary and other compensation.
The
Compensation Committee may, in its sole discretion, retain or obtain the advice of independent compensation consultants or other
external advisors and is directly responsible for the appointment, compensation arrangements and oversight of the work of any
such person. The retention of independent compensation consultants and scope of services provided by them are assessed on an annual
basis.
The
Compensation Committee may select a compensation consultant only after taking into consideration all factors relevant to that
person’s independence from management. We will provide appropriate funding, as determined by the Compensation Committee,
for payment of reasonable compensation to any independent compensation consultants or other external advisors retained by the
Compensation Committee. During 2017, the Compensation Committee engaged the independent compensation consultant for limited services
such as LTIP measurement. In 2017, the Compensation Committee evaluated whether any work provided by its Compensation Committee
consultant raised any conflict of interest and determined that it did not.
Risk
Considerations
The
Compensation Committee and the Board periodically review the risks associated with our compensation policies and practices. These
assessments include an examination of the changes in our risk profile over the past year for our compensation policies and practices.
Based on this assessment, the Compensation Committee and the Board each determined that these risks were not reasonably likely
to have a material adverse effect on us. Among other things, the Compensation Committee and the Board took into consideration
the fact that:
|
·
|
the current significant weighting towards
long-term incentive compensation, the value of which depends on the value of our shares, discourages short-term risk taking;
|
|
·
|
our annual incentive compensation program
includes several different metrics, preventing NEOs from focusing on one metric at the exclusion of other important performance
goals;
|
|
·
|
our compensation program is appropriately
balanced such that if annual bonus targets are not achieved, base pay and long-term incentive compensation will still provide the
executives with a reasonable minimum amount of compensation;
|
|
·
|
stock options and PSUs for executives
vest over three years, which discourages short-term risk taking;
|
|
·
|
our clawback policy permits us to recover
executive compensation in the case of fraud or intentional misconduct requiring a material restatement of financial results;
|
|
·
|
stock ownership guidelines encourage a
long-term perspective by our executives; and
|
|
·
|
incentive awards are decided by the Compensation
Committee and recommended to the Board for approval.
|
Compensation
Peer Group - 2017
The
following is our peer group for executive compensation purposes. The companies in the executive compensation peer group were selected
as they are of similar size as Gran Tierra, are in the same line of business, and are listed on a major exchange in Canada or
the United States. During 2017, Oando Energy Resources Inc., Bankers Petroleum Ltd. and Mart Resources Inc. were removed from
our peer group as they were either sold or delisted. As the Company’s executive office is located in Canada, most of the
companies in the peer group above were chosen as they are also located in Canada and would have similar pay structures. Although
the Company monitors the salaries of the executives in its compensation peer group, there were no salary increases for the Company’s
NEOs in 2017.
Pengrowth
Energy Corporation
|
Bonavista
Energy Corporation
|
Raging
River Exploration Inc.
|
Birchcliff
Energy Ltd.
|
Parex
Resources Inc.
|
TORC
Oil & Gas Ltd.
|
Crew
Energy Inc.
|
NuVista
Energy Ltd.
|
Canacol
Energy Ltd.
|
Surge
Energy Inc.
|
TransGlobe
Energy Corporation
|
|
The
Company has a separate peer group for evaluating performance which is further explained on page 50.
Elements
of Our Compensation Program
Our
executive compensation program includes a mix of fixed and variable pay with performance periods ranging from one to five years.
The primary elements are summarized in the table below:
Compensation
|
Fixed/Variable
|
Cash/Equity
|
Time Period
|
Goal
|
Base Salary
|
Fixed
|
Cash
|
1 year
|
Provide fixed level of income
|
Short-term Incentive
|
Variable
|
Annual cash bonus
|
1 year
|
Reward contribution to annual corporate and individual performance
|
Long-term Incentive
|
Variable
|
PSUs
Stock options
|
3 years
5 years
|
Reward medium and long-term performance
|
Base
Salary
We
pay base salaries in order to attract and retain talented executives and to provide our NEOs with a fixed base of cash compensation.
The salaries typically reflect each NEOs experience, skills, knowledge and responsibilities. Competitive market conditions also
have an impact on setting salary levels. The salaries of our NEOs are reviewed on an annual basis by our Chief Executive Officer
(other than with respect to his own salary, which is reviewed and determined by the Compensation Committee). The table below sets
forth the annual base salaries for our NEOs for fiscal 2017 which were unchanged from 2016.
Name
|
|
2017
Base Salary
($)
|
|
|
2016
Base Salary
(1)
($)
|
|
|
% Increase
2016-2017
|
|
Gary S. Guidry
|
|
$
|
318,852
|
|
|
$
|
318,852
|
|
|
|
—
|
|
Ryan Ellson
|
|
$
|
259,067
|
|
|
$
|
259,067
|
|
|
|
—
|
|
Adrian Coral
|
|
$
|
230,000
|
|
|
$
|
230,000
|
|
|
|
—
|
|
Jim Evans
|
|
$
|
239,139
|
|
|
$
|
239,139
|
|
|
|
—
|
|
Lawrence West
|
|
$
|
239,139
|
|
|
$
|
239,139
|
|
|
|
—
|
|
David Hardy
|
|
$
|
255,879
|
|
|
$
|
255,879
|
|
|
|
—
|
|
|
(1)
|
For
ease of comparison, amounts reported in this column are converted from Canadian dollars and Colombia pesos to U.S. dollars at
the exchange rate at December 29, 2017.
|
Short
Term Incentives - Cash Bonus
One
of our key compensation objectives is for a significant portion of each NEO’s compensation to be tied to Company performance.
Our annual cash bonus plan provides opportunities for our executives, including the NEOs, to earn annual cash bonuses tied to
the successful achievement of key operational, financial and market objectives that that drive our business and stockholder value.
In
February 2017, the Compensation Committee approved the annual bonus target for each of our NEOs which were calculated as a percentage
of their respective base salaries.
The
value of the bonus is calculated as below:
The
following bonus structure was approved by the Compensation Committee for the following executives in connection with 2017 performance:
Name
|
|
Target Payout as a %
of Base Salary
|
|
|
Corporate Performance
Weighting
|
|
|
Individual Performance
Weighting
|
|
Gary S. Guidry
|
|
|
100%
|
|
|
|
100%
|
|
|
|
—%
|
|
Ryan Ellson
|
|
|
80%
|
|
|
|
80%
|
|
|
|
20%
|
|
Adrian Coral
|
|
|
60%
|
|
|
|
60%
|
|
|
|
40%
|
|
Jim Evans
|
|
|
50%
|
|
|
|
60%
|
|
|
|
40%
|
|
Lawrence West
|
|
|
50%
|
|
|
|
60%
|
|
|
|
40%
|
|
David Hardy
|
|
|
50%
|
|
|
|
60%
|
|
|
|
40%
|
|
Assessment
of Individual Performance
Individual
performance has a significant impact on the annual cash bonus for NEOs other than the Chief Executive Officer and is weighted
between 20% and 40% of the award with the remaining amount being driven by our performance relative to our performance measures.
The individual performance rating for each NEO, other than the Chief Executive Officer, is determined through a formal performance
evaluation conducted with the Chief Executive Officer. The performance evaluation measures how each NEO performs against criteria
directly related to their position.
2017
Corporate Performance Goals and Scores
At
the beginning of each fiscal year, the Board of Directors approves the measures (and associated performance targets) that will
be used to measure corporate performance for the fiscal year. For 2017, the Board of Directors approved eight goals based on the
Company’s budget and operating plan that were considered to be the key drivers to the success of the Company’s business
plan for the year, which were used as corporate performance metrics to determine the 2017 annual bonus structure (40% operational,
30% financial, 10% market and 20% strategic). Each of the measures had a threshold level of performance which had to be reached
for the measure to contribute to a payout. There is a target level of performance for each element and a stretch level of performance
above threshold. Between threshold and target performance, and between target and the stretch maximum, performance factors are
graduated according to the performance level actually reached. The Board of Directors met in January 2018 to assess the Company’s
2017 performance relative to the pre-established targets. The following table summarizes the results of the assessment:
Metric
|
|
Relative
Weighting
Factor
|
|
|
2017
Corporate
Targets
|
|
|
2017
Performance
Result
|
|
|
2017
Performance
Factor Level
|
|
|
Performance
Factor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Goals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Field Reserve 2P Additions (MMBOE)
(1)
|
|
15%
|
|
|
10 - 15 - 20
|
|
|
27.9
|
|
|
Maximum
|
|
|
30%
|
|
2P Finding & Development Costs (“F&D”), Including Future Development Costs ($/BOE)
(2)
|
|
10%
|
|
|
15 - 12 - 10
|
|
|
11.3
|
|
|
Above Target
|
|
|
14%
|
|
WI Production before royalties (BOEPD)
|
|
15%
|
|
|
35 - 36 - 38
|
|
|
32.1
|
|
|
Below Threshold
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Goals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General & Administration Expenses ($/BOE)
|
|
10%
|
|
|
4.5 - 3.0 - 2.5
|
|
|
2.6
|
|
|
Maximum
|
|
|
20%
|
|
Cash Costs ($/BOE)
(3)
|
|
10%
|
|
|
25 - 20 - 18
|
|
|
16.4
|
|
|
Maximum
|
|
|
20%
|
|
Funds Flow from Operations ($ millions)
(4)
|
|
10%
|
|
|
200 - 225 - 250
|
|
|
220.2
|
|
|
Below Target
|
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Goals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in NAV/share
(5)
|
|
10%
|
|
|
17.58 - 12%
|
|
|
30%
|
|
|
Maximum
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Goals
(6)
|
|
20%
|
|
|
|
|
|
-
|
|
|
Partially Met Target
|
|
|
15%
|
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
127%
|
|
|
(1)
|
2P
reserves have been calculated in compliance with NI 51-101 and COGEH and are based on the GTE McDaniel Reserves Report. See “Disclosure
of Oil and Gas Information” for important information.
|
|
(2)
|
F&D
costs are calculated as estimated exploration and development capital expenditures in Colombia, excluding acquisitions and dispositions,
divided by the applicable reserves additions both before and after changes in future development costs (“FDC”) costs.
The calculation of F&D costs incorporates the change in FDC required to bring proved undeveloped and developed reserves into
production. The aggregate of the exploration and development costs incurred in the financial year and the changes during that
year in estimated FDC may not reflect the total F&D costs related to reserves additions for that year. Management uses F&D
costs per BOE as a measure of its ability to execute its capital program and of its asset quality.
|
|
(3)
|
Cash
costs includes operating, transportation and commercialization expenses.
|
|
(4)
|
Funds
flow from operations is a non-GAAP measure and does not have a standardized meaning under generally accepted accounting principles
in the United States of America (“GAAP”). Funds flow from operations, as presented, is net income or loss adjusted
for DD&A expenses, asset impairment, deferred tax expense or recovery, stock-based compensation expense, amortization of debt
issuance costs, cash settlement of RSUs, unrealized foreign exchange and financial instruments gains and losses and loss on sale
of business units or gain on acquisition. Management uses this financial measure to analyze performance and income or loss generated
by our principal business activities prior to the consideration of how non-cash items affect that income or loss, and believes
that this financial measure is also useful supplemental information for investors to analyze performance and our financial results.
|
|
(5)
|
See
page 50 for further details of NAV.
|
|
(6)
|
The
2017 Strategic Goals include metrics set by the Compensation Committee relating to joint ventures, exploration discoveries, financing
and exploration commitments included in the Company’s annual budget and approved by the Board.
|
Actual
Annual Cash Bonuses Earned for 2017
The
following table shows the 2017 annual cash bonus awards earned by each NEO:
|
|
Base
Salary
for 2017 ($)
|
|
|
Target
Payout as a %
of Base Salary
|
|
|
2017
Cash Bonus
Awarded ($)
(1)
|
|
|
2017
Cash Bonus
(% of Base Salary)
|
|
Gary
S. Guidry
|
|
318,852
|
|
|
100%
|
|
|
404,145
|
|
|
127
|
|
Ryan
Ellson
|
|
259,067
|
|
|
80%
|
|
|
262,256
|
|
|
101
|
|
Adrian
Coral
|
|
230,000
|
|
|
60%
|
|
|
166,600
|
|
|
72
|
|
Jim
Evans
|
|
239,139
|
|
|
50%
|
|
|
150,658
|
|
|
63
|
|
Lawrence
West
|
|
239,139
|
|
|
50%
|
|
|
136,309
|
|
|
57
|
|
David
Hardy
(2)
|
|
255,879
|
|
|
50%
|
|
|
n/a
|
|
|
n/a
|
|
|
(1)
|
2017
Cash Bonuses were paid on February 15, 2018.
|
|
(2)
|
Mr.
Hardy’s employment with us terminated on August 30, 2017 and, as such, he did not receive a cash bonus for 2017.
|
Long-Term
Equity Incentive Program
Our
equity compensation program was redesigned in 2016 to incorporate equity awards that vest based on the achievement of key operational
goals established by the Board of Directors as described below. Approximately 80% of the value of equity awards granted in 2017
consisted of PSUs and 20% of the value of equity awards consisted of stock options, based on the fair value at grant date.
2017
PSUs Granted
As
part of our long-term incentive plan, PSUs are designed to create a link between executive compensation and increased stockholder
value by rewarding NEOs for achievement against key performance metrics over a three-year period. Our goal is to further incentivize
our executives to achieve the operational goals established by the Board and to increase share and net asset value for our stockholders.
Each
PSU entitles the holder to be issued the number of common shares designated in the performance award multiplied by a payout multiplier,
with such common shares (or cash equal in value to such shares) to be issued on dates determined by the Compensation Committee,
but no later than March 15 of the year following the year in which the last performance period applicable to the award ends. The
payout multiplier is dependent on the performance of the Company relative to pre-defined corporate performance measures for the
period. The number of PSUs that vest may range from zero to 200% of the target number granted based on the performance multiplier
earned under the terms of the award agreement. Each recipient must also remain in the continuous service of Gran Tierra from the
date of grant through the date of settlement in order for the award to vest. PSUs are granted annually.
The
PSUs granted to our NEOs in 2017 may become fully vested at the end of the three-year performance period, based upon our performance
with respect to four separate performance periods as follows:
Performance Period
|
|
Percentage of Target Award Subject to Performance Period
|
|
January 1, 2017 - December 31, 2017
|
|
20%
|
|
January 1, 2018 - December 31, 2018
|
|
20%
|
|
January 1, 2019 - December 31, 2019
|
|
20%
|
|
January 1, 2017 - December 31, 2019
|
|
40%
|
|
|
|
100%
|
|
The
calculation of the performance multiplier is as follows:
|
·
|
50% weighting: Gran Tierra’s Relative
Total Shareholder Return (“TSR”);
|
|
·
|
25% weighting: Gran Tierra’s Net
Asset Value (“NAV”) per shares; and
|
|
·
|
25% weighting: execution of strategy (as determined by the Board).
|
Total
Shareholder Return.
The Compensation Committee believes that the comparison of Gran Tierra’s TSR over a specified
period of time to the returns of peer companies over the same period is an objective external measure of the Company’s effectiveness
in translating its results into stockholder returns. TSR is calculated by comparing Gran Tierra’s change in share price
plus reinvestment of dividends relative to the performance of a pre-selected peer group of companies with respect to the same
measures. The framework included in the table below is used to determining our relative TSR. Results between the performance levels
are interpolated on a linear basis.
|
|
Annualized TSR Above/Below
|
|
Payout Multiplier
|
|
Performance Level
|
|
Median of Peers
|
|
(% of the Target Award)
|
|
Threshold
|
|
-15%
|
|
0
|
|
Target
|
|
At
median
|
|
100
|
|
Maximum
|
|
20%
|
|
200
|
|
The
Compensation Committee approved the following total shareholder return performance peer group (the “Performance Peer Group”)
for the 2017 PSUs:
Callon Petroleum Company
|
Oasis Petroleum Inc.
|
Canacol Energy Ltd.
|
Obsidian Energy Ltd. (formerly Penn West Petroleum Ltd.)
|
Carrizo Oil & Gas Inc.
|
Parex Resources Inc.
|
Contango Oil & Gas Company
|
Spartan Energy Corp.
|
Jones Energy Inc.
|
Synergy Resources Corp.
|
Kosmos Energy Ltd.
|
Tamarack Valley Energy Ltd.
|
Matador Resources Company
|
TransGlobe Energy Corp.
|
Frontera Energy Corporation
(formerly Pacific Exploration & Production Corp.)
|
W&T
Offshore Inc.
|
If
any of the peer companies undergoes a change in corporate capitalization or a corporate transaction (including, but not limited
to, a going-private transaction, bankruptcy, liquidation, merger or consolidation) during the performance period, the Committee
shall undertake an evaluation to determine whether such peer company will be replaced. The Committee has pre-approved Denbury
Resources Inc., Baytex Energy Corp. and EP Energy Corporation as replacement companies. During 2017 Cobalt International Energy
Inc., Stone Energy Corp. and TransAtlantic Petroleum Ltd. were removed from the Performance Peer Group and Tamarack Valley Energy
Ltd., Carrizo Oil & Gas Inc., and Oasis Petroleum Inc. were added as replacements.
The
Performance Peer Group was developed with the assistance of our Compensation Consultants to meet at least one of the following
specifications: an enterprise value of at least $1 billion; Proved Reserves of 30 million BOE; WI production before royalties
of 20,000+ BOEPD; production to be at least 50% oil and natural gas liquids. Enterprise value was calculated as the market value
of our common stock plus the market value of debt minus cash and investments.
Net
Asset Value.
NAV per share is based on before tax NPV discounted at 10% of Colombia only proved plus probable (2P)
reserves, year-end 2017 net debt of $272 million, comprised of working capital deficit of $16 million, senior convertible notes
of $111 million (net of unamortized fees; $115 million gross) and reserves-based credit facility of $145 million (net of unamortized
fees; $148 million gross), excluding risk management assets and liabilities and investment in Sterling Resources Ltd. shares,
and number of shares of Gran Tierra’s common stock and Exchangeable Shares issued and outstanding at December 31, 2017 and
2016, of 391 million and 399 million, respectively. Net working capital and debt at December 31, 2017 and 2016, prepared in accordance
with generally accepted accounting principles in the United States of America. NAV per share was chosen as a performance metric
for our PSUs because it provides an indication of the value of the Company’s reserves on a per share basis. Growth in NAV
per share demonstrates the Company’s ability to increase the underlying value of the Company without diluting stockholders.
The framework included in the table below is used to assess NAV per share performance. Results between the performance levels
are interpolated on a linear basis.
Performance
Level
|
|
Compound
Annual Growth
in NAV/share
|
|
|
Payout
Multiplier
(% of the Target Award)
|
|
Threshold
|
|
less
than 8%
|
|
|
0
|
|
Target
|
|
8%
|
|
|
100
|
|
Maximum
|
|
12%
|
|
|
200
|
|
Strategy.
Execution of strategy was chosen as a performance metric for our PSUs because it provides a link to the Company’s
success in meeting key milestones and achieving its strategic goals. The Strategic Goals included metrics set by the Compensation
Committee relating to acquisitions, exploration discoveries, financing and exploration commitments included in the Company’s
annual budget and approved by the Board.
The
following table lists the number of PSUs awarded in 2017 at minimum, target, and maximum levels :
|
|
Minimum
# of units
|
|
|
Target
# of units
|
|
|
Maximum
# of units
|
|
Gary
S. Guidry
|
|
0
|
|
|
325,600
|
|
|
651,200
|
|
Ryan
Ellson
|
|
0
|
|
|
235,800
|
|
|
471,600
|
|
Adrian
Coral
|
|
0
|
|
|
131,200
|
|
|
262,400
|
|
Jim
Evans
|
|
0
|
|
|
139,500
|
|
|
279,000
|
|
Lawrence
West
|
|
0
|
|
|
139,500
|
|
|
279,000
|
|
David
Hardy
(1)
|
|
0
|
|
|
149,300
|
|
|
298,600
|
|
|
(1)
|
All
PSUs held by David Hardy were forfeited upon his retirement on August 30, 2017.
|
2017
Performance Results.
In February 2018, the Compensation Committee confirmed and approved the performance results for
the portion of the 2017 annual PSU awards that vest based on performance during the one-year performance period ended December
31, 2017 and continued employment through the end of 2019.
For
the performance period ended December 31, 2017, the performance results were as follows:
|
|
2017
result
|
|
|
Performance
Level
|
|
|
Weighting
|
|
|
Payout
Multiplier
|
|
TSR
- Relative TSR above or below median of peers
|
|
+0.5%
|
|
|
Above
Target
|
|
|
50%
|
|
|
0.67
|
|
NAV
- Compound annual growth in NAV per share
|
|
+30%
|
|
|
Maximum
|
|
|
25%
|
|
|
0.50
|
|
Strategy
|
|
|
|
|
Above
Target
|
|
|
25%
|
|
|
0.46
|
|
Total
Multiplier
|
|
|
|
|
|
|
|
|
|
|
1.62
|
|
Stock
Options
Stock
options provide NEOs with an option to buy Gran Tierra common shares at a future date at the exercise price determined at the
time of grant.
Our
Compensation Committee and Board continues to believe that time-vested stock options are an important element of our equity compensation
program because they serve as a strong retention tool while ensuring that the recipient only receives value upon an increase in
the value of our common stock. Stock options within the LTIP mix account for 20% of the value of equity awards granted.
Stock
options vest pro-rata annually over three years, beginning with the first anniversary of the date of grant, and have a term of
five years, subject to the officer’s continuous provision of services to Gran Tierra through the vesting date (except as
otherwise provided in an officer’s award agreement or any employment agreement with Gran Tierra). The exercise price for
our stock options is equal to the market price per share at the time of grant. The Compensation Committee meets in the first quarter
each year to evaluate, review and approve the annual stock option award design and level of awards for the NEOs.
RSUs
No
RSUs were granted to NEOs in 2017 as the program has been replaced with grants of PSUs for our executives. RSUs granted prior
to 2017 entitle the holder to receive, either the underlying number of shares of our Common Stock upon vesting of such units or,
at the option of the Company, a cash payment equal to the value of the underlying shares. RSUs vest over three years, and once
an RSU is vested, it is immediately settled.
Equity
Awards Granted During 2017
In
2017, the Compensation Committee approved the following awards under our 2007 Equity Incentive Plan for the NEOs:
|
|
|
|
|
PSUs
|
|
|
Stock Options
|
|
|
|
Total LTI Grant
Date Fair Value ($)
|
|
|
Target #
of units
|
|
|
Grant Date Fair
Value ($)
(1)
|
|
|
# of units
|
|
|
Grant Date Fair
Value ($)
(1)
|
|
Gary S. Guidry
|
|
1,046,505
|
|
|
325,600
|
|
|
836,792
|
|
|
184,200
|
|
|
209,713
|
|
Ryan Ellson
|
|
757,883
|
|
|
235,800
|
|
|
606,006
|
|
|
133,400
|
|
|
151,877
|
|
Adrian Coral
|
|
421,661
|
|
|
131,200
|
|
|
337,184
|
|
|
74,200
|
|
|
84,477
|
|
Jim Evans
|
|
448,343
|
|
|
139,500
|
|
|
358,515
|
|
|
78,900
|
|
|
89,828
|
|
Lawrence West
|
|
448,343
|
|
|
139,500
|
|
|
358,515
|
|
|
78,900
|
|
|
89,828
|
|
David Hardy
(2)
|
|
479,905
|
|
|
149,300
|
|
|
383,701
|
|
|
84,500
|
|
|
96,204
|
|
|
(1)
|
The
grant date fair value reported in this column is calculated in accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718 Compensation - Stock Compensation (“ASC 718”).
|
|
(2)
|
All
PSUs held by David Hardy were forfeited upon his retirement on August 30, 2017.
|
Benefits
The
NEOs are eligible for full participation in all rights and benefits under any life insurance, disability, medical, dental, health
and accident plans maintained by Gran Tierra for its employees and executive officers. Our executive officers generally do not
receive any supplemental retirement benefits or perquisites, except for limited perquisites provided on a case-by-case basis.
In addition, our employees including our executive officers will be paid 100% of their base salary in the event they become disabled
while still employed by us, until such time as the executive officer begins to receive long-term disability insurance benefits
which is intended to pay two-thirds of base salary to a maximum of $15,000/month to age 70. These are standard basic benefits
in our industry and help to retain and recruit key talent.
Share
Ownership Guidelines
We
have implemented share ownership guidelines for all of our executives, which are designed to align their long-term financial interests
with those of our stockholders. The NEO share ownership guidelines are as follows:
Position
|
Guideline
|
|
|
Ownership
Relative to Base Salary
as of December 31, 2017
(1)
|
|
Chief
Executive Officer
|
3
X base salary
|
|
|
Exceeds
|
|
Chief
Financial Officer
|
2
X base salary
|
|
|
Exceeds
|
|
Other
NEOs
|
1
X base salary
|
|
|
Exceeds
or In-Progress
|
|
If
at any time an executive officer does not meet their ownership requirement, they must retain (a) any of our Common Stock owned
by them (whether owned directly or indirectly) and (b) any net shares received as the result of the exercise, vesting or payment
of any equity award until the ownership requirement is met, in each case unless otherwise approved by the Compensation Committee.
For this purpose, “net shares” means the shares of stock that remain after shares are sold or withheld to (i) pay
the exercise price for a stock option award or (ii) satisfy any tax obligations, including withholding taxes, arising in connection
with the exercise, vesting or payment of an equity award.
Compliance
with these requirements is evaluated as of December 31 of each year. The value of an individual’s share ownership as of
such date is determined by multiplying the number of shares of our stock or other eligible equity interests held by the individual
by the greater of the purchase price of the stock or the closing price on December 31 of each year.
In
determining stock ownership levels, we include shares of common stock held directly or indirectly by the officer (including shares
beneficially owned in a trust, by a limited liability company or partnership, and by a spouse and/or minor children). Outstanding
RSUs, PSUs and unexercised stock options are not included. If an executive officer does not satisfy the stock ownership requirements,
they must retain all shares acquired on the vesting of equity awards or the exercise of stock options (net of exercise costs and
taxes) until compliance is achieved.
The
following table shows the number and value of shares owned at December 31, 2017 compared with the minimum share ownership guideline:
|
|
Number
of Shares
Owned as of
December 31, 2017
|
|
|
Value
of Shares
owned as of
December 31, 2017
(1)
|
|
|
Minimum
Ownership
Per Guideline
|
|
Gary
S. Guidry
|
|
2,527,000
|
|
|
$
6,822,900
|
|
|
$
956,557
|
|
Ryan
Ellson
|
|
266,030
|
|
|
$
718,281
|
|
|
$
518,135
|
|
Adrian
Coral
|
|
0
|
|
|
0
|
|
|
230,000
|
|
Jim
Evans
|
|
251,405
|
|
|
$
678,794
|
|
|
$
239,139
|
|
Lawrence
West
|
|
245,030
|
|
|
$
661,581
|
|
|
$
239,139
|
|
David
Hardy
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
(1)
|
Value
is calculated based on the closing price of the Company’s shares on the NYSE American on December 29, 2017, which was $2.70.
|
Clawback
Provisions
The
Company has adopted a policy specifying that if an executive engages in fraud or intentional misconduct that requires a material
restatement of financial results, and the fraud or intentional misconduct results in an incorrect determination that an incentive
compensation performance goal had been achieved, the Board may take action to recover any incentive compensation resulting from
the incorrect determination that had been paid to the executive during the three-year period preceding the filing of the accounting
restatement.
Prohibition
on Speculative Trading of Company Stock
We
maintain a policy for securities transactions applicable to all officers, directors, and other members of management of the Company
which prohibits engaging in short sales, transactions in put or call options, hedging transactions or other inherently speculative
transactions with respect to our stock at any time. In addition, our Insider Trading Policy, among other things, prohibits our
officers, including our NEOs, directors and employees from trading during quarterly and special blackout periods.
Employment
Agreements
The
Compensation Committee approves the terms of all NEO employment agreements. The terms of those agreements were structured to attract
and retain persons key to our success, as well as to be competitive with compensation practices for executives in similar positions
at companies of similar size and complexity. In assessing whether the terms of the employment agreements were competitive, the
Compensation Committees received advice from our Compensation Consultant and reviewed appropriate surveys and industry benchmarking
data. The employment agreements do not have a fixed term. No changes were made to any of the NEO employment agreements during
2017. The terms of the NEO employment agreements provide for certain payments and benefits in connection with a termination of
employment and corporate transaction. The Compensation Committee believes these payments allow management to focus their attention
and energy on making objective business decisions that are in the best interests of stockholders without allowing personal considerations
to affect the decision-making process. Additionally, executive officers at other companies in our industry and the general market
in which we compete for executive talent commonly provide post-termination payments, and we have consistently provided this benefit
to certain executives in order to remain competitive in attracting and retaining skilled professionals in
our
industry. In 2017, the Company’s pay practices were amended so that no new employment agreements entered into between Gran
Tierra and executive officers will include any provisions that provide for excise tax gross-ups or change in control “Single”
or “Modified Single” triggers of severance payments or equity vesting accelerations.
Say
on Pay Advisory Vote on Executive Compensation
The
Company asked stockholders to vote on a “say-on-pay” advisory vote on our executive compensation in 2017 at the 2017
annual meeting of stockholders. Stockholders expressed substantial support for the compensation of our named executive officers,
with approximately 95% of the votes cast in favor of the “say-on-pay” advisory vote. The Compensation Committee carefully
evaluated the results of the 2017 advisory vote. The Compensation Committee also considers many other factors in evaluating our
executive compensation programs as discussed in this Compensation Discussion and Analysis, including the Compensation Committee’s
assessment of the interaction of our compensation programs with our corporate business objectives and review of peer group data,
each of which is evaluated in the context of the Compensation Committee’s fiduciary duty to act as the directors determine
to be in stockholders’ best interests. While each of these factors bore on the Compensation Committee’s decisions
regarding our named executive officers’ compensation, the Compensation Committee did not make any changes to our executive
compensation program and policies as a result of the 2017 “say-on-pay” advisory vote.
REPORT
OF THE COMPENSATION COMMITTEE
The
Compensation Committee has reviewed and discussed with management the Company’s disclosure under “Compensation Discussion
and Analysis” contained in this proxy statement. Based on such review and discussion, the Compensation Committee recommended
to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Members
of the Compensation Committee:
Brooke
Wade, Chair
Peter J. Dey
Robert B. Hodgins
EXECUTIVE
COMPENSATION
SUMMARY COMPENSATION TABLE
The
following table summarizes the compensation of our NEOs for their performance during the years ended December 31, 2017, 2016 and
2015.
Name
and Position
|
|
Year
|
|
|
Salary
(1)
($)
|
|
|
Stock
Awards
(3)
($)
|
|
|
Option
Awards
(4)
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
(2)
($)
|
|
|
All
Other
Compensation
(5)
($)
|
|
|
Total
($)
|
|
Gary S. Guidry
(6)
|
|
2017
|
|
|
318,852
|
|
|
836,792
|
|
|
209,713
|
|
|
404,145
|
|
|
6,804
|
|
|
1,776,306
|
|
President
and Chief
|
|
2016
|
|
|
297,907
|
|
|
832,048
|
|
|
219,984
|
|
|
359,723
|
|
|
4,555
|
|
|
1,714,217
|
|
Executive Officer
|
|
2015
|
|
|
187,204
|
|
|
350,550
|
|
|
896,072
|
|
|
140,173
|
|
|
2,238
|
|
|
1,576,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ryan Ellson
(7)
|
|
2017
|
|
|
259,067
|
|
|
606,006
|
|
|
151,877
|
|
|
262,256
|
|
|
6,804
|
|
|
1,286,010
|
|
Chief Financial
Officer
|
|
2016
|
|
|
242,050
|
|
|
602,756
|
|
|
159,358
|
|
|
235,347
|
|
|
4,555
|
|
|
1,244,066
|
|
|
|
2015
|
|
|
151,214
|
|
|
221,400
|
|
|
522,709
|
|
|
102,601
|
|
|
2,228
|
|
|
1,000,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim Evans
(8)
|
|
2017
|
|
|
239,139
|
|
|
358,515
|
|
|
89,828
|
|
|
150,658
|
|
|
89,697
|
|
|
927,837
|
|
Vice President,
Corporate
|
|
2016
|
|
|
223,430
|
|
|
356,440
|
|
|
94,229
|
|
|
128,845
|
|
|
3,997
|
|
|
806,941
|
|
Services
|
|
2015
|
|
|
134,921
|
|
|
73,800
|
|
|
298,691
|
|
|
51,301
|
|
|
2,228
|
|
|
560,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian Coral,
|
|
2017
|
|
|
210,461
|
|
|
337,184
|
|
|
84,477
|
|
|
166,600
|
|
|
116,694
|
|
|
915,416
|
|
President,
Colombia
|
|
2016
|
|
|
185,303
|
|
|
78,204
|
|
|
20,670
|
|
|
156,551
|
|
|
122,557
|
|
|
563,285
|
|
|
|
2015
|
|
|
206,230
|
|
|
68,750
|
|
|
94,024
|
|
|
136,070
|
|
|
120,217
|
|
|
625,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence
West
(9)
|
|
2017
|
|
|
239,139
|
|
|
358,515
|
|
|
89,828
|
|
|
136,309
|
|
|
264,963
|
|
|
1,088,754
|
|
Vice President,
|
|
2016
|
|
|
223,430
|
|
|
356,440
|
|
|
94,229
|
|
|
125,866
|
|
|
247,069
|
|
|
1,047,034
|
|
Exploration
|
|
2015
|
|
|
98,522
|
|
|
73,800
|
|
|
298,691
|
|
|
51,301
|
|
|
154,681
|
|
|
676,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Hardy
(10)
|
|
2017
|
|
|
170,586
|
|
|
383,701
|
|
|
96,204
|
|
|
0
|
|
|
731,288
|
|
|
1,381,779
|
|
Former Vice
President, Legal
|
|
2016
|
|
|
239,071
|
|
|
381,710
|
|
|
100,812
|
|
|
184,702
|
|
|
25,515
|
|
|
931,810
|
|
and
General Counsel
|
|
2015
|
|
|
231,936
|
|
|
88,550
|
|
|
160,393
|
|
|
108,382
|
|
|
37,503
|
|
|
626,764
|
|
|
(1)
|
All
compensation is paid in Canadian dollars and converted into U.S. dollars for the purposes of the above table. For 2017 compensation
amounts, the exchange rate at December 29, 2017 of one U.S. dollar to Canadian $1.2545 is used.
|
|
(2)
|
Amounts
reported in the “Non-equity Incentive Plan Compensation” column for each year represent the amount earned in that
year, irrespective of when the amount was paid.
|
|
(3)
|
Amounts
reported in the “Stock Awards” column represent the aggregate grant date fair value of RSU and PSU awards, computed
in accordance with ASC 718, disregarding estimated forfeitures. The PSU awards are subject to market conditions and have been
valued based on the probable outcome of the market conditions as of the grant date. For a discussion of valuation assumptions,
see Note 7 - Share-Based Compensation of the Notes to Consolidated Financial Statements included under Item 7 in our Annual Report
on Form 10-K for the year ended December 31, 2017. Assuming maximum performance is achieved, the value of PSUs based on the price
of the Company’s shares at the date of grant would be as follows: Gary S. Guidry - $1,673,584; Ryan Ellson - $1,212,012;
Jim Evans - $717,030; Adrian Coral - $674,368; Lawrence West - $717,030; David Hardy - $767,402.
|
|
(4)
|
Amounts
reported in the “Option Awards” column represent the aggregate grant date fair value of stock options, computed in
accordance with ASC 718. The value ultimately realized by the NEOs upon the actual vesting of the award(s) or the exercise of
the stock option(s) may or may not be equal to this determined value. For a discussion of valuation assumptions, see Note 7 -
Share-Based Compensation of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form
10-K for the year ended December 31, 2017.
|
|
(5)
|
Amounts
reported in the “All Other Compensation” column include severance payments, vacation pay, parking and transportation
allowances, group term life insurance, and other perquisites, as shown in the table below.
|
|
(6)
|
Mr.
Guidry became President and Chief Executive Officer on May 7, 2015.
|
|
(7)
|
Mr.
Ellson became Chief Financial Officer on May 11, 2015.
|
|
(8)
|
Mr.
Evans became Vice President, Corporate Services on May 11, 2015.
|
|
(9)
|
Mr.
West became Vice President, Exploration on May 11, 2015.
|
|
(10)
|
Mr.
Hardy ceased to be our Vice President, Legal and General Counsel on August 30, 2017.
|
Name
|
|
Group
Term
Life Insurance
(S)
|
|
Parking
and
Transportation
Allowance
($)
|
|
Vacation
Pay ($)
|
|
Severance
Payment ($)
|
|
Other
($)
|
|
Total
($)
|
|
Gary S. Guidry
|
|
928
|
|
5,876
|
|
—
|
|
—
|
|
—
|
|
6,804
|
|
Ryan Ellson
|
|
928
|
|
5,876
|
|
—
|
|
—
|
|
—
|
|
6,804
|
|
Adrian Coral
|
|
3,722
|
|
—
|
|
7,747
|
|
—
|
|
105,225
|
(1)
|
116,694
|
|
Jim Evans
|
|
928
|
|
3,029
|
|
—
|
|
—
|
|
85,740
|
(2)
|
89,697
|
|
David Hardy
|
|
655
|
|
2,551
|
|
47,731
|
|
680,351
|
|
|
|
731,288
|
|
Lawrence
West
|
|
—
|
|
—
|
|
—
|
|
—
|
|
264,963
|
(3)
|
264,963
|
|
|
(1)
|
Consists
of $89,190 for driver, vehicle and vehicle expenses, $6,136 for club membership and $9,899 for savings fund contributions. Mr.
Coral resides in Bogota, Colombia.
|
|
(2)
|
Consists
of $15,945 allowance for housing and utilities; $37,713 for driver, vehicle and vehicle expenses; $27,401 for foreign service
and hardship allowance; $4,384 for goods and services costs; and $297 for language training. Mr. Evans has been residing in Bogota,
Colombia since September 2017.
|
|
(3)
|
Consists
of $84,987 allowance for housing and utilities; $86,872 for driver, vehicle and vehicle expenses; $63,573 for foreign service
and hardship allowance; $14,922 for goods and services costs; $12,365 for club membership; and $2,244 for language training. Mr.
West currently resides in Bogota, Colombia.
|
2017
GRANTS OF PLAN-BASED AWARDS
The
following table shows certain information regarding grants of plan-based awards granted to the NEOs for the fiscal year ended
December 31, 2017:
|
|
|
|
Estimated
Future Payouts
Under Non-Equity Incentive
Plan Awards
|
|
|
Estimated
Future Payouts
Under Equity Incentive
Plan Awards
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
|
|
Exercise
or
Base Price
of Option
|
|
Grant Date
Fair Value
of Stock
and Option
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|
Options
(#)
|
|
Awards
($/Sh)
|
|
Awards
($)
(1)
|
|
Gary S. Guidry
|
|
|
|
$0
|
|
318,852
|
|
637,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
0
|
|
325,600
|
|
651,200
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,200
|
|
2.57
|
|
209,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ryan Ellson
|
|
|
|
$0
|
|
207,254
|
|
383,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
0
|
|
235,800
|
|
471,600
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133,400
|
|
2.57
|
|
151,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian Coral
|
|
|
|
$0
|
|
138,000
|
|
234,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
0
|
|
131,200
|
|
262,400
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,200
|
|
2.57
|
|
84,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim Evans
|
|
|
|
$0
|
|
119,570
|
|
203,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
0
|
|
139,500
|
|
279,000
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,900
|
|
2.57
|
|
89,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence West
|
|
|
|
$0
|
|
119,570
|
|
203,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
0
|
|
139,500
|
|
279,000
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,900
|
|
2.57
|
|
89,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Hardy
|
|
|
|
$0
|
|
127,939
|
|
217,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
0
|
|
149,300
|
|
298,600
|
|
|
|
|
|
|
|
|
|
|
2017/03/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,500
|
|
2.57
|
|
96,204
|
|
|
(1)
|
The
amounts in this column reflect the aggregate grant date fair value of awards granted to NEOs in 2017 computed in accordance with
ASC 718, disregarding estimated forfeitures. The value ultimately realized by each NEO upon the actual vesting of the award(s)
or exercise of the stock option(s) may or may not be equal to this determined value. For a discussion of the valuation assumptions,
see Note 7
—
Share-Based
Compensation of the Notes to Consolidated Financial Statements included under Item 8 in our Annual Report on Form 10-K for the
year ended December 31, 2017.
|
OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2017
The
following table shows for the fiscal year ended December 31, 2017, certain information regarding outstanding equity awards held
by each of the NEOs.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares or Units
That Have Not
Vested
(#)
|
|
Market
Value of
Unearned Units
That Have Not
Vested ($)
(2)
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)
|
|
Equity
Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($)
(2)
|
|
Gary
S. Guidry
|
|
400,000
|
|
200,000
|
(1)
|
3.69
|
|
May
11, 2020
|
|
|
31,667
|
(7)
|
85,501
|
|
|
|
|
|
|
|
63,500
|
|
127,000
|
(5)
|
2.66
|
|
March
1, 2021
|
|
|
212,704
|
(8)
|
574,301
|
|
375,360
|
(3)
|
1,013,472
|
|
|
|
0
|
|
184,200
|
(6)
|
2.57
|
|
March
2, 2022
|
|
|
105,300
|
(9)
|
284,310
|
|
520,000
|
(4)
|
1,404,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ryan
Ellson
|
|
233,333
|
|
116,667
|
(1)
|
3.69
|
|
May
11, 2020
|
|
|
20,000
|
(7)
|
54,000
|
|
|
|
|
|
|
|
46,000
|
|
92,000
|
(5)
|
2.66
|
|
March
1, 2021
|
|
|
154,088
|
(8)
|
416,038
|
|
271,920
|
(3)
|
734,184
|
|
|
|
0
|
|
133,400
|
(6)
|
2.57
|
|
March
2, 2022
|
|
|
76,399
|
(9)
|
206,278
|
|
377,280
|
(4)
|
1,018,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian
Coral
|
|
10,000
|
|
—
|
|
2.51
|
|
December
15, 2018
|
|
|
8,334
|
(10)
|
22,502
|
|
|
|
|
|
|
|
23,000
|
|
—
|
|
5.90
|
|
March
3, 2020
|
|
|
19,992
|
(8)
|
53,978
|
|
35,280
|
(3)
|
95,256
|
|
|
|
16,312
|
|
—
|
|
8.40
|
|
March
9, 2021
|
|
|
42,509
|
(9)
|
114,774
|
|
209,920
|
(4)
|
566,784
|
|
|
|
7,500
|
|
—
|
|
5.83
|
|
Feb.
28, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
8,865
|
|
—
|
|
7.09
|
|
Feb.
28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
20,500
|
|
—
|
|
6.45
|
|
Aug.
10, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
56,666
|
|
28,334
|
|
2.75
|
|
Mar.
3, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
5,966
|
|
11,934
|
|
2.66
|
|
Mar.
1, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
74,200
|
|
2.57
|
|
Mar.
2, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim
Evans
|
|
133,333
|
|
66,667
|
(1)
|
3.69
|
|
May
11, 2020
|
|
|
6,667
|
(7)
|
18,001
|
|
|
|
|
|
|
|
27,200
|
|
54,400
|
(5)
|
2.66
|
|
March
1, 2021
|
|
|
91,120
|
(8)
|
246,024
|
|
160,800
|
(3)
|
434,160
|
|
|
|
0
|
|
78,900
|
(6)
|
2.57
|
|
March
2, 2022
|
|
|
45,198
|
(9)
|
122,035
|
|
233,200
|
(4)
|
602,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West
|
|
133,333
|
|
66,667
|
(1)
|
3.69
|
|
May
11, 2020
|
|
|
6,667
|
(7)
|
18,001
|
|
|
|
|
|
|
|
27,200
|
|
54,400
|
(5)
|
2.66
|
|
March
1, 2021
|
|
|
91,120
|
(8)
|
246,024
|
|
160,800
|
(3)
|
434,160
|
|
|
|
0
|
|
78,900
|
(6)
|
2.57
|
|
March
2, 2022
|
|
|
45,198
|
(9)
|
122,035
|
|
233,200
|
(4)
|
602,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Hardy
|
|
150,000
|
|
—
|
|
5.90
|
|
August
30, 2018
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
100,000
|
|
—
|
|
8.40
|
|
August
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
—
|
|
5.83
|
|
August
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
—
|
|
6.28
|
|
August
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
—
|
|
7.09
|
|
August
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
145,000
|
|
—
|
|
2.75
|
|
August
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
29,100
|
|
—
|
|
2.66
|
|
August
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
right to exercise the option will vest on May 12, 2018, as long as the option holder is still employed by Gran Tierra on that
date.
|
|
(2)
|
Calculated
using $2.70 which is the closing price of Gran Tierra’s shares on December 29, 2017.
|
|
(3)
|
These
amounts include the tranches (representing 60% of the target amount) of the PSU award granted in March of 2016 the vesting of
which is still subject to company performance. The applicable performance period for the third tranche (representing 20% of the
target amount) is January 1, 2018 through December, 2018. The fourth tranche (representing 40% of the target amount) has a performance
period which began on January 1, 2016 and will end on December 31, 2018. Because our performance during 2016 exceeded target,
the amounts above represent the maximum number of the PSUs that may vest. The actual number of PSUs that vest pursuant to the
PSU award granted in March of 2016 will depend on our performance over the applicable performance periods and the NEOs continued
employment through the date of settlement.
|
|
(4)
|
These
amounts include the tranches (representing 80% of the target amount) of the PSU award granted in March of 2017 the vesting of
which is still subject to company performance. The applicable performance period for the second tranche (representing 20% of the
target amount) is January 1, 2018 through December 31, 2018, and the applicable performance period for the third tranche (representing
20% of the target amount) is January 1, 2019 through December, 2019. The fourth tranche (representing 40% of the target amount)
has a performance period which began on January 1, 2017 and will end on December 31, 2019. Because our performance during 2017
exceeded target, the amounts above represent the maximum number of the PSUs that may vest. The actual number of PSUs that vest
pursuant to the PSU award granted in March of 2017 will depend on our performance over the applicable performance periods and
the NEOs continued employment through the date of settlement.
|
|
(5)
|
The
right to exercise the option will vest one-half on March 2, 2018 and one-half on March 2, 2019, in each case if the option holder
is still employed by Gran Tierra on such date.
|
|
(6)
|
The
right to exercise the option will vest one-third on March 2, 2018, one-third on March 2, 2019, and one-third on March 2, 2020,
in each case if the option holder is still employed by Gran Tierra on such date.
|
|
(7)
|
The
RSUs will all vest on May 12, 2018.
|
|
(8)
|
Provided
that our NEOs remain employed through the settlement date, these amounts represent the number of common shares, or their cash
equivalent, deliverable to each NEO with respect to the first tranche (representing 20% of the target amount) of the PSU award
granted in March of 2016. These amounts represent the actual number of common shares, or their cash equivalent, earned pursuant
to the terms of the PSUs for the performance period from January 1, 2016 through December 31, 2016. This tranche became earned
at 178% of target. The awards are enumerated in this column because while the performance element of vesting for the awards has
been fulfilled, the continued service requirement for vesting has not. If the NEOs do not remain employed through the settlement
date, they will forfeit the awards. As such, the awards were not fully vested as of December 31, 2016.
|
|
(9)
|
Provided
that our NEOs remain employed through the settlement date, these amounts represent the number of common shares, or their cash
equivalent, deliverable to each NEO with respect to the first tranche (representing 20% of the target amount) of the PSU award
granted in March of 2017. These amounts represent the actual number of common shares, or their cash equivalent, earned pursuant
to the terms of the PSUs for the performance period from January 1, 2017 through December 31, 2017. This tranche became earned
at 162% of target. The awards are enumerated in this column because while the performance element of vesting for the awards has
been fulfilled, the continued service requirement for vesting has not. If the NEOs do not remain employed through the settlement
date, they will forfeit the awards. As such, the awards were not fully vested as of December 31, 2017.
|
|
(10)
|
The
RSUs vested on March 1, 2018
|
2017
OPTION EXERCISES AND STOCK VESTED
The
following table presents information concerning the aggregate number of RSUs that vested during the fiscal year ended December
31, 2017, for the NEOs. There were no option exercises for the NEOs during the fiscal year ended December 31, 2017, and no PSUs
vested during the fiscal year ended December 31, 2017.
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Vesting
(#)
(1)
|
|
Value Realized on
Vesting
($)
(2)
|
|
Gary S. Guidry
|
|
31,667
|
|
79,168
|
|
Ryan Ellson
|
|
20,000
|
|
50,000
|
|
Adrian Coral
|
|
11,639
|
|
29,381
|
|
Jim Evans
|
|
6,667
|
|
16,668
|
|
Lawrence West
|
|
6,667
|
|
16,668
|
|
David Hardy
|
|
--
|
|
-
|
|
|
(1)
|
All
RSUs that vested during 2017 were settled in cash, and no shares of common stock were issued.
|
|
(2)
|
The
amounts in this column were calculated by multiplying the number of shares of common stock subject to the RSU that vested by the
closing market price of common stock on the vesting date.
|
POTENTIAL
PAYMENT UPON TERMINATION OR CHANGE OF CONTROL
Mr. Hardy
In
connection with Mr. Hardy’s retirement from employment on August 30, 2017, we entered into a Severance Agreement providing
for the following:
|
·
|
Lump
sum cash payment of $680,351, excluding vacation pay; and
|
|
·
|
All
outstanding and vested stock options will remain exercisable through August 30, 2018.
|
Messrs.
Guidry, Ellson, Coral, Evans and West
In
the event that Messrs. Guidry, Ellson, Coral, Evans or West die, voluntarily resign (without good reason, as defined below), or
their employment is terminated by Gran Tierra for cause (as defined below), the executive will not be entitled to receive any
further compensation or benefits whatsoever other than those which have accrued up to the executive’s last day of active
service.
The
NEOs are entitled to severance payments in the event of an involuntary termination of employment by Gran Tierra other than for
cause or a termination of employment by the NEO for good reason, as follows:
|
Base
Salary + Bonus Earned during 12 months preceding
Termination multiplied by:
|
Gary
S. Guidry
|
2
|
Ryan
Ellson
|
1.5
|
Adrian
Coral
|
1
|
Jim
Evans
|
1
|
Lawrence
West
|
1
|
In
addition, if Mr. Guidry is required to file a U.S. income tax return with the Internal Revenue Service, and if any of the payments
or benefits received or to be received by him constitute “parachute payments” within the meaning of Section 280G of
the Code and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company
shall pay to Mr. Guidry, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company,
an additional amount equal to the sum of the Excise Tax payable by Mr. Guidry, plus the amount necessary to put him in the same
after-tax position as if no Excise Tax had been imposed. The Company believes that to ensure Gran Tierra’s executive compensation
remains competitive, the Chief Executive Officer should be tax equalized to his Canadian citizen colleagues on payments that are
subject to U.S. Excise Tax. In 2017, this amount would have been $1,669,682, calculated as follows:
Total Termination payment
|
|
$
|
3,284,201
|
|
Gross-Up of taxable income
|
|
|
1,669,682
|
|
Total taxable income
|
|
|
4,953,883
|
|
|
|
|
|
|
Canadian tax payable
|
|
|
(2,377,864)
|
|
Net cash
|
|
|
2,576,019
|
|
U.S. Excise tax payable
|
|
|
(868,235)
|
|
Net after tax
|
|
$
|
1,707,785
|
|
Pursuant
to the employment agreements for each of Messrs. Guidry, Ellson, Coral, Evans and West, “cause” means any act or omission
of the executive which would, at common law, permit an employer to terminate the employment of an employee without notice or payment
in lieu of notice.
As
defined in the employment agreements for each of Messrs. Guidry, Ellson, Coral, Evans and West, “good reason” generally
means any of the following without the executive’s express written consent:
|
(a)
|
an
adverse change in position, titles, duties or responsibilities, except in connection with the termination of employment for cause;
|
|
(b)
|
a
reduction by the company of the executive’s base salary except to the extent that the annual base salaries of all other
executive officers are similarly reduced or any change in the basis upon which the Executive’s annual compensation is determined
or paid if the change is adverse to the executive (excluding changes to the annual bonus);
|
|
(c)
|
a
change in control (as defined below) of Gran Tierra Energy Inc. or Gran Tierra Energy Canada ULC occurs; or
|
|
(d)
|
any
breach by the Company of any material provision of the employment agreement.
|
As
defined in the amendment to the employment agreement with Mr. Hardy, “change in control” generally means any of the
following (note, “Company” includes either Gran Tierra Energy Inc. or Gran Tierra Energy Canada ULC):
|
(1)
|
a
sale of all or substantially all of the assets of the Company;
|
|
(2)
|
a
merger or consolidation in which the Company is not the surviving corporation;
|
|
(3)
|
a
reverse merger in which the Company is the surviving corporation but the shares of the Company’s common stock outstand
ing
immediately preceding the merger are converted into other property; or
|
|
(4)
|
the
acquisition by any person, entity or group of securities of the Company representing at least fifty percent (50%) of the combined
voting power entitled to vote in the election of directors.
|
The
following events will generally constitute a “change in control” pursuant to the employment agreements with each of
Messrs. Guidry, Ellson, Coral, Evans and West:
|
(1)
|
a
disposition of all or substantially all of the assets of Gran Tierra or GTE ULC;
|
|
(2)
|
a
majority of the voting securities of Gran Tierra Energy Canada ULC cease to be controlled, directly or indirectly, by Gran Tierra;
or
|
|
(3)
|
a
merger or other transaction of Gran Tierra with or into another company pursuant to which any person or combination of persons
thereafter holds a greater number of voting securities of the continuing company than the number of voting securities of the continuing
company held by former shareholders of Gran Tierra Energy, Inc.
|
Upon
a termination of employment, each of Messrs. Guidry, Ellson, Coral, Evans and West forfeit any unvested RSUs and stock options.
Estimated
Potential Payments
The
table below estimates the amounts payable if an involuntary termination of employment without cause, a termination for good reason
or a specified corporate transaction had occurred on December 31, 2017, for the NEOs using $2.70, the closing price of the stock
on that date.
|
|
Acceleration of Vesting
|
|
Name
|
|
Cash
Severance
($)
|
|
Stock
Options
($)
(1)
|
|
RSUs
($)
(1)
|
|
PSUs
($)
(1)
|
|
Total
($)
|
|
Gary S. Guidry
(2)
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or Resignation for Good Reason
|
|
1,445,994
|
|
—
|
|
—
|
|
—
|
|
1,445,994
|
|
Corporate Transaction
|
|
—
|
|
29,026
|
|
85,501
|
|
1,723,680
|
|
1,838,207
|
|
Termination without Cause or Resignation for Good Reason following a Corporate Transaction
|
|
1,445,994
|
|
29,026
|
|
85,501
|
|
1,723,680
|
|
3,284,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ryan Ellson
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or Resignation for Good Reason
|
|
781,985
|
|
—
|
|
—
|
|
—
|
|
781,985
|
|
Corporate Transaction
|
|
—
|
|
21,022
|
|
54,000
|
|
1,248,480
|
|
1,323,502
|
|
Termination without Cause or Resignation for Good Reason following a Corporate Transaction
|
|
781,985
|
|
21,022
|
|
54,000
|
|
1,248,480
|
|
2,105,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian Coral
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or Resignation for Good Reason
|
|
396,600
|
|
—
|
|
—
|
|
—
|
|
396,600
|
|
Corporate Transaction
|
|
—
|
|
10,123
|
|
22,502
|
|
433,620
|
|
466,245
|
|
Termination without Cause or Resignation for Good Reason following a Corporate Transaction
|
|
396,600
|
|
10,123
|
|
22,502
|
|
433,620
|
|
862,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim Evans
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or Resignation for Good Reason
|
|
389,797
|
|
—
|
|
—
|
|
—
|
|
389,797
|
|
Corporate Transaction
|
|
—
|
|
12,433
|
|
18,001
|
|
738,450
|
|
768,884
|
|
Termination without Cause or Resignation for Good Reason following a Corporate Transaction
|
|
389,797
|
|
12,433
|
|
18,001
|
|
738,450
|
|
1,158,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence West
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or Resignation for Good Reason
|
|
375,448
|
|
—
|
|
—
|
|
—
|
|
375,448
|
|
Corporate Transaction
|
|
—
|
|
12,433
|
|
18,001
|
|
738,450
|
|
768,884
|
|
Termination without Cause or Resignation for Good Reason following a Corporate Transaction
|
|
375,448
|
|
12,433
|
|
18,001
|
|
738,450
|
|
1,144,332
|
|
|
(1)
|
Unvested
equity awards will accelerate and become fully vested immediately prior to a Corporate Transaction. With respect to stock options,
the value is calculated as (a) the difference between $2.70, the closing price of our common stock on December 29, 2017, and the
exercise price of the applicable option, multiplied by (b) the number of unvested options subject to accelerated vesting held
by the applicable NEO. With respect to RSUs, the value is calculated as (a) $2.70, the closing price of our common stock on December
29, 2017, multiplied by (b) the number of unvested RSUs subject to accelerated vesting held by the applicable NEO. With respect
to PSUs, the value is calculated as (a) $2.70, the closing price of our common stock on December 29, 2017, multiplied by (b) the
number of unvested PSUs subject to accelerated vesting held by the applicable NEO, assuming a performance factor of 1.
|
|
(2)
|
Under
the terms of Mr. Guidry’s employment agreement, as he is required to file a U.S. income tax return with the Internal Revenue
Service, and as certain payments or benefits received or to be received by him constitute “parachute payments” within
the meaning of Section 280G of the Code and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise
Tax”), the Company shall pay to Mr. Guidry, no later than the time such Excise Tax is required to be paid by the Executive
or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by Mr. Guidry, plus the amount necessary
to put him in the same after-tax position as if no Excise Tax had been imposed. In 2017, this amount would have been $1,669,682,
calculated as follows:
|
Total termination payment
|
|
$
|
3,284,201
|
|
Gross-Up of taxable income
|
|
|
1,669,682
|
|
Total taxable income
|
|
|
4,953,883
|
|
|
|
|
|
|
Canadian tax payable
|
|
|
(2,377,864)
|
|
Net cash
|
|
|
2,576,019
|
|
US Excise tax payable
|
|
|
(868,235)
|
|
Net after tax
|
|
$
|
1,707,785
|
|
PAY
RATIO DISCLOSURE
In
determining the median employee, we prepared a list of all employees as of December 31, 2017. Consistent with applicable rules,
we used reasonable estimates both in the methodology used to identify the median employee and in calculating the annual total
compensation for employees other than the chief executive officer. In measuring our employees’ total compensation, for employees
other than the Chief Executive Officer, we used their base salary paid in 2017, their annual cash bonus paid in 2017 and the value
of the equity awards they received in 2017. Total compensation for Gary S. Guidry, the Company’s Chief Executive Officer
was determined to be $1,776,306 and was approximately 24 times the median annual compensation of all Company employees excluding
the Chief Executive Officer of $73,602. For purposes of this calculation, the Company had 323 employees in Canada and Colombia,
excluding the Chief Executive Officer.
SUMMARY
OF INCENTIVE PLANS
Plan category
|
|
(a)
Number of securities
to be issued
upon exercise of
outstanding options
(1)
|
|
(b)
Weighted average
exercise price of
outstanding options
|
|
(c)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a)
(2)
|
|
Equity compensation plans approved by security holders
|
|
8,960,692
|
|
3.65
|
|
17,280,233
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
—
|
|
—
|
|
|
|
8,960,692
|
|
3.65
|
|
17,280,233
|
|
|
(1)
|
Includes
shares reserved to be issued pursuant to stock options granted, representing 2.3% of the Company’s issued and outstanding
shares, pursuant to the 2007 Equity Incentive Plan (“the Plan”), which is an amendment and restatement of our 2005
Equity Incentive Plan. This does not include any shares reserved to be issued relating to PSUs, DSUs and RSUs, which may be settled
in cash or in shares of our common stock at our election, and for which management’s intent to cash settle is reflected
in the financial statement classification of these awards as financial liabilities.
|
|
(2)
|
In
accordance with Item 201(d) of Regulation S-K, the figure in this column represents the total number of shares of our common stock
remaining available for issuance under the Plan as of December 31, 2017, representing 4.5% of the Company’s issued and outstanding
shares, minus the awards reported in column (a), above. Note, pursuant to the terms of the Plan, the pool of shares available
for grant thereunder is not actually reduced until an award is settled in shares of our common stock (as opposed to reducing the
pool at the time of grant) At December 31, 2017, PSUs, DSUs and RSUs with respect to 6,709,809 shares were issued and outstanding
and, after application of the fungible factor of 1.55, these outstanding awards would represent a 10,400,204 reduction to the
securities remaining available for future issuance under the Plan if such awards were to be equity settled. Consistent with accounting
treatment that reflects management’s intent to cash settle, these amounts are not included in the above table as a reduction
in the securities remaining available for future issuance. Pursuant to the provisions of the Plan, the number of securities remaining
available for issuance is reduced by the aggregate balance of (i) stock options exercised and outstanding at a fungible factor
of 1.0 shares and (ii) unit based awards at a fungible factor of 1.55 shares for each share of our common stock issued pursuant
to any equity settled awards granted under the Plan. Accordingly, the number of shares available for future awards under the Plan
may be different than the amount shown in this column.
|
2007
Equity Incentive Plan
- The only equity compensation plan approved by our stockholders is our 2007 Equity Incentive
Plan (the “Plan”), which is an amendment and restatement of our 2005 Equity Plan (the “Prior Plan”).
The
Plan, provides for the grant of stock options, restricted stock awards, stock appreciation rights, RSUs and other stock awards,
collectively referred to as
“Awards.”
To date, Gran
Tierra has granted stock options, RSUs including DSUs and PSUs under the Plan.
Purpose
The
Board adopted the Plan to provide a means by which employees, directors and consultants of Gran Tierra and its affiliates may
be given an opportunity to acquire stock in Gran Tierra, to assist in retaining the services of such persons, to secure and retain
the services of persons capable of filling such positions and to provide incentives for such persons to exert maximum efforts
for the success of Gran Tierra and its affiliates. As of December 31, 2017, all of the approximately 332 employees, directors
and consultants of Gran Tierra and its affiliates are eligible to participate in the Incentive Plan and may receive all types
of awards.
Stock
Subject to the Plan
The
maximum aggregate number of shares reserved for issuance under the Plan is 39,806,100 shares, or the “Share Reserve.”
Under
the terms of the Plan, the Share Reserve will be reduced by (i) one share for each share of common stock issued pursuant to an
option or stock appreciation right, and (ii) 1.55 shares for each share of common stock issued pursuant to any other type of stock
award, referred to as a “Full Value Award.” If a stock award is settled in cash, such settlement will not reduce the
Share Reserve.
The
following shares of common stock granted pursuant to a stock award under the Plan will become available for subsequent issuance
under the Plan as such shares become available from time to time, as follows:
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·
|
one
share for each share subject to an outstanding option or stock appreciation right that expires, terminates for any reason prior
to exercise or settlement or that is forfeited or otherwise returns because of the failure to meet a contingency or condition
required to vest such shares;
|
|
·
|
1.55
shares for each share subject to a Full Value Award that is forfeited or otherwise returns because of the failure to meet a contingency
or condition required to vest such shares or the Full Value Award otherwise terminates without all of the shares covered by the
Full Value Award having been issued; and
|
|
·
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1.55
shares for each share subject to a Full Value Award that is reacquired or withheld or not issued to satisfy a tax withholding
obligation.
|
However,
any shares of common stock granted pursuant to a stock award under the Plan or the Prior Plan that are not delivered to a participant
because of any of the following reasons will not become available for subsequent issuance under the Plan:
|
·
|
shares
are not delivered to a participant because an option or stock appreciation right is exercised through a reduction in the number
of shares subject to the stock award (a “net exercise”);
|
|
·
|
shares
are reacquired or withheld or not issued to satisfy a tax withholding obligation in connection with an option or stock appreciation
right;
|
|
·
|
shares
are used as consideration for the exercise of an option or stock appreciation right; or
|
|
·
|
shares
are repurchased by Gran Tierra on the open market with the proceeds of an option or stock appreciation right exercise price.
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Eligibility
Employees
(including officers), directors, and consultants of both Gran Tierra and its affiliates are eligible to receive all types of awards
under the Plan. Under the Plan, no employee may be granted options or stock appreciation rights whose value is determined by reference
to an increase over an exercise or strike price of at least 100% of the fair market value on the date of grant covering more than
1,000,000 (0.3%) shares of common stock during any calendar year. The maximum number of shares which may be reserved for issuance
to insiders, at any time, under the Plan, and any other share compensation arrangement of Gran Tierra shall be 10% of the shares
of common stock issued and outstanding. Additionally, the maximum number of shares of common stock which may be issued under the
Plan, at any time, and any other share compensation arrangements within any 12-month period shall be 10% of the common stock outstanding
for insiders as a group and 5% of the common stock outstanding for any one insider and such insider’s associates. The maximum
number of options that may be granted to any one consultant in any 12-month period shall not exceed 2% of the issued and outstanding
common stock at the time of grant.
Repricing;
Cancellation and Re-Grant of Stock Awards
Under
the Plan, the Board does not have the authority to reduce the exercise, purchase or strike price of an option or stock appreciation
right or to cancel any outstanding option or stock appreciation right that has an exercise price greater than the current fair
market value of our common stock in exchange for cash or other stock awards without obtaining the approval of our stockholders
within 12 months
prior
to the repricing or cancellation and re-grant event. Additionally, the Board may not reduce the exercise price of an option or
extend the term of an option held by an insider without obtaining the approval of the stockholders other than insiders who are
eligible to receive stock awards and such insiders’ associates, at a meeting of the stockholders.
Terms
of Options
The
following is a description of the permissible terms of options under the Plan. Individual option grants may be more restrictive
as to any or all of the permissible terms described below.
Exercise
Price; Payment
The
exercise price of options may not be less than 100% of the fair market value of the stock on the date of grant. The “fair
market value” of Gran Tierra’s common stock on a particular day is generally the closing sales price for the common
stock (or the closing bid, if no sales were reported) as quoted on the primary exchange or market upon which Gran Tierra’s
common stock trades. If that day is not a market trading day, then the last market trading day prior to the day of determination
is used.
The
exercise price of options granted under the Plan must be paid either in cash at the time the option is exercised or at the discretion
of the Board, (i) by delivery of other common stock of Gran Tierra, (ii) by a “net exercise” arrangement, (iii) pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of common stock,
results in either the receipt of cash (or check) by Gran Tierra or the receipt of irrevocable instructions to pay the aggregate
exercise price to Gran Tierra from the sale proceeds, or (iv) in any other form of legal consideration acceptable to the Board.
Option
Exercise
Options
granted under the Plan may become exercisable in cumulative increments, or vest, as determined by the Board. Shares covered by
currently outstanding options under the Plan typically vest over a three year period in three equal annual installments during
the participant’s employment by, or service as a director or consultant to, Gran Tierra or an affiliate.
Term
The
maximum term of options under the Plan is 10 years. Options under the Plan generally terminate three months after termination
of the participant’s Service unless (i) such termination is due to the participant’s permanent and total disability,
in which case the option may, but need not, provide that it may be exercised (to the extent the option was exercisable at the
time of the termination of Service) at any time within 12 months of such termination; (ii) the participant dies before the participant’s
Service has terminated, or within three months after termination of such Service, in which case the option may, but need not,
provide that it may be exercised (to the extent the option was exercisable at the time of the participant’s death) within
18 months of the participant’s death by the person or persons to whom the rights to such option pass by will or by the laws
of descent and distribution; or (iii) the option by its terms specifically provides otherwise. A participant may designate a beneficiary
who may exercise the option following the participant’s death. Individual option grants by their terms may provide for exercise
within a longer period of time following termination of Service.
The
option term generally may be extended in the event that exercise of the option within these periods is prohibited. A participant’s
option agreement may provide that if the exercise of the option following the termination of the participant’s Service would
be prohibited because the issuance of stock would violate the registration requirements under the Securities Act, then the option
will terminate on the earlier of (i) the expiration of the term of the option or (ii) three months after the termination of the
participant’s service during which the exercise of the option would not be in violation of such registration requirements.
Restrictions
On Transfer
The
Board may grant stock options that are transferable to the extent provided in the stock option agreement. If an option does not
provide for transferability then the option shall not be transferable except by will or by the laws of descent and distribution
or pursuant to a domestic relations order and shall be exercisable during the lifetime of the option holder and only by the option
holder. Shares subject to repurchase by Gran Tierra under an early exercise stock purchase agreement may be subject to restrictions
on transfer that the Board deems appropriate.
Terms
of Restricted Stock Awards and Purchases of Restricted Stock
Payment
The
Board determines the purchase price under a restricted stock purchase agreement but the purchase price may not be less than the
par value of Gran Tierra’s common stock on the date of purchase. The Board may award stock bonuses in consideration of past
services without a purchase payment.
The
purchase price of stock acquired pursuant to a restricted stock purchase agreement under the Plan must be paid either in cash
at the time of purchase or at the discretion of the Board, (i) by cash at the time of purchase, (ii) by services rendered, or
to be rendered to Gran Tierra or (iii) in any other form of legal consideration acceptable to the Board.
Vesting
Shares
of stock sold or awarded under the Plan may, but need not be, subject to a repurchase option in favor of Gran Tierra in accordance
with a vesting schedule as determined by the Board. The Board has the power to accelerate the vesting of stock acquired pursuant
to a restricted stock purchase agreement under the Plan in the event of death, disability, or in the event of a Change in Control.
Restrictions
on Transfer
Rights
under a stock bonus or restricted stock bonus agreement may be transferred only upon the terms and conditions of the award agreement
as the Board shall determine in its discretion, except where such assignment is required by law or expressly authorized by the
terms of the applicable stock bonus or restricted stock purchase agreement.
Other
Stock Awards
Other
forms of stock awards valued in whole or in part with reference to or otherwise based on our common stock may be granted either
alone or in addition to other stock awards under the Plan. The Board will have sole and complete authority to determine the persons
to whom and the time or times at which such other stock awards will be granted, the number of shares of common stock (or the cash
equivalent thereof) to be granted and all other conditions of such other stock awards. Other forms of stock awards may be subject
to vesting in accordance with a vesting schedule to be determined by the Board. RSUs, including PSUs, are subject to a three year
vesting period. Although DSUs vest immediately, directors are not eligible to receive payment until such time as they are no longer
a director of the Company.
Adjustment
Provisions
Transactions
not involving receipt of consideration by Gran Tierra, such as a merger, consolidation, reorganization, stock dividend, or stock
split, may change the type(s), class(es) and number of shares of common stock subject to the Plan and outstanding awards. In that
event, the Plan will be appropriately adjusted as to the type(s), class(es) and the maximum number of shares of common stock subject
to the Plan, and outstanding Awards will be adjusted as to the type(s), class(es), number of shares and price per share of common
stock subject to such Awards.
Effect
Of Certain Corporate Transactions
The
Plan provides that in the event of the consummation of (i) the sale or other disposition of all or substantially all of the assets
of Gran Tierra, (ii) the sale or other disposition of at least fifty percent of the outstanding securities of Gran Tierra, or
(iii) certain specified types of merger, consolidation or similar transactions, or collectively, a corporate transaction, any
surviving or acquiring corporation may continue or assume Awards outstanding under the Plan or may substitute similar Awards.
Regardless of whether any surviving or acquiring corporation assumes such Awards or substitutes similar Awards, with respect to
Awards held by participants whose Service with Gran Tierra or an affiliate has not terminated as of the effective time of the
corporate transaction, the vesting of such awards (and, if applicable, the time during which such awards may be exercised) will
be accelerated in full.
Duration,
Amendment And Termination
The
Board may suspend or terminate the Plan without stockholder approval or ratification at any time or from time to time.
The
Board may at any time, or from time to time, amend or revise the Plan as follows: (a) to make amendments to the Plan or a Stock
Award of a housekeeping or administrative nature; (b) if the common stock is listed on the Toronto Stock Exchange subject to any
required approval of the TSX, to change the vesting or termination provisions of a Stock Award or the Plan; (c) amendments necessary
to comply with provisions of applicable law or stock exchange requirements or for grants to qualify for favorable treatment under
applicable laws; and (d) any other amendment, fundamental or otherwise, not requiring stockholder approval under the Code. However,
no amendment will be effective unless approved by the stockholders of Gran Tierra within 12 months before or after its adoption
by the Board to the extent such approval is necessary to satisfy the requirements of Section 422 of the Code. The Board may submit
any other amendment to the Plan for stockholder approval.
For
so long as Gran Tierra’s stock is listed on the TSX, under the rules and policies of the TSX any amendment to the Plan is
subject to pre-clearance of such amendment by the TSX, and no amendment, suspension or discontinuance of the Plan may contravene
the requirements of the TSX.
Burn
Rate
In
2017 there were 2,029,035 stock options granted under the Plan which resulted in a burn rate of 0.52%. In 2016 there were 1,744,165
stock options granted under the Plan which resulted in a burn rate of 0.56%, and in 2015 there were 5,346,260 stock options granted
under the Plan which resulted in a burn rate of 1.93%.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related Person Transactions Policy And Procedures
Gran
Tierra discourages transactions with related persons. The charter of the Audit Committee provides that the Audit Committee is
charged with reviewing and recommending to the Board the approval or disapproval of any related person transactions, as defined
under Regulation S-K, Item 404. In addition, potential related persons transactions are to be referred to the Chief Executive
Officer, and brought to the attention of the full Board if material.
There
have been no related party transactions since January 1, 2017 where the procedures described above did not require review, approval
or ratification or where these procedures were not followed.
Certain
Related-Person Transactions
Gran
Tierra has entered into indemnity agreements with certain officers and directors which provide, among other things, that Gran
Tierra will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses,
damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may
be made a party by reason of his or her position as a director, officer or other agent of Gran Tierra, and otherwise to the fullest
extent permitted under Delaware law and Gran Tierra’s Bylaws.
STOCKHOLDER
PROPOSALS
Stockholders
interested in submitting a proposal for inclusion in our proxy materials and for presentation at the 2019 annual meeting of stockholders
may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act and must submit their proposals to us at
our principal executive offices (to the Corporate Secretary at 900, 520 - 3rd Avenue S.W., Calgary, Alberta, Canada T2P 0R3),
not later than the close of business on November 21, 2018. If the date of the 2019 annual meeting is changed by more than 30 days
from the date of the 2018 annual meeting, the deadline for submitting proposals is a reasonable time before we begin to print
and mail the proxy materials for our 2019 annual meeting. There is no minimum number of shares required to be held by a stockholder
interested in submitting a proposal for inclusion in our proxy materials.
Our
Bylaws provide that stockholders may nominate persons for election to the Board of Directors or bring any other business before
the stockholders (other than matters properly brought under Rule 14a-8) at the 2019 annual meeting of stockholders only by sending
to our Corporate Secretary a notice containing the information required by our Bylaws. Notice to us must be made not less than
30 or more than 65 days prior to the date of the annual meeting; provided, however, that if the annual meeting is to be held on
a date that is less than 50 days after the date on which the public announcement of the date of the annual meeting was made by
Gran Tierra, notice may be made not later than the close of business on the 10th day following the day on which public announcement
of the date of the annual meeting is first made by Gran Tierra. Detailed information about how to make stockholder proposals or
nominations for our annual meetings of stockholders can be found in our Bylaws.
HOUSEHOLDING
OF PROXY MATERIALS
The
SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices
of Internet Availability of Proxy Materials or other annual meeting materials with respect to two or more stockholders sharing
the same address by delivering a single Notice of Internet Availability of Proxy Materials or other annual meeting materials addressed
to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience
for stockholders and cost savings for companies.
This
year, a number of brokers with account holders who are stockholders of Gran Tierra will be “householding” Gran Tierra’s
proxy materials. A single Notice of Internet Availability of Proxy Materials or a single set of annual meeting materials will
be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be “householding” communications to your address, “householding”
will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate
in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials or a separate
set of annual meeting materials, please notify your broker. You can also request prompt delivery of a copy of the proxy statement
and annual report by contacting Gran Tierra Energy Inc., Diane Phillips, Corporate Secretary, 900, 520 - 3 Avenue S.W., Calgary,
Alberta, Canada T2P 0R3 or by telephone at (403) 265-3221. Stockholders who currently receive multiple copies of the Notices of
Internet Availability of Proxy Materials or multiple sets of annual meeting materials at their addresses and would like to request
“householding” of their communications should contact their brokers.
OTHER
MATTERS
The
Board knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance
with their best judgment.
|
By
Order of the Board of Directors
|
|
|
|
/s/
Gary Guidry
|
|
Gary
S. Guidry
|
|
President
and Chief Executive Officer
|
March
21, 2018
A copy of Gran Tierra’s Annual Report to the SEC on Form 10-K for the fiscal year ended December 31, 2017, including the financial statements and the financial statement schedules required to be filed with the SEC for the Company’s most recent fiscal year, is available without charge upon written request to: Gran Tierra Energy Inc., 900, 520 - 3 Avenue S.W., Calgary, Alberta, Canada T2P 0R3, Attention: Corporate Secretary.
|
FORWARD
LOOKING STATEMENTS ADVISORY
This
document contains opinions, forecasts, projections, guidance, plans and other statements about future events or results that constitute
forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and financial outlook
and forward looking information within the meaning of applicable Canadian securities laws (collectively, “forward-looking
statements”). Such forward-looking statements include, but are not limited to, the Company’s expectation to fully
fund its operations from cash from operating activities, expectations regarding the annual meeting and the related procedures,
the filing of voting results, the Company’s future operations including planned operations and the exploration and development
of the Company’s blocks, areas and fields.
The
forward-looking statements contained in this document reflect several material factors and expectations and assumptions of Gran
Tierra including, without limitation, that Gran Tierra will continue to conduct its operations in a manner consistent with its
current expectations, the accuracy of testing and production results and seismic data, pricing and cost estimates (including with
respect to commodity pricing and exchange rates), rig availability, the effects of drilling down-dip, the effects of waterflood
and high pressure stimulation operations, the extent and effect of delivery disruptions, and the general continuance of current
or, where applicable, assumed operational, regulatory and industry conditions including in areas of potential expansion, and the
ability of Gran Tierra to access capital and other resources and to execute its current business and operational plans in the
manner currently planned. Gran Tierra believes the material factors, expectations and assumptions reflected in the forward-looking
statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove
to be correct.
Among
the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements
in this document are: Gran Tierra’s operations are located in Colombia, and unexpected problems can arise due to guerrilla
activity; technical difficulties and operational difficulties may arise which impact the production, transport or sale of the
Company’s products, including instability of electricity supply at our production facilities; geographic, political and
weather conditions can impact the production, transport or sale of the Company’s products; the risk that current global
economic and credit conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts; the ability
of Gran Tierra to execute its business plan and its drilling and development plan; the risk that unexpected delays and difficulties
in developing currently owned properties may occur; the timely receipt of regulatory or other required approvals for the Company’s
operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited
availability of drilling equipment and personnel; the risk that oil prices could remain weak or further decline, or global economic
and credit market conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts, which could cause
Gran Tierra to further modify its strategy and capital spending program; and the risk factors detailed from time to time in Gran
Tierra’s periodic reports filed with the Securities and Exchange Commission, including, without limitation, under the caption
“Risk Factors” in Gran Tierra’s Annual Report on Form 10-K filed February 27, 2018. These filings are available
on the Securities and Exchange Commission website at http://www.sec.gov and on SEDAR at www.sedar.com. Although the current guidance,
capital spending program and long term strategy of Gran Tierra is based upon the current expectations of the management of Gran
Tierra, should any one of a number of issues arise, Gran Tierra may find it necessary to alter its business strategy and/ or capital
spending program and there can be no assurance as at the date of this document as to how those funds may be reallocated or strategy
changed and how that would impact Gran Tierra’s results of operations and financing position.
Statements
relating to “reserves” and “resources” are also deemed to be forward-looking statements, as they involve
the implied assessment, based on certain estimates and assumptions, including that the reserves and resources described can be
profitably produced in the future.
All
forward-looking statements are made as of the date of this document and the fact that this document remains available does not
constitute a representation by Gran Tierra that Gran Tierra believes these forward-looking statements continue to be true as of
any subsequent date. Actual results may vary materially from the expected results expressed in forward-looking statements. Gran
Tierra disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable securities laws. Gran Tierra’s forward-looking statements
are expressly qualified in their entirety by this cautionary statement.
DISCLOSURE
OF OIL AND GAS INFORMATION
Gran
Tierra’s Statement of Reserves Data and Other Oil and Gas Information on Form 51-101F1 dated effective as at December 31,
2017 (the “GTE 51-101F1”), which includes disclosure of its oil and gas reserves and other oil and gas information
in accordance with Canadian National Instrument 51-101 -
Standards of Disclosure
for Oil and Gas Activities
(“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGEH”)
forming the basis of this document, is available on SEDAR at www.sedar.com.
Estimates
of net present value contained herein do not necessarily represent fair market value of reserves or resources. Estimates of reserves
or resources and future net revenue for individual properties may not reflect the same level of confidence as estimates of reserves
and future net revenue for all properties, due to the effect of aggregation.
Gas
volumes are converted to BOE at the rate of 6 Mcf of gas per bbl of oil, based upon the approximate relative energy content of
gas and oil. The rate is not necessarily indicative of the relationship between oil and gas prices. BOEs may be misleading, particularly
if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on
the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing
a BOE conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value.
Definitions
All
dollar ($) amounts referred to in this proxy statement are United States (U.S.) dollars, unless otherwise indicated.
BOE
means barrels of oil equivalent.
BOEPD
means barrels of oil equivalent per day.
MMBOE
means million barrels of oil equivalent
Proved
reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual
remaining quantities recovered will exceed the estimated proved reserves.
Probable
reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the
actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
Possible
reserves are those additional reserves that are less certain to be recovered than Probable reserves. There is a 10% probability
that the quantities actually recovered will equal or exceed the sum of Proved plus Probable plus Possible reserves. The estimate
of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due
to the effects of aggregation.
See
the GTE 51-101F1 for additional definitions regarding terms used in this document.
Oil
and Gas Metrics
This
document contains certain oil and gas metrics, including reserves per share, net asset value per share and FDC, which are calculated
as described in this document and do not have standardized meanings or standard methods of calculation and therefore such measures
may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with
additional measures to evaluate the Company’s performance; however, such measures are not reliable indicators of the future
performance of the Company and future performance may not compare to the performance in previous periods.
Prospective
Resources
Prospective
Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations
by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance
of development. Not all exploration projects will result in discoveries. The chance that an exploration project will result in
the discovery of petroleum is referred to as the “chance of discovery.” Thus, for an undiscovered accumulation the
chance of commerciality is the product of two risk components-the chance of discovery and the chance of development. There is
no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is no certainty that it will
be commercially viable to produce any portion of the Prospective Resources.
Estimates
of the Company’s Prospective Resources are based upon the GTE McDaniel Prospective Resources Report. The estimates of Prospective
Resources provided in this document are estimates only and there is no guarantee that the estimated Prospective Resources will
be recovered. Actual resources may be greater than or less than the estimates provided in this in this document and the differences
may be material. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Gran Tierra’s
Prospective Resources will be attained and variances could be material. There is no certainty that any portion of the Prospective
Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion
of the Prospective Resources.
Estimates
of Prospective Resources are by their nature more speculative than estimates of proved reserves and would require substantial
capital spending over a significant number of years to implement recovery. Actual locations drilled and quantities that may be
ultimately recovered from our properties will differ substantially. In addition, we have made no commitment to drill, and likely
will not drill, all of the drilling locations that have been attributable to these quantities.
The
prospective resources in this document are classified as “mean” representing the arithmetic average of the expected
recoverable volume. It is the most accurate single point representation of the volume distribution.
For a discussion of Gran Tierra’s interest in the Prospective Resources, the location of the Prospective
Resources, the product type
reasonably expected, the
risks and level of uncertainty associated with recovery of the resources, the significant positive and negative factors relevant
to the estimate of the Prospective Resources, a description of the applicable projects maturity sub-categories and other relevant
information regarding the Prospective Resources estimates, please see the GTE NI 51-101F1 available on SEDAR at www.sedar.com.
IMPORTANT ANNUAL MEETING INFORMATION Electronic Voting Instructions Available 24 hours a day, 7 days a
week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS
ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:00 a.m., Mountain Time,
on April 30, 2018. Vote by Internet Go to www.investorvote.com/GTE Or scan the QR code with your smartphone Follow the steps outlined
on the secure website Vote by telephone Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch
tone telephone Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown
in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card IF YOU HAVE NOT VOTED VIA THE INTERNET
OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The
Board of Directors recommends a vote FOR each of the nominees listed and FOR Proposals 2 and 3. 1. Election of Directors. Nominees:
01 - Gary S. Guidry For Against Abstain 04 - Robert B. Hodgins For Against Abstain 02 - Peter J. Dey 05 - Ronald W. Royal For Against
Abstain 03 - Evan Hazell 06 - Sondra Scott For Against Abstain 07 - David P. Smith 08 - Brooke Wade 2. Proposal to ratify the appointment
of KPMG LLP as the independent registered public accounting firm for 2018. For Against Abstain 3. Proposal to approve, on an advisory
basis, the compensation of Gran Tierra Energy Inc.'s named executive officers, as disclosed in the proxy statement. For Against
Abstain B Non-Voting Items Change of Address — Please print new address below. Note: To conduct any other business properly
brought before the meeting. C Authorized Signatures — This section must be completed for your vote to be counted. —
Date and Sign Below Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or
other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation
or partnership, please sign in full corporate or partnership name, by authorized officer. Date (mm/dd/yyyy) — Please print
date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
02SA0D 1 U P X +
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice, Proxy
Statement and Annual Report are available at http://www.edocumentview.com/GTE. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE,
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Annual Meeting Proxy — Gran Tierra
Energy Inc. ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON May 2, 2018 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The stockholders hereby appoint Gary S. Guidry and Ryan Ellson, or any of them, as proxies, each with the power to appoint his
or her substitute, and hereby authorizes each of them to represent and to vote all of the shares of Common Stock, Special A Voting
Stock, and Special B Voting Stock of Gran Tierra Energy Inc. that the stockholders are entitled to vote at the Annual Meeting of
Stockholders to be held at 11:00 a.m. (Mountain time) on May 2, 2018, at Centennial Place, 3rd Floor, West Tower, 250-5 Street
SW, Calgary, Alberta, Canada T2P 0R4, and any adjournments or postponements thereof, hereby revoking all previous proxies, with
all powers the stockholders would possess if present, on all matters listed on the reverse side and in accordance with the instructions
designated on the reverse side and with discretionary authority as to any and all such other matters as may properly come before
the meeting. For directions to the meeting, please visit www.grantierra.com. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED
AS DIRECTED HEREIN. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE
SIDE FOR THE BOARD OF DIRECTORS AND FOR EACH OF PROPOSALS 2 AND 3. THE PROXIES NAMED ABOVE ARE HEREBY AUTHORIZED TO VOTE IN THEIR
DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED REPLY ENVELOPE OR VOTE ONLINE AS INSTRUCTED IN THIS PROXY CARD.
IMPORTANT ANNUAL MEETING INFORMATION Using
a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual
Meeting Proxy Card PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals
— The Board of Directors recommends a vote FOR each of the nominees listed and FOR Proposals 2 and 3. 1. Election of Directors.
Nominees: 01 - Gary S. Guidry 04 - Robert B. Hodgins For Against Abstain 02 - Peter J. Dey 05 - Ronald W. Royal For Against Abstain
03 - Evan Hazell 06 - Sondra Scott For Against Abstain 07 - David P. Smith For Against Abstain 08 - Brooke Wade For Against Abstain
2. Proposal to ratify the appointment of KPMG LLP as the independent registered public accounting firm for 2018. 3. Proposal to
approve, on an advisory basis, the compensation of Gran Tierra Energy Inc.'s named executive officers, as disclosed in the proxy
statement. Note: To conduct any other business properly brought before the meeting. B Authorized Signatures — This section
must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as your name(s) appear(s) hereon.
When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each
sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by
authorized officer. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box.
Signature 2 — Please keep signature within the box. 02SA1D 1 U P X +
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The
Notice, Proxy Statement and Annual Report are available at http://www.edocumentview.com/GTE. PLEASE FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Annual Meeting Proxy — Gran Tierra Energy Inc. ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON May 2, 2018 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholders hereby appoint
Gary S. Guidry and Ryan Ellson, or any of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes
each of them to represent and to vote all of the shares of Common Stock, Special A Voting Stock, and Special B Voting Stock of
Gran Tierra Energy Inc. that the stockholders are entitled to vote at the Annual Meeting of Stockholders to be held at 11:00 a.m.
(Mountain time) on May 2, 2018, at Centennial Place, 3rd Floor, West Tower, 250-5 Street SW, Calgary, Alberta, Canada T2P 0R4,
and any adjournments or postponements thereof, hereby revoking all previous proxies, with all powers the stockholders would possess
if present, on all matters listed on the reverse side and in accordance with the instructions designated on the reverse side and
with discretionary authority as to any and all such other matters as may properly come before the meeting. For directions to the
meeting, please visit www.grantierra.com. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. IF NO SUCH DIRECTIONS
ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR
EACH OF PROPOSALS 2 AND 3. THE PROXIES NAMED ABOVE ARE HEREBY AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
AS INSTRUCTED IN THIS PROXY CARD.
GRAN TIERRA EXCHANGECO INC. 8th Floor, 100 University Avenue Toronto, Ontario M5J 2Y1 www.computershare.com
Security Class Holder Account Number Fold Voting Instruction Form (“VIF”) - Annual Meeting to be held on Wednesday,
May 2, 2018 Notes to VIF 1. This voting direction will not be valid and not be acted upon unless it is completed as outlined herein
and delivered to Computershare Trust Company of Canada, Attention: Manager, Corporate Trust, 600, 530 – 8th Avenue S.W.,
Calgary, Alberta T2P 3S8, Canada by 11:00 am (Mountain Time) on Monday, April 30, 2018, or not less than 48 hours before the time
set for the holding of any adjournment(s) thereof. The voting direction is valid only for the Meeting or any adjournment(s) of
the Meeting. 2. If this voting direction is not signed by the Holder (as defined below) of Gran Tierra Exchangeco Inc. Exchangeable
Shares, the votes to which the Holder of the Gran Tierra Exchangeco Inc. Exchangeable Shares is entitled will not be exercised.
3. If the Holder is a corporation, its corporate seal must be affixed or it must be signed by an officer or attorney thereof duly
authorized. 4. This voting direction must be dated and the signature hereon should be exactly the same as the name in which the
Gran Tierra Exchangeco Inc. Exchangeable Shares are registered. 5. Persons signing as executors, administrators, trustees, etc.,
should so indicate and give their full title as such. 6. A Holder who has submitted a voting direction may revoke it at any time
prior to the Meeting. In addition to revocation in any other manner permitted by law, a voting direction may be revoked by instrument
in writing executed by the Holder or his attorney authorized in writing or, if the Holder is a corporation, under its corporate
seal or by an officer or attorney thereof duly authorized and deposited at the office of the Trustee (as defined below) at any
time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof at which the voting
direction is to be acted upon or with a representative of the Trustee in attendance at the Meeting, on the day of the Meeting or
any adjournment thereof, and upon either of such deposits, the voting direction is revoked. VIF’s submitted must be received
by 11:00 am (Mountain Time) on Monday, April 30, 2018. VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK! To Vote
Using the Telephone To Vote Using the Internet Fold Call the number listed BELOW from a touch tone telephone. 1-866-732-VOTE (8683)
Toll Free Go to the following web site: www.investorvote.com/GTE Smartphone? Scan the QR code to vote now. If you vote by telephone
or the Internet, DO NOT mail back this VIF. Voting by mail may be the only method for securities held in the name of a corporation
or securities being voted on behalf of another individual. Voting by mail or by Internet are the only methods by which a holder
may appoint a person as proxyholder other than the Management nominees named on the reverse of this VIF. Instead of mailing this
VIF, you may choose one of the two voting methods outlined above to vote this VIF. To vote by telephone or the Internet, you will
need to provide your CONTROL NUMBER listed below. CONTROL NUMBER 01DUMD
PLEASE SELECT ONE OF THE FOLLOWING: Direct the Trustee to Vote Gran Tierra Exchangeco Inc. Exchangeable
Shares The Holder hereby directs the Trustee to vote as indicated. Appointment of Company Management as Proxy The Holder hereby
appoints Gary S. Guidry and Ryan Ellson, or either of them, as proxyholder of the Holder, with power of substitution, and authorizes
them to represent and vote, as indicated above, all of the Gran Tierra Exchangeco Inc. Exchangeable Shares which the Holder may
be entitled to vote at the Meeting, and at any adjournment or adjournments thereof and on every ballot that may take place in consequence
thereof, and with discretionary authority as to any other matters that may properly come before the Meeting. Appointment of the
Holder, or the Holder’s Designee as Proxy The Holder hereby appoints as proxyholder of the Holder and authorizes them to
represent and vote, as indicated above, all of the Gran Tierra Exchangeco Inc. Exchangeable Shares which the Holder may be entitled
to vote at the Meeting, and at any adjournment or adjournments thereof and on every ballot that may take place in consequence thereof,
and with discretionary authority as to any other matters that may properly come before the Meeting. IF THE HOLDER DOES NOT COMPLETE
ONE OF THE FOREGOING, COMPLETES MORE THAN ONE OF THE FOREGOING OR COMPLETES THE THIRD SELECTION BUT DOES NOT SPECIFY A DESIGNEE,
THE HOLDER WILL BE DEEMED TO HAVE DIRECTED THE TRUSTEE TO VOTE THEIR GRAN TIERRA EXCHANGECO INC. EXCHANGEABLE SHARES AS INDICATED.
The undersigned holder (the “Holder”) of exchangeable shares of Gran Tierra Exchangeco Inc. that were issued in connection
with the transaction between the former stockholders of Solana Resources Limited and Gran Tierra Energy Inc. (the “Company”)
has the right to instruct Computershare Trust Company of Canada (the “Trustee”) in respect of the exercise of the Holder’s
votes at the annual meeting of stockholders of the Company to be held at Centennial Place, 3rd Floor, West Tower, 250 - 5 Street
S.W., Calgary, Alberta, Canada T2P 0R4 on May 2, 2018 (the “Meeting”), as follows: To instruct the Trustee to exercise
the votes to which the Holder is entitled as indicated below; OR To instruct the Trustee to appoint a representative of the Company’s
management as proxy to exercise the votes to which the Holder is entitled as indicated below; OR To instruct the Trustee to appoint
the Holder, or the Holder’s designee, as a proxy to exercise personally the votes to which the Holder is entitled as indicated
below. IMPORTANT NOTE: IF NO DIRECTION IS MADE, FOR OR AGAINST, THE HOLDER’S GRAN TIERRA EXCHANGECO INC. EXCHANGEABLE SHARES
WILL NOT BE VOTED Fold 1. Election of Directors For Against Abstain For Against Abstain For Against Abstain 01. Gary S. Guidry 04. Robert
B. Hodgins 02. Peter J. Dey 05. Ronald W. Royal 03. Evan Hazell 06. David P. Smith 07. Brooke Wade 08. Sondra Scott 2. Ratification
of Selection of Independent Auditors For Against Abstain To ratify the appointment of KPMG LLP as the independent registered public
accounting firm for 2018. 3. Advisory Vote to Approve Named Executive Compensation Approval of, on an advisory basis, the compensation
of Gran Tierra Energy Inc.’s named executive officers, as disclosed in the proxy statement. For Against Abstain Fold Authorized
Signature(s) – This section must be completed for your instructions to be executed. I/We authorize you to act in accordance
with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting
instructions are indicated above, this VIF will be voted as recommended by Management. Signature(s) Date MM / DD / YY G R Q Q 246036
A R 0 01DUNC
GRAN TIERRA GOLDSTRIKE INC. 8th Floor, 100 University Avenue Toronto, Ontario M5J 2Y1 www.computershare.com
Security Class Holder Account Number Fold Voting Instruction Form (“VIF”) - Annual Meeting to be held on Wednesday,
May 2, 2018 Notes to VIF 1. This voting direction will not be valid and not be acted upon unless it is completed as outlined herein
and delivered to Computershare Trust Company of Canada, Attention: Manager, Corporate Trust, 600, 530 – 8th Avenue S.W.,
Calgary, Alberta T2P 3S8, Canada by 11:00 am (Mountain Time) on Monday, April 30, 2018, or not less than 48 hours before the time
set for the holding of any adjournment(s) thereof. The voting direction is valid only for the Meeting or any adjournment(s) of
the Meeting. 2. If this voting direction is not signed by the Holder (as defined below) of Gran Tierra Goldstrike Inc. Exchangeable
Shares, the votes to which the Holder of the Gran Tierra Goldstrike Inc. Exchangeable Shares is entitled will not be exercised.
3. If the Holder is a corporation, its corporate seal must be affixed or it must be signed by an officer or attorney thereof duly
authorized. 4. This voting direction must be dated and the signature hereon should be exactly the same as the name in which the
Gran Tierra Goldstrike Inc. Exchangeable Shares are registered. 5. Persons signing as executors, administrators, trustees, etc.,
should so indicate and give their full title as such. 6. A Holder who has submitted a voting direction may revoke it at any time
prior to the Meeting. In addition to revocation in any other manner permitted by law, a voting direction may be revoked by instrument
in writing executed by the Holder or his attorney authorized in writing or, if the Holder is a corporation, under its corporate
seal or by an officer or attorney thereof duly authorized and deposited at the office of the Trustee (as defined below) at any
time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof at which the voting
direction is to be acted upon or with a representative of the Trustee in attendance at the Meeting, on the day of the Meeting or
any adjournment thereof, and upon either of such deposits, the voting direction is revoked. VIF’s submitted must be received
by 11:00 am (Mountain Time) on Monday, April 30, 2018. Fold VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK!
To Vote Using the Telephone To Vote Using the Internet • Call the number listed BELOW from a touch tone telephone. 1-866-732-VOTE
(8683) Toll Free • Go to the following web site: www.investorvote.com/GTE • Smartphone? Scan the QR code to vote now.
If you vote by telephone or the Internet, DO NOT mail back this VIF. Voting by mail may be the only method for securities held
in the name of a corporation or securities being voted on behalf of another individual. Voting by mail or by Internet are the only
methods by which a holder may appoint a person as proxyholder other than the Management nominees named on the reverse of this VIF.
Instead of mailing this VIF, you may choose one of the two voting methods outlined above to vote this VIF. To vote by telephone
or the Internet, you will need to provide your CONTROL NUMBER listed below. CONTROL NUMBER 01DUOC
PLEASE SELECT ONE OF THE FOLLOWING: Direct the Trustee to Vote Gran Tierra Goldstrike Inc. Exchangeable
Shares The Holder hereby directs the Trustee to vote as indicated. Appointment of Company Management as Proxy The Holder hereby
appoints Gary S. Guidry and Ryan Ellson, or either of them, as proxyholder of the Holder, with power of substitution, and authorizes
them to represent and vote, as indicated above, all of the Gran Tierra Goldstrike Inc. Exchangeable Shares which the Holder may
be entitled to vote at the Meeting, and at any adjournment or adjournments thereof and on every ballot that may take place in consequence
thereof, and with discretionary authority as to any other matters that may properly come before the Meeting. Appointment of the
Holder, or the Holder’s Designee as Proxy The Holder hereby appoints as proxyholder of the Holder and authorizes them to
represent and vote, as indicated above, all of the Gran Tierra Goldstrike Inc. Exchangeable Shares which the Holder may be entitled
to vote at the Meeting, and at any adjournment or adjournments thereof and on every ballot that may take place in consequence thereof,
and with discretionary authority as to any other matters that may properly come before the Meeting. IF THE HOLDER DOES NOT COMPLETE
ONE OF THE FOREGOING, COMPLETES MORE THAN ONE OF THE FOREGOING OR COMPLETES THE THIRD SELECTION BUT DOES NOT SPECIFY A DESIGNEE,
THE HOLDER WILL BE DEEMED TO HAVE DIRECTED THE TRUSTEE TO VOTE THEIR GRAN TIERRA GOLDSTRIKE INC. EXCHANGEABLE SHARES AS INDICATED.
The undersigned holder (the “Holder”) of exchangeable shares of Gran Tierra Goldstrike Inc. that were issued in connection
with the transaction between the former stockholders of Goldstrike, Inc. and Gran Tierra Energy Inc. (the “Company”)
has the right to instruct Computershare Trust Company of Canada (the “Trustee”) in respect of the exercise of the Holder’s
votes at the annual meeting of stockholders of the Company to be held at Centennial Place, 3rd Floor, West Tower, 250 - 5 Street
S.W., Calgary, Alberta, Canada T2P 0R4 on May 2, 2018 (the “Meeting”), as follows: • To instruct the Trustee to
exercise the votes to which the Holder is entitled as indicated below; OR • To instruct the Trustee to appoint a representative
of the Company’s management as proxy to exercise the votes to which the Holder is entitled as indicated below; OR •
To instruct the Trustee to appoint the Holder, or the Holder’s designee, as a proxy to exercise personally the votes to which
the Holder is entitled as indicated below. IMPORTANT NOTE: IF NO DIRECTION IS MADE, FOR OR AGAINST, THE HOLDER’S GRAN TIERRA
GOLDSTRIKE INC. EXCHANGEABLE SHARES WILL NOT BE VOTED Fold 1. Election of Directors For Against Abstain For Against Abstain For
Against Abstain 01. Gary S. Guidry 04. Robert B. Hodgins 02. Peter J. Dey 05. Ronald W. Royal 03. Evan Hazell 06. David P. Smith
07. Brooke Wade 08. Sondra Scott 2. Ratification of Selection of Independent Auditors For Against Abstain To ratify the appointment
of KPMG LLP as the independent registered public accounting firm for 2018. 3. Advisory Vote to Approve Named Executive Compensation
Approval of, on an advisory basis, the compensation of Gran Tierra Energy Inc.’s named executive officers, as disclosed in
the proxy statement. For Against Abstain Fold Authorized Signature(s) – This section must be completed for your instructions
to be executed. I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously
given with respect to the Meeting. If no voting instructions are indicated above, this VIF will be voted as recommended by Management.
Signature(s) Date MM / DD / YY G R Q Q 246036 A R 0 01DUPE
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