Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Chief Executive Officer Succession Plan
On January 9, 2018, Bryan Sheffield, Chairman of the Board and Chief Executive Officer of Parsley Energy, Inc. (the Company)
informed the Board of Directors (the Board) of the Company that he intends to step down from his position as the Companys Chief Executive Officer effective January 1, 2019 (the Transition Date). The Board, upon the
recommendation of its Nominating and Governance Committee (the Nominating and Governance Committee), has approved a succession plan pursuant to which, as of the Transition Date, Mr. Sheffield would remain with the Company in the
role of Executive Chairman of the Board, and Matt Gallagher, currently the Companys President and Chief Operating Officer, would succeed Mr. Sheffield as the Companys Chief Executive Officer and be appointed as the Companys
President and Chief Executive Officer. Until such time, Mr. Gallagher will continue to serve as the Companys President and Chief Operating Officer. Additional information regarding the terms of Mr. Gallaghers existing
Employment Agreement is available in the Companys definitive proxy statement for its 2017 Annual Meeting of Stockholders under the caption Compensation Discussion and Analysis, and such information is incorporated herein by
reference.
Mr. Sheffield is expected to continue as Executive Chairman of the Board through December 31, 2019, at which time he
would retire as an employee and officer of the Company, but continue serving as Chairman of the Board, a
non-employee
director position. The changes in Mr. Sheffields relationship with the Company
described above were not a result of any disagreements with the Company on any matter relating to the Companys operations, policies, or practices, and the events described in this Current Report on Form
8-K
(this Report) are conditioned on Mr. Gallaghers actual assumption of the position of Chief Executive Officer of the Company effective as of the Transition Date.
Mr. Sheffields Letter Agreement
The Compensation Committee of the Board (the Compensation Committee) has approved the following with respect to
Mr. Sheffields compensation for his service as Executive Chairman of the Board (
i.e.
, from the Transition Date, when he steps down as Chief Executive Officer, through the date he is no longer an employee or officer of the Company,
which is expected to occur on December 31, 2019):
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his employment agreement, as amended (the Employment Agreement), will remain in effect until such time as he is no longer an employee or officer of the Company; and
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his base compensation, benefits, and the limited perquisites to which he is entitled will remain at the same level as in effect immediately prior to the Transition Date and he will be eligible to receive an annual cash
bonus for the 2019 fiscal year; however, he will not be granted new equity awards while he is serving as Executive Chairman.
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Upon his retirement as an employee and officer of the Company, expected to occur on December 31, 2019, Mr. Sheffield will be
compensated as a
non-employee
director while he remains on the Board as Chairman, and he will no longer be entitled to any compensation as an employee or officer of the Company. The Company and
Mr. Sheffield entered into a letter agreement memorializing these terms on January 9, 2018, which is attached as Exhibit 10.1 to this Report and incorporated herein by reference. Additional information regarding the terms of
Mr. Sheffields existing Employment Agreement is available in the Companys definitive proxy statement for its 2017 Annual Meeting of Stockholders under the caption Compensation Discussion and Analysis, and such
information is incorporated herein by reference.
Director Appointment
On January 9, 2018, the Board, upon the recommendation of its Nominating and Governance Committee, appointed Matt Gallagher to the Board
as a Class III director, with a term expiring at the 2020 annual meeting of stockholders, and until he is either
re-elected
or his successor is elected and qualified. As an employee of the Company,
Mr. Gallagher does not meet the independence requirements under the rules of the New York Stock Exchange and the Companys independence standards and will not serve on any committees of the Board.
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There are no family relationships between Mr. Gallagher and any director or executive
officer of the Company or any person nominated or chosen by the Company to become a director or executive officer. There are no arrangements or understandings between Mr. Gallagher and any other persons pursuant to which he was selected as a
director. Mr. Gallagher will not receive any director compensation for serving on the Board.
Additional information regarding
Mr. Gallaghers indemnification agreement with the Company is available in Item 1.01 of the Companys Current Report on Form
8-K
filed with the Securities and Exchange Commission on June 4,
2014 under the caption Indemnification Agreements, and additional biographical information about Mr. Gallagher and information regarding certain additional relationships between Mr. Gallagher and the Company is available in
Item 5.02 of the Companys Current Report on Form
8-K
filed with the Securities and Exchange Commission on January 5, 2017, and such information is incorporated herein by reference.
Summary of Chief Executive Officer Succession Plan
A summary of the dates and events described in this Report are contained in the table below:
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Dates
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Event
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January 9, 2018
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Mr. Gallagher is appointed to the Board as a Class III director.
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Through December 31, 2018
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Mr. Sheffield continues to serve as Chairman and Chief Executive Officer.
Mr. Gallagher continues to serve as President and Chief Operating
Officer.
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January 1, 2019 (
i.e.
, the Transition Date)
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Mr. Sheffield steps down as Chief Executive Officer but remains as an employee and officer of the Company in the role of Executive
Chairman.
Mr. Gallagher succeeds Mr. Sheffield as Chief Executive Officer
and is appointed as the Companys President and Chief Executive Officer.
The
offices of Chairman and Chief Executive Officer are separated.
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December 31, 2019
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Mr. Sheffield is expected to retire as an employee and officer of the Company and continue serving as Chairman of the Board thereafter.
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