HOUSTON, March 30, 2021 /PRNewswire/ -- Callon Petroleum
Company (NYSE: CPE) ("Callon" or the "Company") today announced the
adoption of new environmental, social and governance ("ESG")
initiatives, including an updated executive compensation program to
better align with investor priorities and new commitments to
quantitative greenhouse gas ("GHG") emissions reduction
targets.
2021 Compensation Program Highlights
- A refreshed executive compensation program aligned with
sustained delivery of free cash flow, returns, reduced leverage,
and ESG performance
- Reductions in overall compensation opportunities led by a 17.5%
reduction in target long-term incentive ("LTI") value for the CEO,
which lowered his total target compensation by 12.5%, and a 12.5%
reduction in annual compensation for directors
- New annual bonus framework that prioritizes financial
performance and ESG initiatives, eliminates traditional operational
and growth metrics, and caps payouts at target in the event of
negative total shareholder return ("TSR")
- New LTI program that maintains a 60% weighting on
performance-based LTI with performance units tied to free cash flow
and return on capital employed ("ROCE") performance over a
three-year period
New GHG Emissions Targets
- Adoption of medium-term quantitative environmental goals to be
achieved by 2025 including: (1) a 40%-50% reduction in GHG
emissions intensity vs. pro forma 2019 results, (2) the reduction
of flared gas to less than 2% of gas produced, and (3) the
elimination of all routine field gas flaring
- Progress on the stated initiatives will be factored into the
annual incentive compensation program for 2021
"The board of directors and leadership team at Callon have been
focused on implementing changes to the business, both functionally
and strategically, that support a sustainable, returns-driven
entity that creates shareholder value. As part of our focus on
strong governance, we have thoughtfully developed a new executive
compensation program that aligns management incentives with
investor priorities for our industry and for Callon. Our corporate
goals of meaningful free cash flow generation, absolute debt
reduction and returns on capital are reflected in the compensation
criteria and provide a direct link between pay and financial
performance that will contribute to improving investor returns,"
said Richard Flury, Chairman of the
Board of Directors.
Joe Gatto, President and CEO
added: "Callon is also committed to sustainable and responsible
development of our resources by mitigating the risks of climate
change. To build on the momentum we created in 2020, we have
adopted meaningful goals to further reduce flaring and greenhouse
gas emissions by 2025."
Executive Compensation Framework Tied to Sustained
Financial & ESG Performance
Following a comprehensive review of its compensation structure,
in the first quarter of 2021 the Company adopted a leading-edge
compensation program to incentivize sustainable results aligned
with investor priorities. The 2021 program includes reductions to
target pay levels for executives and directors:
- The target LTI value for the CEO was reduced by 17.5%, which
lowered his total target compensation by 12.5%
- The target LTI value for the other executive officers was
reduced by an average of more than 10%
- Annual compensation for directors was reduced by 12.5%
Within the refreshed program, the 2021 annual incentive
compensation framework has been redesigned to:
- Focus on pay-for-performance by maintaining 80% weighting on
quantitative metrics
- Prioritize financial performance by increasing the weighting
for financial metrics to 65% in aggregate, including leverage, cash
return on capital invested, total corporate cash margin, and
relative total shareholder return ("TSR") comparison to a broader
energy index ("XOP")
- Demonstrate our ESG value proposition by introducing a
quantitative ESG category (weighted 15%) focused on flaring, safety
and spills, plus a qualitative assessment tied to sustained
progress towards the greenhouse gas reduction targets described
below; and
- Align payouts with the shareholder experience by including a
relative TSR metric and capping bonus payouts at target if absolute
TSR is negative for the year.
The long-term incentive program includes restricted stock units
(40% weighting) and new cash performance units ("CPUs") (60%
weighting) that are aligned with the Company's focus on achieving
sustainable free cash flow and returns that are competitive both
within and outside the energy industry. The value of the CPUs at
vesting will be determined by the Company's annual adjusted free
cash flow performance relative to goals established by the
Compensation Committee and average annual ROCE over the three-year
performance period.
Additional details regarding the Company's updated executive
compensation program are available in our preliminary proxy
statement, which was filed with the SEC on March 22, 2021.
Environmental Performance & Commitments
The Company is actively working to reduce its carbon footprint
and address the risks of climate change. During 2020, we advanced
several initiatives to improve environmental performance by
expanding access to gas gathering capacity, improving compressor
reliability, and connecting facilities to electric power
substations. Callon also confirms our established practice to have
no routine flaring on new well completions. As a result of these
efforts, we made significant progress in environmental performance
in 2020 relative to pro forma 2019 results by:
- Reducing flared gas volumes by 40% and
- Reducing GHG emissions intensity by over 20%
The Company remains committed to continued GHG emissions
reductions and has adopted the following medium-term quantitative
objectives to be achieved by 2025:
- Reduce GHG emissions intensity by 40-50% relative to pro forma
2019 results
- Reduce flared gas to less than 2% of gas produced
- Eliminate any remaining routine flaring
As noted above, the Compensation Committee has incorporated
progress towards these medium-term environmental objectives into
the Company's 2021 annual incentive compensation framework.
The Company will provide additional detail on these and other
environmental achievements and initiatives in its 2020
sustainability report, which it expects to issue by mid-year
2021.
About Callon Petroleum Company
Callon Petroleum is an independent oil and natural gas company
focused on the acquisition, exploration and development of
high-quality assets in the leading oil plays of South and
West Texas.
This news release is posted on the Company's website at
www.callon.com and will be archived there for subsequent review
under the "News" link on the top of the homepage.
Cautionary Statement Regarding Forward Looking
Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Forward-looking
statements include all statements regarding environmental
performance, greenhouse gas emissions and flaring goals and
initiatives, and the implementation of the Company's business plans
and strategy, as well as statements including the words "believe,"
"expect," "plans", "may", "will", "should", "could" and words of
similar meaning. These statements reflect the Company's current
views with respect to future events and performance based on
management's experience and anticipated future developments and
other factors believed to be appropriate. No assurances can be
given, however, that these events will occur or that these
projections will be achieved, and actual results could differ
materially from those projected as a result of certain factors. Any
forward-looking statement speaks only as of the date on which such
statement is made and the Company undertakes no obligation to
correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise, except as
required by applicable law. Some of the factors which could affect
our future results and could cause results to differ materially
from those expressed in our forward-looking statements include oil
and gas industry conditions; changes in the supply of and demand
for oil and natural gas; our ability to drill and complete wells;
operational, regulatory and environment risks; the cost and
availability of equipment and labor; access to pipelines and other
facilities; our ability to finance our activities; and other risks
more fully discussed in our filings with the SEC, including our
most recent Annual Reports on Form 10-K and subsequent Quarterly
Reports on Form 10-Q, available on our website or the SEC's website
at www.sec.gov.
Contact:
Mark Brewer
Director of Investor Relations
Callon Petroleum Company
ir@callon.com
1-281-589-5200
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SOURCE Callon Petroleum Company