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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Soliciting Material Pursuant to §240.14a-12
 
Denbury Resources Inc.
(Name of Registrant as Specified In Its Charter)
 
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, MAY 28, 2020

 To our Stockholders:
 
You are hereby notified that the 2020 Annual Meeting of Stockholders of Denbury Resources Inc., a Delaware corporation (“Denbury” or the “Company”), will be held at the Company’s corporate headquarters* at 5320 Legacy Drive, Plano, Texas 75024, at 8:00 A.M. Central Daylight Time (CDT) on Thursday, May 28, 2020, for the following purposes:

(1)
to elect eight directors, each to serve until their successor is elected and qualified;
(2)
to hold an advisory vote to approve named executive officer compensation;
(3)
to approve the amendment and restatement of the Company’s 2004 Omnibus Stock and Incentive Plan, principally to increase the number of reserved shares;
(4)
to approve an amendment to the Company’s Second Restated Certificate of Incorporation to (i) effect a reverse stock split of our outstanding shares of common stock at a ratio determined by our Board of Directors from among certain designated alternatives and (ii) if and when the reverse stock split is effected, reduce the number of authorized shares of our common stock;
(5)
to ratify the Audit Committee’s selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020;

and to transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof.

Only stockholders of record at the close of business on March 31, 2020 are entitled to notice of, and to vote at, the annual meeting.

Beginning on or about April 16, 2020, the Company mailed a Notice Regarding the Internet Availability of Proxy Materials to its stockholders containing instructions on how to access the proxy materials and vote via the Internet. Instructions for requesting a paper copy of the proxy materials are contained in the Notice Regarding the Internet Availability of Proxy Materials.

By order of the Board of Directors,
SIGNATUREA03.JPG
Mark C. Allen
Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary

April 16, 2020
Stockholders of record are urged to vote their proxy promptly, whether or not they expect to attend the annual meeting in person.  

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 28, 2020:

We have elected to take advantage of the U.S. Securities and Exchange Commission rules that allow us to furnish proxy materials to our stockholders via the Internet. These rules allow us to provide information that our stockholders need while lowering costs, accelerating the speed of delivery and reducing the environmental impact of our annual meeting. This proxy statement, along with the Company’s Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2019, are available via the Internet at www.proxyvote.com.

*
As part of our precautions regarding the coronavirus or COVID-19, we are planning for the possibility that the annual meeting of stockholders may be held by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be made available.



TABLE OF CONTENTS
Internet Availability of Proxy Materials
Sustainability


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DENBURY RESOURCES INC.
 
PROXY STATEMENT
 
Annual Meeting of Stockholders
to be held on Thursday, May 28, 2020

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (“our Board” or “the Board”) of Denbury Resources Inc., a Delaware corporation (“Denbury” or “the Company”), for use at the Company’s annual meeting of stockholders to be held on Thursday, May 28, 2020 at the Company’s corporate headquarters at 5320 Legacy Drive, Plano, Texas 75024, at 8:00 A.M. Central Daylight Time (CDT), or at any adjournment or postponement thereof. As part of our precautions regarding the coronavirus or COVID-19, we are planning for the possibility that the annual meeting of stockholders may be held by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be made available. This proxy statement, proxy card and our 2019 Annual Report to Stockholders are being first made available to stockholders on or about April 16, 2020.

INTERNET AVAILABILITY OF PROXY MATERIALS

As permitted under the rules of the Securities and Exchange Commission (the “SEC”), the Company is making its proxy materials available to its stockholders electronically via the Internet. On or about April 16, 2020, the Company is sending a Notice Regarding the Internet Availability of Proxy Materials (the “Notice”) to its stockholders of record as of the close of business on March 31, 2020. The Notice includes (i) instructions on how to access the Company’s proxy materials and vote via the Internet, (ii) the date, time and location of the annual meeting, (iii) a description of the matters intended to be acted upon at the annual meeting, (iv) a list of the materials being made available electronically, (v) instructions on how a stockholder can request paper copies of the Company’s proxy materials, (vi) any control/identification numbers that a stockholder needs to access the proxy materials and (vii) information about attending the annual meeting and voting in person.

RECORD DATE AND COMMON STOCK OUTSTANDING

Our Board has fixed the record date for the annual meeting as of the close of business on March 31, 2020.  Only Denbury stockholders of record on the record date are entitled to receive notice of and to vote at the annual meeting.  If you are a holder of our common stock, you are entitled to one vote at the annual meeting for each share of common stock you held on the record date.  On the record date, there were 506,320,160 shares of Denbury common stock issued and outstanding and entitled to vote at the annual meeting.

VOTING OF COMMON STOCK
Voting by Stockholders of Record

You are a stockholder of record if your shares are directly held by you and registered in your name with our transfer agent, Broadridge Corporate Issuer Solutions, Inc. If you are a stockholder of record, you may vote your shares via the Internet at www.proxyvote.com in accordance with the instructions in the Notice. You may also vote by touch-tone telephone from the United States by calling 1-800-690-6903, or by completing, signing and dating the proxy card and returning the proxy card in the prepaid envelope. In order to be valid and acted upon at the annual meeting, your proxy must be received before 11:59 P.M. Eastern Daylight Time (EDT) on May 27, 2020. Shares represented by proxy will be voted at the annual meeting unless the proxy is revoked at any time prior to the time at which the shares covered by proxy are voted by: (i) timely submitting a proxy with new voting instructions via the Internet or telephone; (ii) timely delivering a valid, later-dated executed proxy card; (iii) delivering a written notice of revocation that is received by our Secretary at 5320 Legacy Drive, Plano, Texas 75024, by 11:59 P.M. Eastern Daylight Time (EDT) on May 27, 2020; or (iv) voting in person at the annual meeting by completing a ballot. Attending the annual meeting without completing a ballot will not revoke any previously submitted proxy. If you properly complete and sign your proxy card but do not indicate how your shares should be voted on a matter, the shares represented by your proxy will be voted in accordance with the recommendation of our Board as discussed below.



1


Voting by Beneficial Owners

You are considered a beneficial owner of shares held in “street name” if your shares are held by a broker, bank or other nominee (collectively referred to as a “broker”) on your behalf. If you are a beneficial owner of shares, you will receive instructions from your broker describing how to vote your shares. As a beneficial owner of your shares, you are entitled to direct your broker how to vote your shares. You may instruct your broker on how to vote by completing the voting instruction form provided to you by your broker. You may also vote by telephone or via the Internet if your broker makes such methods available, in which case applicable instructions will be provided to you by your broker. You may change your vote by submitting new voting instructions to your broker in accordance with your broker’s procedures. If you do not instruct your broker on how to vote your shares, your broker may vote your shares as it decides with respect to the matter for which it has discretionary authority (Proposal Five (the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm)) in the absence of timely instructions from you. There are also non-discretionary matters for which your broker does not have discretionary authority to vote unless it receives timely instructions from you: Proposal One (the election of directors), Proposal Two (the non-binding, advisory approval of named executive officer compensation), Proposal Three (amendment and restatement of our 2004 Omnibus Stock and Incentive Plan) and Proposal Four (amendment to the Company’s Second Restated Certificate of Incorporation to (i) effect a reverse stock split of our outstanding shares of common stock at a ratio determined by our Board of Directors from among certain designated alternatives and (ii) if and when the reverse stock split is effected, reduce the number of authorized shares of our common stock). A “broker non-vote” results when a broker does not have discretion to vote on a particular matter, you have not given timely instructions on how the broker should vote your shares and the broker indicates it does not have authority to vote such shares on its proxy. As the beneficial owner of shares, you are invited to attend the annual meeting; however, you may not vote your shares in person at the annual meeting unless you obtain a written proxy from your broker.

Quorum; Required Vote; Treatment of Abstentions and Broker Non-Votes

We must have present in person or represented by proxy at least one-third of our issued and outstanding shares of common stock entitled to vote at the annual meeting in order to have a quorum.  Abstentions and broker non-votes are counted as present at the annual meeting for purposes of determining whether a quorum is present. With respect to Proposal One (the election of directors), you will not be allowed to cumulate your votes.  You are entitled to vote “for” election of a director nominee, “against” election of a director nominee, or you may “abstain” from voting with respect to a director nominee. In order for a nominee to be elected as director, such nominee must receive the vote of the majority of the votes cast with respect to such nominee at the annual meeting, where a quorum is present. A majority of votes cast means that the number of shares voted “for” a nominee’s election must exceed the total number of shares voted “against” such nominee’s election. Abstentions and broker non-votes will not be counted as votes cast for purposes of the election of directors. With respect to Proposals Two, Three and Five, the affirmative vote of a majority of the shares having voting power present in person or represented by proxy at the annual meeting and entitled to vote on the proposals, where a quorum is present, is required for approval. With respect to Proposal Four, the affirmative vote by the holders of a majority of the outstanding shares of our common stock, entitled to vote thereon, where a quorum is present, is required for approval. Abstentions will be included in the vote total on Proposals Two, Three, Four and Five, such abstentions having the same effect on each such proposal as a negative vote; however, if there is a broker non-vote with respect to Proposals Two, Three or Four, it will not be included in the vote total and will not have any effect.



2


We will vote all properly executed proxies at the annual meeting in accordance with the direction on the proxy.  You should be aware that if no vote direction is indicated on an executed proxy, the shares will be voted FOR the election of all of the director nominees under Proposal One; FOR Proposal Two (the non-binding, advisory approval of named executive officer compensation); FOR Proposal Three (amendment and restatement of our 2004 Omnibus Stock and Incentive Plan); FOR Proposal Four (amendment to the Company’s Second Restated Certificate of Incorporation to (i) effect a reverse stock split of our outstanding shares of common stock at a ratio determined by our Board of Directors from among certain designated alternatives and (ii) if and when the reverse stock split is effected, reduce the number of authorized shares of our common stock); and FOR Proposal Five (the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm).  Our Board has designated John P. Dielwart and/or Christian S. Kendall to serve as proxies.  We do not know of any matters other than those matters listed in the Notice that will be presented for action at the annual meeting.  However, if any other matters are properly presented for action at the annual meeting, we intend for Messrs. Dielwart and Kendall, and each of them acting singly as proxies named in the proxy card, to vote at their discretion on such matters.

PERSONS MAKING THE SOLICITATION

We are soliciting this proxy and will bear all costs incurred in connection with such solicitation for the annual meeting, including those incurred for the preparation, printing and mailing of the proxy materials.  Our directors, officers or employees may solicit proxies by personal interviews, telephone or other means of communication.  If they do so, these individuals will not receive any additional compensation for these services.  We may also retain a proxy solicitor to assist us with the distribution and solicitation of proxies for the annual meeting at our expense.


3


Proposal One: Election of Directors

Our Second Amended and Restated Bylaws (“Bylaws”) provide that our Board shall consist of a minimum of three and a maximum of fifteen directors.  Each of the directors is elected annually and holds office until the next annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier resignation or removal.  We presently have eight directors, all of whom are serving terms that expire at the annual meeting.

Unless you mark your executed proxy to the contrary, we plan to vote all such proxies for the election of the eight nominees listed below as directors.  We do not foresee any reason why any of these nominees would become unavailable, but if any of them should, your proxy may be voted for a substitute that is nominated by the Board, or we may reduce the size of our Board accordingly.

The name, age, Board committee membership, period of time served as a director of Denbury and the principal occupation of each person nominated for election as a director are as follows:
Name
 
Age
 
Current Board Committees
 
Director Since
 
Principal Occupation
John P. Dielwart, Chairman
 
67
 
Compensation Committee

Reserves and HSE Committee

Risk Committee
 
2013
 
Vice-Chairman of ARC Financial Corp.

Michael B. Decker
 
70
 
Compensation Committee

Nominating/Corporate Governance Committee
 
2007
 
Partner with Wingate Partners
Christian S. Kendall
 
53
 
 
2017
 
President and Chief Executive Officer of Denbury Resources Inc.
Gregory L. McMichael
 
71
 
Audit Committee

Compensation Committee

Nominating/Corporate Governance Committee

Risk Committee
 
2004
 
Independent Consultant
Kevin O. Meyers
 
66
 
Audit Committee

Reserves and HSE Committee
 
2011
 
Independent Consultant
Lynn A. Peterson
 
67
 
Compensation Committee

Risk Committee
 
2017
 
Independent Consultant
Randy Stein
 
66
 
Audit Committee

Nominating/Corporate Governance Committee

Risk Committee
 
2005
 
Independent Consultant
Mary M. VanDeWeghe
 
60
 
Audit Committee

Reserves and HSE Committee

Nominating/Corporate Governance Committee
 
2019
 
Chief Executive Officer and President of Forte Consulting, Inc.


4


Our director nominees bring various skills, experience and insight to our Board.  They consist of a current chief executive officer (Mr. Kendall), two former chief executive officers of public oil and gas companies (Messrs. Dielwart and Peterson), a former Principal in Charge of a major accounting firm’s Denver, Colorado tax practice (Mr. Stein), a private equity investor and former chief operating officer (Mr. Decker), an engineer with executive industry experience (Dr. Meyers), an experienced financial and management consultant with a focus on strategies to maximize stockholder value (Ms. VanDeWeghe) and a former Top 3-ranked oil and gas analyst who oversaw the energy research team at a nationally-recognized sell-side Wall Street investment firm (Mr. McMichael).  These individuals were selected to give the Board insight from diverse points of view, all of which relate to various aspects of our business.  As depicted below, our director nominees exhibit an effective mix of skills, experiences, diversity and perspectives.

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With the exception of Mr. Kendall, our President and Chief Executive Officer, all of our director nominees are independent. Our large majority of independent directors helps provide independent oversight. For more information on director independence, see Governance of the Company – Director Independence below. Our director nominees provide an effective mix of experience and fresh perspective. Including directors with a mix of tenure on the Board helps transition the knowledge of the more experienced directors while providing a broad set of perspectives and experiences. For more information on how director candidates are identified, see Governance of the Company – Identification of Director Candidates below.




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The narratives below provide more specific biographical information and outline the skills and qualifications for each of the Board nominees.
 
 
 
 
 
John P. Dielwart
 
 
 
 
 
 
 
 
 
 
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Joined the Board: 2013
 
 
Age: 67
 
 
Board Committees: Compensation Committee, Reserves and HSE Committee, Risk Committee
 
 
Principal Occupation: Vice-Chairman of ARC Financial Corp.
 
 
 
 
 
 
 
 
 
John P. Dielwart has been a director of Denbury since November 2013 and was selected Chairman of the Board in March 2016. Mr. Dielwart is a founder and former Chief Executive Officer, as well as a member of the board of directors, of ARC Resources Ltd. (TSX: ARX.TO) (“ARC”), a publicly traded Canadian oil and gas company, and a member of the board of directors of TransAlta Corporation (TSX: TA.TO), a publicly traded electricity power generator and wholesale marketing company, and Crescent Point Energy Corp., a publicly traded oil and gas company (NYSE: CPG). Mr. Dielwart oversaw the growth of ARC, first as its President and then as Chief Executive Officer from its startup in 1996 until his retirement in January 2013. Mr. Dielwart is currently the Vice-Chairman of ARC Financial Corp., Canada’s leading energy-focused private equity manager, a position he assumed after his retirement from ARC. Prior to joining ARC, Mr. Dielwart spent 12 years with a major Calgary-based oil and natural gas engineering consulting firm as Senior Vice President and Director. Mr. Dielwart began his career at a major Calgary-based oil and natural gas company, where he spent five years. Mr. Dielwart served two separate three-year terms as a Governor of the Canadian Association of Petroleum Producers (CAPP), including 18 months (2002 to 2004) as Chairman.
 
 
 
 
 
Skills and Qualifications:
 
 
Mr. Dielwart is a member of the Association of Professional Engineers and Geoscientists of Alberta (APEGA) and received a Bachelor of Science degree (with Distinction) in Civil Engineering from the University of Calgary. In 2015, Mr. Dielwart was inducted into the Calgary Business Hall of Fame. Mr. Dielwart’s background in the oil and gas industry, particularly as a founder and former Chief Executive Officer of ARC, provides the Board with extensive and relevant industry knowledge, as well as a managerial and leadership perspective.  Mr. Dielwart’s experience in overseeing the development of ARC into a successful oil and gas company is an asset to both the Board and management.
 
 
 
 



6


 
 
 
 
 
Michael B. Decker
 
 
 
 
 
 
 
 
 
 
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Joined the Board: 2007
 
 
Age: 70
 
 
Board Committees: Compensation Committee, Nominating/Corporate Governance Committee
 
 
Principal Occupation: Partner with Wingate Partners
 
 
 
 
 
 
 
 
 
Michael B. Decker has been a director of Denbury since December 2007.  Mr. Decker has been a partner of Wingate Partners, a Dallas-based private equity investment company, since 1996.  Prior to joining Wingate Partners, Mr. Decker held the position of Chief Operating Officer of the Trammell Crow Company.  He previously was President of Huffco Group, Inc., an energy exploration company.  Mr. Decker currently serves as a board member of USA Environment LP.  Mr. Decker has served as a consultant for the Boston Consulting Group and has worked as an investment officer for the World Bank. Mr. Decker served as an Advanced Leadership Initiative Fellow at Harvard University during 2018.
 
 
 
 
 
Skills and Qualifications:
 
 
Mr. Decker holds an MBA from the Harvard Business School, a Master of Arts from Oxford University and an Artium Baccalaureatus from Princeton University.  Mr. Decker’s educational background and current and past roles provide him with significant financial, managerial and leadership experience.  Mr. Decker has significant experience in the oil and gas industry, as well as several other industries, which broadens the perspectives he brings to the Board.
 
 
 
 

 
 
 
 
 
Christian S. Kendall
 
 
 
 
 
 
 
 
 
 
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Joined the Board: 2017
 
 
Age: 53
 
 
Principal Occupation: President and Chief Executive Officer of Denbury Resources Inc.
 
 
 
 
 
 
 
 
 
 
 
 
Christian S. Kendall has been a director of Denbury and the Chief Executive Officer since July 2017.  Mr. Kendall joined Denbury as Chief Operating Officer in September 2015 and was named President in October 2016. Prior to joining Denbury, Mr. Kendall was employed at Noble Energy, Inc. (“Noble”), where he served as a member of Noble’s executive management and as part of its operations leadership team as Senior Vice President, Global Operations Services. Prior to that, Mr. Kendall served as Vice President, Gulf of Mexico (2011-2014), and as Business Unit Manager and Vice President, Noble Energy Mediterranean Ltd (2007-2011), having been with Noble since 2001. Mr. Kendall began his career with Mobil Oil Corporation in 1989 and, in total, has more than 30 years of oil and gas industry experience in domestic and international operations roles.
 
 
 
 
 
Skills and Qualifications:
 
 
Mr. Kendall holds a Bachelor of Science degree in Engineering, Civil Specialty, from the Colorado School of Mines and is a graduate of the Advanced Management Program at the Harvard Business School. As President and Chief Executive Officer of the Company, Mr. Kendall is intimately knowledgeable of the day-to-day and strategic operations of the Company, providing the Board with a management perspective.
 
 
 
 



7


 
 
 
 
 
Gregory L. McMichael
 
 
 
 
 
 
 
 
 
 
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Joined the Board: 2004
 
 
Age: 71
 
 
Board Committees: Audit Committee, Compensation Committee, Nominating/Corporate Governance Committee, Risk Committee
 
 
Principal Occupation: Independent Consultant
 
 
 
 
 
 
 
 
 
Gregory L. McMichael has been a director of Denbury since December 2004.  Mr. McMichael is currently a self-employed business consultant, having retired in 2004 from his position of Vice President and Group Leader – Energy Research of A.G. Edwards, where he was responsible for all of the firm’s equity research in the energy sector.  Prior to his employment by A.G. Edwards, which commenced in 1998, Mr. McMichael was Director of Equity Research of Hanifen, Imhoff, Inc. (“Hanifen”), a regional investment banking firm based in Denver, Colorado, for eight years.  Prior to his employment by Hanifen, he worked directly in the oil and gas industry for 15 years, most recently as Chief Executive Officer of Point Resources Inc., a privately held oil and natural gas exploration and production company.  Mr. McMichael previously served as a Special Advisor to the Board of Matador Resources, Inc. (NYSE: MTDR), a publicly traded oil and natural gas company, and a director of Matador Petroleum Company, Quest Resource Corporation and Admiral Bay Resources Inc.  
 
 
 
 
 
Skills and Qualifications:
 
 
Mr. McMichael is a National Association of Corporate Directors Board Leadership Fellow and serves on the board of directors of the Colorado chapter. Mr. McMichael’s experience in the oil and gas industry, coupled with his service on other boards and experience as an analyst covering the energy sector, provides the Board with broad and extensive analytical perspectives.  Mr. McMichael monitors the oil and gas industry and provides the Board with various analyses of relative industry performance.
 
 
 
 

 
 
 
 
 
Kevin O. Meyers
 
 
 
 
 
 
 
 
 
 
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Joined the Board: 2011
 
 
Age: 66
 
 
Board Committees: Audit Committee, Reserves and HSE Committee
 
 
Principal Occupation: Independent Consultant
 
 
 
 
 
 
 
 
 
Kevin O. Meyers has been a director of Denbury since July 2011.  Dr. Meyers has more than 40 years of experience in the oil and gas industry, having retired from ConocoPhillips at the end of 2010. Dr. Meyers currently serves on the board of directors of the following publicly traded companies: Hornbeck Offshore Services, Inc. (NYSE: HOS), a provider of offshore service vessels, Precision Drilling Corporation (NYSE: PDS), a provider of drilling equipment and services, and Hess Corporation (NYSE: HES), an oil and natural gas exploration and production company. Dr. Meyers previously served on the board of directors of Bill Barrett Corporation (NYSE: BBG), LUKOIL, the World Energy Council, the United States Energy Association, the Board of Regents of the University of Alaska and the Nature Conservancy of Alaska. For the ten years prior to retirement, Dr. Meyers was a senior executive with ConocoPhillips, most recently serving as Senior Vice President Exploration and Production, Americas.  Prior to that, he was President of ConocoPhillips Canada, President of ConocoPhillips Russia and Caspian Region, and President of ConocoPhillips Alaska.  For the twenty years prior to that, he served in engineering, technical and executive positions with ARCO, last serving as President of ARCO Alaska.
 
 
 
 
 
Skills and Qualifications:
 
 
Dr. Meyers holds a Ph.D. in Chemical Engineering from the Massachusetts Institute of Technology and Bachelor’s degrees in Chemistry and Mathematics from Capital University in Ohio. Dr. Meyers’ educational background and extensive industry and technical experience provide the Board with significant insight into the Company’s operations and technical matters.  His leadership experience with large oil and gas companies further broadens the perspectives he brings to the Board.
 
 
 
 



8


 
 
 
 
 
Lynn A. Peterson
 
 
 
 
 
 
 
 
 
 
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Joined the Board: 2017
 
 
Age: 67
 
 
Board Committees: Compensation Committee, Risk Committee
 
 
Principal Occupation: Independent Consultant
 
 
 
 
 
 
Lynn A. Peterson has been a director of Denbury since 2017. Mr. Peterson served as President of SRC Energy Inc. (formerly Synergy Resources Corporation) (“SRC”) from May 2015 until January 2020 and as the Chairman of the Board, President and Chief Executive Officer of SRC from January 2016 until January 2020.  Before joining SRC, he was a co-founder of Kodiak Oil & Gas Corporation (“Kodiak”), and served Kodiak as a director (2001-2014) and as its President and Chief Executive Officer (2002-2014) and Chairman of the Board (2011-2014), until its acquisition by Whiting Petroleum Corporation in December 2014.  Mr. Peterson currently serves on the board of directors of PDC Energy, Inc. (NASDAQ: PDCE), an independent oil and gas company, and previously served as a director of Whiting Petroleum Corporation (NYSE: WLL) from December 2014 to June 2015.
 
 
 
 
 
Skills and Qualifications:
 
 
Mr. Peterson graduated from the University of Northern Colorado with a Bachelor of Science in Accounting and has approximately 35 years of experience in the oil and gas industry. As a previous Chief Executive Officer of an oil and gas company, Mr. Peterson provides the Board with valuable industry insight, as well as managerial, business and strategic expertise.  Mr. Peterson’s experience in leading oil and gas companies is an asset to both the Board and management.
 
 
 
 

 
 
 
 
 
Randy Stein
 
 
 
 
 
 
 
 
 
 
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Joined the Board: 2005
 
 
Age: 66
 
 
Board Committees: Audit Committee, Nominating/Corporate Governance Committee, Risk Committee
 
 
Principal Occupation: Independent Consultant
 
 
 
 
 
 
 
 
 
Randy Stein has been a director of Denbury since January 2005.  Mr. Stein is currently a self-employed business consultant, having retired from PricewaterhouseCoopers LLP, formerly Coopers & Lybrand LLP, in 2000.  Mr. Stein was employed for 20 years with PricewaterhouseCoopers LLP, most recently as Principal in Charge of the Denver, Colorado tax practice. Mr. Stein served as Audit Committee Chairman, Co-Chairman of the Nominating/Corporate Governance Committee and a member of the Compensation Committee of Westport Resources Corp., a Denver-based public oil and gas company, from 2000 until it was acquired in 2004.  Mr. Stein is currently a board member and Audit Committee Chairman of HighPoint Resources Corporation (NYSE: HPR) (formerly known as Bill Barrett Corporation (NYSE: BBG)), an oil and natural gas developer, and also served on the board and audit committee of Koala Corporation, a company engaged in the design, production and marketing of family convenience products, from 2001 through 2005. In February 2020, Mr. Stein joined the board of Club Oil & Gas Inc., a private company that invests in oil and gas and real estate interests.
 
 
 
 
 
Skills and Qualifications:
 
 
Mr. Stein’s experience in public accounting with a major accounting firm provides our Board with insights into many aspects of the financial reporting and tax issues facing oil and gas companies.  Mr. Stein’s background also brings additional financial, accounting and tax expertise to the Board through prior experience as a vice president of taxation for a publicly traded oil and gas company, and an expansive understanding of corporate governance and audit committee matters through his service on other boards.
 
 
 
 



9


 
 
 
 
 
Mary M. VanDeWeghe
 
 
 
 
 
 
 
 
 
 
MVANDEWEGHE1A02.JPG
Joined the Board: 2019
 
 
Age: 60
 
 
Board Committees: Audit Committee, Nominating/Corporate Governance Committee, Reserves and HSE Committee
 
 
Principal Occupation: Chief Executive Officer and President of Forte Consulting, Inc.
 
 
 
 
 
 
 
 
 
Mary M. VanDeWeghe has been a director of Denbury since March 2019. Ms. VanDeWeghe has served as the President and Chief Executive Officer of Forte Consulting, Inc. since March 2009. Prior to that, she served as Senior Vice President – Finance at Lockheed Martin Corporation and as a Managing Director at J.P. Morgan. Additionally, she has served as a business school professor at Georgetown University and at the University of Maryland. Ms. VanDeWeghe currently serves on the board of directors of Principal Funds, Inc., a global asset management organization and Helmerich & Payne, Inc. (NYSE: HP), an oil and gas drilling company. She previously has served on the boards of directors for Brown Advisory, Nalco Holding Company, Ecolab Inc., W.P. Carey Inc., and B/E Aerospace, Inc.
 
 
 
 
 
Skills and Qualifications:
 
 
Ms. VanDeWeghe has a Bachelor’s degree in Economics from Smith College, where she graduated Phi Beta Kappa, and received an MBA from the Amos Tuck School of Business at Dartmouth College, where she was a Tuck Scholar. Ms. VanDeWeghe has more than 35 years of experience developing and executing strategies to maximize shareholder value. Her areas of expertise include strategic planning, mergers & acquisitions, capital markets, risk management, project financing, venture capital, investment management, corporate governance and investor relations.
 
 
 
 

Vote Required

As described above, in order for a nominee to be elected as a director, where a quorum is present, such nominee must receive the affirmative vote of a majority of the votes cast with respect to such nominee at the annual meeting. A majority of votes cast means that the number of shares voted “for” a nominee’s election must exceed the number of shares voted “against” such nominee’s election, with abstentions and broker non-votes not being counted as votes cast for purposes of the election of directors. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.

Board of Directors’ Recommendation

Our Board of Directors recommends that stockholders vote FOR election of each of the foregoing director nominees.



10


GOVERNANCE OF THE COMPANY

The business, properties and affairs of the Company are managed by the Chief Executive Officer under the direction of the Board.  The Board has responsibility for establishing broad corporate policies and for the overall performance and direction of the Company. Other than involvement by the Company’s Chief Executive Officer, the Board is not involved in the day-to-day operations of the Company.  Board members keep informed of the Company’s business by participating in Board meetings, attending committee meetings, reviewing regularly provided analyses and reports and engaging in thorough discussions with the Chief Executive Officer and other employees of the Company. Our Board and senior management spend significant time implementing corporate governance guidelines, policies and practices that uphold our core values, align with our corporate governance commitments and support our business sustainability.

Board Leadership Structure

John P. Dielwart serves as Chairman of the Board, and Christian S. Kendall serves as our President and Chief Executive Officer. The separation of the positions of Chief Executive Officer and Chairman of the Board allows our Chief Executive Officer to focus on the day-to-day leadership and performance of the Company and allows our Chairman of the Board to lead the Board in its fundamental role of providing advice and oversight to management. The Board recognizes that no single leadership structure is right for all companies, and depending on the circumstances, other leadership structures might be appropriate.  The Board believes the current leadership structure is effective and appropriate, creates a separation of executive powers by providing a Chairman with whom the Chief Executive Officer can discuss issues facing the Company, and provides a significant voice to non-management directors.

Presiding Director

John P. Dielwart, our Chairman of the Board, is the presiding director at the meetings of non-management directors.  To contact him, please address your letters to:
 
Denbury Resources Inc.
Attn: Chairman of the Board of Directors
5320 Legacy Drive
Plano, Texas 75024

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines that address significant issues of corporate governance and set forth the procedures by which the Board carries out its responsibilities.  The primary responsibility of the Board, as memorialized in the Corporate Governance Guidelines, is the maximization of long-term stockholder value for the Company’s stockholders, with due regard for the Company’s employees and other stakeholders. Among the areas addressed by the guidelines are assessing risk, director qualifications, director responsibilities, selection and election of directors, director compensation and tenure, Board committee responsibilities, director orientation and continuing education, director access to management and independent advisors, succession planning, the number of Board meetings, and Board and committee performance evaluations.  The Nominating/Corporate Governance Committee is responsible for assessing and periodically reviewing the adequacy of these guidelines. The guidelines are available on our website at www.denbury.com, under the “About Denbury – Corporate Governance” link.



11


Risk Oversight

The Board is responsible for oversight of our risk assessment and risk management. The Board strives to effectively oversee our enterprise-wide risk management while maximizing the long-term value for our stockholders, with due regard for our employees and other stakeholders. The Board receives regular updates from, and maintains an active dialogue with, members of our management team and Internal Audit Department about existing risk management processes and how management identifies, assesses and responds to our most significant risk exposures. These interactions enable the Board to evaluate whether management is appropriately managing our most significant risks.
The Board also relies on, and has delegated certain aspects of its oversight responsibility to, its committees to assist the Board with its overall risk assessment and risk management responsibilities. Each committee reviews and assesses with management risk-related matters within the scope of its responsibilities and reports regularly to the Board on such risk-related matters. For example: the Audit Committee oversees our guidelines and policies with respect to risk assessment and risk management, as well as our financial reporting and regulatory compliance risk exposures and the steps management has taken to monitor and control such exposures; the Risk Committee oversees our principal business and operational risks, and our other material risks and exposures, and the actions, activities and initiatives we undertake to mitigate such risks and exposures; the Nominating/Corporate Governance Committee oversees risks relating to our corporate governance matters and legislative affairs and activities and matters related thereto; the Compensation Committee oversees the extent to which risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on us; and the Reserves and Health, Safety and Environmental Committee oversees the independent reserves engineers’ identification of issues and business risks and exposures, and our health, safety and environmental policies, practices and procedures and management’s assessments of high risk areas with respect thereto.

Identification of Director Candidates

The Nominating/Corporate Governance Committee is responsible for identifying and reviewing director candidates to determine whether they qualify and should be considered for membership on the Board.  The Nominating/Corporate Governance Committee has not established a specific minimum or maximum age, level of education, or specified types of skills for potential director candidates, but in general, consideration is given to the candidates’ business and professional backgrounds, and the committee seeks candidates with outstanding integrity, achievements, judgment and other skills and experience that will enhance the Board’s ability to serve the long-term interests of the Company and its stockholders (see Proposal One: Election of Directors). 

 The Board and the Nominating/Corporate Governance Committee aim to assemble a diverse group of Board members and believe that no single criterion, such as gender or minority status, is determinative in obtaining diversity on the Board.  The Board defines diversity as differences of viewpoint, professional experience, education and skills, such as serving on other public company boards, the balance of business interest and experience of the candidate as compared to the incumbent or other nominated directors, and the need for any particular expertise on the Board or one of its committees, among other things.  

Members of the Board will be asked to submit recommendations when there is an opening or anticipated opening for a director position.  The Nominating/Corporate Governance Committee may also use outside sources or third parties to find potential director candidates, and similarly may use the services of outside sources or third parties to evaluate or assist in evaluating nominees brought to their attention.
 
The Nominating/Corporate Governance Committee will also consider nominees for election to the Board submitted to it by stockholders using substantially the same criteria it applies to nominee recommendations by directors, officers, employees and others. To recommend a prospective nominee for the Nominating/Corporate Governance Committee’s consideration, submit the candidate’s name and qualifications in writing to the following address: Denbury Resources Inc., Attention: Nominating/Corporate Governance Committee, 5320 Legacy Drive, Plano, Texas 75024.



12


For information on how to nominate a director (as opposed to recommending a candidate for consideration by the Nominating/Corporate Governance Committee), see Stockholder Proposals for Our 2021 Annual Meeting of Stockholders – Advanced Notice of Nominations or Proposed Business for Our 2021 Annual Meeting of Stockholders below.

Director Independence

The Company’s Bylaws provide that at least two-thirds of the members of the Board will be independent as determined under the rules of the New York Stock Exchange (“NYSE”) and its corporate governance listing standards.  Additionally, each of the Board committee charters requires that members of that committee be independent. The Board has affirmatively determined that all nominees for director, with the exception of Mr. Kendall, the Company’s President and Chief Executive Officer, qualify as independent directors under these standards based on its review of all relevant facts and circumstances.

Code of Conduct and Ethics

The Company has a Code of Conduct and Ethics that applies to its officers, employees and directors.  This code assists employees in resolving ethical issues that may arise in complying with Denbury’s policies.  Our Code of Conduct and Ethics is a values-based document organized around our five core values: Integrity, Teamwork, Innovation, Excellence and Respect. It exemplifies our commitment to “Doing Right” in the conduct of our business.

Our Chief Executive Officer and Senior Financial Officers are also subject to the Code of Ethics for Senior Financial Officers.  The purpose of both codes is to promote, among other things:

ethical handling of actual or apparent conflicts of interest;
full, fair, accurate and timely disclosure in filings with the SEC and in other public disclosures;
compliance with the law and other regulations;
protection of the Company’s assets;
compliance with insider trading policies; and
prompt internal reporting of violations of the codes.

Both of these codes are available on our website at www.denbury.com, under the “About Denbury – Corporate Governance” link.  Any waiver of these codes with respect to our executive officers and directors may be made only by the Board and will be disclosed to stockholders on our website, along with any amendments to these codes, to the extent required by applicable law or NYSE rules.



13


Sustainability

As the only U.S. public company of scale where injecting carbon dioxide into the ground to produce oil is our primary business, Denbury is a key part of the solution to reducing atmospheric carbon emissions, while at the same time providing a vital energy source for the world’s economy. Carbon capture, transportation and secure geologic storage is becoming an essential business, and our assets and expertise position us to be a leader as this market develops.
SUSTAINABILITYA01.JPG

In 2018, through our carbon capture, utilization and storage efforts, and our use of industrial-sourced carbon dioxide, we removed nearly twice the amount of carbon dioxide from the atmosphere than we emitted to produce our oil. Our management has set a target to fully offset our emissions, including emissions associated with the refining and combustion of our produced hydrocarbons by third parties (i.e., Scope 3 emissions), over the next decade.
The Reserves and Health, Safety and Environmental Committee oversees our health, safety and environmental policies, practices and procedures and management’s assessments of high risk areas with respect thereto. Additionally, in 2020, we formed a dedicated Carbon Solutions team, reporting directly to our Chief Executive Officer. The Carbon Solutions team is tasked with developing a plan to realize our goal of leading the industry in carbon capture, utilization and storage.
CARBONEMISSIONSA01.JPG

We are committed to performing safely, consistently delivering on our promises to deploy our differentiated enhanced oil recovery-focused strategy, being good environmental stewards, and making steady progress toward securing our long-term success. For more information about our sustainability efforts, please see our 2019 Corporate Responsibility Report and our Health, Safety and Environmental Policy, both of which are available on our website at www.denbury.com, under the “Responsibility” link.



14


Related Party Transactions

Related Party Transactions Policy and Process

Under our Related Party Transactions Policy, the Nominating/Corporate Governance Committee is charged with reviewing and approving or ratifying all transactions, other than those non-material transactions specifically excluded in the policy, between the Company and a “Related Party.” As defined in our Related Party Transactions Policy, “Related Parties” are the Company’s directors and executive officers, beneficial owners that hold more than 5% of any class of our voting securities, as well as immediate family members of any such directors, executive officers and beneficial owners. Our Related Party Transactions Policy is available on our website at www.denbury.com, under the “About Denbury – Corporate Governance” link.

Communication with the Board
 

The Board has approved a process by which stockholders or other interested parties may contact the members of the Board.  All parties wanting to communicate with the Board should address letters to:

Denbury Resources Inc.
Attn: Corporate Secretary
5320 Legacy Drive
Plano, Texas 75024

In addition, interested parties may e-mail the Corporate Secretary and Board members at: secretary@denbury.com.  All such communications will be forwarded by the Corporate Secretary directly to the Board. Our Bylaws, consistent with Delaware law, permit stockholder meetings to occur by remote communication. As part of our precautions regarding the coronavirus or COVID-19, we are planning for the possibility that the annual meeting of stockholders may be held by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be made available. Except in exigent circumstances, our Board believes that in-person stockholder meetings provide an important opportunity for stockholders to engage with our Board and management.


15


BOARD MEETINGS, ATTENDANCE AND COMMITTEES

The Board met 13 times during the year ended December 31, 2019, including telephonic meetings. All directors attended at least 75% of the Board meetings held in 2019.  Mr. Dielwart, Chairman of the Board, acted as chairman of each Board meeting in 2019. At each in-person meeting, the Board holds an executive session with the non-management Board members, which is chaired by the Chairman of the Board. The Board took all other actions by unanimous written consent during 2019 in accordance with the terms of the Company’s Bylaws.  

All directors attended at least 75% of all meetings of each of the committees on which they served. Additionally, although the Company does not have a formal policy requiring all directors to attend the annual meeting of stockholders, the Company encourages the directors to attend the meeting, and all of the directors, except for Dr. Meyers who could not attend due to unforeseen circumstances, attended last year’s annual meeting of stockholders.

During 2019, the Board had an Audit, Compensation, Nominating/Corporate Governance, Reserves and HSE and Risk Committee. At each Board meeting in 2019, the Chairperson of each committee provided a report on their committee’s activities and findings from their most recent meetings. The Board committees had the following number of meetings during 2019, including telephonic meetings:
Board Committee
 
Number of Meetings in 2019
Audit
 
8
Compensation
 
6
Nominating/Corporate Governance
 
4
Reserves and HSE
 
5
Risk Committee
 
4


The table below shows the Committee memberships at March 31, 2020.
 
Name
 
Audit
 
Compensation
 
Reserves
and HSE
 
Nominating /Corporate Governance
 
Risk
 
 
John P. Dielwart, Chairman
 
 
 
X
 
X
 
 
 
X
 
Michael B. Decker
 
 
 
X
 
 
 
Chairperson
 
 
 
Christian S. Kendall
 
 
 
 
 
 
 
 
 
 
 
Gregory L. McMichael
 
X
 
X
 
 
 
X
 
Chairperson
 
Kevin O. Meyers
 
X
 
 
 
Chairperson
 
 
 
 
 
Lynn A. Peterson
 
 
 
Chairperson
 
 
 
 
 
X
 
Randy Stein
 
Chairperson
 
 
 
 
 
X
 
X
 
Mary M. VanDeWeghe
 
X
 
 
 
X
 
X
 
 




16


Audit Committee

The Audit Committee is comprised of four independent directors: Messrs. McMichael and Stein, Dr. Meyers and Ms. VanDeWeghe, with Mr. Stein acting as chairman.  The primary purpose of the Audit Committee, which is discussed in detail in its charter, is to assist with the Board’s oversight of the:

integrity of the Company’s financial statements;
Company’s compliance with legal and regulatory requirements related to financial reporting;
independence and qualifications of the Company’s independent registered public accounting firm;
performance of the Company’s internal audit function and independent registered public accounting firm;
preparation of required disclosures for the Company’s financial statement filings with the SEC; and
evaluation as to whether the Company has effective processes for risk assessment and risk management.

The Audit Committee meets regularly with management, the Company’s Senior Manager of Internal Audit and the independent registered public accounting firm to review financial accounting and reporting and financial controls of the Company.  The Audit Committee reviews and gives prior approval for audit and permitted non-audit services and related fees of the independent registered public accounting firm.  The Senior Manager of Internal Audit and the independent registered public accounting firm have unrestricted access to the Audit Committee and periodically meet with the Audit Committee without management representatives present to discuss the results of their examinations and their opinions.  The Audit Committee has the power to conduct internal audits and investigations, reviews recommendations or suggestions for changes in accounting procedures, and has the power to initiate or supervise any special investigations it may choose to undertake.  Each year, the Audit Committee recommends to the Board (for ratification by the stockholders) an independent registered public accounting firm (see Audit Matters – Proposal Five).

The NYSE and SEC have adopted standards with respect to independence and financial literacy of the members of audit committees of public companies (including our Audit Committee).  The standards require that all of the members of such audit committees be independent and that they all be able to read and understand fundamental financial statements, including balance sheets, income statements and cash flow statements.  Additionally, the Audit Committee charter requires that at least one member of the audit committee must qualify as an “audit committee financial expert.”  The financial expert must be knowledgeable in the application of generally accepted accounting principles, the understanding and preparation of financial statements, accounting for estimates, accruals and reserves, internal controls over financial reporting and audit committee functions in accordance with SEC rules.  Such knowledge is to have been obtained through past education and experience in positions of financial oversight.  Mr. Stein and Ms. VanDeWeghe have such experience and have been designated as “audit committee financial experts.”  All members of the Audit Committee satisfy the criteria for both independence and financial literacy.

The Audit Committee charter is available on our website at www.denbury.com, under the “About Denbury – Corporate Governance” link.


17


Compensation Committee

The Compensation Committee is comprised of four independent directors: Messrs. Decker, Dielwart, McMichael and Peterson, with Mr. Peterson acting as chairperson.  These directors are also independent under the additional independence requirements of the NYSE applicable to compensation committee members. The primary purpose of the Compensation Committee is to provide assistance to the Board in discharging its oversight responsibilities relating to the compensation and development of the Chief Executive Officer and other officers, and to oversee and administer the Company’s equity and other compensation and benefit plans. The Compensation Committee’s duties and responsibilities, which are discussed in detail in its charter, include:

reviewing and approving a general compensation program and salary structure for the Company, including overall salary increases, bonuses and other annual compensation, and proposing modifications to the compensation program as deemed necessary;
reviewing and approving on at least an annual basis the corporate goals and objectives relevant to the compensation of the Chief Executive Officer, evaluating the Chief Executive Officer’s performance in light of these goals and objectives, and determining and approving the Chief Executive Officer’s compensation based on this evaluation, as well as, in consultation with the Chief Executive Officer, evaluating the performance of, and reviewing and approving the compensation of, all other senior executives on an annual basis;
reviewing and approving the adoption of, or material modifications to, the Company’s incentive compensation plans, deferred compensation plans and equity-based plans, approving awards under these plans, and administering these plans; and
reviewing and discussing with management the compensation discussion and analysis and preparing and approving the Compensation Committee Report, both of which are included in this proxy statement.

The Compensation Committee charter is available on our website at www.denbury.com, under the “About Denbury – Corporate Governance” link.

Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee is comprised of four independent directors: Messrs. Decker, McMichael and Stein and Ms. VanDeWeghe, with Mr. Decker acting as chairman.  The primary purpose of the Nominating/Corporate Governance Committee is to provide assistance to the Board in discharging its oversight responsibilities relating to effective corporate governance. The Nominating/Corporate Governance Committee’s duties and responsibilities, which are discussed in detail in its charter, include:

identifying, recruiting, screening, interviewing and recommending individuals qualified to become members of the Board (see Governance of the Company – Identification of Director Candidates);
recommending and evaluating the director nominees to be presented for stockholder approval at the annual meeting of stockholders or for appointment by the Board if a vacancy occurs between annual meetings;
developing an annual self-evaluation process of the Board and its committees;
monitoring the education, orientation and training needs of directors of the Board;
developing and recommending to the Board for its approval various codes of conduct and ethics and a set of corporate governance guidelines; and
reviewing, approving, or ratifying if appropriate, any related party transactions and any material amendments or modifications to such related party transactions pursuant to the Company’s Related Party Transactions Policy.

The Nominating/Corporate Governance Committee charter is available on our website at www.denbury.com, under the “About Denbury – Corporate Governance” link.



18


Reserves and Health, Safety and Environmental (“Reserves and HSE”) Committee

The Reserves and HSE Committee is comprised of three independent directors: Mr. Dielwart, Dr. Meyers and Ms. VanDeWeghe, with Dr. Meyers acting as chairman. The primary purpose of the Reserves and HSE Committee is to provide assistance to the Board in discharging its oversight responsibilities relating to (a) the Company’s independent reserves engineer, (b) information regarding the Company’s reserves and (c) the Company’s health, safety and environmental policies, practices and procedures.  The Reserves and HSE Committee’s duties and responsibilities, which are discussed in detail in its charter, include:

evaluating and, in consultation with management, selecting the Company’s independent reserves engineer;
reviewing and monitoring the independence of the Company’s independent reserves engineer;
reviewing with management and the independent reserves engineer the calculation and reporting of the Company’s oil, natural gas and CO2 reserves;
reviewing with management the Company’s health, safety and environmental policies, practices and procedures and assessments of relevant high risk areas of each;
reviewing the Company’s strategy and initiatives in the area of corporate social responsibility; and
reviewing the Company’s reports regarding corporate responsibility activities prior to publication.

The Reserves and HSE Committee charter is available on our website at www.denbury.com, under the “About Denbury – Corporate Governance” link.

Risk Committee

The Risk Committee is comprised of four independent directors: Messrs. Dielwart, McMichael, Peterson and Stein, with Mr. McMichael acting as chairman. The primary purpose of the Risk Committee is to provide assistance to the Board in discharging its oversight responsibilities relating to the Company’s principal business, financial and operational risks, and other material risk exposures, and the actions, activities and initiatives of the Company to mitigate such risks and exposures, in each case to the extent such oversight is not otherwise the duty or responsibility of other committees of the Board. The Risk Committee’s duties and responsibilities, which are discussed in detail in its charter, include:

reviewing and evaluating management’s identification of the major risks to the Company’s business;
reviewing the principal financial risks, exposures and liabilities undertaken or assumed by the Company;
reviewing the Company’s insurance programs and policies; and
reviewing other material risk exposures as directed by the Board, including risks related to information technology and cybersecurity.

The Risk Committee charter is available on our website at www.denbury.com, under the “About Denbury – Corporate Governance” link.



19


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following table presents information regarding the number of shares of Denbury common stock beneficially owned as of February 29, 2020 by (i) each stockholder known by the Company to beneficially own more than 5% of our issued and outstanding common stock, (ii) each executive officer of the Company named in the Summary Compensation Table (our named executive officers), (iii) each director of the Board and director nominee and (iv) all directors and executive officers as a group. Unless otherwise indicated, each stockholder identified in the table is believed to have sole voting and investment power with respect to the shares beneficially held. The percent of outstanding shares is calculated on the basis of 506,320,160 shares of Denbury common stock outstanding (which excludes treasury shares) as of February 29, 2020. The table includes shares that were acquirable within 60 days following this date.

 
Beneficial Ownership of
Common Stock as of
February 29, 2020
Name of Beneficial Owner
 
Shares
 
 
 
Percent of Shares Outstanding
Directors and Executive Officers:
 
 
 
 
 
 
  John P. Dielwart
 
301,603

 
(1) 
 
*

  Michael B. Decker
 
371,212

 
(1) 
 
*

  Gregory L. McMichael
 
204,568

 
(1) 
 
*

  Kevin O. Meyers
 
288,219

 
(1) 
 
*

  Lynn A. Peterson
 
181,189

 
(1) 
 
*

  Randy Stein
 
340,130

 
(1) 
 
*

  Mary M. VanDeWeghe
 
92,943

 
(2) 
 
*

  Christian S. Kendall
 
2,614,925

 
(3) 
 
*

  Mark C. Allen
 
1,782,224

 
(3)(4) 
 
*

  James S. Matthews
 
705,937

 
(3)(4) 
 
*

  All of the executive officers and directors as a group (10 persons)
 
6,882,950

 
(5) 
 
1.4
%
Stockholders owning 5% or more of issued and outstanding common stock
 
 
 
 
 
 
BlackRock, Inc.
 
74,867,065

 
(6) 
 
14.8
%
Fidelity Management & Research Company
 
70,295,811

 
(7) 
 
13.9
%
The Vanguard Group
 
69,375,119

 
(8) 
 
13.7
%
State Street Corporation
 
26,295,533

 
(9) 
 
5.2
%

*
Indicates less than 1%.
(1)
Includes 71,911 shares of unvested restricted common stock which will vest on May 21, 2020.  In addition to the foregoing vesting provisions, unvested awards will vest upon the holder’s death or disability or a change in control of the Company.
(2)
Includes 71,911 shares of restricted common stock which vested on March 26, 2020, and 11,032 shares of unvested restricted common stock which will vest on May 21, 2020. In addition to the foregoing vesting provisions, unvested awards will vest upon the holder’s death or disability or a change in control of the Company.
(3)
Includes the following shares of common stock (as shown in the table below) for each individual which they respectively have the right to acquire pursuant to: (a) shares of unvested restricted common stock which vest on the dates listed; (b) shares of unvested restricted common stock that vest ratably between January 31, 2021 and the date the officer becomes retirement eligible; and (c) shares related to the three-year TSR award granted in 2017, which vested at 59% of the targeted level on March 31, 2020 (see Executive Compensation – Compensation Discussion and Analysis – Results of Incentive-Based Compensation for Year-Ended 2019). The holders of the unvested shares of common stock do not have voting rights with respect to such shares until such shares vest. In addition to the foregoing vesting provisions, all of these shares will vest upon a holder’s death or disability or a change in control of the Company. This does not include shares for which the performance period has not ended.


20


 
 
 
 
Christian S. Kendall
 
Mark C. Allen
 
James S. Matthews
Unvested Restricted Stock -
Vesting on July 1, 2020
 
(a)
 
139,333

 

 

Unvested Restricted Stock -
Vesting on July 11, 2020
 
(a)
 
132,000

 
102,667

 
52,800

Unvested Restricted Stock -
Vesting on July 16, 2020 and 2021
 
(a)
 
204,828

 
108,104

 
56,896

Unvested Restricted Stock -
Vesting on July 17, 2020, July 19, 2021 and July 18, 2022
 
(a)
 
728,888

 
355,555

 
186,666

Unvested Restricted Stock -
Ratably & Retirement Vesting
 
(b)
 

 
50,996

 

TSR Awards -
Vested on March 31, 2020
 
(c)
 
87,335

 
67,927

 
34,933

Total
 
 
 
1,292,384

 
685,249

 
331,295


(4)
Does not include stock appreciation rights (“SARs”) for which the closing price of Denbury common stock as of February 29, 2020, was below the various strike prices.
(5)
Shares beneficially owned by these executive officers and directors as a group include 2,633,142 shares of restricted stock which vest over time and 190,195 incentive-based shares, which vested on March 31, 2020. This amount does not include SARs held by certain executive officers for which the closing price of Denbury common stock as of February 29, 2020, was below the various strike prices.
(6)
Information based on Schedule 13G/A filed with the SEC on February 4, 2020.  BlackRock, Inc. claims sole voting power of 73,710,696 shares and sole dispositive power of 74,867,065 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
(7)
Information based on Schedule 13G/A filed with the SEC on February 7, 2020.  The Company estimates that the share number reported includes 54,741,500 shares acquirable upon conversion of the Company’s 6⅜% Convertible Senior Notes due 2024. Fidelity Management & Research Company claims sole voting power of 25,115,940 shares and sole dispositive power of 70,295,811 shares. The address of Fidelity Management & Research Company is 245 Summer Street, Boston, Massachusetts 02210.
(8)
Information based on Schedule 13G/A filed with the SEC on February 11, 2020.  The Vanguard Group claims sole voting power of 457,092 shares, shared voting power of 82,148 shares, sole dispositive power of 68,890,645 shares and shared dispositive power of 484,474 shares. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
(9)
Information based on Schedule 13G filed with the SEC on February 14, 2020.  State Street Corporation claims shared voting power of 24,483,255 shares and shared dispositive power of 26,295,533. The address of State Street Corporation is State Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111.



21


MANAGEMENT

The names, ages and positions held by our officers are set forth below.  Each officer holds office until his or her successor is chosen and qualifies or until their earlier resignation or removal in accordance with our Bylaws. Set forth below the table is a description of the business experience of each of our current officers.
Name
 
Age
 
Position
Christian S. Kendall
 
53
 
Director, President and Chief Executive Officer
Mark C. Allen
 
52
 
Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary
James S. Matthews
 
58
 
Executive Vice President, Chief Administrative Officer, General Counsel and Secretary
Jenny Cochran
 
52
 
Senior Vice President – Human Resources, Data and Procurement
Matthew Dahan
 
56
 
Senior Vice President – Business Development and Technology
John E. Filiatrault
 
54
 
Senior Vice President – CO2 Supply and Pipeline Operations
David Sheppard
 
48
 
Senior Vice President – Operations
Dan E. Cole
 
67
 
Vice President – Commercial Development and Governmental Relations
Chris Hibbetts
 
39
 
Vice President – Finance
Nicole H. Jennings
 
45
 
Vice President – Planning
Steve A. McLaurin
 
53
 
Vice President and Chief Information Officer
Alan Rhoades
 
55
 
Vice President and Chief Accounting Officer
Randy J. Robichaux
 
49
 
Vice President – Environmental, Health and Safety
Nikulas J. Wood
 
40
 
Vice President – North Region


Christian S. Kendall is a Director, President and Chief Executive Officer of Denbury. Biographical information for Mr. Kendall is included under Proposal One – Election of Directors.

Mark C. Allen, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary, is a Certified Public Accountant. Prior to serving in his current role, Mr. Allen served as Vice President and Chief Accounting Officer from the time he joined Denbury in April 1999 until June 2009 when he became Senior Vice President and Chief Financial Officer. Before joining Denbury, Mr. Allen was Manager of Financial Reporting for ENSCO International Incorporated from November 1996 to April 1999. Prior to November 1996, Mr. Allen was a manager in the accounting firm of Price Waterhouse LLP. Mr. Allen also served as a director of Genesis Energy, L.P. between June 2006 and February 2010 and Encore Energy Partners GP LLC between August 2010 and December 2010. Mr. Allen holds a Bachelor of Business Administration in Accounting degree from Evangel University.

James S. Matthews, Executive Vice President, Chief Administrative Officer, General Counsel and Secretary, has served as the Company’s General Counsel since joining Denbury in January 2012. Prior to serving in his current role, Mr. Matthews served as Vice President until he was promoted to Senior Vice President in May 2014.  Mr. Matthews was a partner with the law firm of Vinson & Elkins LLP from 2001 until joining Denbury in 2012, with a primary focus on representing companies in oil and gas finance transactions. Mr. Matthews holds a Bachelor of Arts degree from Vanderbilt University, a Master’s degree from Ohio University and a Juris Doctor degree from Emory University School of Law.

Jenny Cochran, Senior Vice President – Human Resources, Data and Procurement, joined Denbury in 2013. Prior to serving in her current role, Ms. Cochran served as Denbury’s Director of Compensation and Vice President – Human Resources. Prior to joining Denbury, Ms. Cochran previously worked in several leadership roles over 15 years at Temple-Inland, a building products manufacturer with 10,000 employees, most recently serving as Vice-President, Human Resources. Ms. Cochran received a Bachelor of Science degree from Texas A&M University and an MBA from the University of Texas.



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Matthew Dahan, Senior Vice President – Business Development and Technology, joined Denbury in October 2010 and has more than 35 years of oil and gas experience. Prior to serving in his current role, Mr. Dahan was appointed Vice President in June 2014 and prior to that served as Denbury’s Asset Manager for the Cedar Creek Anticline and as Reservoir Engineering Manager for the North Region. Before joining Denbury, Mr. Dahan served as Technical Director for Delta Hydrocarbons, BV in the Netherlands and Director of its affiliates Trefoil E&P S.L., Argentina and Delta Hydrocarbons Hungary Kft. Earlier in his career, Mr. Dahan also worked for Mobil Oil Corporation and Saudi Aramco in various engineering and supervisory roles, both domestically and internationally. Mr. Dahan earned his Bachelor of Science degree in Petroleum Engineering from the Colorado School of Mines.

John E. Filiatrault, Senior Vice President – CO2 Supply and Pipeline Operations, joined Denbury as an officer in June 2010. Mr. Filiatrault has more than 32 years of experience in the energy industry with Denbury, Natural Gas Pipeline Company of America, El Paso Corporation and Kinder Morgan in a variety of assignments relating to engineering and operations. Mr. Filiatrault received his Bachelor of Science degree in Civil Engineering from Valparaiso University and his MBA from Samford University.

David Sheppard, Senior Vice President – Operations, joined Denbury as an officer in November 2015 and has more than 25 years of experience in the oil and natural gas industry. Prior to joining Denbury, Mr. Sheppard was employed at Noble where he held a variety of leadership roles, most recently as the Director of Global Drilling. Mr. Sheppard’s experience and responsibilities at Noble have included onshore and offshore drilling, development projects, and production engineering. Mr. Sheppard earned his Bachelor of Science degree in Petroleum Engineering from Texas A&M University.

Dan E. Cole, Vice President – Commercial Development and Governmental Relations, joined Denbury as an officer in October 2006.  Prior to joining Denbury, Mr. Cole was Director of the Mississippi/Alabama Business Unit for Plains Marketing, LP since April 2004, and Manager, Gulf Coast Region for EOTT Operating for the prior eight years before it was acquired by Plains Marketing.  Mr. Cole has more than 40 years of marketing, transportation and supply experience in the natural gas and crude oil industry.  Mr. Cole received his Bachelor of Business Administration degree from Texas A&M University.

Chris Hibbetts, Vice President – Finance, joined Denbury in 2012.  Prior to serving in his current role, Mr. Hibbetts served as Denbury’s Director of Corporate Accounting and Finance where he supervised the corporate accounting, financial reporting, finance and treasury functions.  Before joining Denbury, Mr. Hibbetts was a senior manager with the public accounting firm PricewaterhouseCoopers LLP.  Mr. Hibbetts received a Bachelor of Science in Business Administration degree from Trinity University and a Master in Professional Accounting from the University of Texas.  Mr. Hibbetts is a licensed Certified Public Accountant in the state of Texas.

Nicole H. Jennings, Vice President – Planning, joined Denbury in 2009. Prior to serving in her current role, Ms. Jennings served as Denbury’s Director of Planning and Director of SEC Reporting and Technical Accounting. Ms. Jennings also served as a Manager of Technical Accounting and Manager of External Reporting at Celanese Corporation, and prior to joining Celanese in 2006, was a senior manager in the accounting firm of PricewaterhouseCoopers LLP. Ms. Jennings received a Bachelor of Business Administration degree and a Master of Science in Accounting from Texas A&M University. Ms. Jennings is a licensed Certified Public Accountant in the state of Texas.

Steve A. McLaurin, Vice President and Chief Information Officer, joined Denbury as an officer in January 2011.  Prior to joining Denbury, Mr. McLaurin was a partner with PricewaterhouseCoopers LLP, IBM and SolomonEdwardsGroup.  Mr. McLaurin has more than 30 years of experience working with leading organizations and helping them manage their information technology solutions.  He started his career as a systems analyst at General Dynamics.  Mr. McLaurin holds a Bachelor of Science degree in Computer Science from Evangel University and is a Certified Information Systems Auditor.

Alan Rhoades, Vice President and Chief Accounting Officer, is a licensed Certified Public Accountant in the state of Texas. Mr. Rhoades has served as Denbury’s Chief Accounting Officer since July 2009. Before joining Denbury in July 2003, Mr. Rhoades was Assistant Controller for Amerada Hess Corporation from 2001 to 2003, and held that same position for Triton Energy Limited from 1996 until it was acquired by Amerada Hess Corporation in 2001.  Prior to joining Triton Energy Limited, Mr. Rhoades was a manager in the accounting firm of KPMG LLP. Mr. Rhoades received his Bachelor of Business Administration degree from the University of Texas at Arlington.


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Randy J. Robichaux, Vice President – Environmental, Health and Safety, joined Denbury in 1997 and has more than 22 years of HSE experience in the energy industry. Prior to being named Vice President, Mr. Robichaux served as Denbury’s Director of HSE and Asset Integrity. During his tenure at Denbury, Mr. Robichaux has worked in both the field and at corporate headquarters while developing and implementing Denbury's HSE program. Before joining Denbury, Mr. Robichaux worked for the Louisiana Department of Environmental Quality as an Environmental Quality Specialist.  Mr. Robichaux holds a Bachelor of Science degree from Nicholls State University and is both a Certified Safety Professional and a Registered Environmental Manager.

Nikulas J. Wood, Vice President – North Region, joined Denbury in 2005 and has more than 17 years of experience in the energy industry. Prior to being named Vice President, Mr. Wood served in progressive roles across Denbury’s organization, including managerial positions in Operations, Acquisitions & Divestitures, Corporate Planning, and most recently in Development Design, where he served as director of the group. Mr. Wood received a Bachelor of Science degree from Purdue University and an MBA from Southern Methodist University.



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COMPENSATION COMMITTEE REPORT

The goal of the Compensation Committee is to design compensation policies and programs to attract and retain top level individuals in key positions and provide incentives for those individuals to increase the long-term value of the Company for our stakeholders. Our stockholders’ views on our executive compensation program are important to us, and we value and utilize the feedback and insights that we have received, and continue to receive, from our stockholders. To communicate with the Compensation Committee, please follow the procedures outlined under Governance of the Company – Communication with the Board.

The following Compensation Discussion and Analysis (“CD&A”) should be read in conjunction with the Summary Compensation Table on page 49, as well as the related tables and narrative disclosures. We have reviewed and discussed the CD&A included in this proxy statement with management and have recommended to the Board that the CD&A be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 
The Compensation Committee
Lynn A. Peterson, Chairperson
Michael B. Decker
John P. Dielwart
Gregory L. McMichael


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee listed above are independent directors.


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EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) provides you with a detailed description of our executive compensation objectives, philosophy and programs, the compensation decisions we have made under those programs, and the rationale and details supporting specific compensation decisions. These decisions were made prior to the outbreak of the coronavirus (COVID-19) pandemic, the substantial decline in the price of oil, the significant downturn in the global economy and the reduced market price of our common stock. This CD&A focuses on the compensation of our named executive officers for 2019 (our “named executive officers” or “NEOs”). We review the roles and responsibilities of our officers and key employees on an annual basis and determine which of those individuals qualify as named executive officers by meeting the definition of “executive officer” for purposes of Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), Item 402(a)(3) of Regulation S-K and Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We evaluate which individuals meet the definition of “executive officer” on an annual basis. In 2019, we had three officers who met the definition of “named executive officer” under SEC rules. Our named executive officers for 2019 are shown in the table below.
Name
 
Title
Christian S. Kendall
 
President and Chief Executive Officer
Mark C. Allen
 
Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary
James S. Matthews
 
Executive Vice President, Chief Administrative Officer, General Counsel and Secretary

This CD&A should be read in conjunction with the Summary Compensation Table on page 49 which details the compensation of our named executive officers in 2019, 2018 and 2017, as reported in accordance with SEC rules.

Executive Summary

Our Strategy

As part of our corporate strategy, we are committed to strong financial discipline, efficient operations and creating long-term value for our stakeholders through the following key principles:

continuing to improve our debt profile;

maximizing value and cash flow through our tertiary recovery operations and a combination of other exploitation, development, exploration and marketing techniques, and monetizing existing non-core assets, while controlling costs;

balancing our development capital expenditures with our cash flows from operations;

optimizing the timing and allocation of capital to maximize the rates of return on our investments;

continuing to play a key part in the solution to reducing atmospheric CO2 emissions, while at the same time providing a vital energy source; and

attracting and maintaining a highly competitive team of experienced and incentivized personnel.

Our Results

We had a number of important business developments and accomplishments in 2019. The discussion below summarizes our results for 2019 and how those results reflect the execution of our strategy.

Generated Significant Cash Flow. Generated approximately $494 million of cash flow from operations (approximately $409 million after reducing for interest payments treated as debt reduction), significantly exceeding our approximately $274 million of incurred development capital expenditures and capitalized interest in 2019.


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Reduced Debt. Reduced our debt principal by approximately $250 million and significantly improved our debt maturity profile, ending the year with no outstanding borrowings on our senior secured bank credit facility. Improved our leverage ratio to 3.7x during 2019 from 4.2x during 2018 (ratio of net debt (debt principal less cash) to adjusted EBITDAX (a non-GAAP measure)).

Progressed Cedar Creek Anticline. Continued progress on the CO2 enhanced oil recovery development project at Cedar Creek Anticline, our largest oil field, to access the potential for significant long-term oil production and cash flow from this key asset, with project activities and capital primarily related to procurement of the pipe and preparation for installation of the CO2 pipeline.

Reduced Costs. Reduced general and administrative expenses (excluding $18.6 million of severance expense related to a voluntary separation program) by $7.1 million, a 10% reduction from 2018 amounts.

Portfolio Management. Continued to optimize our oil and natural gas asset portfolio through the following: (i) sold half of our nearly 100% working interests in four conventional southeast Texas oil fields in March 2020 for $50 million and a carried interest in ten wells to be funded and drilled by the purchaser and (ii) sold Citronelle Field for approximately $10 million in July 2019. Continued the monetization of valuable surface land with no active oil and natural gas operations around Houston, Texas, including the following: (i) sold multiple parcels in transactions totaling $14 million in 2019 and (ii) entered into a contract to sell acreage for $32 million, which provides for a substantial portion of the cash proceeds from such sale to be received not later than mid-2021.

Aligning Compensation with Execution of Our Strategy

We believe that our strategy aligns compensation with both individual and Company short-term and long-term results. In 2019, incentive-based awards were approximately 58% of our named executive officer’s target compensation. Additionally, approximately 63% of our 2019 named executive officer target compensation was tied to the value of our common stock, which aligns the interests of our named executive officers with those of our stockholders. All of our equity-based awards have three-year vesting provisions. The following illustrates the compensation components of our 2019 target compensation for our named executive officers. The percentage amounts in the graphic below represent average numbers for the named executive officers as a group.

TTC2019A01.JPG


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Incentive-Based Awards for the Performance Period Ended 2019

For the performance period ended December 31, 2019, our named executive officers were eligible to earn equity and cash under three incentive-based awards: the (i) three-year TSR (total shareholder return) award granted in 2017, (ii) three-year Oil Price Change vs. TSR award granted in 2017 and (iii) 2019 annual incentive bonus. See Results of Incentive-Based Compensation for Year-Ended 2019 below for a description of each award and the achievement percentage and amount earned compared to target compensation.

Summary of Executive Compensation Practices

Our executive compensation policies and programs are designed to:

align the interests of our named executive officers with those of our stockholders through stock-based compensation, while limiting potential dilution and conserving shares under the 2004 Omnibus Stock and Incentive Plan (the “2004 Incentive Plan”);

align named executive officer compensation with the execution of our strategy; and

create a compensation structure for our named executive officers that is easily understood and measured.

The table below summarizes certain compensation practices that we have implemented to align the interests of our named executive officers with those of our stockholders. Many of these practices are discussed in greater detail throughout this CD&A, and our compensation components are described below under Compensation Components.

What We Do
þ Incentive-Based Compensation.  The majority of our named executive officer pay is incentive based and not guaranteed. It must be earned every year based on objective and challenging operational and financial goals. Annual incentive bonuses are based entirely on Company performance.
þ No Employment Agreements.  We do not have employment agreements with executive officers.
þ Stock Ownership Guidelines.  All officers and directors are subject to stock ownership and retention guidelines that are in line with our peer group.
þ No Company Securities Hedging.  We have a policy prohibiting hedging and short sales of Denbury stock by our directors and employees, including our named executive officers.
þ Clawback Policy.  We have a clawback policy under which our Board can cause the reimbursement by an executive officer of certain incentive compensation under certain circumstances.
þ No Pledging.  We discourage pledging of Denbury stock by executive officers and directors. Currently, no executive officers or directors pledge shares of Denbury stock.
þ Risk Mitigation.  We mitigate compensation risk through varied performance measures and targets, long-term equity incentives, and Board and management processes to identify risks.
þ Independent Compensation Consultant.  The Compensation Committee uses an independent compensation consultant that provides no other material services to the Company.
þ No Tax Gross-Ups.  We have no tax gross-up payments for excise taxes in change-in-control transactions.
þ Severance Plan Double Trigger Change in Control.  Our Severance Protection Plan provides for double trigger severance payments. Severance protection benefits will become payable under the Severance Protection Plan only with the occurrence of both a change in control and a qualifying termination.



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2019 Say-on-Pay Results

Each year, we evaluate the result of the say-on-pay vote cast by our stockholders, which we consider a key indicator of stockholder sentiment. We are committed to ensuring that our stockholders fully understand our executive officer compensation programs, including how such programs align the interests of our executive officers with those of our stockholders and how such programs reward the achievement of our strategic objectives. At our 2019 annual meeting of stockholders, approximately 94% of shares having voting power present in person or represented by proxy were voted in favor of the compensation of our named executive officers, compared to 60% and 52% in 2018 and 2017, respectively. We attribute the high level of support for our executive compensation program in 2019 to our significant efforts to engage with our stockholders on our executive compensation program and the substantial redesign of our approach to compensation, beginning in 2018, as further described in Executive Compensation – Compensation Discussion and Analysis – Compensation Components on page 33. Our stockholders’ views on our executive officer compensation program are important to us, and we value and utilize the feedback and insights that we have received, and continue to receive, from our stockholders. As a result, our Board recommends a vote FOR Proposal Two on page 58, the non-binding, advisory vote to approve named executive officer compensation.

Stockholder Engagement

We are committed to continuously maintaining an open dialogue with our stockholders and engaging in a robust process to solicit feedback from our stockholders. Stockholders involved in our engagement efforts were invited to meet with members of our senior management. Additionally, as part of our annual engagement process, members of the Board, including the Chairperson, are generally available to meet with our stockholders. As part of our stockholder engagement campaign, we reached out to several of our largest institutional stockholders in an effort to obtain input on how our executive officer compensation program, disclosure practices, sustainability program and corporate governance may be better aligned with stockholder expectations.

Throughout 2019, we met with stockholders owning approximately 41% of our outstanding common stock as of February 29, 2020. The Board and our management carefully considered stockholder feedback. Below is a chart summarizing the feedback that we received from our stockholders and our responses. For more information regarding our compensation policies and programs for 2020, see Executive Compensation – Compensation Discussion and Analysis – 2020 Compensation beginning on page 45.



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Stockholder Feedback / Reason for Change
Company Response / Compensation Change
Target compensation for named executive officers should not be significantly increased.
The Compensation Committee determined that there would be no increases to the target compensation amounts for our named executive officers in 2020.
Equity compensation granted to named executive officers should more closely align with the interests of stockholders.
The Compensation Committee eliminated the Debt-Adjusted Reserves Growth per Share award (and proportionately increased the TSR award) for 2020 in order to more closely align (i) the interests of our named executive officers with those of our stockholders and (ii) our equity program with those of our compensation peer group.
Continue to tie executive compensation to environmental, social and governance metrics.
Health, safety and environmental performance has always been an important factor in determining our annual incentive bonus payout, accounting for 15% of the target bonus payout. Additionally, beginning in 2020, the Compensation Committee will consider our performance on our climate change-related goals when determining the payout for our Other Strategic Initiatives metric, which accounts for a combined 25% of the target payout in 2020.
Denbury should increase its disclosure on climate change risks and other environmental and social topics.
In March 2020, we published our 2019 Corporate Responsibility Report, which was prepared in accordance with the Global Reporting Initiative’s Sustainability Reporting Standards and includes recommended disclosures from the Sustainability Accounting Standards Board and Task Force on Climate-related Financial Disclosures. The report is available on our website at www.denbury.com, under the “Responsibility” link. Additionally, we updated our health, safety and environmental policy, which is available on our website at www.denbury.com, under the “Responsibility” link.
Denbury should disclose its goals with respect to capturing, utilizing and storing carbon emissions.
Through our carbon capture, utilization and storage efforts, and our use of industrial-sourced CO2, we currently remove more CO2 from the atmosphere than we emit to produce our oil. In our 2019 Corporate Responsibility Report, we state that our management has set a target to fully offset our emissions, including emissions associated with the refining and combustion of our produced hydrocarbons by third parties (i.e., Scope 3 emissions), over the next decade.
Denbury should increase its disclosure on human capital management initiatives.
In 2019, we publicly disclosed our long-standing policy on human rights, which is available on our website at www.denbury.com, under the “Responsibility” link. Additionally, our 2019 Corporate Responsibility Report contains updated disclosures on our long-standing policies related to anti-discrimination, diversity and equal employment.

We believe that we have addressed and utilized the feedback that we received from our stockholders to enhance our disclosures and implement positive changes to our compensation, governance and sustainability programs in 2019 and 2020.



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Objectives and Philosophy

Our compensation policies are designed to ensure that salary levels and compensation incentives attract and retain top level individuals in key positions and are commensurate with each individual’s level of executive responsibility, the type and scope of our operations, and our Company-wide financial condition and performance. Our overall compensation philosophy is that we:
 
pay competitive base salaries at a level to attract and retain outstanding talent, generally targeted at the median level of salaries of our peer companies;
provide a proper balance and mix of compensation, which places significant emphasis on long-term and incentive-based awards; and
reward employees for the results of the Company as a whole.

Roles in Setting Executive Officer Compensation

Role of the Compensation Committee
 
The Compensation Committee, which consists of four independent directors, provides assistance to the Board in discharging its oversight responsibilities relating to the compensation of our Chief Executive Officer and other executive officers. The Compensation Committee is responsible for the review and approval of all aspects of our executive compensation program. Among its primary duties, the Compensation Committee reviews and approves, on at least an annual basis, the corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluates the Chief Executive Officer’s performance in light of these goals and objectives, and determines and approves our Chief Executive Officer’s compensation based on this evaluation. Additionally, in consultation with the Chief Executive Officer, the Compensation Committee evaluates the performance of, and reviews and approves the compensation of, all other executive officers on an annual basis.

Other duties of the Compensation Committee with respect to setting executive officer compensation include:

setting, reviewing and certifying performance metrics and targets under incentive-based compensation awards;
evaluating Company performance results with respect to annual incentive bonuses;
evaluating and setting the Company’s compensation peer group;
evaluating the competitiveness of each executive officer’s total target compensation package; and
approving any changes to executive officer compensation packages, including but not limited to, base salaries, annual incentive bonus target amounts and equity and cash awards.

The Compensation Committee charter, which fully describes the Compensation Committee’s duties and responsibilities, is available on the Company’s website at www.denbury.com, under the “About Denbury – Corporate Governance” link.

Role of the Chief Executive Officer

Within the framework of the compensation programs approved by the Compensation Committee, each year our Chief Executive Officer recommends the level of base salary, annual incentive bonus amounts and equity and/or cash award amounts for our other executive officers. These recommendations are based, in part, upon his assessment of each executive officer’s performance, the performance of the individual’s respective department or function, the performance of the Company as a whole, and officer retention considerations. The Compensation Committee reviews our Chief Executive Officer’s recommendations and approves any compensation changes affecting our executive officers as it determines in its sole discretion. Our Chief Executive Officer is not involved in setting or approving his own compensation.



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Role of the Independent Compensation Consultant
 
For 2019, the Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”) to serve as its independent compensation consultant and to advise the Compensation Committee on compensation-related matters. Meridian reports directly to the Compensation Committee. The Compensation Committee retains sole authority to approve Meridian’s compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement. A representative of Meridian attends meetings of the Compensation Committee as requested and communicates with the Compensation Committee periodically between meetings.

Meridian provides various executive compensation services to the Compensation Committee pursuant to a written consulting agreement with the Compensation Committee. Generally, these services include (i) advising the Compensation Committee on the principal aspects of our executive compensation program and evolving industry practices and (ii) providing market information and analysis regarding the competitiveness of our compensation program design and our award values in relation to Company and executive officer performance.

At the direction of the Compensation Committee, Meridian performed the following services, among others, related to our 2019 compensation program:

provided presentations and reports on executive officer compensation trends (including those related to incentive-based awards);
provided evaluations of total compensation for each executive officer as compared to industry peers;
provided input to the Compensation Committee with respect to executive officer compensation;
reviewed drafts of this proxy statement, including the CD&A and related compensation tables;
reviewed the Company’s compensation peer group and recommended changes; and
provided other consulting and advice at the request of the Compensation Committee.

Other than Meridian’s services mentioned herein and other services performed at the request of the Compensation Committee, including an analysis of the compensation paid to the Company’s directors and general educational presentations related to compensation-related matters, Meridian provided no other material services to the Company during 2019. The Compensation Committee has assessed the independence of Meridian pursuant to applicable SEC and NYSE rules and concluded that no conflict of interest exists that would prevent Meridian from serving as an independent compensation consultant to the Compensation Committee.
Use of Peer Survey Comparisons

In making 2019 executive officer compensation decisions, the Compensation Committee considered compensation data from a select group of peer companies. In consultation with Meridian, the Compensation Committee adjusted the compensation peer group for 2019 from the group used for 2018 compensation by removing two companies (Energen Corporation and Murphy Oil Corporation) and adding one company (SRC Energy Inc.). The peer companies were selected from a group of independent publicly traded oil and gas companies with similar operations using several criteria, such as market capitalization, revenues, assets, enterprise value and production volumes. The 2019 compensation review peer group is set forth below.

2019 Compensation Review Peer Group
California Resources Corporation
Matador Resources Company
SRC Energy Inc.
Callon Petroleum Company
Oasis Petroleum Inc.
Whiting Petroleum Corporation
Carrizo Oil & Gas, Inc.
PDC Energy, Inc.
WPX Energy, Inc.
EP Energy Corporation
QEP Resources, Inc.
 
Jagged Peak Energy Inc.
SM Energy Company
 

We believe that the selected companies were the most appropriate for executive officer compensation comparisons for 2019 compensation decisions. The differences and similarities between us and the companies in our compensation peer group are taken into consideration when considering peer group data for executive officer compensation. The Compensation Committee reviews the peer group composition annually in consultation with Meridian.



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Compensation Components

The Company’s 2019 named executive officer (NEO) compensation program included the following primary components:
2019 Compensation Components
Base Salary
Annual Incentive Bonus
Equity Awards
 
The graph below details the percentage each compensation component contributed to total 2019 targeted compensation for our named executive officers as a group. Each component is discussed in more detail below.

2019 Target Compensation

COMPCIRCA01.JPG
            
(1)
Beginning in 2016, any amounts earned under incentive-based equity awards above the 100% target level are payable in cash, rather than in shares of Company common stock, to limit potential dilution and conserve available shares under the 2004 Incentive Plan.


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Total Target Compensation

The target compensation amounts for each 2019 compensation component for our named executive officers are shown in the table below. These target amounts did not change for 2020 compensation, as more fully described in 2020 Compensation beginning on page 45.
2019 Total Target Compensation
 
 
Annual Base
Salary Rate (1)
 
Annual
Incentive Bonus
 
Equity Awards
 
Total Target Compensation
Christian S. Kendall
 
$
840,000

 
$
1,092,000

 
$
4,100,000

 
$
6,032,000

Mark C. Allen
 
580,000

 
696,000

 
2,000,000

 
3,276,000

James S. Matthews
 
500,000

 
500,000

 
1,050,000

 
2,050,000


(1)
On April 1, 2019, base salaries were adjusted to $840,000, $580,000 and $500,000 for Messrs. Kendall, Allen and Matthews, respectively.

Equity Compensation Granted

To limit potential dilution and conserve available shares under the 2004 Incentive Plan, the Compensation Committee set a stock price floor of $2.25 per share in determining the total number of shares granted for equity awards in 2019. As a result, our named executive officers (as a group) were granted a cumulative reduction in value of approximately $1,665,165 than would have been granted if the actual NYSE closing stock price of (i) $2.13 per share on April 1, 2019 had been used for the TSR and Debt-Adjusted Reserves Growth per Share (“Reserves Growth”) awards and (ii) $1.12 per share on July 17, 2019 had been used for the time-vested restricted stock. The table below illustrates the difference in values of total target equity compensation and total equity compensation granted for our named executive officers.

2019 Equity Compensation – Target vs. Granted (1)
 
 
Three Year
TSR Award
 
Three Year
Reserves Growth Award
 
Time-Vested
Restricted Stock
 
Total
 
 
Target
Granted
 
Target
Granted
 
Target
Granted
 
Target
Granted
Percent Value Granted
Christian S. Kendall
 
$
1,640,000

$
1,552,531

 
$
820,000

$
776,266

 
$
1,640,000

$
816,355

 
$
4,100,000

$
3,145,152

77%
Mark C. Allen
 
$
800,000

$
757,332

 
$
400,000

$
378,665

 
$
800,000

$
398,222

 
$
2,000,000

$
1,534,219

77%
James S. Matthews
 
$
420,000

$
397,599

 
$
210,000

$
198,799

 
$
420,000

$
209,066

 
$
1,050,000

$
805,464

77%

(1)
Granted values reflect the Company’s stock price on the date of grant.



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Cash-Based Compensation

We strive to provide our named executive officers with a level of cash compensation in the form of base salaries and annual incentive bonuses, at appropriate levels given their positions, professional status and accomplishments. Adjustments to target cash-based compensation for 2019 are depicted in the table below.
Cash-Based Compensation Adjustments for 2019
 
 
Annual Base
Salary Rate
 
Annual Incentive
Bonus Target
 
Total Target
Cash-Based Compensation
 
 
2018
2019 (1)
 
2018
2019
 
2018
2019
% Change
Christian S. Kendall
 
$
775,000

$
840,000

 
$
1,162,500

$
1,092,000

 
$
1,937,500

$
1,932,000

—%
Mark C. Allen
 
$
520,000

$
580,000

 
$
728,000

$
696,000

 
$
1,248,000

$
1,276,000

2%
James S. Matthews
 
$
450,000

$
500,000

 
$
540,000

$
500,000

 
$
990,000

$
1,000,000

1%

(1)
On April 1, 2019, base salaries were adjusted to $840,000, $580,000 and $500,000 for Messrs. Kendall, Allen and Matthews, respectively.

Base Salaries

We believe that base salaries should be competitive with the salaries of similar management positions at our compensation peer companies. Similar to previous years, base salaries for 2019 were approximately 17% of total targeted compensation for our named executive officers and were adjusted as depicted in the table above. These adjustments were made to (i) maintain similar levels of target cash compensation for our named executive officers (as compared to 2018) when combined with the decreases in target annual incentive bonus percentages described further below and (ii) more closely align each named executive officer’s base salary with the base salary of similar management positions at our compensation peer companies.

Annual Incentive Bonuses

Annual incentive bonuses are paid in cash and are an integral part of the overall compensation program for all of our employees. The decision to pay annual incentive bonuses, and in what amounts, is determined by the Compensation Committee on a Company-wide basis. The annual incentive bonus target amounts are based on a percentage of base salary. For the second consecutive year, the Compensation Committee reduced the annual incentive bonus target percentages for each of our named executive officers, as depicted in the table below, in order to more closely align each named executive officer’s target annual incentive bonus percentage with the target bonus percentages of similar management positions at our compensation peer companies. The target annual incentive bonus percentage amounts did not change for 2020 compensation, as more fully described in 2020 Compensation beginning on page 45.
Target Annual Incentive Bonus Percentages
 
 
2017
 
2018
 
2019
 
% Change Since 2017
Christian S. Kendall
 
175%
 
150%
 
130%
 
(26)%
Mark C. Allen
 
175%
 
140%
 
120%
 
(31)%
James S. Matthews
 
150%
 
120%
 
100%
 
(33)%




35


The 2019 annual incentive bonus was calculated for all of our employees, including our named executive officers, as follows:

2019 Annual Incentive Bonus Calculation


BONUSCALC2A03.JPG


Annual incentive bonuses were determined for all of our employees, including our named executive officers, based on objective criteria. The annual incentive bonus had a potential payout range from 0% to 200% of target and was based entirely on Company performance. Seventy-five percent (75%) of the annual incentive bonus payment was tied to quantitative metrics related to the Company’s performance targets with respect to (i) Total Production, (ii) Lease Operating Expenses, (iii) General and Administrative Expenses, (iv) EBITDAX, (v) Reserves Replacement and (vi) HSE Performance. Twenty-five percent (25%) of the annual incentive bonus payment was based on metrics related to the Company’s performance on Other Strategic Initiatives, such as operating within cash flow, liquidity, balance sheet management, portfolio management and rate of return on capital projects.

In 2019, the target points for the Total Production metric were increased from 15 points to 20 points, and the target points for the Other Strategic Initiatives metric were decreased from 30 points to 25 points. Additionally, to reflect our continued commitment to cost reduction and safety, the thresholds, targets and maximums for the Lease Operating Expenses, General & Administrative Expenses and HSE Performance metrics were all reduced (i.e., made more difficult to achieve) in 2019, and the Total Production and EBITDAX metrics were adjusted to reflect our reduced 2019 capital budget and desire to operate within cash flow. In February 2019, we announced a 2019 capital budget range of $240 million to $260 million, a decrease of 20% to 25% from our 2018 capital spending level, and anticipated 2019 total production of between 56,000 and 60,000 barrels of oil equivalent per day. The 2019 annual incentive bonus targets reflect our reduced capital budget range.


36


The table below depicts the annual incentive bonus metrics, their respective weightings for 2019 and the thresholds, targets and maximums for each metric.

2019 Annual Incentive Bonus
Metric
 
Target Points
 
Threshold
(50%)
 
Target
(100%)
 
Maximum
(200%)
Total Production (1)
 
20
 
55,500 BOE/d
 
58,000 BOE/d
 
60,000 BOE/d
Lease Operating Expenses (2)
 
10
 
$440 million
 
$420 million
 
$400 million
General & Administrative Expenses (3)
 
5
 
$78 million
 
$72 million
 
$67 million
EBITDAX (4)
 
15
 
$400 million
 
$500 million
 
$585 million
Reserves Replacement
 
10
 
50%
 
100%
 
200%
HSE Performance
 
 
 
 
 
 
 
 
  Serious Injury & Fatality Rate
 
5
 
1.27
 
0.95
 
0.63
  Total Recordable Incident Rate
 
5
 
1.01
 
0.75
 
0.49
  Significant Spills Rate
 
5
 
0.17
 
0.13
 
0.09
Other Strategic Initiatives (5)
 
25
 
 
 
 
 
 
Total
 
100
 
 
 
 
 
 

(1)
Total Production is calculated before adjustments for any acquisitions and/or divestitures.
(2)
Lease Operating Expenses excludes the cost of CO2.
(3)
General & Administrative Expenses excludes annual incentive bonuses and any incentive-based equity compensation earned above target levels.
(4)
EBITDAX is defined as consolidated net income excluding interest expense, tax expense (benefit), depletion, depreciation, amortization and exploration expense, non-cash items, net losses from disposed, abandoned or discontinued operations and all other extraordinary or non-recurring losses and charges.
(5)
Other Strategic Initiatives includes qualitative metrics related to operating within cash flow, liquidity, balance sheet management, portfolio management and rate of return on capital projects.

For more information regarding actual payout decisions for our 2019 annual incentive bonus program, see Results of Incentive-Based Compensation for Year-Ended 2019 on page 40.



37


2019 Equity Awards – Overall Program

Equity awards were a significant focus of our total compensation program for our named executive officers in 2019. All awards granted under our 2004 Incentive Plan are designed to align the interests of our named executive officers with those of our stockholders.

For 2019, the Compensation Committee determined that the equity awards granted to our named executive officers would be allocated as depicted below, all of which vest over a three-year period.
Percent
 
Award Name
 
Award Type
 
Terms
40%
 
Time-Vested Restricted Stock
 
Equity
 
Vesting ratably over three years (34%, 33%, 33%)
40%
 
TSR Award
 
Equity (1)
 
Based on peer ranking over a three-year performance period and cliff vesting after three years
20%
 
Reserves Growth Award
 
Equity (1)
 
Based on a three-year performance period and cliff vesting after three years

(1)
Beginning in 2016, any amounts earned under the TSR and Reserves Growth awards above the 100% target levels are payable in cash, rather than in shares of Company common stock, to limit potential dilution and conserve available shares under the 2004 Incentive Plan.

We continued to place a great emphasis on incentive-based equity awards (the TSR and Reserves Growth awards) to further align the interests of our named executive officers with those of our stockholders. For 2019, long-term incentive-based awards comprised 60% of our equity award mix. The remaining 40% of the equity award mix was time-vested restricted stock, vesting ratably over three years.

Generally, the target number of shares that can be earned under the incentive-based equity awards will be earned if the Company ranks at the 50th percentile of its peer group or performs at the mid-point of the designated vesting levels. If performance is below designated minimum levels, no shares are earned.

Each of the target levels and the formulas employed to reward achievement was determined and defined by the Compensation Committee at the time of grant of the incentive-based awards, based upon year-end targets and goals. Achievement of discretionary factors and confirmation of performance levels are determined by the Compensation Committee. Any portion of the shares which are not earned by the end of the performance period are forfeited.

Each of the equity awards is discussed in greater detail below.

Time-Vested Restricted Stock

Time-vested restricted stock grants vest ratably over a three-year period. To limit potential dilution and conserve available shares under the 2004 Incentive Plan, the Compensation Committee set a stock price floor of $2.25 per share in determining the total number of shares of restricted stock that could be granted. As a result, our named executive officers (as a group) were granted 1,282,461 fewer shares of restricted stock than would have been granted if the actual NYSE closing stock price of $1.12 per share on July 17, 2019 had been used (a cumulative reduction in value of approximately $1,436,357). In July 2019, our named executive officers received time-vested restricted stock grants as shown in the table below.
 
 
Time-Vested Restricted Stock
(Number of Shares)
Christian S. Kendall
 
728,888
Mark C. Allen
 
355,555
James S. Matthews
 
186,666



38


TSR Award 

The TSR award is based on comparing the average of the Company’s total shareholder return during each year within the three-year performance period to that of the Company’s peers. The stock prices used to compare TSR are based on the increase or decrease in the Company’s or a peer company’s average common stock price (assuming reinvestment of any dividends) between the last ten trading days of one calendar year and the last ten trading days of the next calendar year. The peer group of 14 companies for the 2019 TSR award, as selected by the Compensation Committee in consultation with Meridian, is primarily weighted toward oil production and oil reserves, and includes eight companies from the Company’s peer group used for the Compensation Committee’s overall review in setting 2019 compensation. For this particular award, it was determined that having a peer group whose members were more aligned with the Company’s heavily-weighted oil production and reserve mix, as opposed to natural gas, was more appropriate than a peer group based on the relative size of each member. The peer group of companies used for the 2019 TSR award is shown in the table below.
2019 TSR Award Peer Group
California Resources Corporation*
Murphy Oil Corporation
Carrizo Oil & Gas, Inc.*
Oasis Petroleum Inc.*
Continental Resources, Inc.
Occidental Petroleum Corporation
Crescent Point Energy Corp.
PDC Energy, Inc.*
EP Energy Corporation*
SM Energy Company*
Laredo Petroleum, Inc.
Whiting Petroleum Corporation*
MEG Energy
WPX Energy, Inc.*
*
Included in the Company’s peer group used for the Compensation Committee’s review in setting 2019 compensation.

The TSR achievement percentage is determined based on where the Company ranks relative to its peers at the end of the three-year performance period based on the following chart. The TSR award contains a feature such that if the Company’s three-year average TSR is negative, the award payout is capped at 100% of target regardless of the Company’s earned payout percentage.
Three-Year Average TSR Rank
Performance Percentage Scale (subject to interpolation) (1)
1
200%
2
186%
3
171%
4
157%
5
143%
6
129%
7
114%
8
100%
9
86%
10
71%
11
57%
12
43%
13
29%
14
14%
15
0%
 
(1)
Beginning in 2016, any amounts earned under the TSR award above the 100% target level are payable in cash, rather than in shares of Company common stock, to limit potential dilution and conserve available shares under the 2004 Incentive Plan.



39


Reserves Growth Award

The Reserves Growth award measures the growth in proved reserves over an average of four equally-weighted periods: (i) annually for each of the three years in the performance period and (ii) the growth over the three-year period in the performance period. Award payout will be based on per-share proved reserves growth against pre-set target levels, with per-share determinations made after conversion of outstanding debt into common stock equivalents. The Reserves Growth award contains a feature such that if the Company’s reserves replacement is less than 100% of production, the award payout is capped at 100% of target regardless of the Company’s debt-adjusted reserves growth per share compared to the performance scale.

Three-Year Average
Reserves Growth
Performance Percentage Scale (subject to interpolation) (1)
10% or greater
200%
9%
175%
8%
150%
7%
125%
6%
100%
5%
75%
4%
50%
3%
25%
Less than 3%
—%
 
(1)
Any amounts earned under the Reserves Growth award above the 100% target level are payable in cash, rather than in shares of Company common stock, to limit potential dilution and conserve available shares under the 2004 Incentive Plan.

Results of Incentive-Based Compensation for Year-Ended 2019

For the performance period ended 2019, our named executive officers were eligible to earn equity and cash under three incentive-based awards: the (i) three-year TSR award granted in 2017, (ii) three-year Oil Price Change vs. TSR award granted in 2017 and (iii) 2019 annual incentive bonus. The Compensation Committee certified the TSR award and Oil Price Change vs. TSR award at 59% and 50%, respectively, of the targeted levels (target equal to 100%). The 2019 annual incentive bonus was certified at 112% of target based on the Company’s results with respect to the predetermined performance metrics.

Below are summaries of the results of the (i) three-year TSR award granted in 2017 (ii) three-year Oil Price Change vs. TSR award granted in 2017 and (iii) 2019 annual incentive bonus.
Three-Year TSR Award (granted in 2017)
Metric
 
TSR Percentile Rank Compared to Peers
 
Award Achievement (Percent of Target)
Compared the average of the Company’s total shareholder return during each year within the three-year performance period to that of the Company’s peers.
 
29.4% (ranked 13th out of 17 companies)
 
59%

Three-Year Oil Price Change vs. TSR Award (granted in 2017)
Metric
 
TSR Relative to Oil Price Change
 
Award Achievement (Percent of Target)
Compared the change in WTI crude oil prices to the Company’s total shareholder return, both over a three-year period.
 
(29.7)%
 
50%



40


2019 Annual Incentive Bonus

The table below depicts the annual incentive bonus metrics, their respective weightings for 2019 and the thresholds, targets, maximums and results for each metric.

2019 Annual Incentive Bonus
Metric
 
Target Points
 
Threshold
(50%)
 
Target
(100%)
 
Maximum
(200%)
 
Results
 
Points Earned
Total Production (1)
 
20
 
55,500 BOE/d
 
58,000 BOE/d
 
60,000 BOE/d
 
58,419 BOE/d
 
24
Lease Operating Expenses (2)
 
10
 
$440 million
 
$420 million
 
$400 million
 
$414 million
 
13
General & Administrative Expenses (3)
 
5
 
$78 million
 
$72 million
 
$67 million
 
$71 million
 
6
EBITDAX (4)
 
15
 
$400 million
 
$500 million
 
$585 million
 
$607 million
 
30
Reserves Replacement
 
10
 
50%
 
100%
 
200%
 
(58)%
 
HSE Performance
 
 
 
 
 
 
 
 
 
 
 
 
Serious Injury & Fatality Rate
 
5
 
1.27
 
0.95
 
0.63
 
0.53
 
10
Total Recordable Incident Rate
 
5
 
1.01
 
0.75
 
0.49
 
0.88
 
4
Significant Spills Rate
 
5
 
0.17
 
0.13
 
0.09
 
0.18
 
Other Strategic Initiatives (5)
 
25
 
 
 
 
 
 
 
 
 
25
Total
 
100
 
 
 
 
 
 
 
 
 
112
 
(1)
Total Production is calculated before adjustments for any acquisitions and/or divestitures.
(2)
Lease Operating Expenses excludes the cost of CO2.
(3)
General & Administrative Expenses excludes annual incentive bonuses and any incentive-based equity compensation earned above target levels.
(4)
EBITDAX is defined as consolidated net income excluding interest expense, tax expense (benefit), depletion, depreciation, amortization and exploration expense, non-cash items, net losses from disposed, abandoned or discontinued operations and all other extraordinary or non-recurring losses and charges.
(5)
Other Strategic Initiatives includes qualitative metrics related to operating within cash flow, liquidity, balance sheet management, portfolio management and rate of return on capital projects.

In February 2020, the Compensation Committee certified the results of the 2019 annual incentive bonus. Seventy-five percent (75%) of the annual incentive bonus payment was tied to quantitative metrics related to (i) Total Production, (ii) Lease Operating Expenses, (iii) General and Administrative Expenses, (iv) EBITDAX, (v) Reserves Replacement and (vi) HSE Performance. Based on the Company’s results, the Compensation Committee determined that a total of 87 percentage points were earned for the quantitative metrics.

The remaining twenty-five percent (25%) of the annual incentive bonus payment was based on the Company’s performance on Other Strategic Initiatives, such as operating within cash flow, liquidity, balance sheet management, portfolio management and rate of return on capital projects. Based on the Company’s performance on Other Strategic Initiatives, the Compensation Committee determined that 25 percentage points were earned for that metric. In making its determination with respect to the number of percentage points earned for the Other Strategic Initiatives metric, the Compensation Committee considered, among other things, the results described below.



41


Other Strategic Initiatives
Results
Operating within Cash Flow
We generated approximately $494 million of cash flow from operations (approximately $409 million after reducing for interest payments treated as debt reduction), significantly exceeding our approximately $274 million of incurred development capital expenditures and capitalized interest in 2019.
Liquidity
We reduced our debt principal by approximately $250 million and significantly improved our debt maturity profile, ending the year with no outstanding borrowings on our senior secured bank credit facility.
Balance Sheet Management
We improved our leverage ratio to 3.7x during 2019 from 4.2x during 2018 (ratio of net debt (debt principal less cash) to adjusted EBITDAX (a non-GAAP measure)).
Portfolio Management
We continued progress on the CO2 enhanced oil recovery development project at Cedar Creek Anticline, our largest oil field, to access the potential for significant long-term oil production and cash flow of this key asset, with project activities and capital primarily related to procurement of the pipe and preparation for installation of the CO2 pipeline. Additionally, we continued to optimize our oil and natural gas asset portfolio through the following: (i) sold Citronelle Field for approximately $10 million in July 2019 and (ii) sold half of our nearly 100% working interests in four conventional southeast Texas oil fields in March 2020 for $50 million and a carried interest in ten wells to be funded and drilled by the purchaser, and we continued the monetization of valuable surface land with no active oil and natural gas operations around Houston, Texas, including the following: (i) sold multiple parcels in transactions totaling $14 million in 2019 and (ii) entered into a contract to sell acreage for $32 million, which provides for a substantial portion of the cash proceeds from such sale to be received not later than mid-2021.
Rate of Return on Capital Projects
The aggregate internal rate of return on our capital projects in 2019 was approximately 20%, which was in line with our 2018 results and at the high end of our targeted range.

For more information on the Company’s 2019 results, see Executive Summary – Our Results on page 26.

Incentive-Based Compensation Earned for Year-End 2019

The chart below shows the cash amounts earned by our named executive officers under the incentive-based awards vesting in 2019, as compared to target.
2019 Incentive-Based Compensation Earned
 
 
Three-Year TSR Award
Three-Year Oil Price Change vs. TSR Award
 
Annual Incentive Bonus
Name
 
Target
 
Actual (1)
 
Target
 
Actual
 
Target
 
Actual
Christian S. Kendall
 
$
562,500

 
$
15,720

 
$
562,500

 
$
281,250

 
$
1,092,000

 
$
1,199,704

Mark C. Allen
 
437,500

 
12,227

 
437,500

 
218,750

 
696,000

 
759,636

James S. Matthews
 
225,000

 
6,288

 
225,000

 
112,500

 
500,000

 
546,191


(1)
Represents the value of the shares vested on March 31, 2020, based on a NYSE closing stock price of $0.18 per share.


42


The bar graph below further illustrates the significant difference in value between the average amount of target compensation granted to our named executive officers (as a group) and the much lower average amount of compensation realized by our named executive officers (as a group) with respect to the three-year incentive awards with a performance period ending in 2019 (i.e., the TSR award and Oil Price Change vs. TSR Award).

INCENTIVECOMPBARA01.JPG

The average amount realized under the TSR award demonstrates the impact of the decline in commodity prices and corresponding reduction in our stock price, which has led to significant shortfalls between targeted equity compensation levels and realized equity compensation.



43


CEO Realized Compensation

The following CEO Realized Compensation Table discloses the compensation actually realized by our Chief Executive Officer, Mr. Kendall, which is different than the compensation that SEC rules require to be reported in the Summary Compensation Table above. We consider this CEO Realized Compensation Table to be relevant to investors because it shows how our compensation program affects the realized compensation of our Chief Executive Officer in a given year. The primary difference between the CEO Realized Compensation Table values and the Summary Compensation Table values is the method and timing used to value equity awards. SEC rules require companies to report the grant-date fair value of all equity awards in the Summary Compensation Table for the year in which such equity awards were granted and to report incentive-based equity at the grant-date fair value at 100% of the target level. Additionally, incentive-based cash awards are reported in the Summary Compensation Table as of the date of grant at 100% of the target level. As a result, approximately 59% of the total compensation amount reported in our Summary Compensation Table for 2019 relates to awards that have not yet vested or been earned to date, and for which the value, if any, is consequently uncertain. The CEO Realized Compensation Table values contain the following differences from the Summary Compensation Table values:
 
Time-vested restricted stock is restricted stock that vested during the year presented and is valued at the vesting-date price, representing the value earned by Mr. Kendall for such shares. In contrast, the Summary Compensation Table includes the grant-date fair value of all shares in the year granted.
With respect to incentive-based equity awards, the CEO Realized Compensation Table reflects the vesting-date fair value of awards earned by Mr. Kendall in the year of vesting, at the then-current market price of the shares earned and the percentage actually earned for each award. In contrast, the Summary Compensation Table includes such awards in the year of grant, at the grant-date fair value of the award, and assumes that the target (i.e., 100%) is earned.
With respect to the Oil Price Change vs. TSR cash award granted in 2017, the CEO Realized Compensation Table will not include that award until 2020, the year of vesting. In contrast, the Summary Compensation Table includes such award in 2017, the year of grant, at target (i.e., 100%).

CEO Realized Compensation Table
Year
Cash and All Other Compensation
(Salary, Bonus, Non-Equity Incentive Plan Compensation and All Other Compensation)
Stock Awards
(Time-Vested Restricted Stock, Incentive-Based Operational Awards and TSR Awards)
Total
Percent of Summary Compensation Table Values Realized
Summary

Compensation

Table Values
 
Realized

Compensation

Table Values(1)
Summary

Compensation

Table Values(2)
 
Realized

Compensation

Table Values(3)
Summary

Compensation

Table Values
 
Realized

Compensation

Table Values
2019
$
2,072,163

 
$
2,072,163

$
3,012,057

 
$
1,153,853

$
5,084,220

 
$
3,226,016

63%
2018
2,211,485

 
2,211,485

3,518,097

 
2,770,601

5,729,582

 
4,982,086

87%
2017
2,295,249

 
1,732,749

1,984,922

 
521,543

4,280,171

 
2,254,292

53%

(1)
This column does not include the value of the Oil Price Change vs. TSR cash award for 2017, which vested on March 31, 2020.
(2)
Represents the grant-date fair value of restricted stock and incentive-based equity awards.
(3)
Represents the vesting-date fair value of restricted stock and incentive-based equity awards.


44


2020 Compensation

This section describes compensation actions taken with respect to 2020 compensation for our named executive officers. We include this disclosure because we believe it enhances the understanding of our executive compensation practices and our objectives, philosophy and programs going forward. Named executive officer compensation for 2020 is described below.

NEO Total Target Compensation

The Compensation Committee determined that there would be no increases to the target compensation amounts for our named executive officers in 2020. The target amounts for each compensation component for our named executive officers are shown in the table below.
2020 Total Target Compensation
 
 
Base Salary
 
Annual
Incentive Bonus
 
Equity Awards
 
Total Target Compensation
 
% Change from 2019
Christian S. Kendall
 
$
840,000

 
$
1,092,000

 
$
4,100,000

 
$
6,032,000

 
—%
Mark C. Allen
 
580,000

 
696,000

 
2,000,000

 
3,276,000

 
—%
James S. Matthews
 
500,000

 
500,000

 
1,050,000

 
2,050,000

 
—%

Annual Incentive Bonuses

The annual incentive bonus target amounts are based on a percentage of base salary. The Compensation Committee did not increase the annual incentive bonus target percentages for our named executive officers in 2020, as depicted in the table below.
Target Annual Incentive Bonus Percentages
 
 
2017
 
2018
 
2019
 
2020
 
% Change Since 2017
Christian S. Kendall
 
175%
 
150%
 
130%
 
130%
 
(26)%
Mark C. Allen
 
175%
 
140%
 
120%
 
120%
 
(31)%
James S. Matthews
 
150%
 
120%
 
100%
 
100%
 
(33)%



45


The table below depicts the annual incentive bonus metrics and their respective weightings for 2020.
2020 Annual Incentive Bonus
Metric
 
Target Points
Total Production (1)
 
20
Lease Operating Expenses (2)
 
10
General & Administrative Expenses (3)
 
5
EBITDAX (4)
 
15
Reserves Replacement
 
10
HSE Performance
 
15
Other Strategic Initiatives (5)
 
25
Total
 
100

(1)
Total Production is calculated before adjustments for any acquisitions and/or divestitures.
(2)
Lease Operating Expenses excludes the cost of CO2.
(3)
General & Administrative Expenses excludes annual incentive bonuses and any incentive-based equity compensation earned above target levels.
(4)
EBITDAX is defined as consolidated net income excluding interest expense, tax expense (benefit), depletion, depreciation, amortization and exploration expense, non-cash items, net losses from disposed, abandoned or discontinued operations and all other extraordinary or non-recurring losses and charges.
(5)
Other Strategic Initiatives includes qualitative metrics such as operating within cash flow, liquidity, balance sheet management, portfolio management, progressing toward our climate-change related goals and rate of return on capital projects.

2020 Equity Awards

For 2020, the Compensation Committee determined that the equity awards granted to our named executive officers would be allocated as depicted below.
Percent
 
Award Name
 
Award Type
 
Terms
40%
 
Time-Vested Restricted Stock
 
Equity
 
Vesting ratably over three years (34%, 33%, 33%)
60%
 
TSR Award
 
Equity (1)
 
Based on peer ranking over a three-year performance period and cliff vesting after three years

(1)
Any amount earned under the TSR award above the 100% target level will be payable in cash, rather than in shares of Company common stock, to limit potential dilution and conserve available shares under the 2004 Incentive Plan.

The Compensation Committee eliminated the Reserves Growth award (and proportionately increased the TSR award) for 2020 in order to more closely align (i) the interests of our named executive officers with those of our stockholders and (ii) our equity program with those of our compensation peer group. The table below shows changes to our equity award allocations to named executive officers for 2020.
Award
 
2019
 
2020
TSR Award
 
40%
 
60%
Reserves Growth Award
 
20%
 
N/A
Time-Vested Restricted Stock Award
 
40%
 
40%
Total
 
100%
 
100%



46


The following equity award amounts were granted to our named executive officers in 2020. It is currently anticipated that time-vested restricted stock awards for 2020 shown in the table below will be granted mid-year, ratably vesting over a three-year period.
Name
 
Time-Vested
Restricted Stock
 
TSR Award
(100% of Target)
Christian S. Kendall
 
$
1,640,000

 
$
2,460,000

Mark C. Allen
 
800,000

 
1,200,000

James S. Matthews
 
420,000

 
630,000


Change in Control and Severance Benefits

Our named executive officers, together with all of our employees, have built Denbury into the successful enterprise that it is today, and we believe that it is important to protect them in the event of a change in control. Further, it is our belief that the interests of stockholders are best served when the interests of our named executive officers are aligned with theirs and providing change-in-control benefits should eliminate possible reluctance of our named executive officers to pursue potential change-in-control transactions that may be in the best interest of stockholders.  For more information on these potential benefits, see Potential Payments Upon Termination or Change in Control below.

Perquisites and Other Benefits

Our named executive officers participate in our benefit plans on the same terms as our other employees. These plans include medical, dental, vision, disability and life insurance and partial matching contributions to our 401(k) plan. Additionally, our named executive officers received a cash perquisite in 2019 of $25,000. Our only retirement benefit is our 401(k) plan. We do not offer any pension or post-retirement medical benefits.

Stock Ownership Guidelines

Our Board has approved stock ownership and retention guidelines for our officers, based on the recommendation of the Compensation Committee and a review of our peer company stock ownership guidelines performed by Meridian. Under our stock ownership and retention guidelines, all officers are expected to hold stock with the following values:
Officer Level
 
Ownership Guideline
President and/or Chief Executive Officer
 
5x annual base salary
Chief Operating Officer, Executive Vice Presidents and/or Senior Vice Presidents
 
3x annual base salary
Vice President
 
2x annual base salary

When calculating an officer’s holdings for purposes of determining whether these guidelines are satisfied, an officer’s holdings include shares of common stock owned directly by the officer or immediate family members, plus restricted stock, both vested and unvested. Until the guideline amount is achieved, officers are required to retain at least one-third of the shares obtained through the 2004 Incentive Plan other than awards of SARs.


47


Risk Assessment Related to Our Compensation Program

We do not believe that our compensation policies and practices are reasonably likely to have a material adverse effect on the Company’s risk profile. Although portions of our compensation program are incentive-based, we believe that we have allocated our compensation among (i) base salary (ii) short-term compensation opportunities and (iii) long-term compensation opportunities in such a way as to discourage unreasonable risk taking. Further, one of the main factors we take into consideration in setting compensation is the performance of the Company as a whole, which we believe encourages decision making that is in the best long-term interests of the Company and our stockholders. Finally, the time-based vesting over a multi-year period for all of our incentive-based awards, as well as our stock ownership guidelines for our directors and officers, ensures their interests align with those of our stockholders for the long-term performance of the Company.

Policy on Recovery of Compensation and Clawbacks

The Board has adopted a clawback policy under which the Board, or a committee of the Board, has the right to cause the reimbursement by an executive officer of the Company of certain incentive-based compensation if the compensation was predicated upon the achievement of certain financial results that were subsequently the subject of a required restatement of the Company’s financial statements and the executive officer engaged in fraudulent or intentional illegal conduct that caused the need for the restatement. Our policy will be revised, if appropriate, to conform to any final listing standards that may be adopted by the NYSE under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”).

The previous CD&A contains statements regarding future individual and Company performance targets and goals. These targets and goals are disclosed in the limited context of Denbury’s compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. Denbury specifically cautions investors not to apply these statements to other contexts.


48


EXECUTIVE COMPENSATION – COMPENSATION TABLES
Summary Compensation Table

The following table sets out a summary of executive compensation for our named executive officers for the years indicated below.
Name and Principal Position
 
Year
 
Salary
 
Bonus
 
Stock Awards(1)
 
Non-Equity Incentive Plan
Compensation(2)
 
All Other Compensation(3)
 
Total
Christian S. Kendall
 
2019
 
$
823,750

 
$

 
$
3,012,057

 
$
1,199,704

 
$
48,709

 
$
5,084,220

President and Chief Executive Officer
 
2018
 
775,000

 

 
3,518,097

 
1,383,375

 
53,110

 
5,729,582

 
2017
 
638,750

 

 
1,984,922

 
1,599,324

 
57,175

 
4,280,171

Mark C. Allen
 
2019
 
$
565,000