Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
On September 27, 2019, in connection with the previously announced comprehensive succession planning process, Laredo Petroleum, Inc. (the "Company") announced that, effective as of October 1, 2019 (the "Effective Date"), Randy A. Foutch, the Company's current Chairman and Chief Executive Officer, will transition from his role as Chief Executive Officer and be succeeded in this position by Mikell J. ("Jason") Pigott, who will serve as President and Chief Executive Officer. Mr. Pigott has served as President of the Company since May 28, 2019. Mr. Foutch will remain as a Non-Executive Chairman of the Board of Directors ("Board") of the Company until the Company's annual meeting of stockholders in May of 2020 (the "2020 Annual Meeting") at which point he will not stand for reelection and the Company will appoint an independent director as Chairman of the Board.
In connection with this transition and in recognition of his efforts as the Company’s founder, Mr. Foutch is anticipated to enter into an agreement (the "Agreement") under which he is entitled to receive the following payments and benefits: (i) a "Founder's Bonus" of approximately $5.85 million and (ii) 18 months of COBRA employer contributions following October 1, 2019. The Board approved the Founder's Bonus in recognition of Mr. Foutch's principled leadership and guidance since the founding of the Company, which benefited from his more than 40 years of distinguished service in the exploration and production business.
Mr. Foutch will receive the foregoing payments and benefits on or after the Effective Date provided he signs and subsequently does not revoke the Agreement, including his release of claims in favor of the Company, and he complies with the provisions of the Agreement, including restrictions against competition and the customary confidentiality and non-disclosure covenants. In addition, Mr. Foutch will receive a pro rata portion of his cash bonus for the 2019 fiscal year for the period from January 1, 2019 to October 1, 2019, based on the actual performance of the Company.
For his services as a Non-Executive Chairman of the Board from the Effective Date until the Company's 2020 Annual Meeting, Mr. Foutch will receive cash compensation of $250,000, paid pro rata quarterly based on a rate of $375,000 annually, subject to Mr. Foutch remaining on the Board until the 2020 Annual Meeting. Mr. Foutch is receiving cash compensation for service as Non-Executive Chairman, which the Company believes is consistent with market practice, equal to approximately 1.5 times the compensation for a current Laredo director. While the other Laredo directors have the option to receive a portion of their director fees in equity, the Board determined it was in the best interests of stockholders that Mr. Foutch's director fees be paid 100% in cash, since he will not be standing for re-election once his term ends in May 2020.
Item 7.01. Regulation FD Disclosure.
On September 27, 2019, the Company issued a press release announcing the organizational transitions referenced herein. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information furnished under Item 7.01 of this Current Report on Form 8-K and the exhibit attached hereto are deemed to be "furnished" and shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information and exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.